October 30, 2007 Not All Is Gloomy in Real Estate: A Blog Network Attracts Capital By DAN MITCHELL The residential real estate market may be troubled, but property-focused Web sites are still attracting visitors and investors.
Curbed.com, a popular real estate blog network with sites in New York, San Francisco and Los Angeles, has obtained $1.5 million in financing to expand into new cities and add staff members. According to Lockhart Steele, the network’s publisher, traffic is growing 10 percent a month and the site is drawing national advertisers.
Nick Denton, Mr. Steele’s boss when he was managing editor of the Gawker Media blog network, and Zach Nelson, chief executive of NetSuite, a maker of business software, are among the individual investors. Gawker Media also invested.
In some respects, sites like Curbed are insulated from the woes of the real estate market in a way that traditional sites may not be. “We’re not just about real estate,” Mr. Steele said. “People come to the site to talk about their neighborhoods and about life in the city.” This wide focus has helped Curbed draw advertisers like American Express and Volkswagen, Mr. Steele said.
At greater potential risk are national-focused sites like Zillow.com and Realtor.com that depend on an active market of buyers and sellers to thrive. Nonetheless, Zillow, which estimates home values, last month obtained $30 million in its latest round of financing, bringing the total to $87 million for the site, which was started less than two years ago. And its traffic in the third quarter was 20 percent higher than in the period a year earlier, according to Spencer Rascoff, Zillow’s vice president for marketing and chief financial officer.
It has also begun posting home listings provided by brokerage firms. The first of these to participate is ERA.
“The housing slowdown has actually increased people’s appetite and interest,” Mr. Rascoff said. “In a crazy market like this, both buyers and sellers are trying to get an edge.”
Advertising-supported sites seem, at least for now, to be on safer ground than those that rely heavily on “showcase listings” that sellers pay for.
“Any site that charges fees to brokers will be hurt the most,” said Steve Murray, editor of the newsletter Real Trends. Realtor.com, run by the National Association of Realtors, remains the top real estate destination on the Web, with more than five million unique visitors a month — down only slightly in the last six months, according to Nielsen/NetRatings. If the downturn lasts long enough, “everyone suffers,” said Brad Inman, founder and publisher of the real estate news service Inman News. During bad times, “there’s always an uptick first” in real estate advertising, he said. “Nobody’s free of the dark shadow of a down market.”
Still, Mr. Inman was one of the lead investors of Curbed.com, in part because Curbed “is not a direct real estate play,” he said. “I didn’t even think of it in context of the market.”
I want to congratulate Lockhart Steele on this great news. Curbed is the pioneer in the field of real estate blogging and I am happy to see that they are not only still around but they are expanding their operations. For all of you investors out there consider Curbed a value stock. They have only just begin to lay a smackdown of profitable proportions.
This news also serves a motivator to get off my duff and put some ideas I have for the Property Grunt to use. More on that later.
Recently I was approached by ta representative of Openhouse NYC with a proposal of content exchange. This is a pilot program which will go last for limited period. In exchange for a video segment, they will post a Property Grunt entry of my choice.
Personally I am quite flattered and jazzed with this new relationship. Open House NYC is one of the premiere shows focusing on New York City real estate and can be seen every Sunday morning at 8:30 AM. Hopefully this will be the beginning of a long and fruitful relationship.
This particular video piece is about a subject that is close to my heart. Noise.
And it is probably the most thorough piece on how to deal with noise from the physical to legal options.
Countrywide Financial, the nation’s largest home lender and loan servicer, announced yesterday that it would help borrowers restructure some $16 billion in mortgages to avoid foreclosure or financial stress associated with quickly rising adjustable-rate loans.
As many of you know, I am not the biggest fan of Countrywide and as far as I am concerned they really had no choice. First of all if they foreclosed on all those buyers they would end becoming one of the biggest landlords of distressed properties which is bad because they do not have the infrastructure to be property managers and brokers and would have to outsource those tasks which would cost them more money.
Another option would have been to sell the company and let it be someone else's quagmire but that option was eighty-sixed for obvious reasons.
The SEC has been watching them carefully ever since it was reported that Angelo R. Mozilo has been made some well timed sales of his company's stock. So they need as much good press as possible.
