Bubble buyers capitulating?

From the Record:

Homeowners who’ve decided it’s (finally) time to sell

Henry and Rachel Kirk bought their two-bedroom Mahwah town house in 2005, not long before the housing bubble began to deflate. As their family expanded to include three children, they thought of trading up but couldn’t face the loss as housing values plummeted.

“We could never have put the place on the market back then,” Henry Kirk says.

A lot of homeowners felt the same way, choking off much of the supply of houses on the market in recent years. But that’s starting to change as home values have begun to recover. Prices are now about 19 percent below their 2006 peaks in the New York metro area, an improvement over the 27 percent drop they hit in the depths of the housing bust. That’s led more homeowners, including the Kirks, to put their properties up for sale.

According to Fannie Mae’s Monthly National Housing Survey, 40 percent of those polled in February said it’s a good time to sell, up from 34 percent a year earlier. And the New Jersey Realtors recently reported that while inventories remain tight, new single-family listings in February jumped 16.4 percent in Bergen County and 17.9 percent in Passaic.

With these signs that homeowners are more willing to sell as the spring buying season gets under way, The Record talked to three sellers who recently listed their homes.

Sam Horowitz and Kelly McCormick bought their home, a Westwood colonial, in 2005. They loved the house and neighborhood, an easy walk to a playground, school and Westwood’s lively shopping district.

But they recently put it on the market so they could move to Morris County because both their jobs — he’s a commercial real estate broker, she’s a project manager for an engineering company — have relocated there.

Recognizing the reality of the market, they set a listing price of $389,000, even though they paid $455,000.

“Anytime you’re not getting out what you put in, you’re disappointed,” says Horowitz, who’s in his late thirties. “But we’ve lived in the house for almost a full decade, and the house was terrific for us that entire time. I also understand that every financial situation is not going to work out ideally.”

Nancy and Steven Brillo of Wayne sold their house gradually — then all at once.

They had bought the Cape Cod for $315,000 in 2002, after falling in love with the Packanack Lake neighborhood.

“I cannot tell you how much we love living here. Packanack is a great community,” says Nancy Brillo, who works in education, testing children with special needs.

But once the couple had two sons — now 8 and 10 — the house began feeling too small.

“There’s one bathroom for the four of us,” Brillo, 39, says. “We couldn’t take it anymore.”

They began looking for a bigger place about two years ago, but their choices were limited because they were determined to stay in Packanack Lake. They put their house on the market several times over the past two years, and got three offers. But those deals fell apart because the Brillos couldn’t find the right house nearby.

To flush out sellers, they put letters in mailboxes around the neighborhood — and hit pay dirt with a ranch house around the block. The owners weren’t ready to sell yet, but said they would be in a year or two.

“My husband and I knew this was the house,” Brillo says. “We were in love with this house.”

This entry was posted in Economics, Housing Recovery, New Jersey Real Estate. Bookmark the permalink.

26 Responses to Bubble buyers capitulating?

  1. grim says:

    If you’d like to start the day with something on the positive side, from Vox:

    26 charts and maps that show the world is getting much, much better

  2. Fast Eddie says:

    I’ve been saying the same thing as this article for years now. It’s really nothing new. We had to cancel a deal because we couldn’t find a house and there’s an ocean of f.ucked bag holders stuck in their sh1tholes they bought during the peak years. And what’s the difference between being 27% underwater or 19% underwater? Does it hurt any less? If the couple above bought for 455K and is currently listing at 389K a DECADE LATER, what does that tell you about the m0rons that paid 700K in mid 2000s? F.uck you, pay me.

  3. Fast Eddie says:

    Recognizing the reality of the market, they set a listing price of $389,000, even though they paid $455,000.

    “Anytime you’re not getting out what you put in, you’re disappointed,” says Horowitz, who’s in his late thirties. “But we’ve lived in the house for almost a full decade, and the house was terrific for us that entire time. I also understand that every financial situation is not going to work out ideally.”

    Gee, great deduction, D1ck Tracy! When it’s all said and done, you’re going to be 100K poorer. You were losing $833 per month over 10 years. Nice financial move!

  4. Fast Eddie says:

    To flush out sellers, they put letters in mailboxes around the neighborhood — and hit pay dirt with a ranch house around the block. The owners weren’t ready to sell yet, but said they would be in a year or two.

