Durie Motors, Hillsdale NJ, site of new Bank

After nearly a century, Durie Motors of 210 Broadway, Hillsdale NJ, closes down. A used car dealer and auto repair shop will be replaced by a bank branch. Pascack Community Bank of Westwood, plans to open sometime in 2009, along with a branch in Rochelle Park. Founded in 2002, at 21 Jefferson Avenue in Westwood, NJ, it has been growing ever since.

In market psychology studies it seems that the major expansion of banks at an unprecedented level has shown the complete optimism they had. These extreme levels of optimism were an indicator of problems to come in the banking system.

As you drive around Bergen County and else where over the past few years, banks have opened up all over. The theory of extreme good begets a reverse in mood has prevailed again. With all the failures, mergers and takeovers now in the banking industry, I wonder which branches, new as they are, will be open in five years, or even two years. Was this a warning that they were chasing deposits or just had growth euphoria.

However, these small community banks like Pascack Community Bank may be a good place to be. For the most part, the small banks did not participate in the same game as the big banks and investment banks. I am not particularly endorsing any bank, please do you own do-diligence.

So, good bye Durie Motors. I guess it just a sign of the times, but where is it directing us to go.

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Deflating a massive credit expansion are like bombs going off all around. Deleveraging all these institutions is like a crack in a dam that grows and breaks, and the water wipes out the countryside. If there is an easy way to describe the situation I would say it is something like this. The market, with low rates and full of liquidity (cash), needed to find a way to make a profit with it. So they leveraged it to the maximum amount. The idea was to create a profit with the least amount of equity. This drifted right down the eco scale and fell right on the consumer. They needed people to borrow all this money, more and more people so they could move as much of it as possible.

This is where it all gets sticky. My understanding is the fudging ran ramped. The mortgage originators came up with every different way to justify the reason they could underwrite these loans. Most no one cared. When I was hearing, a few years back that you could borrow the 80% on a first and they would loan you, no problem, the other 20% on a second, I said, "here we go again".

With all this going on they came up a great solution; let’s insure it with credit default swaps. So, AIG took about $480 billion worth of these and went out on a limb. I guess they thought it was easy business.

Letting Lehman go down was a bad move, this really got the fed going to stop crunch. Lehman failing was dragging down the money markets funds. They had paper on the street which affected the funds along with holders redeeming at a record pace. The first one, one of the originals funds, the $60 billion Reserve Primary Fund  was redeeming for less than 100%. This was the first in 14 years.

Around the world, other Central Banks will do something similar to us eventually, they have problems also. As for the rest of the solution, there is a load of money sitting on the side lines which will bid for the assets also. They will feel comfort knowing that there is all this capital available from Uncle Sam as a backstop to the contraction in credit. The sovereign funds from many oil producers, flush with cash are waiting to buy our real estate.

Real estate will be a direct recipient to this program, along with car loans, small business loans etc.  The banks need the capital to lend. They will get it. This will lower interest rates; we all know what that does.  I believe rates will lower also because of demand. This is due to the slowing economy. This massive inflow of cash and feelings by the government that home owners need help; will make plenty of capital available to get real estate off and going.

Whould be buyers should take advantage of the market. I don’t know if it will be next month or we will have to wait for spring. Real Estate agents should also ready themselves for the changes to come.

I am going to write a blog about what and how it looked on the street in the 80′ savings and loan bust. I had clients buy huge portfolios of commercial real estate when everyone was running away or didn’t have the mortgage availability.

What do you think, I feel we have gotten frighten here and that is what bottoms are like.

Also, if you haven’t read, When will the real estate market bottom? in this blog directory.

It is a reverse look at the street view of this crisis back in 2005.

The Country is like deer caught in the headlights, let’s get going!

All this wrangling for political positioning, while another major bank, Washington Mutual goes down. We don’t have the luxury of time to debate. I think most everyone is getting numb to it all. People are confused and nervous. We must be wise, but the boat is sinking and some officials are wondering what is for lunch.

We need to see action and agreement. This will give confidence to all the markets. What bank is next? The banks won’t even loan to each other, let alone someone else.

Richard

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My First Sale.
Around 1976-77, I got my real estate license.  My family had a large trucking and truck leasing business in Hudson County. I worked there since I was 13 years old. When I was a kid I also played in a rock band. I attribute my skill from music, entertainment and my father’s mentoring me. His method was you watch, listened and you are on your own.
I guess I was 24 years old.  My families Consulare’, as you would call him, had a real estate license. I knew him all my life. Attorneys back then got Broker’s licenses automatically. He was convinced, my brother and I should get our real estate license. So we did. His office was in the Hudson Dispatch building in Union City I lived about 30 miles north of there. So, I think I went there once, the day I got my license.
 