US existing home sales fell 8.0 percent in September as a persistent housing slump continued to weigh on the property market and the world's biggest economy, an industry group said Wednesday. The National Association of Realtors (NAR) said in a monthly snapshot that sales of existing homes and apartments tumbled to a seasonally adjusted rate of 5.04 million units in September from 5.48 million in August.
The drop was worse than expected. Most economists had only expected sales to decline to around 5.25 million.
As I have stated before, if you can, wait it out. Of course there are others who disagree and say this is the time to jump in and you are free to follow their path.
Jim Rogers, the veteran investor who predicted the 1999 commodities rally, declared that the US economy was "in recession" as he said he would take flight from the dollar and switch his investments into currencies including the Chinese yuan.
Everyone is raving about China that they are the next big thing. However, I am not as bullish on China. Yes, they are experiencing hyper growth in their economy. But if you read the NYT's coverage on China, well let me put it this way. The candle that burns twice as bright burns out twice as fast. In the near future I plan on doing more entries on China and how much of an impact it will have on our future.
This article has been getting heavy rotation on the New York Time.
In a down real estate market, they came to buy. They came early, they came in numbers and they came with bank checks for $5,000.
By 10 a.m. Saturday, more than 700 people filled a hall in the convention center here for what real estate agents say is the largest auction of foreclosed properties ever in Minnesota, with more than 300 houses or apartments for sale in two days. Opening bids ranged from $1,000 — for a three-bedroom house — to $729,000, for a five-bedroom house on 11.9 acres. The crowd was standing-room only, with more waiting to enter. Some were looking for homes, others for investments.
“It’s a symptom of the foreclosure crisis,” said Jim Davnie, a Democratic state representative in Minnesota. Mr. Davnie said he had concern that areas already hit by the foreclosure crisis would now be hit by investors buying properties to rent them out, “which makes neighborhoods less stable than owner-occupied housing.”
I am not a big fan of these auctions. They are only suitable for people who have insider knowledge about the property that is for sale and they are not ideal places for first time buyers. However from this article it appears that people are listening to their bank accounts rather than their emotions. Also these auctions play a key role in the recovery of this market. The quicker these distressed properties move, the quicker we will be able to get this economy back its feet.
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This bloggers discusses the wacky hijinks that have occurred since moving in.
Chances for misappropriating building funds are not limited simply to fudging expenditures and writing questionable checks. Being on the board means interacting with vendors who supply many types of products and services necessary for your building's continuing operation - and therein lies another opportunity for malfeasance: bid-rigging and kickbacks.
I received a letter last night around 6:30 pm from the building manager (it's Friday night, she should be off enjoying her weekend). I thought it was the $225 check for the phone jacks. Instead, it was a letter from the board threatening to take me to court. For what? I have no idea. Just another scare tactic, I think.
To me, a lawsuit-happy board bringing frivolous lawsuits against owners can be costly and drive common charges up for the building. Taking someone like me to court with a baseless claim is most likely gonna end up pissing other owners off in the end.
What's funny is they would rather go to court than to just answer some simple questions that I feel I have the right to ask. I just can't understand why they don't want to answer these questions:
1. They said extra security cameras were put in place. Where are the security cameras located?
2. What is Resident Pilot and how will it benefit me as a homeowner. How much does it cost? Were there any proposals from other vendors? If so, who?
It is all rather amusing to me. Maybe this blogger is a little nutty, but I think we'd all be mistaken for some type of pistachio if we were in that type of situation.
Monday October 22, 5:46 pm ET By Madlen Read, AP Business Writer Stocks Reverse Losses, Finish Higher Amid Strength in Technology Sector and Bargain Hunting
NEW YORK (AP) -- Wall Street finished a back-and-forth session higher Monday as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector. Several companies including drug maker Merck & Co. reported decent third-quarter results, but investors were unhappy with rival drug maker Schering Plough Corp.'s results. They were also mindful of the downbeat profit outlooks from several blue chip companies last week.
Still, after an early slide, the market seemed to grow optimistic about Apple Inc.'s earnings, which did top Wall Street's expectations when the company reported after the closing bell. The eager anticipation of the report sent tech stocks higher, and by early afternoon, other stocks were tagging along.
