October Existing Home Sales Rise, Median Price Falls

From Marketwatch:

Existing-home sales rise first time since Feb.

Sales of existing U.S. homes rose 0.5% to a seasonally adjusted annual rate of 6.24 million in October, the first increase since February, the National Association of Realtors reported Tuesday. Economists were expecting sales to fall to 6.15 million annualized. September’s sales were revised higher to 6.21 million from 6.18 million initially reported. Sales are down 11.5% in the past year. Median sales prices fell a record 3.5% year-over-year, the third decline in a row. Inventories of unsold homes increased 1.9% to 3.854 million, representing a 7.4-month supply at the October sales rate. It’s the largest months’ supply since April 1993.

From the National Association of Realtors:

Existing-Home Sales and Prices Overview

Breakouts of Single-family, Condo and Co-op

Single-Family Existing-Home Sales and Prices

Condo and Co-op Sales and Prices

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267 Responses to October Existing Home Sales Rise, Median Price Falls

  1. NJGal says:

    I thought it might rise based – the dropping prices show us that sellers are starting to cave and cut prices. However, is this just a false bottom? I think so.

  2. NJGal says:

    Wait there…just noticed that most of that rise was the West…interesting as they seem to have the most NEW homes. But sales and prices dropped around here. Maybe the Northeast hasn’t quite reached the false bottom!

  3. ks2nj says:

    From the article, I take the following home:

    “…Median sales prices fell a record 3.5% year-over-year, the third decline in a row. Inventories of unsold homes increased 1.9% to 3.854 million,…”

    I am really curious on the definition of ‘bottom’ (false or real)?
    How do we distinguish a dip/notch-up from a bottom?

  4. ks2nj says:

    NJGal, where did you notice that the rise was the West? I don’t see it in the article

  5. James Bednar says:

    ks2nj,

    I just added links to the NAR PDFs. You can find that data there.

    jb

  6. chicagofinance says:

    Is this a bottom? Consider:

    1. There are a whole host of people that have been waiting on the sidelines to jump into the market as buyers.

    2. In the last few weeks, as Wall Street bonuses have become more tangible and more definitive, there are people entering or upsizing in the market.

    Until these actors in the demand side of the market have their needs addressed, we will be unable to properly assess the direction of the market.

    Just cross off 2006, and keep focused on March, April and May. You can already see people attempting to manipulate the public’s perception.

    There are no guarantees though [of markets moving in any direction].

    Patience grasshopper[s].

    chicago

  7. James Bednar says:

    The change in inventory direction is most interesting to me.

    jb

  8. AntiTrump says:

    Reposting an earlier post about an article in the NY Observer. NYC always sees a bonus related bounce in first quarter.

    http://www.nyobserver.com/20061127/20061127_Tom_Acitelli_pageone_thelab.asp

  9. FirstTimeBuyer says:

    We clearly haven’t hit bottom if my husband and I, who make beaucoup dollars on paper, can’t afford small, relatively crappy houses in marginal neighborhoods. The market cannot sustain those asking prices.

  10. Seneca says:

    I asked my banker friends this holiday weekend if they would be buying bigger/better homes with their new bonuses. Response was absolutely not, going to knock out the family room wall and make a great room or expand the kitchen but not moving anywhere.

    NAR reports sales in the the Northeast declined 2.9 percent vs. last month and declined 9.8 percent vs last October. Median price is down 5.2 percent vs. a year earlier. THAT is what you can take to the table with an offer. Real estate, like politics, is local.

    I just would like to see a Newark-Union MSO number to get even MORE specific.

  11. AntiTrump says:

    In the Northeast we seem the median and mean price seems to be falling back to 2004 levels.

    This doesn’t match the stats published by the NJ Realtors.

  12. Richard says:

    oh boy, 3.5% decrease after an 80-100% run-up. if you’re going to try and time this market plan on renting for a couple of years, you’ll probably need that to time it properly. if you’re holding back hoping for a killer deal you better be willing to be extremely flexible.

  13. James Bednar says:

    From the NY State Association of Realtors:

    New York housing market slows in October

    November 22, 2006 – Sales of existing single-family homes in New York state in October dropped slightly more than 7 percent compared to October 2005, according to preliminary single-family sales data accumulated by the New York State Association of REALTORS®. The preliminary data showed a median sales price decrease of 6 percent compared to October 2005.

    The October 2006 sales total of 8,721 represents a 7.3 percent decrease from the October 2005 sales total of 9,403. The October 2006 total fell 3.1 percent compared to the September 2006 sales total of 9,001.

    The October 2006 statewide median sales price of $235,000 represents a 6-percent decline from the October 2005 median of $250,000. The October 2006 median did increase slightly, 1.1 percent, compared to the September 2006 median of $232,500.

    Sales gains were reported in 24 of the 58 reporting counties compared to September 2006, while 17 reported growth compared to October 2005.

    Twenty-six counties reported gains in median selling price in October 2006 compared to September 2006, while 36 reported gains compared to October 2005.

    “As anticipated, the New York housing market’s shift toward buyers, driven by an increase in available inventory, has slowed median sales price growth to single-digit gains,” said Charles M. Staro, NYSAR chief executive officer. “Housing sales, while slowing, still remain at strong levels in the state.”

  14. AntiTrump says:

    Median price is the mid point of all the homes sold. I will try to explain with an example of how price pressures start from the higher end of the market and and it price declines will have to trickle down before it affects the median price.

    For example let us say that 11 homes sold on the market at these prices in 2005:

    100K
    200K
    300K
    400K
    450K
    500K Median
    600K
    700K
    800K
    900K
    1000K

    Now the price decline starts fromthe top so lets say that that in 2006 the most expensive homes start to take a 10% cut so the numbers will look like this.

    100K
    200K
    300K
    400K
    450K
    500K Median
    540K
    630K
    720K
    810K
    900K

    As you can see from this example that the high end homes were so ridiculously prices that even after a 10% cut, it may not affect the median price. The 20% cuts have to trickle down through out the price range to see significant moves in the median.

  15. BC Bob says:

    “if you’re going to try and time this market plan on renting for a couple of years,”

    Exactly what I plan on doing with the interest from the sale of my house.

  16. AntiTrump says:

    Richard, I think you are missing the point.

    We are only at the begining of a prolonged housing slump. 3.5 % is just the appetizer, the main course and desert are still on the way.

  17. NJGal says:

    ks2nj – sorry, it was from another article, on drudgereport I think. The rise was something like 6.4% in the west, with almost everywhere else falling.

  18. Ramesh says:

    I think there are couple of packets of value in this overvalued housing market. I think i got a good deal based on cash flows and buying the proerty. The rent property could fetch is equal to mortgage paymemt+tax. But keep wishing homes prices to fall as we are planning to buy more. I am just trying to getin with ok deal so that i have the diversification.

  19. NJGal says:

    Richard, I thought you were a troll who occasionally had something to say. Apparently not.

  20. NJGal says:

    Wait, did everyone see this quote (found it on housingbubble):

    “‘As expected, existing-home sales appear to be stabilizing, fingers and toes crossed,’ said Lereah.”

    Yes, of COURSE you expected all this Mr. Lereah. Now just keep those fingers and toes crossed! I seriously cannot believe people still listen to this guy.

  21. Nothing less than 25% off peak 2005 says:

    Sales are down 11.5% in the past year. Median sales prices fell a record 3.5% year-over-year, the third decline in a row. Inventories of unsold homes increased 1.9% to 3.854 million, representing a 7.4-month supply at the October sales rate. It’s the largest months’ supply since April 1993.

    Homebuilders are still building homes at a nice clip….Only adds to the downward pressure on house prices.

  22. ks2nj says:

    Ramesh (#19), what are you saying?
    Are you buying investment properties because you think you are getting good deals?

  23. Pat says:

    I think Richard has a point for many paper-wealth owners. But not the folks on the short end of the stick from the last two or three years. And his point is really falling on deaf ears for renters with cash right now.

    Just be careful when you go to many online rent vs. buy calculators….they won’t even permit you to put in a negative 3.5% appreciation (it would kill the calculation). I need to email in a complaint to HUD on that one, by the way. Having a calculator on an approved government site that does not permit realistic modelling of the real world is completely anti-American, and is almost a promise of home-price appreciation. Could be litigated.

    Somebody needs to be discussing this with a committee reporting to gentle Nancy Pelosi. ;)

  24. Spelunker says:

    Based on the -1.3% seasonally adjusted monthly drop for the northeast i would say that the NAR’s ad was not successful for our region.

  25. Pat says:

    Ha. Did it.

    Lets see if I get anything back on my misleading the poor public complaint.

  26. James Bednar says:

    Conforming loan limits to stay unchanged in 07.

    From MarketWatch:

    Conforming loan limit unchanged at $417,000

    The maximum conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac will remain at $417,000 for most of the U.S., the Office of Federal Housing Enterprise Oversight announced on Tuesday.

    The limit remains unchanged from 2006. The conforming loan limit sets the maximum size of a first mortgage the government-sponsored mortgage agencies Fannie Mae and Freddie Mac can buy or guarantee. Conforming mortgages generally carry interest rates one-quarter to one-half a percentage point lower than larger loans, know as jumbo mortgages.

    The maximum conforming loan limit is based on the October-to-October change in the average house price, according to the Federal Housing Finance Board’s Monthly Interest Rate Survey. From October 2005 to October 2006, a decline of $501, or 0.16%, was reported in the average price — the first decline reported since 1992-1993. The average price was $306,759 in October 2005 and $306,258 in October 2006.
    Prior to the decrease in prices seen in this year’s survey, the average increase was 8.8% over the past five years, according to OFHEO. In 2006, the conforming loan limit increased 15.9% over the year prior; in 2005, the limit increased 7.8% over the year prior.
    Earlier this month, OFHEO announced it would keep the limit unchanged even if there was a decrease in October-to-October house prices, opting to defer a decline in the limit for a year.
    “This amount is in keeping with OFHEO’s recent announcement of an orderly and transparent process for any downward adjustment,” said OFHEO director James B. Lockhart. “We made this decision so as not to disrupt the end-of-the-year pipeline of mortgages or the market for mortgage-backed securities.”

  27. Ramesh says:

    ks2nj,

    This is for me to live. For investment i think we need even more price drops. I am hoing for a drop in prices even though i am buying one. So i can buy more.

  28. HEHEHE says:

    That David Lereah is hilarious. Note the AP writer got the “real” headline correct. The absolute king of denial:

    http://news.yahoo.com/s/ap/20061128/ap_on_bi_ge/homes_sales

  29. Mike says:

    Guys- I posted this incorrectly in another thread.

    I believe e focus so much here on purchase price and I understand that you don’t get a chance to renegotiate a purchase price. However, there is a herd mentality on this site to advise buyers in general to hold off buying because the vocal majority feel prices will definitely decrease significantly. No one knows where home prices will go in the next year (If you did, you’d make 7 figures on Wall St. :))

    My point is if mortgage rates increase 1% or more in the next year or so, (which is probably a good bet to happen) you end up paying more every month anyway.
    Its just an opinion of mine which I’m in the minority here I know, but I don’t think it should be ignored or ridiculed….

  30. BC Bob says:

    “Inventories of unsold homes increased 1.9% to 3.854 million, representing a 7.4-month supply at the October sales rate. It’s the largest months’ supply since April 1993.”

    That’s what I take from this report. Inventories continue to build. If this was a business, prices would be slashed. That’s OK, they will.

    Anti,

    Good post on median prices. It’s important for all to understand.

  31. Lindsey says:

    Despite all the weakness in the market, prices here really haven’t moved much. Yet. I think we’re right on the edge of that. Over the last four months I have seen asking prices (median) start to drop just a bit, but the pace looks to be accelerating.

    Inventory is really starting to push now. Nationally you can see inventory is up almost 1M units from a year ago (better than 30%), and the month to month jump is much greater now than a year ago.

    Last year Sept. to Oct. inventory grew by 13K (2.85M to 2.868M) This year, 71K from 3.783 to 3.854. Considering seasonal factors, that’s enormous.

    Close to home, inventory and Monmouth/Ocean has dropped noticably over the last 30 days, but tracking is complicated as Toms River, Little Egg Harbor and Eagleswood have dropped off the MLS I use. Poking around, I found an MLS that showed Toms River with 1,693 listings yesterday, but I am assuming there is some redundancy with the site I usually use. If there is no redundancy, Ocean County’s inventory would have remained flat since peaking in September.

  32. James Bednar says:

    One thing that I don’t understand Mike.

    You tell us that we can’t speculate on the movement of prices, “No one knows where home prices will go in the next year”

    But in the next breath, you speculate on the movement of interest rates, and you do so with quite an air of certainty.

    You realize if you knew where interest rates were going to be in the next year, you could also be making 7 figures on Wall St..

    :)

    jb

  33. The Kid says:

    This is great news. I will continue to read this site, as I prepare to purchase something in the Spring. Looks like we can expect “Big Things” come spring.

    The Kid

  34. Mike says:

    #33

    jb- Good point. I don’t have a crystal ball either.

    I guess my point is from a majority of the posts on this site, the overwhelming opinion is that prices will continue to fall at a major clip. Not one post on where interest rates are going which is short sided IMO.