    Yeah, we heard the same thing. A few years later, they still weren’t ready to sell. Don’t hold your breathe, sweetie. Talk is cheap; just like when a house agent says there’s a lot of interest in the house and it will go fast. Sure. The prices are warranted, they never go down here, they’re not building any more land and it’s contained to subprime, too.

  5. Wealthy Millenial says:

    I bought my place from some sad 2006-era buyers who folded at $150K less than they paid after sitting overvalued on the market for several months. On the other hand, there were bidding wars on every property at the time. An overpriced home is a nice opportunity to make a deal of your choosing without the realtor screaming “THREE OTHER BIDDERS” in your ear.

  6. The Great Pumpkin says:

    Same situation as fast Eddie, but these people have done what we told fast Eddie to do. Pick a location and start working. Can’t keep looking at stale listings and expect to find a house. Get a good agent for that location and start sending letters.

    “They began looking for a bigger place about two years ago, but their choices were limited because they were determined to stay in Packanack Lake. They put their house on the market several times over the past two years, and got three offers. But those deals fell apart because the Brillos couldn’t find the right house nearby.

    To flush out sellers, they put letters in mailboxes around the neighborhood — and hit pay dirt with a ranch house around the block. The owners weren’t ready to sell yet, but said they would be in a year or two.

    “My husband and I knew this was the house,” Brillo says. “We were in love with this house.””

  7. Liquor Luge says:

    Best buys are:

    1) overpriced homes of idiot bagholders
    2) garden variety shitboxes

  8. Fast Eddie says:

    Get a good agent for that location and start sending letters.

    Read this statement and convince yourself you’re not getting punked by a troll.

  9. grim says:

    As dumb as they were for buying during the bubble, the financial impact post-sale was relatively minor.

  10. grim says:

    Even considering interest and property taxes. Compare it to the equivalent rent for a decade. Yeah, probably hurts to not get the big payday you were hoping for, but hardly armageddon.

  11. The Great Pumpkin says:

    I’m not a troll. Im being serious. You have to work extremely hard to get a nice home at a good price in this market. There is a ton of competition for these houses. You have to work harder than your competition, if that means going door to door, constantly sending letters, so be it. Right now, you have been getting slaughtered in this competition, so much so, that you have given up. This market isn’t for the lazy or for those with the lack of motivation to get it done. I’m not saying you are either of these, but this is what it takes to get it done. You need to know what you want, where you want it, and must bring your check and act quick. In this market, there is no thinking about it, it will be gone if it’s good.

    Fast Eddie says:
    March 22, 2015 at 9:00 am
    Get a good agent for that location and start sending letters.

    Read this statement and convince yourself you’re not getting punked by a troll.

  12. The Great Pumpkin says:

    Yup, you have to live somewhere. Hurts that you didn’t buy a home and make money off of it, but that’s the nature of the game. These people who lost out after 10 years did nothing more than pay rent to the previous owner. They didn’t really lose to the magnitude that some people think. Yes, they are a bag holder, but aren’t all renters bag holders? So if they didn’t buy the house, they would have had to rent. So what is the difference? Lose 100,000 on a house over 10 years, or lose rent over 10 years. 2,000 a month rent for a home (cheap) for 12 months is 24,000. 24,000 over 10 years comes out to 240,000. I don’t see the big deal if they lost out buying in 2005, they have to live somewhere, and unfortunately it costs to live somewhere, whether you are buying or renting. Renting, you are always paying more because the owner needs to profit. So I would rather own.

    grim says:
    March 22, 2015 at 9:16 am
    Even considering interest and property taxes. Compare it to the equivalent rent for a decade. Yeah, probably hurts to not get the big payday you were hoping for, but hardly armageddon.

  13. The Great Pumpkin says:

    1- grim, that’s a cool article. Thanks for sharing it.

    This is a good thing. Child labor on the decline means wage inflation will surely come if this keeps up. The pool of cheap labor that capital can exploit is getting smaller and smaller. Great to see a positive article. Really shows why this stock market rally might only be in its infancy. Market might rage to 2030, imo.