Disappointing earnings and Standard & Poor's downgrade of another series of mortgage-backed securities sent stocks plunging Friday, taking the Dow Jones industrials down 366 points.
"It is not unusual for a big down day to be followed by an up day. I think the bargain hunters are out there," said Brian Gendreau, investment strategist for ING Investment Management. "It seems there's fairly strong demand out there, despite all the bloodletting on Friday."
He noted that while some big-name companies' results have disappointed Wall Street, about two-thirds of earnings so far have beat estimates and outlooks remain upbeat for the technology and health care sectors.
What have here ladies and gentleman is a perfect storm for day trading. And it looks like there is more volatility on the way.
Of course the Fed will save the day.
http://biz.yahoo.com/ap/071022/fed_markets.html
WASHINGTON (AP) -- The Federal Reserve will do whatever is necessary to prevent damage to the economy from the credit crunch that has gripped Wall Street, a Fed official said Monday, warning it will take time for financial markets to fully recover from the strains. ADVERTISEMENT
Fed Governor Randall Kroszner's remarks came as fears about the credit crunch and a painful housing slump have gripped investors in recent months, causing stocks to nosedive. Wall Street took another sharp plunge -- 366 points -- on Friday. The Dow Jones industrials was up in trading on Monday afternoon, after being down more than 100 points early in the session.
"The Federal Reserve will continue to monitor developments in financial markets and act as needed to support the effective functioning of these markets and to foster sustainable economic growth and price stability," Kroszner said in a speech here to the Institute of International Bankers.
Oh, I just feel a warm fuzzy and especially with that emergency fund coming together.
Does the rescue plan for the credit markets need to be saved?
The plan is still being developed, but the roughly $75 billion effort to snap up troubled securities is struggling to get off the ground, days after it was disclosed by the country’s three biggest banks with the support of the Treasury Department.
Citigroup, Bank of America, and JPMorgan Chase back the plan but are just beginning to hammer out the details. Bank regulators are aware of the discussions but some say they are out of the loop. And market participants are puzzled, with investors like Pimco and T. Rowe Price balking at buying in.
Yesterday, Citigroup executives said separately that they bought some time by securing $80 billion in financing through the end of the year. That provides some relief because Citigroup can avoid a fire sale of assets at distressed prices, but it is not a long-term solution for the bank or the industry. A greater amount of backup financing is needed.
The Treasury-supported proposal for the industry, however, provides a framework for a new fund to purchase assets held by structured investment vehicles, or S.I.V.’s, that have been pressured since the credit market meltdown this summer. It is intended to help the banks backing such vehicles avoid bringing those risky loans onto their balance sheets and to spare investors — including money market funds — distress.
So what do you propose ? Aside from buying foreclosures, which I am not advocating for the newbies, what would you do ? Investing in financials waiting for the upturn ? Buying consumer staples companies ? Gold ?
namboy
That is the question I have pondering for quite sometime. However there is no easy formula to present with real estate and personal finance in general because it is all quite subjective. For instance someone who has $20,000 in credit card debt and is barely scraping by is unlikely to jump into day trading, while a person who has little or no debt and has plenty of liquidity is probably more likely to make more riskier investments in the stock market.
The best I can do is give you my take of what is going down. Please bear in mind, I am not a financial planner nor am I an expert in finance. These are just my opinions. So I strongly recommend that you all talk to professionals in the field before making any decisions.
With only 15 months left in office, President Bush has left whole agencies of the executive branch to be run largely by acting or interim appointees — jobs that would normally be filled by people whose nominations would have been reviewed and confirmed by the Senate. In many cases, there is no obvious sign of movement at the White House to find permanent nominees, suggesting that many important jobs will not be filled by Senate-confirmed officials for the remainder of the Bush administration. That would effectively circumvent the Senate’s right to review and approve the appointments. It also means that the jobs are filled by people who do not have the clout to make decisions that comes with a permanent appointment endorsed by the Senate, scholars say. While exact comparisons are difficult to come by, researchers say the vacancy rate for senior jobs in the executive branch is far higher at the end of the Bush administration than it was at the same point in the terms of Mr. Bush’s recent predecessors in the White House.
Basically the federal government is being held together by spit and bailing wire.