    Just want a balanced argument, that’s all.

    thx

  35. BC Bob says:

    Mike,

    Listen to the market, the market is telling me where prices are headed. If you think it’s such a good bet that rates will rise, go into the markets and start selling the long end.

  36. AntiTrump says:

    For Richard’s and other peoples benefit. Let me lay out the economic of renting and buying in the current markt:

    Cost of a *decent* house in NNJ 500,000
    Yearly Mortage of 90% at 6 % interest = (450000 * 6 /100) = $32,000
    Add Property Taxes: $12,000
    Total Mortgage + Prop Taxes = $44,000
    Potential tax benefit at 25% tax rate $11,000
    After tax cost of Mortgage + Prop Taxes = $33,000
    Add PMI+maintenance+insurance ($250 a month) 3,000
    Opportunity cost of 5% on 50,000 Down Payment 2,500

    Total Cost of ownership on a 500K house with 12000 Yearly Property taxes with 10% down a 6% mortgage:
    Aprox: $38500 per year.

    My rent is per year: $22,200 per year
    5% that get on my100K downpayment = $ 5,000

    My actual rental cost per year:
    $17200.

    In my case it doesn’t make sense to rent based on my view on the Real Estate outlook. It maybe diffrent for others on this board.

    To say that you are living rent free your house will have to incease in value to the amount of your total costs of owning. In our example your house will have to increase by about $38500 a year to say that you are living rent free, that is not wasting money on rent. That is about a 7 to 8 % appreciation a year going forward and not including any major investment you have to make in the next couple of years

    Regardles of whether you are optimistic, pessimistic or neutral on the real estate market the fundamental formula of housing costs vs rental remains the same. You can plug in your own numbers depending on your assumptions.

    So if our perenial optimistic Richard plugged in a 10% year over year appreciation you will be much better owning, but if your outlook is netural (i.e. stagnant realestate prices, or declining real-estate prices) you are better of renting in the near term.

  37. AntiTrump says:

    Mike, if your cystal ball says that rates will be at 7%, mine says that prices will drop. Even at 6% many buyers are priced out, unless they resort to teaser and optional 50 year mortgages. 7% mortgage rate will be a bloodbath !!

  38. The Kid says:

    Anti Trump-

    Can you help me understand your above formula? It would be a HUGE help, as I am in this stage of a purchase decision.

    The Kid

  39. v says:

    In my opinion, spring is when
    1] NAR will be proved wrong yet again and
    2] price capitulation will really start.

  40. BC Bob says:

    Anti,

    Good stuff. You’re right, it only makes sense, at this time, with rising markets. I have disected this every which way. S*it, I have more spreadsheets, rent vs buy, than flippers have houses. There is only one way to go, RENT, hold onto your cash. You’ll be rewarded for your patience.

  41. AntiTrump says:

    34 The Kid Says:

    Kid, I woudn’t hold by breath for spring 2007. More late 2007/early 2008.

  42. James Bednar says:

    From Marketwatch:

    Fed’s Plosser sees possibility more rate hikes are needed

    The Federal Reserve may need to raise its overnight interest rate target above 5.25% to keep inflation under control, said Charles Plosser, president of the Philadelphia Federal Reserve Bank, in a speech on Tuesday in Rochester, N.Y., where he once taught. Plosser said it’s possible inflation could return to acceptable levels without further hikes, but stressed that the Fed must act to back up its words or it will lose credibility. Plosser, who does not vote on the Federal Open Market Committee until 2008, is considered one of the most hawkish or anti-inflation Fed officials. In his speech, Plosser said he expected U.S. economic growth to return to its trend rate of about 3% next year.

  43. James Bednar says:

    From Marketwatch:

    Bernanke: Still optimistic about productivity growth
    Bernanke: Slowdown in home construction to be drag in ’07
    Bernanke: Economy has been evolving as Fed expected
    Bernanke: ‘Troublesome’ if core inflation does not slow
    Bernanke sees balanced growth risks, upside inflation risks
    Bernanke says rate of home purchases may be stabilizing
    Bernanke detects some turnaround in U.S. auto sector
    Bernanke: Economy ex-auto, ex-housing expands at solid pace
    Bernanke says inflation has been ‘better behaved of late’
    Bernanke sees moderate growth ahead, inflation easing slowly

  44. Pat says:

    Kid:

    Oldie but goodie explanation follows:

    http://www.nmhc.org/Content/ServeContent.cfm?ContentItemID=1160

    Note, references may be out of date, but concepts of what to watch for hold.

  45. James Bednar says:

    I’d love some insight on this move..

    From Bloomberg:

    Citadel Hedge Fund May Issue $2 Billion in Bonds

    Citadel Investment Group LLC plans to sell as much as $2 billion in notes in what may be the first-ever bond sale by a hedge fund, Fitch Ratings said.

    The fund, which has more than $12 billion under management, will receive an investment-grade rating of BBB+ from Fitch for the offering. The securities are being issued through a medium- term note program, meaning Chicago-based Citadel can sell the $2 billion in debt over time.

  46. The Kid says:

    AntiTrump-

    From what I’ve read on this site, that seems the way to go. I’m slowly moving my purchase intent BACK a few months. Like the name says, I’m a kid to all this stuff. Thanks for your continued help.

    The “New” Kid “on the block”

  47. AntiTrump says:

    #44 James Bednar Says:

    JB:

    Berkanke seems confused. Guy is all over the place. Maybe he means it is going to be goldilocks economy, not too hot, not too cold.

    I though Alan Greenspan was hard to understand but this guy is worse.

  48. AntiTrump says:

    Richard:

    Despite the wave of negative news that we see in the media most days about the scary and uncertain state of the real-estate market, if you are still recommending reader to jump into Real-Estate, I suspect that you are either:

    1. A Realtor
    2. Mortgage Banker
    3. Home Seller

    If you are a realtor or Mortgage banker, don’t worry about falling prices as it is good for you in the long run as fall in prices = increase in sales. You should be more concerned about sales volume and a deadlocked market is not good for you.

    If you are a seller and have bought prior to 2003 you can still get out ahead if you re-adjust your price expectations to reflect the current market conditions (i.e highest inventory level since 1993).

    If you bought in the last two years and are trying to get out, you need to find relegion.

    If

  49. skep-tic says:

    so in the Northeast sales were down, prices were down, and inventory was up.

    let’s also not forget about all of the hidden price cuts in the form of incentives. the official price is probably a few percentage points too high.

    same thing with the official sales number due to widespread cancellations.

    in short, there is little evidence that the housing downturn is improving or even plateauing in the NE.

  50. profuscious says:

    Listening to everyone’s arguments pro and con here, it seems like the crucial phenomena here is the buyer’s x-factor. While it may not be that easy to paint everyones most important survival interest into a simple, black and white picture, the fact of the matter is that whether it is wall st., main st., or the other side of the tracks, we all need a roof over our heads. The ultimate x-factor despite one’s financial wisdom.

  51. skep-tic says:

    Mike,

    Nice to see someone try to present reasonable counterarguments, but I’m not sure why you’re convinced rates will be going up next year. Have you been following the bond and futures markets lately? Right now they are showing better than even chances of a rate cut next spring.

    Bottom line is that housing affordability is at an all time low. Something’s got to give whether it be rates or price. Rates can’t go too much lower, but price has a lot of room to fall.

  52. Poser says:

    AntiTrump,
    So glad you laid out the cost of owning vs renting. I try to explain this to folks all the time. It just doesn’t make sense in the current market to own. Both from a cash flow perspective and savings perspective. Also, people don’t understand that you need an emergency fund in case you lose your job, to fund those mortgage or rent payments. If you tie up your cash in a downpayment and then barely have enough cash to make all monthly expenses, it’s going to take you months/years to come up with cash reserves of 3, 6 mos, 1 year, whatever, of living expenses in the event you lose your job and have no income. Then you’re forced into foreclosure.

  53. FirstTimeBuyer says:

    Mike, you’re wrong about the affect of mortgage rates on sale prices. You say that mortgage rates will go up next year and therefore, anyone holding out will lose the potential downturn in prices to increased rates. However, historically, prices tend to drop when mortgage rates go up. Also, prices should drop with more inventory on the market. Not to mention, rates continue to go down in response to declining sales (at least today, if you check the news).

    Bottom line: I’m not worried about a 1 or even 2% increase in rates if prices can drop 5 or 10% (or more). And if rates go up and prices don’t fall (unlikely, but hey, while we’re speculating…), at least I have another six months to save for a downpayment.

  54. Mike says:

    #36

    Bob, I think we both agree where resi RE is headed in the short term.

    Problem is no one knows how long the slowdown will continue. We also don’t know where interest rates are headed, so to blindly say (I’m not pointing you out), “wait till end of ’07 or ’08”, makes no sense whatsoever. We all may think we’re experts, but w/o knowing each buyers individual situation, its foolish to make these statements.

  55. Bruzer says:

    I just don’t see the market in my area changing in any significant way yet despite everything I’m reading and the inventory #s being what they are which is up. The level of overvaluation still seems quite widespread in listings. I calculate 25% approximately overvalued based on cash flow. It’s been a long wait for me as a first time multi family buyer and I just hope there’s some light at the end of this tunnel.

  56. Nothing less than 25% off peak 2005 says:

    I guess my point is from a majority of the posts on this site, the overwhelming opinion is that prices will continue to fall at a major clip. Not one post on where interest rates are going which is short sided IMO.

    Just want a balanced argument, that’s all.

    It doesn’t matter where interest rates go…psychology has been severely damaged and heloc loans and Toxic loans readjusting.

    in early 1990’s interest rates dropped from 9% to 6% and house/condo prices collapsed.

  57. Nothing less than 25% off peak 2005 says:

    worth repeating

    skep-tic Says:
    November 28th, 2006 at 1:09 pm
    Mike,

    Nice to see someone try to present reasonable counterarguments, but I’m not sure why you’re convinced rates will be going up next year. Have you been following the bond and futures markets lately? Right now they are showing better than even chances of a rate cut next spring.

    Bottom line is that housing affordability is at an all time low. Something’s got to give whether it be rates or price. Rates can’t go too much lower, but price has a lot of room to fall.

    BOOOOOOOOOOYAAAAAAAAA

    Bob

  58. Mike says:

    #38

    anti-trump – If you have a 1% rise in rates, to make your monthly payments a wash, you’d have to drop 40K in price for a 250K mortgage.

    My point is, its not wise to blindly sit on the sidelines. Other factors besides making a prediction that home prices will crash.

  59. Pat says:

    Mike? Can’t I just refinance when appropriate, but wait for the lowest price, safely disregarding rate increases? Isn’t this what most homebuyers from the 90’s did over the last few years…refinanced?

  60. Richard says:

    >>We are only at the begining of a prolonged housing slump

    that’s an opinion. RE is still highly localized and that doesn’t change due to the recent national weakness in today’s numbers. heck after such a macro run-up you’d expect a similar result on the downside. i’m interested in 2 things. where/how many in the buying pool step in as prices decline further providing support levels and where the RE is local phenom starts disassociating itself from the overall trend. i have a feeling we’re looking at a slow bleed until some stable point is reached a couple of years out. what the deterioration is anyone’s guess but it sure looks like the days of making money off appreciation are over for a while.

  61. James Bednar says:

    Is this cycle playing out just like the last? Are we at the equivalent of 1990 right now?

    http://money.cnn.com/2006/11/28/news/economy/homesales/index.htm?postversion=2006112810

    The National Association of Realtors said that the median price of a home sold in October was $221,000, the same as in September, but down 3.5 percent from October 2005.

    The previous record drop was a 2.1 percent decline in November 1990, the real estate group said.

  62. Nothing less than 25% off peak 2005 says:

    Greedy grubbing sellers and starving realtors are beginning to shake…especially those that have stepped up to another house and have not sold existing one..Are they in for a shocker!

    BOOOOOOOOOOYAAAAAAAAAA

    Bob

  63. Nothing less than 25% off peak 2005 says:

    Median price drops BS!

    Price drops for many houses are much greater than 10%

  64. Richard says:

    Anti-trump, it is possible to have a different opinion from the general feeling without exhibiting self-aggrandizing disrespect. Last I checked you didn’t have a crystal ball.

  65. Pat says:

    “…have a feeling we’re looking at a slow bleed until some stable point is reached a couple of years out…”

    Richard, I tend to disagree, based on the 20% drop example I pointed out to you the other day. The dog sold. Two weeks. And it just dropped comps 20%. Margin seller made the market.

    Granted, commuter areas are not all the same, and some areas may not experience the same levels of panic selling. But what is going to protect a majority of towns from what I just saw? Faith?

  66. Mike says:

    #52

    skeptic- glad to have a civil conversation here. I don’t follow the bond/futures market at all. I could care less. Also, I’m not convinced that rates will definitely go up next year. I think they will and I think home prices will stabilize, but that’s just my opinion like everyones elses….no one knows where they will be long term.

    The bigger point like i said is that there are more factors than just price in determining when to buy or not.

