Monday, February 16, 2009

Let's watch 800 on the S&P 500

The devastating decline in Japanese GDP coupled with the renewed auto viability concerns sent shockwaves around the global markets.

The market watchers are seem very nervous at these levels. The traders and chart readers have been working the 800 - 880 range in the S&P 500, but the general consensus is that if we break through 800, we're going right back down to our 2008 lows.

I will say however, that the markets are always looking for the next bit of breaking bailout news so watch out for sharp reversals if the housing bailout or auto bailout or bank bailouts get any traction.

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I mention this home sale not for the dramatic decline in home price (which is dramatic) or because it's my old home town in NJ, but because of the potential impact on real estate taxes and tax rates.

Here's the story:
A monster 6,000 sq ft mansion with 6 bedrooms and 5 bathrooms in a nice part of the best commuter town in New Jersey with top rated schools is listed for $2.25 million and sold 359 days later for $1.2 million (46% below asking price).

The absolute killer - the recent township assessment from 2007 (!!!) puts the property at $2,200,000. So now the assessor is going to get flooded by neighbors appealing their assessment. Maybe, they'll just reassess the whole town down 40-50% from 2007, but the town's budget probably won't change, so will the town have the guts to double the tax rate to keep tax revenues the same? It will be interesting to see how this plays out.

Separately, that's my new starting point on bids for real estate - I'll give you 40% of your assessed value in cash:)

Cheers!

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