“You’ve got more vacancies now than a hotel in hurricane season,” said Paul C. Light, a professor of public service at New York University and one of the nation’s best-known specialists on the federal bureaucracy. “In my 25 years of studying these issues, I’ve never seen a vacancy rate like this.”
And it is going to get worse.
“You’ve got more vacancies now than a hotel in hurricane season,” said Paul C. Light, a professor of public service at New York University and one of the nation’s best-known specialists on the federal bureaucracy. “In my 25 years of studying these issues, I’ve never seen a vacancy rate like this.”
Michael J. Gerhardt, a law professor at the University of North Carolina who studies the federal appointment process, said that he believed the large number of vacancies reflected a widespread fear by Republicans that the next president, whoever it is, will be a Democrat, and that there is no job security at the top ranks of the executive branch.
“Republicans don’t have as much incentive to give up lucrative jobs in the private sector right now,” Professor Gerhardt said.
Professor Light said it was not surprising for the number of vacancies in senior government posts to grow near the end of a president’s term, when political appointees seek work outside government and it becomes more difficult to recruit candidates for what may be short-term jobs.
But he said the situation in the final months of the Bush administration was dire. Since Mr. Bush may well be replaced by a Democrat who would almost certainly want a wholesale turnover of political appointments, the vacancies could continue well into 2009 at many cabinet departments and other agencies, Professor Light said.
He said the problems of having so many acting senior government officials were obvious: “One of the things we know is that they just aren’t as effective as Senate-confirmed appointees. They just don’t have the standing in their agencies. Acting people are very shy about making decisions.”
Anyone in the Republican party who has any talent or capital is not going to commit to any type of high level position in the White House at this point in time because it is not worth it. They would rather make more money in the private sector or wait it out till the next Republican administration, which at this rate will probably occur in the next ice age.
Also no Republican in their right mind wants to be associated in anyway with George W. Bush’s administration if they have aspirations to continue their political career. Remember Michael “The Fashion God D. Brown” formerly of FEMA? This is probably the type of cannon fodder that is running the majority of our governmental departments right now. They are non threatening personalities who know how to follow the party line and are only interested in putting out fires and making sure the administration holds together till GW takes his final flight on Air Force One. Which is the wrong type of person you want in these positions because they are not going to be assertive in making decisions. They are simply going to fade in the background and hope that no one notices what they are doing. If they screw up, who cares, they can be replaced.
“The housing decline is still unfolding, and I view it as the most significant current risk to the economy,” Mr. Paulson said on Tuesday in a combative speech at Georgetown University in which he called for changes by mortgage lenders, credit rating agencies and Wall Street investment banks that had resold mortgages to investors around the world. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth,” he warned.
He just figured this out now? The real estate and general public have known about the meltdown for more than 2 years. I know Mr. Paulson is not a stupid man since he was a CEO of Goldman Sachs.
It appears his strategy is to maintain the status quo. I am not saying he is a bad guy but his primary objective is to make sure the economy doesn’t hit any more icebergs so he is not going to do anything to cause any further upsets. Besides, I am not sure if Mr. Paulson could take any aggressive measures since he is a relative newcomer to the D.C games and does not have the network that someone like Bernanke has to make changes.
Do not count on the government to bail us out of this situation. They are only going to do as much as they need to and no more. Whatever actions the government takes and whatever information they release, I would strongly advise to examine it closely to see if it is simply lip service at what type of effect it will have on our finances. In other words, we are on our own.
Foreign investors slashed their holdings of US securities by a record amount as the credit squeeze intensified, according to the latest Treasury figures. The Treasury International Capital report – known as the Tic – for August will be closely watched because it appears amid growing concerns about the weakness of the US dollar, which hit a record low recently against a basket of major currencies.
Currency traders were given a green light to continue selling the US dollar on Wednesday, as the International Monetary Fund said the greenback “remains overvalued” and rejected claims the euro had risen too far. Contradicting Rodrigo Rato, the outgoing IMF managing director, who last week said “right now the dollar is undervalued”, the fund’s staff conclude the dollar is still too high. The multilateral lender also forecast slower growth in 2008 at 4.75 per cent, compared with 5.2 per cent expected this year.
The dollar fell to a new low against the euro on Thursday after the 13-nation European currency broke through the $1.43 mark on reports from Washington that growing economic weakness was boosting jobless claims.
Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.
