From CNBC:
The housing shortage may be turning, warning of a price bubble
The most competitive, tightest housing market in decades may finally be loosening its grip, and that could put pressure on overheated home prices. The supply of homes for sale in the second quarter of 2018, the all-important spring market, rose at three times the rate of the same period in 2017, according to Trulia, a real estate listing and research company.
The inventory jump was the largest quarterly improvement in three years and could be signaling a slight thaw in today’s housing market. But it is just a start.
“This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters,” according to Alexandra Lee, a housing data analyst for Trulia’s economics research team.
The supply of homes for sale is still down 5.3 percent compared with a year ago. Still, all real estate is local, and some markets are seeing greater relief. Thirty of the nation’s 100 largest cities, including New York City, Miami and Los Angeles, now have more supply than a year ago.
…
Of course, the increase is a double-edged sword. Supplies are increasing because sales are slowing, and sales are slowing because prices are so high. In New York City, the median household must spend 65 percent of its income to buy a home, according to Trulia. In Los Angeles, it takes 59 percent.
Median income is meaningless. Poor people can’t afford to buy houses
Honestly, can’t see a national bubble in real estate. Localized pockets, maybe. I just can’t see prices crashing. Minute prices dropped by even 15%, there would be a feeding frenzy in the market that would take place to support pricing. Can you call it a bubble if prices don’t pop, just stagnate till the market can afford higher prices? That’s what I see here.
There is certainly no bubble in nj. Only place possible is along the Gold Coast, and I just don’t see it due to the demand in those areas.
It’s seriously a flawed way of looking at what the market can afford. It gives you an idea, but nothing more.
Hold my beer says:
July 15, 2018 at 8:00 am
Median income is meaningless. Poor people can’t afford to buy houses
For example,
Wayne has supported these prices for almost a decade now. Why would they drop now? It’s clear the market can support current pricing, they did it through a period of horrible economic growth for almost a decade. Current pricing is as low as it will go, unless workers start making less money, which I just don’t see happening.
New York and LA are premier cities and have global elites buying 2nd homes there.
People with mortgages of 3 to 5% interest rates will stay put unless they can get a better rate. The ones that need to sell,believes they can get a better price.
Not unless you live in NJ.Buyers from 2006 are still waiting to break even. The ones that need to sell are are taking a hit from the 2006 price.People with a 15 year mortgage have built up enough equity that they can absorb the hit. 30 year mortgage holders are still waiting
They are just such cool places to live if you are rich. If you don’t care about cost(majority don’t at this level), just about the ability to party and socialize with the “it” groups of socialites at elite parties, this is where you live.
Hold my beer says:
July 15, 2018 at 8:31 am
New York and LA are premier cities and have global elites buying 2nd homes there.
The ones that need to sell are are taking a hit from the 2006 price.People with a 15 year mortgage have built up enough equity that they can absorb the hit. 30 year mortgage holders are still waiting
People who bought with a 15 year mortgage in 2006 have nearly paid their homes off.
If you put down at least 10% in 2006 on a 30 year, you have more than enough equity to take a hit.
For example:
2006 Purchase: $500,000
10% down payment: $100,000.
Starting loan balance: $400,000.
Current loan balance: $300,000.
Sale price: 20% below 2006 prices – $400,000.
Commission: $20,000
Net after sale: $80,000
They may not like what they walk away with, but they can absorb the hit.
After 12 years of “ownership”, they are paid the equivalent of about $3,100 a month in rent.
Depending on the house, the town, that might be absolutely in-line with what they’d have paid on the rental.
This isn’t taking into account the tax treatment, which actually lowers this somewhat. Let’s say something like $2,900-$3,000 a month “rental” after tax benefits.
As bad as the bubble was, these folks really didn’t get hurt all that much. Granted, they didn’t do well, but they didn’t really get burned either.
I swear…nyc metro market probably has the savviest buyers in the country. They don’t blow up the bubble like other parts of the country do over and over through every cycle.
“As bad as the bubble was, these folks really didn’t get hurt all that much. Granted, they didn’t do well, but they didn’t really get burned either.”
Not saying they didn’t inflate the bubble, but just not anywhere near the levels in other parts of the country.
Grim good analysis!
Basically getting back down payment and treat payments , commission and improvements as rental payments – If inline with town rental cost.
Knowing homeowners- Improvements to be able to sell at a better price is what will bite
Nyc metro market is like a blue chip stock. Just not going to see that many wild swings or crazy appreciation/depreciation. Just slow and steady over time.
Vegas and Florida are prob the markets most comparable to penny stocks.
Is there an architect/ trade association that sponsors those articles? Jeez they never publish one that isn’t a borderline criminal ripoff.
grim says:
July 15, 2018 at 6:35 am
$85,000?