    “ILO
    Child labor is on the decline

    Any amount of child labor is too much child labor, and the pace at which it’s being reduced is not fast enough to meet the International Labor Organization’s goal of eliminating hazardous child work by 2016. But the rate of decline — one-third reduction from 2000 to 2012 — is nontrivial and worth celebrating”

  14. The Great Pumpkin says:

    This is proof of how powerful the U.S. really is. There has not been a major war since 1945(wwII) exactly when the U.S. became the world’s most powerful nation. When was the last time that the world has not seen powerful nations at war for this long of a period of time? Thank you, USA!!!

    This period of peace and stability also provides the means for the economy to do well. This is why the stock market can go on an unbelievable run in the next 15 years.

    America is in a strong position right now. Low energy costs to go along with a bunch of new energy reserves, combined with the highest proportion of educated individuals the world has ever witnessed, along with insane food production, and advances in technology, along with almost no wars, means that we are about to go on the biggest economic party this world has ever seen.

    “War is on the decline

    Less than a century removed from the World Wars, it can be hard for people to believe war is on the decline. But in the long run, deaths from organized political violence are falling, as Steven Pinker’s The Better Angels of Our Nature details. “The rate of documented direct deaths from political violence (war, terrorism, genocide and warlord militias) in the past decade is an unprecedented few hundredths of a percentage point,” Pinker wrote in an excerpt in the Wall Street Journal.

    It’s not just Pinker, either: analysts like John Mueller, Joshua Goldstein, and John Horgan have persuasively argued that the end of war is in sight. “War is merely an idea,” Mueller writes. “Unlike breathing, eating, or sex, war is not something that is somehow required by the human condition or by the forces of history. Accordingly, war can shrivel up and disappear, and it seems to be in the process of doing so.””

  15. The Great Pumpkin says:

    I also forgot to factor in that those people selling their house and taking a loss, are now buying a cheaper property. These bag holders are not in such bad shape as some people make it sound. The only true bag holders are renters. Homeowners can always hold till the market improves and not experience any loss, can a renter do the same?

    The Great Pumpkin says:
    March 22, 2015 at 9:39 am
    Yup, you have to live somewhere. Hurts that you didn’t buy a home and make money off of it, but that’s the nature of the game. These people who lost out after 10 years did nothing more than pay rent to the previous owner. They didn’t really lose to the magnitude that some people think. Yes, they are a bag holder, but aren’t all renters bag holders? So if they didn’t buy the house, they would have had to rent. So what is the difference? Lose 100,000 on a house over 10 years, or lose rent over 10 years. 2,000 a month rent for a home (cheap) for 12 months is 24,000. 24,000 over 10 years comes out to 240,000. I don’t see the big deal if they lost out buying in 2005, they have to live somewhere, and unfortunately it costs to live somewhere, whether you are buying or renting. Renting, you are always paying more because the owner needs to profit. So I would rather own.

    grim says:
    March 22, 2015 at 9:16 am
    Even considering interest and property taxes. Compare it to the equivalent rent for a decade. Yeah, probably hurts to not get the big payday you were hoping for, but hardly armageddon.

  16. Mike says:

    In reference to getting the word out with a letter to be more aggresive, I’ve seen this work once where a couple heard by word of mouth a gentleman was retiring and moving to Florida and gave them first shot at purchasing in which they did.

  17. NJT says:

    #11 Pumpkin

    ” In this market, there is no thinking about it, it will be gone if it’s good.”

    Amen.

    In my neck of the woods comparable houses that are priced around 30% less than those that have been sitting for months sell in days or at most a week. No consistent type of buyer, though. Everything from DINKS to retired folk (I wouldn’t want to retire here actually, I’m gone as soon as the kids are on their own but some people just have to have their ‘dream home’ before they die…I guess).

    BTW – I have a attorney friend that specializes in real estate closings so…

    The only way I got the one I’m in now for a great price was because a Realtor friend told me the owner was considering selling soon so I walked by EVERY DAY and when the sign went up I was there. First in (without realtor, then he came over). Made the offer and it was taken on the spot. Smart old widow that would rather spend her last years sipping a margarita on the beach in Florida.

  18. Ben says:

    I also forgot to factor in that those people selling their house and taking a loss, are now buying a cheaper property. These bag holders are not in such bad shape as some people make it sound. The only true bag holders are renters. Homeowners can always hold till the market improves and not experience any loss, can a renter do the same?