The Dow Jones industrial average dropped more than 360 points Friday - the 20th anniversary of the Black Monday crash - as lackluster corporate earnings, renewed credit concerns and rising oil prices spooked investors. The major stock market indexes turned in their worst week since July after Caterpillar Inc. (CAT), one of the world's largest construction equipment makers, soured investors mood Friday with a discouraging assessment of the U.S. economy. In a week dominated by mostly negative results from banks facing difficult credit markets and rising mortgage delinquencies, investors appeared surprised that an industrial name was feeling an economic pinch, too.
Foreigners are running away from the dollar as fast as a bunch of blonde cheerleaders running away from OJ Simpson during a production of Julius Ceasar which has led the Dollar in becoming the new Killer Rabbit. Yeah, I know. Tell us something we don’t know.
Follow the money.
Now what I really want to know is what all are those countries going to do with all that liquidity? They are not going to simply toss a couple of billion in a money market account. They are going to want to get the biggest bang for their buck or at least place their funds in a secure investment.
The Bad old days.
One of the places where the money is leading us to a return to tech stocks.
A year ago, Yahoo invested in Right Media, a New York-based company developing an online advertising network. Yahoo’s investment valued the firm at $200 million. Six months later, when Yahoo acquired Right Media outright, the purchase price had swelled to $850 million.
What changed? According to Right Media’s chief technology officer, Brian O’Kelley, very little, except that Yahoo’s rivals, Microsoft and Google, were writing billion-dollar checks to buy online advertising networks, and Yahoo thought it needed to pay any price to keep up.
Of course that did not go unnoticed.
“I have to say I giggled,” Mr. O’Kelley, 30, said of the deal that earned him millions. He has since left Right Media and is starting another company. “There is no way we quadrupled the value of the company in six months.” Does this sound familiar?
The trend is described as a return to madness (by skeptics) or as a rational approach to unlimited opportunities presented by the Internet (by true believers). Greed, fear and a desperate rush to pick the next big winner are all adding fuel to the fire that is Silicon Valley’s resurgence.
“There’s definitely a lot of betting going on, and it’s not rational,” said Tim O’Reilly, a technology conference promoter and book publisher. Mr. O’Reilly is credited with coining the phrase “Web 2.0,” which refers to a new generation of Web sites that encourage users to contribute material. His Web 2.0 conference, which begins Wednesday in San Francisco, has become a nexus for the optimism around the latest set of society-changing online tools. But that has not stopped Mr. O’Reilly from worrying that the industry is minting too many copycat companies, half-baked business plans and overpriced buyouts.
When the bubble inevitably pops, he said, “there are going to be a lot of people out of work again.”
“We are almost going back to year 2000 types of errors,” said Aaron Kessler, an Internet analyst at Piper Jaffray. Internet companies “are buying users instead of revenue and profitability,” he said
If it is not tech then it will be gold, oil or whatever is deemed the next big thing. People with liquidity are going to go to where they are going to get the highest return which can lead to more volatility. Whatever path you chose in investing your money, know the product, know when to get in and know when to get out. Just remember to follow the money, see where it leads you. It might be someplace where you can make a profit.
I realize that the points that I have stated in this entry are probably broad and general but I hope you all understand that I have to present this information in this manner because everyone’s financial situation is different so any action is quite subjective.
"And where does the newborn go from here? The net is vast and infinite." Major. Motoko Kusanagi
As I have stated before, do not rely on my blog as your only source of information. Look at other resources, talk to experts in the field, look at your own finances and see what your options are and take the proper course of action. Just be aware of the variables I have presented and that there are definitely other factors out there that can affect your finances.
Think of yourself as a newborn just entering this new world and remember there are limitless opportunities for you.
Remember that this is cyclical. So there is no need for any type of self induced emotional hijacking because if you keep a cool head you should be able to get through this.
Those of you who have any suggestions or advice please feel free to comment on it.
Below is an interview I conducted for the sales team and developer of the Oro. I hope to have many more of these in the near future. I have always curious about the how a developer and sales team operate, especially in this market, hopefully this will answer some questions.
I want to thank Kelly Kreth for setting up this interview and Christine Hodgson and Ron Herschko for spending the time to answer my questions.
