Crazy Monday Morning: 10/06

MM - thanks for update on your market! 2 questions.

Question - What are FNM/FRE fees now and where did they rise from?

Question - Can you provide an update via comments if rates move wildly in either direction?

I sense a coming fed rate cut. Its past residential at this point, small/medium sized businesses , state budgets, commercial paper market are all clogged right now. This is bad.

Noah:

Its hard to say what the FNM/FRE fees are right now as there a 100's of different combinations available to answer your question, but generally if its a 20% Down loan with 720 Credit, the GSE's will want .375 built into the loan. If the credit score is 740, they will want nothing.

Haven't experienced a reprice yet but will definitely update when I do. All I know right now is the treasuries are down 16bps and the dow is down 737!!!!!! Are you buying anything?? MBS?? :)

I think a rate cut will definitely give some confidence to investors right no and will potentially free up some money.

sick at home, cant get rid of this cold/cough...yes nibbling here...some commodity stocks, fcx, sso, and ddm for a trade...tough out here though. Market is nutz

Hi Noah,

There seems to be a discrepancy between the StreetEasy Manhattan Numbers than that one that was reported today located here:

http://www.cnbc.com/id/27004656

In the article, it reads as follows:

"In the third quarter, inventory in Manhattan rose 26 percent to more than 10,000 units while the number of units sold fell by a third from last year's third quarter, according to the Corcoran/PropertyShark report."

10,000 units? I check your StreetEasy numbers and have not yet seen it above 9,000.

Can you help me to understand what is the discrepancies with the numbers?

Thanks!

IL - my widget has some rules in it, fine tuning the stats which include:

a) only for Manhattan, not 5 boroughs
b) exclude duplicates
c) exclude those without address

are the main ones. So, the 8,100 number is a bit more accurate I feel and in line with Jonathan Millers reports which come directly from the brokerage houses systems (Elliman's).

Yes rate Adjustments have to be on the way, I also agree it was a crazy day at one point DOW was -800 then a rally before the close to get to -370..........I know here in Tucson AZ this volatility is keeping people from wanting to go look at homes I'm sure its this way in most other markets as well.

I believe that the economy is in recession and will stay in recession for the next several quarters. I further believe that the markets are going to continue to overreact to the downside based upon lack of confidence and forced selling by clients that want/need cash.
Right now I am building positions in BAC, WFC, MSFT and BOA with the conviction that in five or ten years these companies will be the real winners based upon the actions of the Treasury/Fed, as well as leaders out of recession.
I have never been a trader, so I don't know much about that. As an investor, be it real estate, stocks, private businesses, collectibles, the challenge is to identify assets that are well priced and that stand to be beneficiaries based upon exogenous factors (e.g. WFC being a long term beneficiary based upon current actions by Fed/Treasury and the ability to acquire smaller banks for a bargain). So long as you have a price target, and long enough time window, and enough of a cash reserve to ride out any unforseen delays, time like these present great opportunities
What do you think Noah? Now that I am building positions in these companies I am looking for dips, which I suspect will continue and may be deep.

well if you have that long a timeline to hold and a stomach for it, seems ok. I would focus on JPM, BAC, WFC...C has problems, but you didnt list it. Personally, I am not getting interested in these stocks until much lower prices, I dont care if I miss a bounce. It could be a dead 5 years for these guys as they restructure, recapitalize, and face stiffer regulation on everything lending...

I would focus on picking up stocks that are getting beaten down during this time, but do not have capitalization problems are in positioned to take advantage of global infrastructure growth and expansion, and energy.

Dont want to pick specifics here. I would also maintain some safety plays as this bear market bulls on; gold on dips/deleveraging, some short etf's on rallies, treasuries on rallies although I think medium term treasuries will be a great short.

my two cents, can change at any time, so go at your own risk

Interesting analysis. I agree with you about C, for some reason, that company scares me. I am going to keep buying on the dips until I build the positions that I want. I can't pick a bottom, so I will be buying every time there is a big sell-off, like today with BAC. The thing I like about BAC, WFC is that the government is doing everything they can to help these companies become huge and profitable. I also like their management and the way they do the responsible thing, even if it is unpopular. Finally, I believe that, when markets stabilize, these guys will be the prime movers in financing the next big growth drivers, which will be alternative energy and rebuilding infrastructure.
Anyway, thanks for your two-cents.

I had an offer accepted on a coop below the asking price and loan approved at a good interest rate. All of this occured right before the economy bust. Just waiting for a coop board review.

My credit is solid, my job secure ( as one can hope for )but I am worried. There isn't a way to back out of the offer without losing the deposit. The only option would be to fail the coop review.

I am not convinced this is a poor investment choice in spite of the economy. For example, will it be more difficult to get a loan at a later date? My retirement portfolio has taken a hit so my net asset worth is less now than it was 1 month ago, if I tried to qualify for a loan at a later date of the same magnitude. NYC real estate has dipped before but comes back over time.
As you can see, I am trying to find a bright spot here. Any thoughts?