  67. chicagofinance says:

    James Bednar Says:
    November 28th, 2006 at 12:48 pm
    I’d love some insight on this move..
    From Bloomberg:
    Citadel Hedge Fund May Issue $2 Billion in Bonds
    The fund, which has more than $12 billion under management, will receive an investment-grade rating of BBB+ from Fitch for the offering. The securities are being issued through a medium- term note program, meaning Chicago-based Citadel can sell the $2 billion in debt over time.

    #1 – how much info will they disclose?

    #2 – love to review the prospectus to see whether there are any “special” provisions [technical deafult clauses etc.]

    #3 – just because Fitch gave them a BBB+ [bottom rung investment grade] doesn’t mean the deal will be priced that way. At the end of the day, when we hear price talk and actual “when issued” spreads, it will give you are real indication of what the financial community thinks

    #4 – smacks a little of desperation? in certain scearios yes…….I surprised that they are willing to go the public markets…….maybe it is a ripe source of less expensive capital from their perspective

    chicago

  68. Mike says:

    #37

    Why would you buy a 500K house w/a 450K mortgage for your 1st house? Either that’s a bad example or I’m missing something….

  69. BC Bob says:

    “the fact of the matter is that whether it is wall st., main st., or the other side of the tracks, we all need a roof over our heads.”

    No one is endorsing putting up a tent!!! The argument is whether you rent that roof or buy it. If you do the analysis and it works for you, go jump in,there’s plenty available. Did you ever wonder if it is such a good time why is everybody trying to sell???

  70. Nothing less than 25% off peak 2005 says:

    “The bigger point like i said is that there are more factors than just price in determining when to buy or not.”

    Like what?

    Please share those reasons.

    Paying the near current asking prices is writing a ticket to losses the next 5-10 years if youy have to sell your house.
    READ MY LIPS…IT IS NOT A GOOD TIME TO BUY!

  71. Mike says:

    #54

    “However, historically, prices tend to drop when mortgage rates go up. Also, prices should drop with more inventory on the market.”

    Since ’00 that hasn’t been true….(prices/rates)

  72. Bruzer says:

    Antitrump
    You have to use the same $50k equity investment in both secnarios, you use $50k in 1st scenario and 100k in second. Also, in first scenario you don’t include the 1 year return on the invested $50k.
    As you say the opportunity (cost) benefit to rent rather than own is a positive # which makes renting a benefit:
    [38.5 – (50*ownership ROR)] -[22-(50*5%)].
    Also, bear in mind the greater risk to owning rather than renting, which does not get reflected in the comparison.

  73. You are a little too opinioned says:

    Anti:

    If only your math was accurate:

    Interest payments on $450,000 mortgage in the first year are a little less than $27,000.

    Property taxes should be around 9,000 (Taxes vary, but 9k seems a little more typical).

    Usually there is no PMI (through a second mortgage, the interest on the second mortgage is not that much higher).

    Don’t look at the opportunity cost (since you already took that into acount in your cost of renting)

    The cost of owning house in that first year (ignoring changes in home price) is 29,000 (i used 2,000 for insurance and maintenance)

    I doubt that you are able to get that same house for rent for less than $2,500 a month, which would bring the cost of renting to approximately $28,000 (i used 1875 as the after tax interest on your downpayment).

    Which inly underscores that a lot of it is assumption driven, but it is much closer than you presented. Of course if you are able to get that same house for a really low rent – more power to you.

    Overall, this website is overly biased predicting doom and goloom in the upcoming months/years. I appreciate JB efforts in bringing all this information together, just wish there would be a little less of that “Burn! Burn! Burn! spirit.

  74. Nothing less than 25% off peak 2005 says:

    i KNOW THERE ARE PLENTY OF DUMMIES THAT CAN’T ADD AND SUBTRACT BUT IT IS EASY TO DETERMINE THAT RENTING RIGHT NOW IS BY FAR THE BEST VALUE VS BUYING AN OVERBLOATED HOUSE.

    yeah but if you bought 10-15 years ago???

    Run the numbers from 10-15 years ago and it was advantageous to BUY!
    NOT now if you pay anyway near current Bloated asking prices

    BOOOOOOOOOOOYAAAAAAAAAAA

    Bob

  75. Mike says:

    #54 continued

    “Bottom line: I’m not worried about a 1 or even 2% increase in rates if prices can drop 5 or 10% (or more). And if rates go up and prices don’t fall (unlikely, but hey, while we’re speculating…), at least I have another six months to save for a downpayment”

    If you have a 1% increase in mortgage rates, you will still be paying MORE than if prices went down 5% (on a 250K / 30yr fixed). That’s my point. You SHOULD be concerned about interest rates

  76. James Bednar says:

    it sure looks like the days of making money off appreciation are over for a while.

    Richard,

    I think this is one of the most significant variables in play right now. I believe this shift will have a major impact on buyer psychology in the upcoming years.

    jb

  77. Mike says:

    #72

    How about relocating to a different part of the country for personal reasons?

    You’re also advocating not buying in the next 5-10 years? Don’t think I’d agree w/that

  78. chicagofinance says:

    Re Citadel:

    1. sorry BBB- is bottom rung investment grade at Fitch, two notches below BBB+

    2. From the Bloomberg article – “Their design is to reduce their reliance on Wall Street firms for funding, which would eventually provide them with a competitive advantage because they won’t be forced into liquidation during periods of stress,”.

    In other words, they rather deal with diffuse parties that wouldn’t call them on overextending counterparty risk exposure. There’s no way I would be buying at investment grade levels, I would demand a more speculative spead, or some other upside compensation.

    Sounds as if they are getting greedy and going after “retail” accounts, without having to dilute their returns with their main investor funds.

  79. skep-tic says:

    Seems to me the least controversial POV right now is that we’re in a transition period. Maybe prices are about to crash. Maybe this will be a decade long slow grind to the bottom. Or maybe prices will just lie flat for a fews years while wages catch up. It’s also possible that prices could start going up again like in the UK.

    We’re all just making guesses about what’s most likely down the road. Still, since most would accept that at the very least we are right now in a transition period, wouldn’t it be wise to wait a while to see which of the above scenarios emerges?

    As someone above pointed out, massively levering up to by a house in such an uncertain environment is a huge risk. There seems to be very little incentive to take on this risk right now

  80. Nothing less than 25% off peak 2005 says:

    Then go ahead and buy buy buy Mikey.

    rates are going up up up…buy buy buy…

    IT IS NOT A GOOD TIME TO BUY….UNFORTUNATELY FOR MANY YOUNG FOLKS THIS PERIOD OF TIME HAS INFLATED HOME PRICES..I SAW FIRST HAND THE EARLY 1990’S BUBBLE AND MADE A KILLING WAITING THEWN BUYING AND HAVE SOLD OFF THE MNAJORITY OF THOSE HOLDINGS IN THE PAST 3 YEARS…HELD ONLY THE FEW 9BEST) IMO…..YOU FORUNTATELY TODAY HAVE THE INTERNET TO GATHER INFORMATION..I DIDN’T HAVE THIS 15-20 YEARS AGO

    BOOOOOOOOOOOYAAAAAAAA

    Bob

  81. chicagofinance says:

    Sorry – MTN’s tend to be smaller in size, and investors will buy them in smaller amounts [“slugs” – as in whisky]

  82. James Bednar says:

    S&P/Case-Shiller® Home Price Indices will be released at 2:15pm today.

    jb

  83. Poser says:

    #75
    How can the cost of owning a house be $29,000 when you didn’t take into account, in the example being used, the payment on the $50,000 2d loan? And those rates are higher. They’re around 10% whether you take heloc or a fixed 15 year loan. those are the only ones I’ve seen.

  84. profuscious says:

    “….Did you ever wonder if it is such a good time why is everybody trying to sell???”

    so in another words, follow the herd?

  85. James Bednar says:

    Thanks CF, as always great insight. Any thoughts (speculation) on whether this might be linked to the Citadel rumors heard over the past month?

    jb

  86. Nothing less than 25% off peak 2005 says:

    bECASUE THEIR NUMBERS ARE BOGUS….OWNING A HOUSE IS EXPENSIVE…UPKEEP MAINTENANCE RISING PROPERTY TAXES, RISING ARM PAYMENTS?
    There are benefits to owning…privacy, pride in ownership appreciation (IF YOU BUY AT THE RIGHT TIME)

    NOW IS NOT A GOOD TIME TO BUY! YOU WANT TO BUY GO AHEAD THE NUMBERS DO NOT COMPUTE AND IF YOU HAVE TO SELL IN NEXT 5-10 YEARS THERE IS A VERY GOOD CHANCE IF YOU PAY ANYWHERE NEAR ASKING YOU WILL LOSE MONEY!!!

    YOUR CHOICE!

    BOOOOOOOOOOYAAAAAAAA

    Bob

  87. Richard says:

    >>I think this is one of the most significant variables in play right now. I believe this shift will have a major impact on buyer psychology in the upcoming years.

    jim, to me that’s the x factor. people will now be buying houses for the right reasons, as a place to live. the removal of those buying for other purposes and what impact that will have i believe will be localized along with said effects but considering the national run-up there has to be some common drag regardless of location.

  88. You are a little too opinionated says:

    #85

    I got 8.125% rate on that 15 year mortgage. If you use that rate the cost is 29,700.

  89. James Bednar says:

    Richard,

    It’s my opinion that current RE prices are still reflecting a premium for future appreciation. The levels of appreciation we’ve seen over the past 4-5 years are still priced-in.

    I believe that a period of flat prices will ultimately result in a period of falling prices. As psychology shifts, that premium will be eliminated.

    jb

  90. Poser says:

    #90
    When did you get the 8.125% rate?
    I cannot seem to arrive at the additional $700 you calculated. After I factor the tax deduction for the interest only (assuming a 25% effective tax rate). I keep coming up with an additional $4800 a year in total for net interest and principal. What am I missing?

  91. Nothing less than 25% off peak 2005 says:

    Flat prices?

    Prices are already going down!

    I expect real shake and bake come this spring as these grubbers realize the spring ain’t going to help their cause….then concern really grows!

    Prices at the fringe are going to tank. lots of dummies in trouble…talked into buying or be priced out…Non-sense!
    If it doesn’t make sense it doesn’t make sense!

    Booooooooooyaaaaaaaa

    Bob

  92. You are a little too opinionated says:

    #93

    You need to reduce the interst payments on the first mortgage (since the first mortgage would be 50000 less)

  93. James Bednar says:

    For those who don’t understand what I mean by the appreciation premium.

    Let’s say a home has appreciated at 10% a year for the last five years.

    Y1) $300,000
    Y2) $330,000
    Y3) $363,000
    Y4) $399,300
    Y5) $439,230

    Lets say you were now in year 5, and wanted to purchase the home. How much would you pay?

    $439,230

    But lets say someone else was also interested at that price, how much more would you bid?

    Well, if you assume that the past appreciation rate will continue to hold true, you might pay the year 6 price ($483,153) in year 5, because you assume you’ll make the difference up in appreciation.

    But what if someone else has the same intention as you. Well.. Perhaps you’ll consider paying up to a year 7 price ($531,468) knowing you’ll just make up the difference in two years anyhow.

    The question is, what would you bid if you thought that future appreciation was going to be 5%? 2%? 0%? Or even negative?

    Expectations of future appreciation play a significant role in current pricing.

    jb

  94. UnRealtor says:

    “My point is if mortgage rates increase 1% or more in the next year or so, (which is probably a good bet to happen) you end up paying more every month anyway.”

    Not true. Next year I’ll have saved yet another chunk of change, along with the interest it continues to accrue.

    I can wait indefinitely, watching my net worth increase each month, as sellers watch theirs decline.

  95. Mike says:

    #97

    Not true if prices don’t fall or if you’re paying rent.

    You’re assuming a steep drop of more than 10% in prices next year and beyond.

  96. BC Bob says:

    “….Did you ever wonder if it is such a good time why is everybody trying to sell???”

    “so in another words, follow the herd?”

    No, Not at all!!! The herd (I/O’s, flippers) are trapped. Don’t want to follow that!!

  97. AntiTrump says:

    #75 You are a little too opinioned Says:

    “Interest payments on $450,000 mortgage in the first year are a little less than $27,000”.

    What do you mean?

    Use a financial calculator:

    http://www.mortgage-calc.com/mortgage/simple.php

    Loan Balance 450K
    Interest 6%
    Term 30 years:
    Payment = 2698 *12 = 32376.

    Sure, if you get a teaser rate or an optional ARM you canpay less but, should you?

    “Usually there is no PMI (through a second mortgage, the interest on the second mortgage is not that much higher).”
    Wrong!
    Any buyer who belives this should call your mortgage broker, the second mortgage is usually prime (8.25 ) + something or close to prime if you are lucky.

    9K in taxes for 500K house in Northen NJ? Why don’t you post them MLS # for the house and the buyers who visit this board can decide if it a house that they want to spend 500K on.

    As for rentals, you can check http://www.nj.com or craigslist or talk to your friendly neighborhood realor.

    And for record I don’t anticipate a collapse. I see a prolonged downturn which will result in a 20% ~ 30% correction over the next two years.