The Sales Team
1. How long did it take you to form a sales team?
Over the course of several months, we compiled a synergistic sales team - each agent complimenting the others’ strengths. Our three primary sales agents are: Samantha Behringer, Michael Deon Allen and Jonathan Davidson.
2. Usually when new agents are hired they go through training; was there any type of training for the staff or was it simply run and gun?
To best be able to explain the product, the sales agents had an opportunity to meet with the Ismael Leyva team, including Ismael himself. Each finish, feature and appliance was discussed in detail. This included not only the apartments, but the common areas, lobby and amenity spaces.
3. According to Kelly, you have closed a tremendous amount of sales in 6 months, what do you owe to your success?
We have an exceptionally well-designed product with extensive amenities including: a 50 foot lap pool, fitness center, racquetball/basketball court, saunas, a screening room and a residents' lounge and wetbar, prime access to transportation, sharp pricing and a strong sales team. Oro is also the tallest building constructed in brooklyn in the last 80 years, at over 400 feet. Because of that, the views of Manhattan are amazing.
4. How have you been able to adapt to current market conditions?
We believe that our sales velocity indicates that we have been able to adapt to current market conditions. Our pricing is right on target and we offer so much more than one can find in many other areas of Brooklyn and Manhattan .
5. Have you seen more foreign buyers?
Yes, we have seen Asian and South American buyers.
6. What are some common mistakes buyers make?
Many times first-time buyers are unaware of closing costs and basic contract and deposit procedures. We educate them as much as possible to allow the transaction to proceed smoothly.
7. Once all units are sold, what happens to the sales team? Do you go your separate ways or do you plan on managing the Oro?
The sales agents will move on to another project – either together or separately.
The Developer
1. What made you choose this area of Brooklyn ? How many other development sites did you look at before picking this one?
The developers, Ron Herschko, who also developed the Toy Factory in Brooklyn, and Dean Palin believe that this area of Brooklyn is the fastest growing and has an exceptional central location with easy access to Manhattan . They feel it offers some of the best views of the Manhattan skyline available. Additionally, the developers think that this is the proper location for this product based on the fact that they look at sites everyday.
2. What is your history of real estate development?
The development team has 50 years of experience developing properties in all five boroughs.
3. What have been the challenges of putting together this particular development?
Helping people to understand and believe in the neighborhood as much as the developers do. It is an area rich in culture--museums, art, music, restaurants and shopping and offers fantastic access to transportation.
4. Did you go about using traditional sources of financing or did you gather up a group of investors?
Financing was provided by a construction lender and two institutional investors.
October 14, 2007 Banks May Pool Billions to Avert Securities Sell-off By ERIC DASH Several of the world’s biggest banks are in talks to put up about $75 billion in backup financing that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that still looms over the broader economy.
Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days.
A broad framework for an agreement could be reached as early as tomorrow, according to people with knowledge of the discussions, but many important details still need to be hammered out. Another round of discussions is taking place this weekend, and it still possible that the parties will not reach agreement.
The proposal recalls the 1998 bailout of the hedge fund Long Term Capital Management, when a group of big banks came together to prevent the fund from collapsing after it made a series of bad bets. But it also shows the heightened concerns of both government and financial players that problems in a crucial part of the credit market have not stabilized, even after a half-point drop in interest rates, and threaten to derail the overall economy.
Senior executives from each of the banks have attended meetings in Washington and New York hosted by Robert Steel, the Treasury undersecretary for domestic finance and a former Goldman Sachs banker who is a close adviser to the Treasury secretary, Henry M. Paulson.
The group has also sought input from others. Several big international banks, including Barclays and HSBC, have been asked about their interest in participating. The group has also reached out to several of the major structured investment vehicles, as well as big institutional investors in the money markets, like Fidelity. The Federal Reserve has been aware of the talks but has not been playing an active role in the discussions.
The effort to create a backup fund began at the behest of Mr. Paulson. The freeze in markets for commercial paper had shown very limited signs of thawing, but Wall Street firms were having almost no luck finding buyers for mortgage-backed securities and derivatives.
Mr. Paulson called a meeting that included the chief executives of Citigroup, Bank of America and other big banks to see what could be done to relieve the bottleneck. The meetings that followed — in Washington, New York and on conference calls — were led primarily by Mr. Steel and by Anthony Ryan, a former investment banker who is now assistant Treasury secretary for financial markets.