My brother and I were basically on our own. Sure our Broker could give us guidance, but he never ran a broker’s office. He was not even, in the county we were going to work in. So who needed him.  We just prodded along on are own.
I got my license and the first day I was legal I worked on my first lead.  A friend of my oldest brother just finishes his internship at St Mary’s hospital in Newark, NJ.  He became a Doctor of Internal Medicine. He needed a house where that could accommodate his office and his family.
His mom’s house was to be sold to get the down payment. At this point all those years of school and an internship left him a bit strapped. In the mid 70′s, the pay was nothing for interns to live on. He also had a Sunday job for doctors group, at another hospital. It paid $50 for 12 hour shift.
I met my Doctor client my first day. So you know, we were not in the MLS, nor had any idea how to join.  As, I said he needed a home office and wanted to live in Paramus NJ. I didn’t have a listing form to sign up the house, but I had my work book from real estate school. It had a sample exclusive listing agreement form. I cut it out of the book and ran up to the library in Cliff Side Park, where he lived and copied the form 10 times. Only one problem it had the word specimen printed diagonally across it. No white out, so I erased it the best I could and the rest is history. I used this form for about 3 months.  I went back and signed it up.
 

I thought the next thing I should do was get a yard sign. So, I went to Delia Sign and South Hackensack, NJ and had a sign made. I waited on a barrel, while Tony painted it. When it was done, still wet, I took it. I returned to the house and was going to put the sign in the lawn.
One problem, there wasn’t a lawn. The Doctors father before he died had the lawn concreted over. I found one little square just behind the curb to put it up. As I was about to hit the top of the channel iron (old style commercial type sign), a got a big slap on the back. It threw me forward and shook me up. It was an older Man with an Italian accent. He said, you sella the house?. I said yes, that I was the Real Estate agent and was putting the house for sale. He said that his Son and daughter-in-law were longing for a house. They had just got married and were staying with him and his wife. He asked if he could bring them by that night. I wrote the deal that night and I figured I was in the real estate business. 
 

You would think all was great, 1 day in the business one list and sale. No, I had to find a place for them to move to or else they could not sell. Earlier on I explained, we were not in the MLS. So I turned to the classified ads to find a house in Paramus that could become a home office. I also went door to door, up and down the streets the doctor wanted. I found a house in about 5 or 6 days. We made a deal to buy it. It was a lot more then the sale.
 

Now I need to get a mortgage for my doctor on the new house. I went to Central Bergen Saving and Loan. That was where I had my savings. I spoke to the manager. He said no. My Doctor hadn’t the income to qualify. A matter of fact, he had only about one third the income he needed to qualify. I was in a sweet. What do I do, everything was on my shoulders. Two families were depending on me. I tried more banks, no good. I’m at my 7^th day and I had to tell my Doctor the problem. I met with him and told him the bad news. The only thing I could think of was how we worked at the trucking company. No matter what it was, we always knew someone to reach out to that could give you something you need because they knew you. You also did the same for others. This was the way I was brought up, all on relationships. This was the way I learned from my father. So I asked the Doctor, if there was anyone that he knew, in his business who would understand and standup for him to a Bank. If he knew another Doctor, who might of went through this before himself. A connection, so to speak. Someone, who was established and could stand up for him. He gave me the name and number of a Doctor from the Doctor’s group he worked for on Sundays. I called him. He gave me a name and number of a local small bank president.
 

I called the Bank President, and explained the story to him. He said to come and pick up an application and have it filled out and signed. He also asked when we needed the money. We not only got the loan for the house, but for the office construction too. I asked him how long it was going to take for the board approval; he said it was approved while I was on the phone.
That was the way it was suppose to be. I had lunch with this Bank President and Chairman about a year ago with one of my partners, who by coincidence, was a founding director of the bank. We did this from time to time. The Bank President always brought home made Grappa. I have borrowed and had accounts with his bank for my building/developing business. The Bank is sold now to a much larger Bank. All good things must pass.
 

This was a happy ending. I was upset though, that this was a hard deal. I only made 2 sales in my first week. I thought, I may not be good at this. You know If you sell real estate, shouldn’t you sell every day?
 

This is a true story.
 