    And I still think that if think that you find a house that you like at a price that you can afford, it is okay to buy it if you don’t have to sell it in the next five years. I don’t think prices will go back to 2000 levels, the correction will be a combination of price declines and fundamentals like incomes catching up to prices.

  98. James Bednar says:

    From Standard & Poor’s:

    http://www2.standardandpoors.com/spf/pdf/index/112806_HomePrice.pdf

    Home Prices Continue to Soften According to the S&P/Case-Shiller Home Price Indices

    The chart above indicates that, as of September 2006, annual gains in home prices are at lows not seen since mid-1997, marking the slowest annual appreciation in housing in more than nine years. September 2006 is up only 3.7% from a year ago, compared to a peak of 20.5% in mid-2004.
    “Home price gains continue on a downward spiral,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “In September we saw monthly declines or flat prices in seven of ten major metropolitan areas. In addition, two more regions — San Francisco and Washington DC — are very close to showing annual declines in their home price markets. Both regions have demonstrated outright monthly declines in each of the last four months.”
    San Diego and Boston show the weakest markets, down 1.0% and 3.3% from a year ago, respectively. Month-over-month returns continue to be lackluster, with only three regions demonstrating any price increases over the month.

  99. BC Bob says:

    Mike,

    If prices stay flat, rent wins, at least in my case.

  100. Al says:

    Mike Says:
    November 28th, 2006 at 1:38 pm
    #72

    How about relocating to a different part of the country for personal reasons?

    You’re also advocating not buying in the next 5-10 years? Don’t think I’d agree w/that

    Hey Mike great point, please read below:

    FOR SOME REASON IN THE LAST 5 YEARS (I THINK WE ALL KNOW FOR WHAT REASON – 18%/YEAR APPRECIATION RATE) PEOPLE FORGOT THAT BUYING A HOUSE IS A RESPONDSIBILITY.

    What If i loose a job tomorrow and I bought the house too expensive and I am going to loose 6% from realtor’s fee + additional 15% of home value if I have to sell in a rush (just for the record 21% of 340K home – 68K!!!) ??

    vs.

    If a loose my job tomorrow I can at least sell the house with minimal losses – hopefully 6% from the agent’s fee only still …20K!!!)

    For some reason people here do not see buying a home as a HUGE RISK????

    HISTORICALLY IT WAS THAT YOU HAVE TO LIVE IN THE HOUSE FOR 7 YEARS JUST TO BREAK EVEN…

    NUT NOW IT IS IT’S OK THAT I WILL MOVE IN 2 YEARS – I WILL MAKE 20% -THE MORE EXPENSIVE HOME I WILL BUY THE MORE MONEY I MAKE.

    READ MY LIPS: I AM NOT PAYING SOMEONE 100K FOR THEM LIVING IN THE HOUSE FOR 3 YEARS…..

  101. profuscious says:

    roof vs. tent
    own vs. rent
    tomato, tomato…

  102. bergenbubbleburst says:

    Mike You can alwasy refinace to a lower rates, when rates drop again, you can also pre-pay your mortgage, if you have the extra cash.

    Howver, once you over pay for a house, yo will have alwaysa over paid for it, no matter what happens over 10 or 20 or more years. Plus all the additional interest you will pay, if you over pay by 100K or more which many people have doen over the last 3 years.

    I will take rising rates any time over artifically low rates that some hope will prop up artifically high prices.

  103. ck986 says:

    #68,

    Mike you seem to be new here, data and statistics have been presented here ad nauseam. We predicted this fall and called the top last year. Dont just come in here and say you guys are just pulling all of this down market stuff out of your @ss’s. We have looked at mortgage stats, we follow interest rates, appraisal market reports, individual state realtor reports, home builder reports etc. Some one mentions bond market to you and you say you dont care. Well if you dont want to look at all of the facts and get ot know all of the economic indicators why are you here. We do not have a crystal ball, but using the collective knowledge of this board and all of the information presented here I feel we have a very strong educated guess of what will happen.

    If you read the report posted by the NAHB you would have noticed that 80% of the population make their decision primarily focusing on price. I know anyone can qualify for any size loan, but for the financialy responsible price matters.

    I dont mean any disrespect, but read the news listings, go home shopping, follow the market, follow the economic indicator, read calculated risk or winters economic blog and then come back and talk. If you dont care about the economics then you cannot talk about housing in an educated fashion. Just sit back and enjoy the slow ride down.

  104. James Bednar says:

    Can we try to cut back on the (over)use of CAPS?

    jb

  105. Mike says:

    #102

    Bob- Even if mortgage rates go up next year? Please explain.

  106. ck986 says:

    Also housing prices would need to fall 10% or 25K on a 250K house if interest rates increased by 1%. This is happening right now. You can negotiate more than 10% off many homes in Bergen and Union.

  107. You are a little too opinionated says:

    Anti:

    The number from financiaa calcultor includes principal payments – i excluded those (and since the interest you could earn on that 5k is so small i excluded that as well)

    I am questioning if you could rent that same 500,000 for $1,800.

    My experience in northern new jersey is that taxes are usually less than 2% of market price.

  108. Mike says:

    #105

    You are assuming rates will stabilize or lower in the future. “When rates drop again” as you said.

    How do you know rates won’t increase in ’07? If they increase you pay much more in monthly payments.

  109. UnRealtor says:

    Mike, no amount of rationalizing or explanation will change this:

    http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

    We’re at a 100-year peak. If that’s the way things will stay, then I’ll remain “priced out forever,” as I refuse to enter debt slavery when my money can work for me and my family in far more productive ways elsewhere.

  110. pretorius says:

    CK986,

    If the people here are experts at following housing-related data, then why are they ignoring the fact that prices for existing single family homes are on the rebound throughout New Jersey? The silence on this point is deafening.

    The MSA level data in the single family report released by NAR last week make it a superior tool for evaluating local home price trends. The data in this report, summarized in the chart linked below, illuminate the fact that house prices across New Jersey have already bottomed and are accelerating upwards again.

    http://www.hobokenx.com/html/modules/newbb/dl_attachment.php?attachid=1164225618&post_id=58955

    While I acknowledge the figures released today cover all home types (single family, townhouse, condo, co-op), the lack of local information in this report renders it almost useless for the purpose of evaluating the New Jersey residential real estate market.

  111. ks2nj says:

    Someone above has said that this site is too biased. I disagree. I think I have seen more reason (and number crunching) here than on the NAR site, TV ads, brokers all put together.

    The run-up of the past few years in house prices is because of the projected appreciation far surpassed home-ownership expenses may be. Not anymore – atleast not in NJ.

    Someone mentioned interest rates going up next year (did you polish the crystal ball?).. To me, that means a lot more houses on fore-closure + less people able to afford the same house (supply/demand.. u know) leading to panic selling.

    I’m waiting for the panic!

  112. 2008 Buyer says:

    Regarding the “non consideration of interest rate changes in discussion” argument. You may have a point there however I would like to add that there are a number of people who have purchased homes with teaser or initially low rates that are going through their initial rate adjustment who are wondering how they are going to make their payment at TODAY’s rate. Their problem is especially compounded in that home prices are not appreciating as they have in the past. keep in mind, there are over a trillion dollars in ARMs resetting for the first time this fall and going into next year. Imagine what it will happen if rates go up? Fire sales….get me out of this house….but maybe I’m biased

  113. v says:

    #98

    Mike,
    “You’re assuming a steep drop of more than 10% in prices next year and beyond. ”

    It’s not just us who are expecting a price drop. Check out CME housing NY futures for Aug 2007. They are expecting ~7% drop between Nov 06 & Aug 07.

    http://www.cme.com/housing/housing.html

  114. ks2nj says:

    2008 buyer, you are right on!
    let’s wait for the panic!

    Mike, I am really curious where your arguments are coming from – realtor, lender, seller?

    Since we are talking about disclosure – let me say i’m a home owner in another state while a potential buyer in NJ.

  115. bergenbubbleburst says:

    Mike I never said rates will rise or fall in 07 per se. hoever, they will at some point fall or rise again. If rates got to 7 or 8%, or more, they will probably fall again at some point, how long, I do not know.

    But my pointis if I have over paid, nothing willver change that, even if at the end of some time period I amke money on the house.

    I would rather take my chances with higher rates, then over inflated house prices.

  116. UnRealtor says:

    JB, post #96, beautiful post.

    Very clearly sumarizes how the market has changed. Only one way to go —> down.

  117. ck986 says:

    I have access to the MLS for the area that I am searching in(about 6 towns) and I can tell you that all homes priced from 350-550 in said areas have had price reductions and most if not all have fallen to early 05 pricing if not even 04 pricing. I think that the stats mislead. The new home buyer has been priced out and they are no longer purcahsing or are purchasing much less. Only those with equity are trading or making transactions and those are the pricier homes thus prices seem to have increased slightly. I rencetly got married and am looking for a home and having that tool (access to the MLS) has opened my eyes and given me a very good understanding of where the market is. I see homes with 100K-200K reductions, now the later is much less frequent, but occurs. You are looking at stale data and limiting yourself if you only rely on the 3rd quarter realtor data. If I recall from this weekend when I looked at that data prices were relatively flat. If you only look at the number on these reports you are also limiting yourself go out there and look at homes ask your buyers agent to print out the transaction history for each house you look at. It is listed by address and not mls number so you should get a bit of info.

  118. bergenbubbleburst says:

    pretorius; House prices have bottomed, and are already rebounding? Are you serious, this decline has just started, prices have just now started to fall,and you and or your stasts claim they are rebounding? I do not see that at all, and if your information is form a realtor source, then I would treat it a suspect.

    I see much more in price declines, and pain for peiopel who purchased int eh last 3 years who could not afford to.

  119. UnRealtor says:

    “You’re assuming a steep drop of more than 10% in prices next year and beyond.”

    Well, we’ve already seen a 10% drop since 2005 peaks.

    But prices only need to remain flat, which if the last 60 years is any guide, they won’t:

    http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

  120. chicagofinance says:

    James Bednar Says:
    November 28th, 2006 at 2:24 pm
    Can we try to cut back on the (over)use of CAPS?
    jb

    “read my lips you schmuck”

    out-of-box classic

  121. James Bednar says:

    pretorius,

    Are you telling me you think we already saw a bottom based on a year of data?

    If that is the case, I beg to differ. Here is a similar chart, with a much broader time horizon. It’s based on the OFHEO HPI, just as relevant as the NAR data.

    http://njrereport.com/images/NewUni-HPI-06Q2.GIF

    jb

  122. bergenbubbleburst says:

    Mike I do not know when rates will rise or fall, but if you buy with x interest rate, and that rate goes down, you can always refinance. You can alos pre-pay, if youc an afford it, which will effectively lower your interest rate.

    if you over pay, you will have always over paid, you cannot rationalize that away. That is why I will tkae my chances if higher rates, if that is the case.

    I would also point out that in the early 90’s we had an environment of falling prices and falling interest rates.

    It is my opinion that any body that thinks that after this unprecedented run we have had in prices, and lax lending standards, and no money down an all the rest that prices will just flat line is dreaming, manias never end that way.

    Plus we have out of control property taxes and a state that is not creating any well paying jobs. As a state we are in a far worse predicament then we were int he earlu 90’s. Being close to NYC, is not going to save us.

  123. pesche22 says:

    well boys and girls they are all over TV today
    saying “the worst is over”

    housing on the rebound. get in early

  124. James Bednar says:

    The HPI data does not yet include the third quarter.

    jb

  125. Bruzer says:

    James I think your logic is right but consider this simpified way to look at it too. A rational person should be willing to pay:

    Net operating income/
    [net operating income/price of home including closing costs, ie cap rate + (expected annual price appreciation – expected annual inflation rate)]

    Right most homes are priced at a cap rate of 5.5% in my market (which exceeds borrowing rates- seriously!) reflecting, as you say a very high, likely unjustified by long term historical standards, capital appreciation assumption.

  126. v says:

    pesche22,
    Who is on tv?

  127. pretorius says:

    ck986,

    Do you believe that the NAR data released today (October figures for 4 regions) ara accurate, but the NAR data released last week (3Q figures for 150 MSAs) are false?

    I posted a chart containing data for the last 5 quarters covering every major metro area in the state. Instead of limiting myself to a single data point, I made the effort to assess information across time periods and geographic areas.

    The price cuts we’re witnessing usually reflect reductions from unrealistically optimistic asking price levels, not a reduction to actual 2004 price levels. If prices in the 6 towns where you’re looking really are falling – in contrast to rising prices in the broader NJ area – then I suggest you begin looking somewhere else because prospective homebuyers are signalling that the situation in those towns is deteriorating.

  128. James Bednar says:

    pre,

    Can you provide the same graph detailing each MSA since 2000?

    Thanks,
    James

  129. pesche22 says:

    my sister in law.

  130. FirstTimeBuyer says:

    Mike Says:
    “However, historically, prices tend to drop when mortgage rates go up. Also, prices should drop with more inventory on the market.”

    Since ‘00 that hasn’t been true….(prices/rates)

    Mike, I’m not going to make decisions based on what happened during the bubble. For the rest of real estate history, prices dropped when rates went up.