Officials at the New York Fed and the Federal Reserve Board in Washington said they had stayed out of the discussions. But Fed officials have been tracking the credit markets closely, and have said the market for structured investment vehicles remains largely frozen.
The investment vehicles, which are pools of assets backed by mortgages, credit card debt and other loans, are often organized by banks but are not actually owned or held by them. The investment vehicles are supposed to be financed through the issuance of commercial paper, but there have been few takers for securities tainted by mortgages.
The most acute problems are for structured investment vehicles that do not have backup lines of credit with a sponsoring bank. Until recently, that seemed safe enough for investors, because the securities were backed by what appeared to be solid collateral. But the panic over bad mortgages has decimated the market value of such securities and made them impossible to sell.
To be sure, banks have been buying back a great deal of commercial paper in recent weeks, even in cases where they are not legally obliged to do so. But that is tying up bank capital and could lead to a credit crunch in other areas.
Edmund L. Andrews contributed reporting.
When this many big time players converge to put together a pot this big to resolve this crisis, you know that they have been going through copious amounts of dry underwear.
The Mortgage, like any other form of debt, is passed around in the markets. As soon that house is bought and sold that mortgage is bundled up with a bunch of other mortgages and sold off to another buyer. And then begins the circle of life.
Like a doobie at a frat party, that mortgage is passed around. But when people start freaking out when it turns out their doobage is laced with PCP, then everyone lays off the bowl.
As I have stated before in a previous entry, any investment vehicle or product that has connections to mortgages has become verboten in Wall Street so it appears these parties are facing an uphill battle.
Will this help? Or will it make things worse? Do they have the liquidity to pull this off? Who benefits if the fund comes together and who benefits if it doesn't?
Hi there Gawker, I am Kelly Kreth, the new sex/relationship writer for the NY Press (and also, President of my own PR firm.) Anyway, just for the record I am no longer dating Eric Schaeffer. How about doing a Gawker's 50 most eligible NYC bachelorettes and including me? Thanks, Kelly Kreth
I have never met Kelly but I have seen her in person and I have had many delightful email conversations with her. She has no idea who I am however she is cool with that.
She is the woman of the 21st century. She is smart, well read, has her own business, which is important because she is not some gold digger, and if needed she will put her foot up your ass. Literally.
Don't be alarmed that she is the sex columnist of the NY Press. Just be on your game when you approach her. Jewish doctors are quite welcome.
8 artists decided to do their part for affordable housing by sneaking into the Providence Place mall and built a secret studio apartment where they crashed for 4 years. Eventually mall security caught on and busted their ringleader. The irony is that during their stay they were actually burglarized. If you want to learn more go to the direct site of the artist.
It appears that two cities in California are pulling a Bloomberg and are ondering whether to give the authorization to landlords and apartment associations to ban smoking in their buildings. It is something straight out of Demolition Man.
A new homeowner found 100 grand in cash in his attic and now the previous owner wants it back. The smartest thing the new homeowner did was turn the money over to the police. Personally, I would let the previous owner take it under the condition that he would never bother me again.
Who knows why the previous owner had all that loot lying around in house and guess what? I don't want to know. It could be legitimate reasons or perhaps something else altogether. None of my business and I want no part of it. I have heard too many stories of weird s**t being left behind in apartments and no good comes from that.
I just got this report on foreclosures from Propertyshark courtesy of Kelly Kreth. Although it is nowhere near LA levels, things are getting rough for New York City.
New York City (five boroughs): · New Foreclosure Auctions: New York City saw an 8.55% quarterly increase in new residential foreclosures in the third quarter of 2007 (698 foreclosures) compared to the second quarter of 2007 (643 foreclosures), and a 64.24% jump over the third quarter of 2006. · Foreclosures by Borough: Staten Island had the largest percentage increase in foreclosures (64.81%) compared to the prior quarter, but Queens and Brooklyn again comprised the highest number of new foreclosure auctions in New York City. The number of Manhattan foreclosures remained very low.
Once again Staten Islanders are still trying to figure out what an ARM is and how it operates. But there appears to be a mortgage learning curve in the other boroughs. Of course Manhattan is holdings its own. For now.