Richard
 

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New Homes in Saddle River NJ for sale by, Jim Nigro and Richard Stabile. Saddle River New French Estate Home on 7.6 park like acres for sale. Pristine and majestic Saddle River runs thru this fully sprinkled estate. With beautiful walking bridge which can accommodate both golf cart equipment and lawn. The house will be approximately 14,000 square feet with 4 car garage and full rear raised masonry patio. With 11 fireplaces planned, 7 bedrooms, 7.5 baths with all the finish and design features that will set this exquisite property from its peers. Luxurious gunite pool, landscaped grounds, sculptured patio and lawn areas. Green advantages with geothermal heat, air conditioning and solar electric along with state of the art electronics. Construction plans interior and exterior designed by James Nigro and to be built by Richard Stabile a property for the most discerning purchaser. Your can preview the elevation and rendering along with pictures of the lot at newhomesbyrichard.com/saddleriverfrench.html and other associated pages.

Call Richard Stabile 201 573 8811 ext 331 or email us at richard@newhomesbyrichard.com 

Pascack hills Properties LLC

123 Broadway Woodcliff Lake, New Jersey 07677

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Richard

Woodcliff lake new homes under construction at Glen Estates, a new, 6 lot cul-de-sac. There are 3 houses available by area’s top home builder/developer/new home seller Richard Stabile.  Currently being built is a 5000 square foot house, with 2 story foyer, 2 story great room, 5 total bed rooms, 4.5 baths.  Brick and precast front and masonry stucco sides and rear.  This home has all large rooms and will include many special interior features including our top trim and design work done by Richard. Also includes custom kitchen cabinets with granite tops.  Breath taking, ¾ inch custom built solid maple and cherry vanities made on site.  You may view pictures and plans on; Woodcliff lake new homes  , view new homes in Woodcliff lake and other towns in Bergen and Passaic Counties New Jersey.  Properties are being offered by REMAX Real Estate Associates, Woodcliff Lake, New Jersey. Builder/Realtor Richard Stabile 201 573 8811 ext 331.

Is it going to be a long hot summer? Or is it a hot summer for real estate?

The sellers are capitulating to the notion of a long hot slow summer.

However, as you can read in my prior entries on this blog page, it may be a hot summer for real estate. Speaking of Northern Bergen county area, I see the pendulum moving from severe bear market to action and volume at the lows. This is a first sign of recovery. Especially, this late in the spring. Read the other sections of this blog page if you are a potential buyer or seller in the North Jersey real estate market. I guess it can stand true for other areas as well. I specialize in Northern Bergen, Saddle River, Upper Saddle River, Woodcliff Lake, River Vale, Hillsdale, Old Tappan, Harrington Park, and the surrounding towns. The indicators I have will carry far beyond this area. I don’t want to speak about Florida or Nevada and the areas of severe over building because I don’t have current data.

Prices have dropped and are in a basing period in my view. I am not sure if the summer stays busy. That may be asking too much however, I think buyers are poking around and making deals. And as always will be motivated by fear and greed. Wanting the best deals but, not wanting to get beat out all the time.

It will be fun to see how it plays out, totally opposite of general consensus as always.

Richard     

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         I was 21 years old. My family thought I was crazy to buy a house.

They all said rent!  Look, interest rates were at a major high, I think an all time high for mortgages. It was early 1974, Nixon already took us off the gold standard and wage price controls were the talk of the day. Interest rates for mortgages in New Jersey held a usury rate of 9%. Inflation was wild, due mainly I believed to the Viet Nam war and oil. So, basically that spring, if you were not a cash buyer there were no deals. The rate for a mortgage was 9.5%, which was ½ point over usury. Therefore loans were illegal written over 9%.

Up steeps this 21 year old who says , “I want a house”. Everything is so bad out there, I’ll never be able to afford it when it gets better. I hope that makes sense to you because it was my guiding force.  Well I like reading the classified section of the Bergen Record. I found an ad from Tulp and company Realtors from Teaneck. It said there were 2 homes available, one in Teaneck for $48,900 and one for $54,900 in Bergenfield. Both these homes were executive relocations and had financing provided by Equitable Life Co. Equitable had a service company which packaged the relocation of corporate executives. They provided the mortgage to the buyers so the asset could be sold and the Corporation the homeowner worked for, which relocated their job paid the spread to get the loan at 9%.  This was ½ percent under market.

            I called and met a salesman about my age, Lloyd Tulp. Lloyd father own the Real Estate Office. He had just got his real estate license. Lloyd showed me the houses. I made an offer of $53,000 on the one in Bergenfield. It was a 10 year old or so split ranch, on a quite street with a great unfinished basement. They accepted it and financed a 10% down deal.  I father always said never buy used if you don’t have to. This was as close to new I could get. I only had two to choose from.