    And to answer your other post, I’m not concerned about modest rate increases because I can refinance. Right now, my husband and I make about $150k per year and cannot afford a modest house in a modest neighborhood. There is no way to sustain that, so “crystal balls” that say prices will drop are pretty reasonable.

  131. Nothing less than 25% off peak 2005 says:

    Right most homes are priced at a cap rate of 5.5% in my market (which exceeds borrowing rates- seriously!) reflecting, as you say a very high, likely unjustified by long term historical standards, capital appreciation assumption.

    Which market is 5.5% cap rate?

    seeing less than 5% in many markets

  132. NJGal says:

    Pretorius, citing from hobokenx – be honest – you’re one of the realtors that posts over there all the time aren’t you? I really don’t understand you folks – you should be welcoming price drops, as your guru Lereah said today – it will increase sales, and keep you in commissions.

    And you ignore buyer psychology by the way – the masses barely hear or read anything about their local markets – they hear what’s on the Todays show, and when they hear “biggest price drop since 1969!” the psychology starts to change. And it will keep changing, as more numbers like that are posted.

  133. v says:

    your sister in law seems to have rubbed off on you.

  134. bergenbubbleburst says:

    pretorius: I live in one of the so called better Bergen co towns,and asking prices are back in many scases to 2004 levels.

    this is also the case in premier BC towns like Franklin lakes, could the situation in that town be deteoirating,a s far as its desireability goes? Not a chance.

    As far as the data goes, I find the numbers to be confusing, as wella s conflicting. All i can rely on is what is going on in my town and surrounding towns, and I can tell you nothing is selling, and houses are still coming on the market, including one that just came on today.

    Accoring to a local realtor whoo has been in the business for over 20 years, inventory in my town is at its highest level for this time of year since 1993.

  135. pretorius says:

    NJ Gal,
    The chart from hobokenx is my chart – I created it and posted it there. If I knew how to post charts on this website, then I would. The workaround was to link to hobokenx.

    James,
    Sorry, I don’t have the time to produce the chart you requested.

    The reason I created the chart was to bring visibility to an overlooked trend – New Jersey house prices are rising again – which is harder to notice when staring at a table of 150 MSAs. Anyway, here is the source doc.

    http://www.realtor.org/Research.nsf/files/MSAPRICESF.pdf/$FILE/MSAPRICESF.pdf

  136. James Bednar says:

    Pre,

    It’s ok, I’m not looking for it today. Take your time, graph it, email it to me and I’ll post it up here.

    nnjbubble@gmail.com

    You do have access to historic NAR MSA data, correct?

    jb

  137. NJGal says:

    But here is the issue pretorius, and it has been much discussed on this board – typically when real estate starts a downtrend, prices continue to rise. They are not the leading indicator – supply is. And supply continued to rise. Meanwhile, demand continued to drop – sales have been falling. We’re talking about a few quarters, and those don’t make a trend yet.

  138. aj says:

    Hey Ramesh (port #19 & 28).

    How much % did you lowball for buying your current house?

    Also (if OK) please tell the suburb – where you bought.

    Thanks.

  139. AntiTrump says:

    Mike, Richard and the other guy:

    I always beleived and still do beleive that the housing bubble was created by a combination of fed pumping the economy with free money and market pshycology and I also beleive strongly that fed has almost shut the money tap completely and market pshycology is turning.

    Many of the bulls who cheered own home buyers claimed that this *boom* was grounded in fundamentals. The theme that I heard over and over from the bulls are:

    1. Many wealthy immigrants coming into the country.

    2. Job growth.

    3. Lack of supply and lack of land to build.

    Tell me, which of these factors changed in the last couple of months for the inventory of homes for sale in pretty much all markets to double from last year:

    1. Did wealthy immigrants stop coming or are the immigrants who came in the last year not as wealthy as the ones in the prior years.

    2. Did job growth decline so drastically for such a build up in inventory?

    3. Did they make more land in NJ?

    If you don’t have the answer, I can give you a hint:

    The price run was driven by unusually low interest rates and a combination of creative mortgage financing (i.e 40 year mortgage, optional ARM mortgage, teaser rates, etc etc).

  140. Richard says:

    to determine true price levels one needs to look at towns individually and look at actual sales prices, then lop off the outliers. outliers don’t make a trend contrary to beliefs that one stupid guy who overpays for a house means everyone else will overpay for it. it’s what the market will bear and price paid is only one aspect of the equation.

    there are a few ‘top’ towns i’ve been tracking very closely in NJ and i can tell you my unprofessional opinion is prices paid today are off the peak trend about 6-9%.

  141. NJGal says:

    “Many of the bulls who cheered own home buyers claimed that this *boom* was grounded in fundamentals. ”

    But notice that none of those people are now saying, “Don’t worry, the fundamentals are in place; we can guarantee that prices and sales will rise again.” Gee, maybe it’s because they were grasping at straws to explain a market based purely on easy money and psychology?

  142. bergenbubbleburst says:

    pretorius NJ house prices are rising again? if this is your belief, can you give us an intelligent reason as to why that is the case.

    Do you mena they just dropped, just a little, just fro a short period of time, and now they are ont the rise again? what is causing the rise/ Did I miss something.

  143. bergenbubbleburst says:

    pretorius NJ house prices are rising again? if this is your belief, can you give us an intelligent reason as to why that is the case.

    Do you mean they just dropped, just a little, just fro a short period of time, and now they are ont the rise again? what is causing the rise/ Did I miss something.

  144. Richard says:

    >>The price run was driven by unusually low interest rates and a combination of creative mortgage financing (i.e 40 year mortgage, optional ARM mortgage, teaser rates, etc etc).

    you missed a big one. market psychology. IMO the herd mentality drove this thing higher than it should’ve gone. if you focus on interest rates, this situation may drag out for a very long time with the world awash in liquidity with no place to go hence low interest rates. if you focus on creative mortgage financing this thing has a long way to go as these ‘innovations’ have fundamentally changed the market and how you borrow similar to what leasing did for the auto market.

    credit contraction will tighten up things but the psychology that induced a herd mentality is what really blew this one up.

  145. BC Bob says:

    Wishful thinking regarding prices accelerating. We have just gone thru the biggest bubble in RE history. Do you honestly think that after 80-100% gains, this downtrend will be over in a few months???? Did you ever believe there was a bubble?? There has never been one bubble in the history of the markets that has ended in a soft landing. This one will not be different. If price increases were solidly entrenched, why haven’t rents increased at the same rate. Back in 2000, the prices were approx 10X rental income, that has risen to 25X. Do rental prices adjust or do house prices???

    This market has turned and when psychology changes the markets adjust accordingly. It will become self perpetuating, lower prices bring lower prices. It really is simple, either incomes need to come up to house prices or vice versa. If everybody gets a 100% raise in 2007, I believe home prices have bottomed and will rise!!!!!!!!

  146. Spelunker says:

    NJ Gal Says:

    “typically when real estate starts a downtrend, prices continue to rise. They are not the leading indicator – supply is”

    Agreed.

    as it happens in reverse with a boom. supply becomes scarce then the prices go up. In a normal boom anyhow. By that i mean a real shortage of homes due to population. We didn’t really have that this time around. The boom was fueled by low rates. However now we are left with plenty-o-inventory. And I can just see crazy eddy selling it now (dating myself a bit) he is giving it all away because the prices are (or will be) INSANE!

    Pretorious Says:
    “Sorry, I don’t have the time to produce the chart you requested.”

    That’s cheese. That is akin to:
    “you wouldn’t know her, she is not from around here”

  147. James Bednar says:

    From Marketwatch:

    Court allows U.S. suit vs. Realtors to proceed

    A federal court in Chicago has allowed the Justice Department’s antitrust lawsuit against the National Association of Realtors to proceed, the department said Tuesday.
    The court rejected the association’s argument that last-minute changes to its policies prevented judicial scrutiny, the department said.
    In denying the association’s motion to dismiss the case, the court said that “NAR has failed … to demonstrate that this case should be dismissed at the outset,” according to the Justice Department.
    In September 2005 the department’s antitrust division filed a lawsuit charging that NAR rules limit competition from real-estate brokers who use the Internet to serve their customers. The lawsuit alleged that the association’s policy threatened to lock in outmoded business models and discourage discounting.

  148. BC Bob says:

    “Bob- Even if mortgage rates go up next year? Please explain.”

    Mike,

    What????? I simply stated that even if RE prices remain flat, I am better off renting. Your response confuses me. I wasn’t talking interest rates, only home prices. However, since you brought it up, what the hell do you think will happen to RE prices if rates rise??? In this scenario, do I have to explain why renting is a better option??? Am I missing something???

  149. BC Bob says:

    Spelunker,

    With you on Crazy Eddy, haven’t heard that name in ahwile. I could see him doing an ad for a bank,with a s*itload of property on their books!!

  150. pretorius says:

    NJ Gal,

    While I won’t deny that a supply overhang pressures prices, the claim that inventory is a great leading indicator of home prices is overstated. A better indicator of where home prices are heading is local economic conditions, particularly employment and income trends.

    I looked at the data from the link I included in post 139 and identified the worst performing market, Detroit. During the 3rd quarter, house prices in the Detroit MSA plunged 10.5% on a year-over-year basis. And Detroit is the 8th largest MSA in the country with a 5 million population, so the sample size should reduce concerns that a “mix shift” or other blip explains the house price decline.

    Then I looked at the Michigan Association of Realtors data to check and see if a decrease in sales (which would be mirrored by a simultaneous increase in supply) preceded the sharp decrease in prices. In fact, the Detroit Board of Realtors reported a 10.6% increase in sales in the first 6 months of 2006 compared to the same period last year, suggesting supply was actually falling in the period leading up to the sharp price decline Detroit is currently experiencing.

    In other words, in a huge market where prices are declining, there is no evidence that rising supply led to the decline in house prices. Instead, I think everybody on this site would agree the decline in Detroit house prices was caused by deteriorating employment and income trends there.

    Likewise, the future direction of New Jersey home prices will depend on economic conditions around here. Interest rate levels, psychology, and what David Lereah and real estate agents have to say don’t really matter very much.

  151. Bruzer says:

    Nothing less than 25% off peak 2005,

    5.5% cap rates in jersey city calculated assuming no vacancy factor and very little maintenance capital spending. I would be interested to hear what maintenance spending level folks use in their calculations.
    Note: that rate is on 4 families in 450-600k range, 2-3 families acorss the board tend lower.

  152. pretorius says:

    A 5.5% cap rate seems sensible when financing costs are low and rents are rising, especially if the buyer expects price appreciation.

  153. skep-tic says:

    Give Mike, Pretorius and Richard some credit. They are trying to make reasonable arguments in a very one sided forum.

    We all know that RE moves at pretty glacial speed. Whatever trend that has developed is fairly new and is just starting to be visible. Keep in mind that we are still waiting for the first calendar year of negative appreciation.

    Despite all of the inventory, dropping sales, etc, it is possible for RE to turn around. Look at the UK. If it did, there would be no more reason for it than the last 2 yrs of appreciation, but they happened, so it could happen again.

    That said, there’s no reason to think that one month of increased sales or slight upward movement in median price is anything other than noise. RE trends take several quarters to develop, even years. And what we have seen developing since Q2 05 is steadily increasing inventory and steadily decreasing transactions.

    Mike, Pretorius and Richard– it would be great if you could try to explain what will cause the inventory buildup and diminish sales trend to unravel if not lower prices or rates

  154. ck986 says:

    Pret,

    I dont see Bergen county in that list of MSA’s. The towns I am looking at are some of the best towns in Bergen and Union Counties, Wyckoff, Ridgewood, Cresskill, Midland Park, Cranford, and as of recent Berkly Hts. I agree prices have fallen on average about 10% since 2005. On the MLS site you can actually pull up recent sales of homes sold in surrounding streets and compare prices. Cresskill seems to be back in 2004. I dont know why this town has been hit harder than others. Although I can afford homes in Ridgewood I will not pay the taxes to live there. I dont understand why homes cost what they do there. I would expect them to be cheaper due to higher taxes.

    I do not characterize the markets for the towns I am interested in with realtor info, because I have something better. I have access to the raw data. I prefer raw data to realtor derived stats. I use realtor data, mortgage, NAHB, and interest rate data to characterize the strength of the broader market and regional markets. I dont think the nominal declines flow through the stats privided by realtors. I dont know why, because I dont actually work with the data sets the NAR works with, nor do I know what they do with that data. I take it for what its worth. Information derived from a self serving organization that is provided to help people buy and sell homes or create transactions in the housing industry. I dont know how accurate it is. It would be great if someone could test this.

    I think that the delcines are not occuring because the first time buyer is not buying the only people buying are those with equity and they do not care to spend a little more because they have benefited from the recent market trend.

    I like the otteau information, although limited it was broken out by town and did give some valuable info.

  155. NJGal says:

    “That’s cheese. That is akin to:
    “you wouldn’t know her, she is not from around here””

    Ha. That answer, then, is the proverbial “George Glass.” (sorry, had to work in the Brady reference).

  156. BC Bob says:

    pretorius;

    1)Why the high (going thru the roof) absorption rates??