Holy f*ck they got taken.
By that (idiotic) measure the Buffalo NY metro market are the “savviest” buyers in the country. Maybe Shamokin, PA buyers too. They weren’t even affected by the last bubble.
Pumps – you truly are too stupid for any honest pursuit. You should see if you can get your Dad’s old drug corner back.
I swear…nyc metro market probably has the savviest buyers in the country. They don’t blow up the bubble like other parts of the country do over and over through every cycle.
There is a huge amount of softness at the high end of the market. Beginning bubble-like softness. Anybody who knows Glen Rock knows it is a double blue ribbon town. Very top rated schools, TWO train lines a couple hundred yards away from each other (two LINES, not stops). I know the town very well. There should never be 36 SFH for sale in any kind of good market. Check GSMLS for yourself. 7 of the 9 CHEAPEST houses are going head-to-head at $475K-$500K, 5 of them at $499K!
In “regular” markets there should be about 4-8 nice houses for sale in Glen Rock, and zero to two in the best section. At the height of the 2006 bubble I never saw more than 80 properties for sale. 8-12 total would be normal with half of them being low end or condos.
There is something brewing.
The competition between listings in Glen Rock is something I’ve never seen before. 3 houses at $699K, 3 houses at $749K, 5 more between $765K and $800K, 2 at $899K, 3 above $950K.
The house I mentioned a while back, the corner lot house that has a backyard that is a true and legal build lot. They tried to sell both house and build lot together starting at $1.6M, or the house without the build lot at $1.1M (later lowered to $999K). They were not offering the build lot alone, I presume, until they sold the house as the build lot alone is the true jewel. Anyway, the listings were removed.
Given that property taxes are much lower in Cali, you can obtain a much larger mortgage. Imo, that’s the difference in the values obtained during bubbles.
Come on, you know that’s a bs comparison. I was talking about markets that actually appreciate if you could understand how to read.
The Original NJ ExPat says:
July 15, 2018 at 5:52 pm
By that (idiotic) measure the Buffalo NY metro market are the “savviest” buyers in the country. Maybe Shamokin, PA buyers too. They weren’t even affected by the last bubble.
Here’s a newsflash Pumps – Nobody knows what you are talking about. You are a court jester performing for the Senators, pretending to be one. You are occasionally amusing, but it’s not the kind of comedy you want to watch all day.
Come on, you know that’s a bs comparison. I was talking about markets that actually appreciate if you could understand how to read.
Pump, Zillow says Wayne market has gone COLD.. not even cool. COLD…
I was watching Rutherford, train town. went from very hot to, hot, warm to COOL.. not yet COLD.. Expect it to be COLD soon.. I see houses coming back on market after attorney review and even just before closing.. See a lot of inventory now.. So something is UP for sure..
Once the ‘tax deduction lost’ is realized by June 2019, I expect the NJ market to go cold soon
Clifton is Very Hot now. Only means downhill from here..
On the 85,000 tip. I couldn’t believe it myself.
For 50K all in I got:
Kitchen demoed and rebuilt including removal of two windows, replacement of two windows, all cabinets UltraCraft (very tall due to raised ceiling), marble countertops, sink, dishwasher, 36″ commercial range/oven, cabinet depth fridge, Oven vent/light/blower, tiled walls, floors, all trim, 3 ceiling fans, 9 recessed lights, brick wall removed to expand kitchen to former porch. Former porch door replaced with french doors, 6 custom windows, 240 watt electric heater (sealed oil). New external door. Expand toilet closet to make room for full size sink, new window, mirror, fan, new door new toilet. 2nd floor bathroom, complete demo and rebuild, double wide vanity, mirror, removed 2 windows, installed one new window, vanity lights, fan, 4 recessed lights, new toilet, new bath, custom shelves, tiled shower and floor, new sink, bidet removed. Two bedrooms, ceiling and fixture replaced, new oak crown (thick stuff). Third bedroom, ceiling fan installed where no overhead lighting existed. Painted all rooms touched. (7 rooms). All appliances, fixtures included. Good luck touching something similar. This was a Captain Cheapo extravaganza. The work was decent. Not perfect, not bad enough to need redoing.
If any of you want to see before after pictures, I have no issue posting them. I need to find that spreadsheet. Quotes ranged from 50K (my Vernon buddy) to 150K (the locals). Heck, one cabinet guy wanted 50K for just the cabinets.
Can someone give me an honest response? Can nj tax system be reformed so that it does not rely on property taxes? Is it possible and how?
And does anyone see a major correction in pricing coming and why?
I think you are not a bright guy. How’s that?
Can someone give me an honest response?