             I guess you want to know the reason I bring this up?  Well you see I bought when nobody was. In a better market I felt prices would rise and be unable to keep up.

You see prices were off a bit but, rates were up. I thought about the relationship between interest rates and price. It was my conclusion that interest rates dropping would cause prices to rise. I never had formal education (college), but I was very business mined. I worked in my father’s trucking and truck leasing company. It gave me a view into the world that very few people my age had. My friends all look up to me, even people much older.

            You see it was fear I bought out of. Not fear which stops most from buying. I guess it could be said that I was never conventional. The idea that our emotions control us is true. However, harnessing your emotions is what we need to conquer. Using logic instead of reacting to news and world events is hard. But, as I write more about these issues maybe there is hope for us.

So, when interest rates are at extreme lows what should you do?

If interest rates rise and prices are off what should you do?

Should you listen to the media and hide, when things seem very bad all around, prices are off and rates have backed up some.

Or should you wait for things get better and prices rise.

Remember you can always refinance if rates go lower.

We must understand that in 1974 inflation drove rates up high.  We also had the oil crisis with extreme increases in cost.  These circumstances are somewhat similar but different and they always will be somewhat different every time around. But one thing has not changes. Fear is the problem, but if controlled becomes our greatest motivational asset. If you are in agreement with most people you know and the media, you are probably on the verge of being wrong, If not wrong already. There are ways to judge extremes and I will go into another time.

Think for yourself. Walk alone and prosper.

I’ll go deeper into the process another day.

P.S.

By the way, I sold the house 12 years later for $289,900. Lloyd Tulp and I met again about 12 years later. He had become a major developer of office buildings and a property speculator. We did a lot of business together. You know that it’s a small world. Although his partnership Poscanzer and Tulp went out of business in the late 80’, Lloyd is doing great on his own these days.

He is and was quite a player, I always liked him.

Does any body know what time it is?

By the way, I sold my first house in 1987, just before the stock market crashed. And at the very top in the 80′s market. I will tell you when I bought my next house soon, you will not believe it.

Richard

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   Years ago a friend of mine described how dumb a turkey was. I never verified this but it sounded good. He said that if you fired a gun at a group of turkeys, they would run toward the gun to find out what the noise was about.  He went on to say if turkeys were in a pen and they ran from a dog they would keep shoving each other tight into the corner of the fences and not stop, not knowing they were not getting away and getting crushed.

   I always laughed and share this with associates over time. So let look at this and what it means.  You could find a lot of different relationships to markets here. I’ll give you some.

1. Turkeys running to the noise without checking what it was or knowing the danger. This is simple, we as a group (majority of the market participants) do the same. Something happens in the markets and we follow everyone else to the action. Regardless of the underlying facts, all we care is it is happening. A company could not make money, not know when they will make money or if they ever will make money. However, it is something new that we know little about and everyone is buying it.

2. Turkeys stuck in the corner, is a simple one. We get into position that we follow every one else to. However, because everyone is doing it we continue to stay the course. It is a kind of security in numbers, companionship, not a fool on their own.

So what do we learn here. When most agree and regardless of normal cautions continue to believe a market will extend in the direct of mass choice. Doesn’t it seem like turkey mentality.  When most are doing one thing, it time to do another. If nothing seems to be happening, it will. It will probably be the unexpected. Turkeys don’t prepare for the unexpected, they just react wildly.

Continuing to believe because the public and press believe is usually the end of a move in markets. Follow the group and you will comfort in the fact that you all lost out together. You know warm and fussy. 

By Richard Stabile

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Do you really know what time it is?

Very few people really know when its time to step up and buy.

And fewer even know when it is best to sell.

I have seen older folk living on 5 million dollars worth of land, free and clear, not have food to eat. I had customers visit me over the years, new project to new project and never buy until finally they buy the top. I’ve had customers miss out on a house and not step up again until prices rise significantly higher and then get frustrated and over pay.

After 30 years of real estate selling, managing I almost seen it all. We never see it all till it happens (if that makes sense). In other words there will always be something new. Such is the case, we are living in mouse exercise wheel just going round and round, and as soon as you get real sure of what is happening, someone knocks over the cage. Your whole perception of your known world is altered.

There really is no fully known course. We like to believe there is because it gives us a sense of security. The truth is, expect the least expected. I am not trying to confuse but, I am trying to clear things up. Share the truth, not a myth. 

My proofs are simple. The 1987stock market crash to most was totally unexpected.

The resolution was even more unusual, the market goes back up, gains over 12 years about 500% or more. No depression, everything turns out ok.