    2)Economic conditions were great, int rates close to historic lows when this market stopped on a dime. Obviously this is not helping the I/O’s, flippers, etc.. What gets them out of their predicament ???

    3)If it was solely based on economic conditions, why haven’t rents kept pace with home prices??

    4)What about the migration of good high quality jobs out of this state??

    5)Did you see last month’s GDP???

    6)With economic conditions appealing why the incentives???

    7)What about the affordability index??

    8)What about the growth of household debt versus disposable income??

    9)Why is the H-Builder’s index hanging around their lows???

    Why,Why,Why????

    Don’t dismiss the psychology of this marketplace, the same greed/fear that fueled this parabolic rise will be its kiss of death. It’s just starting, hold on, it will be some ride.

  157. AntiTrump says:

    #157 # skep-tic Says:

    “Give Mike, Pretorius and Richard some credit. They are trying to make reasonable arguments in a very one sided forum.”

    I will, when they back up their claims with some hard data.

  158. chicagofinance says:

    pretorius:

    Are you the party on kannket referring to Otteau’s analysis as garbage [paraphrasing] and dismissing my comments on “mix”?

    I can understand the theory [or in your case, observation] that there is a narrow swath of the NNJ and near-NYC/NNJ that is benefitting from a strong economy and record profit in financial services. However, I find it puzzling that you should so aggressively interpret recent NJAR data, and present it in a way that strains credulity.

    It is possible that your “expressed” opinion [actual?] is correct, but it really represents a low probability outcome.

    May I ask if you were the one trashing this site and its participants over on kannekt before the administrator took the posts down?

    What is your angle may I ask?

    hmmmm….

    chicago

  159. NJGal says:

    “Likewise, the future direction of New Jersey home prices will depend on economic conditions around here. Interest rate levels, psychology, and what David Lereah and real estate agents have to say don’t really matter very much.”

    I can see your point there, but then again, this is an unprecedented type of boom. Economic conditions are only one factor now – this is way too out of control. For example, the NYC economy, which NJ is somewhat dependent on, is somewhat steady. But sales here are still falling, inventory increasing, etc. NJ is losing jobs and population – that won’t help. Boomers will be retiring soon. Affordability is at an all time low. If the landscape of the real estate market matched the supposed rosy economic conditions of the area, would we be having this discussion? So either the economy isn’t as rosy as it seems, or it’s having no effect.

    I just don’t think the usual rules apply to this boom at all in many ways, and I just cannot see a happy ending to this one, no matter how happy a face one tries to paint on some statistics.

  160. Bruzer says:

    one other thing to recall about the runup in home prices was that the equity markets were roughly flat over that period and income interest rates were low (along with low borrowing interest rates). part of the home price runup came from lack of other investment alternatives as well.

  161. pretorius says:

    AntiTrump,

    Read my posts 113 and 154 again. Plenty of data is there. Can you produce responses to these posts that are backed by data?

  162. skep-tic says:

    as for the reliability of Realtor numbers, check out this example from Massachusetts (courtesy of the Boston Globe)

    “Massachusetts Association of Realtors said today [that] the median sale price of a single-family home was down 2 percent in October.

    “The group’s report was the second one issued today on the local housing market, and its pricing data differed from numbers in an analysis by the Warren Group, a real estate data firm.

    “The median sale price of single-family homes dropped 6.9 percent compared to October 2005, according to The Warren Group.”

  163. pretorius says:

    Chicagofinance,

    I’ve posted on Kannekt several times but I’m not going to waste time looking back to confirm or deny whether I authored specific comments there.

  164. Nothing less than 25% off peak 2005 says:

    Bruzer Says:
    November 28th, 2006 at 5:13 pm
    Nothing less than 25% off peak 2005,

    5.5% cap rates in jersey city calculated assuming no vacancy factor and very little maintenance capital spending. I would be interested to hear what maintenance spending level folks use in their calculations.
    Note: that rate is on 4 families in 450-600k range, 2-3 families acorss the board tend lower.

    You can wipe your @$$ with that 5.5% cap rates. I was getting 12%+ cap rates back in the ole last bubble in early 1990’s. 5.5% cap rates are not worth jack with the alternatives.

    NO SPRING REBOUND…READ MY LIPS SPRING HOUSING MASSACRE COMING TO A HOOD NEAR YOU.

    With a few dummies still running around with phoney loans and ponzi money the time to buy investment property is NOT now or even a House or condo.
    It was picking the carcasses of pigeons like you 15+ years ago.

    BOOOOOOOOOOYAAAAAAAAAA

    Bob

  165. Clotpoll says:

    Is there any way of knowing- as a certainty- whether you overpaid for a home, other than selling it?

  166. Clotpoll says:

    Hey Pretorius (from 154):

    Detroit leads the US in foreclosures. How many (if any) of those sales were Sheriff Sales…and what impact do massive amounts of foreclosures have on that market?

  167. profuscious says:

    NJGal, I agree with your sentiment. There are way too many unknowns, such as:

    immigration policy – if Bush & Pelosi push amnesty, the door will open for a lot of people wanting to stay in the US; prepare for the most dynamic shift in demographics in the nations history, which by design will shore up the loss of aging boomer population who is moving south and west.

    x-factor – our base survival interest is to put a roof over our heads (not a tent). In a world that seems to be getting more and more insecure, perhaps there was some panic buying over the last several years.

    So was rational thought trumped by irrational and insecure exhuberance? Will the next great international crisis drive the market into further insane levels of panic buying?

  168. Nothing less than 25% off peak 2005 says:

    Pfizer to cut U.S. sales force by 20 percent
    Tuesday November 28, 5:24 pm ET

    NEW YORK (Reuters) – Pfizer Inc. (NYSE:PFE – News) said on Tuesday it would cut its U.S. sales force by about 20 percent, or some 2,200 jobs, as part of a comprehensive cost-cutting program.

    Some high paying jobs going POOOOOOOOOOOFFFFFFF!

    It is inevitable house prices will descend for some time.

  169. James Bednar says:

    Here is an XLS based on the NJAR data. The date range is 2001.Q3 to 2006.Q3. It contains median price broken down by North/Central/South Jersey as well as 2 Bedroom (and less), 3 Bedroom, and 4 Bedroom plus. This is the best I can do at trying to eliminate the mix issues.

    http://njrereport.com/files/NJMedianBedroom.xls

    As much as I’d love to point out huge declines and a bottom to the market, I just don’t see it.

    I’ll also take this time to make my bad call known. Roughly 6 months ago I had said that I expected to see year over year declines across NJ by Q3 of this year.

    Yes, I know a handful of counties did show YOY declines (Bergen, Warren, Cape May) and even more showed declines when adjusted for inflation (Essex, Morris, Passaic, Somerset). I’ll go on record as being wrong on that one.

    jb

  170. Pat says:

    “A better indicator of where home prices are heading is local economic conditions, particularly employment and income trends.”

    How does this statement fair when considering the tech crash and relative flat NJ incomes, but run-up in housing? So the inverse is not true? Only works one way, I guess, huh?

  171. HEHEHE says:

    What is this Kannekt of which you speak?

  172. James Bednar says:

    profuscious,

    Want a real unknown/wildcard that I believe could have an significant impact on certain sections the NJ market? Gay marriage.

    jb

  173. v says:

    Sales of existing single-family homes in New York state in October dropped slightly more than 7 percent compared to October 2005, according to preliminary single-family sales

    http://www.nysar.com/releases/oct06stats.html

  174. pretorius says:

    Clotpoll,

    The best data I have – state by state figures for the 1st half of 2006 – confirm that the number of foreclosures in Michigan was higher than New Jersey.

    Although affordability is better in Michigan by a huge margin, people there are struggling to meet their relatively modest mortgage obligations. On the other hand, New Jersey homeowners have experienced little trouble making their relatively high mortgage payments.

    The reason is Michigan’s economic situation is deteriorating, while New Jersey’s is stable.

    The relatively high number of foreclosures in Michigan is not causing home prices to decline there. Instead, the same local economic conditions causing home prices to decline are also causing people to default on their mortgage obligations.

    Here’s the data.

    http://www.firstamres.com/pdf/Foreclosure_Study_2006.pdf

    I know this will come out mean spirited, but before you suggest work for me again could you try and look up the data yourself first?

  175. James Bednar says:

    Let me clarify that before all hell breaks loose.

    By impact I mean increased demand.

    jb

  176. pretorius says:

    Bednar,

    You can’t be serious when your write in post 173 that “as much as I’d love to point out huge declines and a bottom to the market, I just don’t see it.”

    All 6 charts reveal the same thing: prices declined during 4Q05 and 1Q06, and prices have been rising since.

  177. scribe says:

    Could someone with access please look up 55 Warwick Street in zip code 08830?

    Realtor.com is showing that it sold on 8/4 for $636,920, but over the last few months, it was listed for $699,000. Disappeared from the ads around Thanksgiving.

    I’m wondering – Sold or withdrawn?

  178. profuscious says:

    jb,

    could be right: build it, legalize it, and they will come. What’s next, mary j? I guess that’s one way to solidify your tax base.

  179. Behind the Fence Crowd says:

    Concern with higher interest rates…

    Mike Says “My point is if mortgage rates increase 1% or more in the next year or so, (which is probably a good bet to happen) you end up paying more every month anyway.
    Its just an opinion of mine which I’m in the minority here I know, but I don’t think it should be ignored or ridiculed….”

    Don’t be fooled into fearing higher interest rates. Here’s why… If you look at the total 30 yr cost of a $500k loan @ 6.25% your total outlay is $1,108K. Compare that to waitng and paying 20% less for a house a year or two from now, meaning $420k loan @ 8.25% ( a 2% increase ) and the 30 year cost is $1,135k. Yes slightly more, but more likely far less costly of having to worry about becoming upside down in your mortage if prices continue to fall, and also far less concern of actual capital $ losses should you be forced to sell early while the market not in an upturn.

    BtFC

  180. bklynrenter says:

    A lot of the optimistic comments here talk about lower rates in 2007 and then buyers returning. But the paralysis in this market is predominantly supply driven so far. Look at the NAR’s biased numbers, current sales are running at 6.2m per annum. Thats higher than in 2003 and only down a bit off the peak (less than 15%). Instead, supply has ramped up because of toxic mortgages, HELOC’s andf all the other financial poison out there. supply is almost double that of 2003, hence the 7.3 months of inventory. In 2007, the demand side should buckle, if it doesn’t then no interest rate cuts, if it does, then demand falls, interest rates drop and you get the double benefit of lower prices and lower prices. Why wouldn’t you wait??

  181. bklynrenter says:

    correction… you get the double benefit of lower rates and lower prices.

  182. v says:

    “I’ll go on record as being wrong on that one.”

    James,
    Your prediction is a lot closer than those ‘analysts’, sleezy realtors and greedy flippers who were earlier this year predicting continued double digit YOY gains.

  183. syncmaster says:

    Federal Reserve Chairman Ben Bernanke made clear Tuesday that policymakers want to see inflation continue to recede, suggesting the Fed probably won’t be cutting interest rates any time soon.

    http://biz.yahoo.com/ap/061128/bernanke.html

  184. Pat says:

    I’m liking the visitation of the Kannekt Krowd.

    Even the HeHeHe guy they refer to over there with such admiration.

    You RE boosters are a lot nicer than I thought you’d be.

  185. syncmaster says:

    Just visited Kannekt for the first time. God-damn, people there talk about having 100-150k saved up like it’s no big deal. And it sounds like everyone and their mother on that site makes 200K, they sneer at 100K. Damn. I should have gone to B-school.

  186. Pat says:

    syncmaster, it’s all relative. Very few people in our country have the perspective you saw.

    Remember, they’re talking about what they know, and what they can live with, like raising a family in a shoebox.

  187. BC Bob says:

    Jb,

    You may be a lot closer that you think when you add into the equation the incentives that are rampant in the industry.

  188. syncmaster says:

    Pat,

    I realize that and know you’re right but yet… I find it all so depressing.

    Oh well, that’s neither here nor there.

  189. FirstTimeBuyer says:

    OT:
    We just got a call from a mortgage predator. When my husband politely asked the caller where they got their lead, the associate hung up on him. The guy called back, not realizing he just talked to us, and when my husband said as much, he hung up again. Fed up, my husband called the caller ID number and got back to the guy (Dave, from “Fidelity Borrowing”). When my husband asked why he hung up on him and that he’d like to be removed from their call list, the guy said he wasn’t obligated to do so, and proceeded to swear repeatedly at my husband, make jokes, etc., all while people around him laughed. My husband hung up and called the main number and complained to a manager, who at first seemed sympathetic, but then asked for our number and name “to further investigate.”

    After the house fire disclosure issue, the constant calls from predators, and the pressure from even legit mortgage brokers, I feel exhausted, spent, and dirty. At this point, I don’t care if I ever buy. It’s such a dirty business.

  190. James Bednar says:

    scribe,

    Do you have an MLS#?

    jb

  191. Home Seller says:

    #115

    2008 buyer- I disagree somewhat. Those people who bought into an adjustable ARM can refinance, its not too late.

    Disclosure: I have a 7/1 ARM from 2004.

  192. v says:

    I don’t believe those numbers. Fact of the matter is that the market is in a much deeper sh*t hole then what is being reported.