    You also forgot to mention upkeep costs and property taxes. Why do you assume people renting are renting a home for $2000?

    When I turned 21, I was renting an apartment for $600 a month. When I got married at 28, we rented an apartment for $1100 a month. When I had my kid at 32, I was renting a townhome for $1600 a month. I bought a home last year 40% down, and mortgage/taxes run me $2300 a month. Had I bought this home in 2005, mortgage/taxes would have run me $2900 a month. I chose to live in smaller places and buy a nice home after the fact. On an cash basis, I paid on the order of $15k to $20k per year less renting for over 10 years. Christ…had I not had a kid, I would have kept up the gig and my wife and I would have bought the house for full in cash in another 5 years.

  19. Toxic Crayons says:

    @davidwchen: Camden NJ developer, asked by @AP about unpaid loans, says: “Your job is not to ask me any questions” http://t.co/LfM5JTo1I5

  20. Toxic Crayons says:

    Your tax dollars at work.

  21. grim says:

    You also forgot to mention upkeep costs and property taxes. Why do you assume people renting are renting a home for $2000?

    Because it’s the roughly the equivalent. Why would you make anything other than a like for like comparison?

  22. Ben says:

    Because I’ve never seen anyone my age rent a house comparable to the one they buy. They always rent an apartment/condo or rent very small town home.

    He’s using an equivalent rent metric to conclude that its always the best decision to buy and never to rent. You have a ton of options when renting that he’s completely discounting. And, lets be honest, the types houses most people are looking to but aren’t available for rent.

    If it was between renting my current home and buying my current home, of course I am buying. But it was never between that.

  23. NJGator says:

    When the 13-Year-Old Picks a $14 Million Condo

    A year and a half ago, Skye van Merkensteijn was shooting hoops with a friend who lives at the Aldyn, a condominium-rental hybrid on Riverside Boulevard with its own indoor basketball court, climbing wall and bowling alley.

    Thirteen-year-old Skye was impressed — and envious. Well, his worldly pal told him, he just happened to know of an apartment for sale on the 21st floor.

    Skye went home, jumped online and called up a video of the property in question — a 12-room spread with a hot tub and private 37-by-15-foot outdoor pool.

    “When my husband, John, came home,” said Skye’s mother, Elizabeth van Merkensteijn, “Skye announced: ‘We’re moving and this is the place we’re moving to.’ ”

    Mr. van Merkensteijn, an investor, told his son he couldn’t afford a $14 million apartment. As for Mrs. van Merkensteijn, if you wanted her to leave the family’s eight-room apartment at the Beresford on Central Park West, she said, you were going to have to carry her out. In a box.

    Still, for a lark the couple strolled over to check out their son’s find, which, in addition to the pool and an expansive terrace, had bedazzling views of the Hudson and the Palisades. “We looked at each other and said, ‘This is unbelievable,’ ” Mrs. van Merkensteijn recalled. “The idea that you could own a place like this in New York City was amazing.”

    Skye came along to the closing a few months later.

    In New York, teens and preteens are becoming savvy connoisseurs of real estate.

    Perhaps it’s because they’re so utterly at home on the Internet. Perhaps it’s because they’re lured by online images of condo amenities like an indoor pool or a children’s playroom or because they’re fans of “Million Dollar Listing New York” on Bravo. Or maybe it’s because it’s become business as usual for children in certain precincts of Manhattan to participate in family decisions.

    “They choose where they and their parents are going to have dinner or where they’re going to go on vacation,” said Stuart Moss, an associate broker at Corcoran. “So why shouldn’t it extend to where they’re going to spend several million dollars for a residence?”

    http://www.nytimes.com/2015/03/22/realestate/when-new-york-kids-help-find-the-family-home.html?action=click&pgtype=Homepage&module=real-estate-left-region&region=real-estate-left-region&WT.nav=real-estate-left-region&_r=0

  24. NJT says:

    I tell my kids: “When you’re 18 you can do whatever you want but you might not be able to live here”.

    “…teens and preteens are becoming savvy connoisseurs of real estate.”

    If they can figure out how pay for it themselves…GO! Maybe I can learn something!

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