We've been waiting on October's Luxury Letter—the monthly high-end market update prepared by Leonard Steinberg, Hervé Senequier and their team at Elliman—because while all those positive numbers for Quarter 3 were encouraging in light of all the mortgage/credit problems, they were inflated by deals that were agreed on in Q2, but not closed until Q3. Now we have some August and September sales intel, and it's an ugly sight. The Elliman gang divides transactions into five categories of "luxury," from $1-$2 million smaller apartments up to big, single-family townhouses. When you total up the numbers for August, you get 371 sales. In September, that number is just 113, a sharp 70% drop. The $1-$2 million "Min/Luxe" sales dropped to 59 in September from 218 in August, and the $2-$4 million "Mid/Luxe" sales went from 115 to 34. Shocking stuff, and Leonard Steinberg isn't trying to spin it any other way: Yes, the 3rd quarter was a strong one, but September was simply bad. And yes, overall if the entire year were calculated to-day, it has been a very strong 2007. We have always stressed that the most accurate assessment of the real estate market lies in signed contracts....many closings that are registering now went to contract months and years ago! We predicted this would happen. Usually it's the summer sales season that's slow when compared to the fall, but it looks like the luxury market has yet to get off the ground this season. Or maybe everyone who wants an apartment already bought one. Um, yeah.
September is the kick off month of the sales season and sets tone for the coming months. So if this is what we are facing now, I am quite skeptical of any type of improvement in the near future.
And it gets better since it appears the commercial market is also starting to gas out.
Between July and September, leasing activity was down 28% for high-end office space compared with a year earlier, according to a quarterly report by Cushman & Wakefield. The numbers suggest companies are expanding and changing locations with less frequency, approaching large deals with a newfound sense of caution, brokers said. Still, office rents climbed to record highs, hitting an average of $75 a square foot for high-end space, while vacancy rates dropped to 5.4%, the lowest point in several years. The soaring rents — which climbed past $150 a square foot in some deals — represent a dramatic jump from a year ago, when the Manhattan rents averaged about $54 a square foot. "To a large degree, people are holding their breath," a vice president at the commercial brokerage firm Studley, Steven Coutts, said of the impact from the credit crunch. "Ultimately it's inevitable that it's going to have an impact on some New York firms to a certain degree, so it's a question of how much."
There is a growing Greek Chorus that is telling everyone to dive in now if you want to find the deals. My take is that this is not the time to jump in. This is the time to wait. Yeah, you heard me. I would wait. I would do research, I would visit properties, I would go to open houses and unless I was in dire need to buy or found the perfect deal, I would sit on the sidelines.
The first rule of real estate is not to overpay. That usually only happen when prices drop. Now that it is becoming more expensive to borrow money, sellers having to make compromises on their prices in order for buyers to justify the cost of borrowing. And sellers will only make those concessions once a significant period of time has passed and their properties have not moved.
So if you have the luxury to sit it out, I say go for it. You might find a better deal down the line.
The American greenback’s long fall has given the opportunity of a lifetime to some of our neighbors. Peter Alexander reports
With the dollar getting crushed, it appears that the Canadian Looney is laying the smack down in America. According to this report 5 years ago you could exchange a 100 dollar bill for 160 Canadian dollars. But now they are both dead even. Or if you want to be exact.
Now the Canadians are crossing the border looking for bargains and other goodies. However there is a negative consequence to this turnaround. The film and television industry would go north for cheaper production costs, but with this new dynamic in currency production costs are rising so shows like Stargate:Atlantis, Eureeka and basically the entire lineup of the Sci Fi Channel are in a tight bind along with the pending writer's strike.
One state that is taking advantage of this windfall is the resting place of Bruce and Brandon Lee.
“We’re looking at a flood, but the dam is the border, and it’s tough getting everything through that border,” said Mike Kent, a Realtor in Birch Bay, an unincorporated area south of Blaine where Kent said Canadians have been snapping up water-view property that looks across at the pricier hills of their homeland.
New York has also gone on the Maple Leaf band wagon and has been advertising heavily in Canada to bring more tourists to New York.
So if you see a poutine scarfing, maple syrup sucking Canadian in the neighborhood, give them a hug and point them to the nearest open house. The Canadian people may play a key role in holding up this market.