    If it is an indication, we are seeing more kannetors pleading .. err “offering a different view” of the market :)

    In my opinion, if spring “come back” doesn’t happen Mr Lierah’s subpoena will on the way.

  193. scribe says:

    Grim,

    From NJ.com: MLS # 705157

    Ad says: Published with Weichert on 09/15. Updated 11/22.

    But that house is not on the NJMLS or realtor.com anymore.

    This is new construction. I’m not completely sure, but I think the house was never occupied. Just bought and re-listed for more.

    And thanks, Grim.

  194. Clotpoll says:

    Why does anyone here believe Bernanke? Look at the bond market! They are pricing in very decent odds of rate cuts by March ’07. Something is going to have to be done to break the logjam in short rates, and the Fed NEVER bucks the bond market long-term. This year’s inversion has lasted to the point at which it cannot be dismissed as a nuisance or short-term anomaly. Right now, I think we’re looking at three 25 bp cuts.

    I’d also add that the Fed chairmanship is a political appointment…and there IS intense political influence being exerted upon the Fed. Whatever we may think of Bernanke, he didn’t play the political part of his game so well leading up to the election. If he had, the rate hikes would’ve stopped before July, and we’d have seen at least one rate cut before the election. If he plays it the same way leading to ’08, he might find himself out of a job on the back end of that election cycle. I bet he likes his job.

    If we examine Bernanke & Paulson’s statements over the past few days, it can be concluded that an avalanche of massive liquidity is about to be triggered. Hell, I even heard somebody on CNBC today claim that Paulson was hired specifically to engineer a devaluation of the dollar! And while we’re at it, why not proclaim China to be a currency manipulator? That should distract everyone from the piles of money that they’re practically going to be dropping from helicopters…

    Anybody got old photos from Weimar Germany?

  195. v says:

    Home Seller,
    “Those people who bought into an adjustable ARM can refinance, its not too late.

    What do you mean “it’s not too late”? When is it going to be too late?

  196. profuscious says:

    Clotpoll,

    hence the name Helicopter Ben?

  197. Clotpoll says:

    Hey First Time (from 193):

    Why let the behavior of others (no matter how sleazy) dictate your actions? Regrettable as it is, these things happen to lots of potential buyers. Learn from them and rise above.

    The amount of hucksters and charlatans hovering around RE is in direct proportion to its relative value. They’re there because items of extreme value are on the table.

  198. Lindsey says:

    Lot of craziness here today (including Crazy Eddie, Sweet!) but this thread had generated a lot more heat than light.

    With the holiday coming there’s going to be some hunkering down just as there was last year. Inventory exploded in the spring (started in February actually) and if we have anything close to a repeat performance, then we can start talking about just how ugly this can get in 07.

    The bad fundamentals (price-to-income ratios, supply vs. demand) still outweigh the good fundamentals (low interest rates and um, uh, low interest rates) for most of NJ.

    As we stand in Monmouth/Ocean we should end the year with inventory about 40% above Dec. 05. Prices are still up, but sales volume, especially at the top is way, way down.

    My favorite stat for this year: In August there were almost twice as many $1M+ homes for sale in Monmouth County than in the state of Maine.

  199. Poser says:

    syncmaster, Pat,
    Just went to kannekt for 1st time based on your posts. good grief. where do those people come from.

  200. v says:

    Clotpoll,
    “Why does anyone here believe Bernanke?”

    “They are pricing in very decent odds of rate cuts by March ‘07. ”

    “That should distract everyone from the piles of money that they’re practically going to be dropping from helicopters…

    “he might find himself out of a job on the back end of that election cycle. I bet he likes his job.”

    You the man.

    1] Don’t believe Bernanke but believe sleezy Mr. Liereah.
    2] Lower interest rates and flood market with easy money. In other words don’t worry about infaltion but save housing.
    3] Bernanke will screw the economy to keep his job?

    You are really desperate to come up with such sh*t.

  201. Sal says:

    According to NAR (National Association of Realtors):

    Home sales rose from 6.18 million to 6.24 million homes (annually). That’s an increase of 60,000 homes annually, or an increase of about 5000 per Month.

    NAR also reported that inventory rose 1.9% in October to 3.85 million units – an increase of 70,000 homes during the month of October.

    That means that sales rose by 5,000 units, but inventory rose by 70,000 units.

    Doesn’t quite sound like a bottom to me….

  202. v says:

    Clotpoll,
    Are you REInvestor101?

  203. James Bednar says:

    We certainly live in interesting times. I think that is something we can all agree on.

    jb

  204. Pat says:

    If you refinance a 2004 ARM and owe more than the 2007 appraisal on the property, what do you do, bring a check? Seriously, I’ve never had to do this.

    Is there a refinance calculator that assumes declining home values, and will determine the BE point for refinancing/not refinancing based on the check you would need to cough up?

    Sorry for the gawsh-darn Goober question.

  205. BC Bob says:

    “Hell, I even heard somebody on CNBC today claim that Paulson was hired specifically to engineer a devaluation of the dollar!”That should distract everyone from the piles of money that they’re practically going to be dropping from helicopters…”

    Clot,

    What did you say about Gold recently??

  206. HEHEHE says:

    Fact is there is nothing to celebrate in the recent housing numbers for RE bulls. You are talking a miniscule increase in sales with a huge inventory still out there and with a minor drop in prices. This is an extremely large bubble and it will take a while to deflate but it will likely deflate more precipitously than in the 80’s due to the widespread use of ARMS and other mortgage products that did not exist at that time. I honestly see about 5 yrs out prices at 40-50% of where they were at the peak.

  207. profuscious says:

    JB,

    the great thing is, this blog has helped chronicle our reality, which may be of some value to the historians some day. You’ve managed to tap into the minds of many a willing laborer. Some are unskilled. Some are skilled and some will be artists before they’re done.

  208. HEHEHE says:

    Ps. Bernanke will not be lowering rates to keep this bubble alive. Hehehehe, I’ll buy you a steak dinner on that one.

  209. BC Bob says:

    “what do you do, bring a check?”

    Pat,

    Great point. If it’s so damn easy to refinance at these rates, why the hell didn’t they start with a fixed, especially at/near historic lows.

  210. Home Seller says:

    v- how about “now” for refinancing?

  211. HEHEHE says:

    I could be mistaken but doesn’t it cost money to refinance?

  212. Lily says:

    #75:
    There is a house for sale $789000 and for rent for 2900.
    Calcute the number!!!!

  213. BC Bob says:

    HEHEHE,

    That’s old world. Today, just throw it into the price of the loan!!

  214. Home Seller says:

    First Time buyer- Please don’t take this the wrong way but you say you and your husband make 150K/year and you say you cannot afford a modest home in a modest neighborhood.

    That works out ‘roughly’ to clearing 9K/month. a 350K mortgage w/1K per month property taxes leaves you with around $5,500-6K/month for everything else. Just curious what I’m missing?

  215. v says:

    “If you refinance a 2004 ARM and owe more than the 2007 appraisal on the property”

    Pat,

    I feel ARMers will have to write checks
    1] to pay off the difference.
    2] to pay additional down payment to make up 20% because of credit crunch at that time. This is something all 2005 and part of 2004 3/1 ARMers will encounter.

  216. HEHEHE says:

    BC BOB,

    Of course that’s where the additional 8K in loss came from when they sell their pleasure palace down the road.

  217. HEHEHE says:

    Did anybody by chance see Trump interviewed this Sunday night on CNBC. I was flipping channels and they had this show High Net Worth or some other silly title. Anyway Trump is asked by the interviewer about the current real estate market and Trump responds in the typical swarmy RE wordplay “there are certain markets where things are tough and others that are doing well”. Next question the guy asks is there anything that can make things worse and Trump says “As long as Ben doesn’t raise rates everything should be fine, but Ben wouldn’t be foolish enough to raise rates”. Hehehe it was said with such unflappable self interest I almost choked on my dinner.

  218. v says:

    Homeseller,
    Now is good time and for those 3/1 ARMers, 3 years back would have been an even better time. You seemed to know when it is going to be too late.

    “Those people who bought into an adjustable ARM can refinance, its not too late.”

  219. profuscious says:

    Maybe we should have The Donald and Helicopter Ben go head to head in the pit. My money (or should I say his money) would be on H-Ben every time.

  220. Home Seller says:

    v, I just meant those people who want to get back into a Fixed type loan, thats all

  221. Clotpoll says:

    Hey v (from 204 & 206):

    You need to brush up on your reading comprehension. Did my post mention anything about an endorsement of printing money like drunken North Koreans? No. Did I suggest that anyone believe David Lereah? No (I don’t buy his line either; he is a paid spokesman for my trade group, NOT a disinterested, third-party economist). Is there anything “desperate” in the tone of that post? No.

    I’m sorry I don’t fit your preconception of “Realtor”. For the umpteenth time: I do NOT care where interest rates go, I do NOT care whether it is a “buyer’s” or “seller’s” market and I do NOT care whether prices go up, down or sideways. All I do is bring buyers and sellers together…period. Ascribing any more power than that to us is like saying the guys in coats running around the floor of the NYX determine stock prices.

    However, I do sense an emotional investment on the part of some here in seeing a potential economic outcome that would be part and parcel of the greatest financial collapse since the Depression. Seeing it anticipated with such relish is more than a little creepy.

    To BC Bob (from 209):

    Me liking gold a lot right now. Also, silver, titanium, nickel, platinum, copper, stolen copper, lead, lithium, fertilizer and old beer cans.

  222. profuscious says:

    check this out:

    NJ doesn’t look too popular in any respect:

    http://www.insightcafe.com/reports/SBI_2006.pdf

  223. Clotpoll says:

    And, I am not REInvestor 101.

    Clot, je suis. Seconde, ne puis.

  224. suziehomemaker says:

    Hello All, this is for Lindsey, I aswered yes to all of your Qs.We started looking early last year and were prepared to pay $450K-$500k, got tired of seeing nasty places for the money. This is not my dream home, but the only way you can get that is by building it yourself, but, I love the location and neighbourhood, I have driven by ther so many times and crazy as it may sound , always felt like I belonged there, we are still neg. price but I feel we will get it, am i worried about price drop? not really, if we get it for our offer it will be close to 25% off last year.

  225. Rich In NNJ says:

    Didn’t seem as if there were enough posts in this comment section so I thought I’d enter this information.

    Extremely preliminary numbers for November

    For Bergen County ONLY, here is the NJMLS average & median price along with the number of homes sold and number under contract in November (11/1-30) for the past 11 years. This is for residential SFH listings; this does NOT include Condos/Co-ops & Twnhs.

    Year Avg$ Med$ Sold UnderContract
    1995 $252,575 $211,500 467 515*
    1996 $265,360 $215,000 518 533
    1997 $270,893 $215,000 487 518
    1998 $281,122 $225,000 503 493
    1999 $340,059 $259,900 526 512
    2000 $355,776 $280,000 511 555
    2001 $329,608 $310,000 461 574
    2002 $465,299 $377,000 478 545
    2003 $502,568 $399,900 539 566
    2004 $547,068 $455,000 616 611
    2005 $683,231 $520,000 513 514
    2006 $673,827 $494,000 324 450 as of 11/28/06 10:35 PM EST

    And here is the same data for Condos/Co-ops, Townhouses ONLY.

    Year Avg$ Med$ Sold UnderContract
    1995 $146,676 $135,000 123 108*
    1996 $166,774 $140,000 127 128
    1997 $166,227 $129,000 161 129
    1998 $184,786 $153,000 147 143
    1999 $174,601 $148,500 213 186
    2000 $204,699 $159,000 192 180
    2001 $235,621 $201,000 178 214
    2002 $268,863 $222,000 213 199
    2003 $274,329 $250,000 239 218
    2004 $333,324 $300,000 235 250
    2005 $424,590 $374,900 248 189
    2006 $374, 792 $340,000 148 183 as of 11/28/06 10:35 PM EST

    And here is the all inclusive data (SFH, Condos/Co-ops, Townhouses).

    Year Avg$ Med$ Sold UnderContract
    1995 $230,498 $192,000 590 623*
    1996 $245,948 $200,000 645 661
    1997 $244,888 $196,000 648 647
    1998 $259,335 $210,000 650 636
    1999 $292,369 $231,500 739 698
    2000 $314,515 $252,000 703 735
    2001 $348,877 $282,000 639 788
    2002 $404,748 $339,000 691 744
    2003 $432,454 $365,000 778 784
    2004 $488,043 $411,500 851 861
    2005 $598,944 $480,000 761 703
    2006 $580,061 $457,500 472 633 as of 11/28/06 10:35 PM EST

    *1995 data may be incomplete as I believe this is the first year this data becomes available.

    SFH Only
    1/1/2004 – 12/31/2004: $565,882 $450,000 7,632 7,962
    1/1/2005 – 12/31/2005: $649,841 $510,000 7,294 7,650
    1/1/2006 – 12/31/2006: ? ? ? ?