In 1990 oil goes down to $10 a barrel. We should rejoice. No, Saddam invades Kuwait, we go to war.  In 2000 stock market peaks out at all time highs, predictions abound for continuation of the same. Not!  

I don’t like this one, 9/11 tragedy, markets hit hard, real estate and stocks etc.

Markets come back to all time highs in both.

What about oil, did anyone last year or the year before think $134 a barrel was even thinkable. Not!  Do you think bad of oil at this high or good?  Remember cheap oil brought us a war.  I can go on and on. One thing that is predictable is to do the opposite of the prediction. Or know that at some point the unthinkable will exist. You know that 3 times standard deviation stuff.  Albert Einstein proved so many things just with math. And we fail to believe what math tells us.

Something significant will come out of this high oil price. I’m not sure what it is but we all hate it and that’s good.

Do you think it is time to buy?

By: Richard Stabile

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Many things drive markets but other then extreme new events (wars, natural catastrophes etc.), the most dominant is price, time and carry. If prices move up or down it will attract people to the market. If time goes by with little interest, it eventually will attract people to the market. This is a peculiar thing. People make a market and market psychology is people moving from one opinion to another. Individuals make their own decisions but most people think in herd mentality. The person that can be the first buyer in a sub division is usually a little away from the pack. However, they will by the middle lot more often then not, they don’t want to be too far from the pack for long. Very few are not influence by group consolatory thinking. If you listen to Warren Buffett you will know he is pretty opposite the herd most of the time. Most people can’t leave the herd. There is great comfort in knowing that you are not on your own. 

When a market rises it brings on more interest. Most people will pay a lot more in a rising market without batting an eye. It is the competition which brings on a primal instinct to win. The same goes for sellers in a declining market. Once they give into the idea that the market has been dropping and usually for sometime. They will give in to the buyer’s demands. I find that when the sellers really start to give in it is a maturing decline.  You see when the herd groups up and agrees on something and also acts on it. Vis-a-vis the sellers accepting and giving in a large proportion, the market is ready to change.

When the market is raising and the most demanding seller’s are getting their deals and you can’t believe it. The market is maturing and ready for a rest or a decline.  A market participant needs to weigh all the emotions to get a good deal. Being a good buyer or good seller is not a game of popularity.

When time passes interest wanes, people eventually start to venture out. It takes the first buyer to step up. Slowly the market starts up again. Unlike a pure price driven market which runs more out of fear and greed, this is a basic quite market which sneaks up on you. In the stock market, investors look for a flat line chart and wait for it to break out.   The carry to me is critical. But I want to qualify one thing. It is not just pure interest rate cost. It is relative interest rate cost. When rates have been in a range let say 8% for some time and move down to say 6% that is big. If rates move to a new low in rates as it had a few years ago that is big. However, the problem is it takes time now to digest the fact that we are off the low rate bottom. Our real estate market needs a 5% rate market to pick up strongly. Market psychology dictates that people who have 4 ¾ to 5 .25 mortgages won’t give them up so easy. If they could replace them reasonable they would give them up and buy another house.  Only time and price will overcome carry. The three components are inter-related. The fact is that relative carry is the key here. It’s where you have just been with rates that will dictate the acceptance of the current rate. People perceive their deal. They will buy on the decline in rates as prices go up. They are reluctant to buy when prices drop, even if rates ate just 1 or 1.5 % higher. This is because fear and ridicule of being wrong.  There is much to say about timing. Truly most can not plan out timing of markets well.  But you can make basic observations that will help. If you can blend carry and price along with time, you should be operating much more efficient than the emotional herd mentality player.

So I say lest look at this market. Well there has been significant price decline, (not bad). There has been about 3 years of time, (not bad). And relative interest rates due to time passing is starting to stabilize in the 5 7/8 to 6.5% range (not bad). Meaning, the more time that has gone by since the low in rates, the better of acceptance, of the slightly higher rate.  The range we are in now is accepted. We must note that a major reversal would probably happen if the interest rates went under 5.5%.

Move up buyers have a last hurdle which is a function of the market. They must sell to buy. So the chain of sale must occur from the bottom up. First time buyers must buy so the seller of the home they purchased can move up and so on. I think a significant regulation change has a possibility of starting this chain. Fanni Mae raised conforming limit to about $700,000 in Bergen County this may do this. About two weeks ago Fannie Mae took away the premium they were charging for using the expanded limit that was approved a couple of months ago. It was not working with a ½ % or so interest rate premium. Now at close to conforming rate structure, the second link in the chain will use these mortgages.

Is the market bottoming? You decide.  

By Richard Stabile

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