    1/1/2004 – 11/31/2004: $567,262 $450,000 6,949 7,490
    1/1/2005 – 11/30/2005: $649,951 $510,000 6,767 7,252
    1/1/2006 – 11/30/2006: $685,701 $515,000 5,398 6,393 as of 11/28/06

  226. rhymingrealtor says:

    First time homebuyer,

    What that mortgage broker/company did to you is a fineable (sp) offense, I would go to this website http://www.fcc.gov/cgb/donotcall/ and follow instructions for filing a complaint.

    KL

  227. v says:

    There you go again.

    You are the master of contradiction.

    from #198″ it can be concluded that an avalanche of massive liquidity is about to be triggered….That should distract everyone from the piles of money that they’re practically going to be dropping from helicopters…”
    #225 “Did my post mention anything about an endorsement of printing money like drunken North Koreans? ”

    Dropping money from helicopters is worse than printing money like North Koreans.

    #198 “he might find himself out of a job on the back end of that election cycle. I bet he likes his job.”

    What about the assertion that Bernanke will neglect economy to save his job? Isn’t that wild?

    “I do NOT care where interest rates go, I do NOT care whether it is a “buyer’s” or “seller’s” market and I do NOT care whether prices go up, down or sideways.”
    Finally if you didn’t care about current market conditions, then why do you post regularly on this board encouraging folks to buy? Are you desperate? of course you are. You exhibit all the traits of a desperate realtor trying to save his job/business.

  228. v says:

    Rich In NNJ,
    Are average, median prices based on sale or contract prices?

  229. Rich In NNJ says:

    I’m not sure there would be a difference. The price agreed to by the seller and buyer would be the contract price aka sale price, right?
    Unless you meant sale versus asking price?

    Anyway, the average and median prices posted are final sales price.

    Rich

  230. suziehomemaker says:

    Hey Guys, put an offer on a home,if offer is accepted, as 1st time buyer,not too much knowledge in the mortgage area, should I go with a mortgage broker who promises to find lowest rates, or is there a way I can research this on my own,and still find competive prices?

  231. Do you see children playing in NJ streets anymore. I don't, so I moved. says:

    Just thought I woud repost here too.
    So I finally took the plunge and moved south. Since my job has me bouncing all over the country, I have had the chance to experience different cities. So here my story.

    27 years old – 100K salary. I am extremely lucky as I went to a great school and have a great job. My wife, she could make another 40-50K if she wanted to work and not have kids.
    So what does 100K salary afford you? Conservatively 300K home with 20% down and some car payments, because every 20 something has those. And I have zero debt. So, where can I buy a house that would be good for a starter family (3 bed 2 bath) with other individuals living in that area of which are at the same or similar socio-economic level and share the drive and ethics that I do? Not anywhere in New Jersey. And no, I do not want an overpriced condo. I grew up in Toms River, nothing against the town, but this would be a prime example of people my age that I can not relate.
    So what do I have now that I relocated? I moved to a nice suberb of Atlanta (Marietta) with great schools and very affordable housing. I also rented in Midtown Atlanta, which is extremely nice, in a major city, dirt cheap. http://www.spiremidtown.com. Considered overpriced for midtown, but I digress.
    4 bedroom 3 bath (2500 sq.ft.) house, 1/2 acre, pool, great neighborhood, great schools, kids playing in the street. All this for 200k and 2k a year in taxes. I put 20% down with a 6% 30 year mortgage. Guess what, my wife and I go out to eat at great restaurants on the weekends, we frequently go shopping and pay off our credit cards every month. I not only save in my 401K, but also max out my Roth and have and individual Scottrade Account that I place additional funds. In a few years, I am even going to buy a lake house. Albeit Atlantans complain about traffic, but have they ever been on route 80, 78, 287, or the GSP. They don’t know what traffic is.
    The hardest thing about moving is of course family. But they must understand that college graduates can not survive. Down here, everyone has a much better quality of life. Take our neighbors, they life in a similar house, have a few kids; He is a manager at Target and his wife is a stay at home mom. Although they purchased their house a few years ago for about 10% less, it goes to show you what people with regular jobs can have. And the difference between a Target manager and one who is in New Jersey is that they take pride in their job and they have drive and character. You know those -adult degenerates/possibly ex-cons, unenthusiastic/unhelpful teen, or retiree trying to pay property taxes who work as a sales clerk at some retail tore. Not here, this is a profession, that pays the mortgage and not your drug money, iTunes songs or property taxes. My neighborhood is currently dominated by young professionals stockpiling savings, however, it is nice to know that others can enjoy the same benefits of great schools and people without sacraficing what life is all about for a home.

  232. James Bednar says:

    Suzie,

    You didn’t get pre-approved before you made an offer?

    jb

  233. Clotpoll says:

    To v (from 231):

    You are now officially in the Ten Cent Intellect club. Find a post I have made here- ever- that is an unqualified endorsement for purchasing or selling RE in this market. Let me save you some time…you won’t find it, because I DO NOT make blanket statements to people whose situations I don’t know.

    It is not approaching clever to take snippets of a post I made simply to offer a tongue-in-cheek prediction of where the Fed might go with rates and offer them as some sort of evidence of whatever attitude or behavior you care to attribute to me. To believe that there are no political influences upon the Fed or that self-interest does not play into the actions of political appointees is naive beyond belief. However, you have demonstrated that you may be capable of such naivete.

    Do you have any tangible evidence of my alleged personal business dilemma? Do you have my sales stats…or those of my office? If so, please feel free to post them here. I’ll be happy to take my licks. If not, kindly shut up. Your conjecture as to my motives for posting here only highlight your own myopic bunker mentality.

  234. v says:

    Rich In NJ,
    “I’m not sure there would be a difference. ”

    I agree there will not be much difference between contract and sale prices. However Oct sale price would have been decided by contracts signed in Aug. Therefore oct sale price reports have a two month lag. Average and median calcs on Oct contract prices will be more current.

  235. v says:

    clotpol,

    “clever” clotpol trying to weezle out yet again?

    “is not approaching clever to take snippets of a post ”
    This is because you won’t find any!

    “To believe that there are no political influences upon the Fed or that self-interest does not play into the actions of political appointees is naive beyond belief”
    You are desperate if you want us to believe feds will cut rates, throw money from helicopters to save housing.

    “Do you have any tangible evidence of my alleged personal business dilemma?”

    I don’t have any information about your company. It is time you shut up and stop predicting country’s economic future based on your assumption that everyone in the government is as greedy as you.

  236. Rich In NNJ says:

    “However Oct sale price would have been decided by contracts signed in Aug.”

    Agreed contract prices are not disclosed until the sale is final.

  237. AntiTrump says:

    #198 Clotpol:

    Is this the same bond market that said that fed was going to stop at 4 then 4.25 then 4.5 4.75, then 5 ?

    The problem in looking at bond prices as an economic indicator like we used to before is that currently a huge chuck of that is held by asian goverments to keep their currencies low and generate demand for their products in the US. They are willing to forgo losses on their bonds to do so.

  238. NJGal says:

    Wow, amazing thread here folks.

    With all this talk of rates, did everyone see the giant headline about the dollar being at its 15 year low? The Europeans are losing their minds over it. So with that in mind, does anyone really think the Fed is going to drop rates anytime soon?

  239. AntiTrump says:

    #195 Home Seller Says:

    You took a 7 Year ARM and there is nothing wrong with that.

    The problem is the folks who took the optional ARM where you can qualify for a loan based on the teaser rate like 1% to 2%. When the rate resets, they no longer qualify for the loan balance so refinancing is not an option for them.

  240. suziehomemaker says:

    J.B, When we began looking last year , we were pre-approved for way more than we wanted to spend, since then we have saved more money, no dept. excellent credit.

  241. v says:

    Rich,
    Thanks!

    “Agreed contract prices are not disclosed until
    the sale is final.”
    I didn’t know that.

  242. AntiTrump says:

    #235 Do you see children playing in NJ streets anymore. I don’t, so I moved. Says:

    Thanks for sharing your experience with us.

    This goes back to a point that I posted a while back on this forum.

    “Unless you have a really high paying job or personal/family/emotional commitments that require you to live in NJ, you should start to atleast look at the opportunities life styles in some of the other growing towns/cities”

  243. FirstTimeBuyer says:

    Clotpoll- Just because everyone does it, doesn’t mean it’s right. I don’t have to “rise above” — the industry does. I have every right to be discouraged by this industry.

    RhymingRealtor- Thanks for the FCC link.

    HomeSeller- a $150k salary doesn’t clear $9k per month. After 401k deductions, health insurance, and payroll taxes, it’s closer to $7k per month. After day care for one child, normal monthly bills like a modest car payment, car insurance, phone, and cable, and then spending cash and gas money, there isn’t a lot let for a $350k mortgage and property taxes. We don’t have $60-$80k for a downpayment, so we have to pay PMI or go with a larger loan. Again, I say that the market cannot sustain the current housing prices if people like us cannot afford to live where we work.

  244. bergenbubbleburst says:

    clot: If it is part and parcel of a depression ,then what can you do. Nobody forced people to gou out and pay over inflated prices for 50 year old dumps. People could have and should have said no, they did not, if that means a depression, than that is the way it goes. Many times people have to learn the hard way.

  245. bergenbubbleburst says:

    clot: Read BErnanke’s commentd from yesterday, he is nto cutting rates any time soon, and the bond market will adjust accordingly to reflect that fact.

  246. AntiTrump says:

    Bernake Raises Inflation Concern:

    http://news.bbc.co.uk/1/hi/business/6193828.stm?headline=Bernanke~raises~inflation~concern

    Forget inflation and employment. The Feds’ primary job is to save the housing bubble so they will start cutting rates to save the housing bubble soon.

    Wishful thinking !!

  247. bergenbubbleburst says:

    pretorius; NJ’s economic situation is stable? You must be kidding, the state is an economic basket case, and its losing high paid jobs at a rapid pace. Are you reading any of the economi reports coming out for the state? Throw in out of control property taxes,a nd our beloved little state is in a huge mess, certainly nto what I would call stable. And being close to NYC will not save us.

    And again prices are rising ? Where? are you looking at asking prices, aor sold prices?

  248. Clotpoll says:

    To Susie (from #234):

    Predatory mortgage lenders want you to focus solely on rate…that way, you take your eye off the other parts of the loan. That’s where they make money.

    Lenders are all borrowing the same money, from the same source. Pretty much all of them mark it up the same, too. If a rate quote seems ridiculously high, throw it out.

    However, if the rate seems too low, really investigate it. As long as a lender does not go into detail, he’s under no obligation to disclose all the terms of a potential loan (strange, but true). The common scam is to pitch you a low rate, rope you in, then hit you as close as possible to closing with a Good Faith Estimate jammed to the max with junk fees, points and prepaids. The unscrupulous lender knows at that point, you’re too far in and too close to closing to look for alternatives.

    When you speak to a lender, ask him to lay out ALL the loan terms- immediately- in a Good Faith Estimate. If he does so- quickly- that’s someone who deserves your business.

  249. FirstTimeBuyer says:

    #235 Do you see children playing in NJ streets anymore. I don’t, so I moved.–

    I lived in Atlanta for three years, and yes, the housing is less expensive and the economy is growing. Atlanta is a great town. However, the Atlanta metro area cannot compare to most of NJ when it comes to crime rate or public education. It’s not apples for apples. There are some concessions made when you move South.

  250. Home Seller says:

    .

  251. Home Seller says:

    Firsttimebuyer,

    have you checked you and your husband’s w-4? if you’re claiming “0” and getting a big check at tax time, might be better to claim more exemptions so you take home more each month.

    Even at clearing $7500/month w/all costs associated, you have to tighten your belt alot but it is doable.

  252. Clotpoll says:

    Hey First Time (from #253):

    You’re veering toward saying something nice about NJ…watch out, or you’ll be “branded” like me.

  253. AntiTrump says:

    To Susie (from #234):

    I agree with clotpol, don’t go by rate along.

    I have had two mortgages and refinanced twice. When I bought my first house, i was a novice. Went with the mortgage broker and lawyer that my realtor *recomended*. At the closing time he said some bs about the rate having to go up by .25%. And obviously I had to go ahead with the closing or deal with the other consequenes of delaying the closing.

    I suggest going directly with one of the lenders as opposed to a mortgage broker.

  254. syncmaster says:

    Clotpoll,

    Re #256

    There are many positives about living in New Jersey. However, when a person spends years watching the incredible increase in home prices and then one fine day realizes that he’s been priced right out a market that a few short years ago was in his reach…. a little frustration is understandable. Many posters here are in that boat.

  255. bergenbubbleburst says:

    clotpol: we all love our state, but to ignore the serioius problems that the state faces, and to dicvorce those problems form the housing market is just stupid. it has to be looked at in its totality, and being close to NYC is not going to save us.

    People can say what they want about Corezine, but he is in my opinion, the last chance NJ has to turn itself around

  256. bergenbubbleburst says:

    Sorry should be Corzine

  257. AntiTrump says:

    “You want a price correction to bring buyers back into the market,” Lereah said. “The fact that this has not happened suggests there needs to be more of a price correction before you see sales stabilize.”

    Lereah actually said that according to the Star Ledger article posted on the main page.

    Double WOW! Looks like he is trying to beat some sense into the sellers.

Comments are closed.