From the Journal News:
If there is a housing bubble, fresh data suggest that in parts of the Lower Hudson Valley, at least, it may not so much be bursting as perhaps slowly deflating.
Driven lower in part by fewer sales of high-end homes, the median price of a single-family house in Rockland County fell 3.8 percent in the third quarter to $510,000 from $529,950 a year earlier, according to figures from the Greater Hudson Valley Multiple Listing Service, which compiles sales data for Rockland and Orange counties. The median price is the one at which half of all homes sold for more and half sold for less.
The data, released yesterday, showed fewer homes sold in the quarter, with 459 deals closed, down 20.3 percent from 576 a year ago. Houses also took longer to sell, with average days on the market creeping up to 85 days from 63 in the third quarter of 2005. Inventories rose, too, with 1,558 homes available for sale, an increase of 40.4 percent above last year’s level of 1,110.
“We’re seeing what we’ve been hearing all along – there’s a decided softening in the market,” said Ann Garti, chief executive at the Greater Hudson Valley MLS.
“Prices have risen to the point where there’s just a finite number of buyers,” she said.
The inventory of unsold homes hasn’t quite reached the record highs seen during the housing doldrums of the early 1990s, but this is the highest number of unsold homes in years, said Roberta Bangs, president of the Rockland County Board of Realtors.
…
Although that may be true for homes, data suggest the county’s condominium market has softened to a greater extent with the median price of apartment- and townhouse-style units dropping 7.9 percent to $285,493 from $310,000 a year ago. In Orange County, however, condos gained 6.4 percent, to $234,000 from $219,950 in the third quarter of 2005.
20% drop in sales = “slowly deflating”
Interesting article from the Herald News:
It’s taxing doing business in N.J.
…Pocsi and many other local business owners say they are fed up with the costs of doing business in the state. A report released Wednesday by a national tax group echoed their pain, finding that New Jersey’s business taxes are the 48th worst in the nation.
Some economists, however, don’t paint such a dire picture.
…The Tax Foundation, a nonprofit group based in Washington D.C., studied the tax systems in each state as part of their annual survey. New Jersey ranked high in every tax category — from corporate to sales. Its individual and property taxes were some of the nation’s worst.
New Jersey has ranked in the bottom four states since the Tax Foundation began the survey four years ago. Chris Atkins , an attorney for the group, said the state’s prognosis is getting worse.
“They seem to be going in the wrong direction,” said Atkins, pointing to this year’s 1 percent sales tax increase.
Despite the challenges, New Jersey is still attracting business. The state ranked second in the nation for business creation over the past five years, increasing by 26 percent, according to Woo’s research.
The report also found, however, that the state had the third highest rate of business closings, with 19 percent of firms folding, according to the 2006 data.
More at the link above, Rich
20% drop? where’d you get that number?
“If there is a housing bubble, fresh data suggest that in parts of the Lower Hudson Valley, at least, it may not so much be bursting as perhaps slowly deflating.’
This just goes to show that a slow moving economic change (such as with housing) does not fit well with the “dramatic news NOW” culture of pretty much all media. It seems that if it doesn’t happen in one afternoon, it’s not happening at all.
Curiousd,
“20% drop? where’d you get that number?”
Quarterly sales, right in the article.
BC Bobm
ahhh… so you READ the article. interesting. i’ll try that next time.
Home builders see no end in sight to housing fall
Posted 10/10/2006 2:18 PM ET
http://www.usatoday.com/money/economy/housing/2006-10-10-home-builders_x.htm
NEW YORK (DowJones/AP) — Several more home builders posted preliminary sales results that indicate there’s still no bottom in sight to the sharply deteriorating housing market.
D.R. Horton (DHI) said orders fell 25% in its fiscal fourth quarter while M/I Homes (MHO) posted a 51% decline in its third quarter.
The two companies join a growing number of builders posting sharp double-digit order pullbacks. Previously, KB Home (KBH) reported a 43% order decline in its fiscal third quarter while Beazer Homes USA (BZH) posted a 49% drop-off in its fiscal fourth quarter.
Lennar (LEN) is the lone builder to buck the trend so far, posting only a 5% sales decline in its fiscal third quarter that ended Aug. 31.
In a statement Tuesday, D.R. Horton Chairman Donald Horton said “the current selling conditions in the homebuilding industry continue to be challenging, with higher than normal cancellation rates and increased use of sales incentives in many of our markets.”
D.R. Horton’s cancellation rate surged to 40% in the quarter from 29% in its fiscal third quarter. However, the company didn’t lower its view for 2006.
Robert Schottenstein, chief executive and president of M/I Homes, blamed high cancellation rates and an inventory glut for the weak demand.
He ratcheted down his earnings outlook for 2006 to a per-share range of $5.25- $5.75 from previous estimates in the range of $6.30-$6.65. He now expects the company to deliver only 4,000 homes, down from a previous estimate of 4,500 homes.
In addition to the housing slowdown, KB Home is also facing an SEC investigation into stock-option grants. Last month, it delayed releasing its fiscal third-quarter results until the probe is complete. This week, KB Home indicated that its net income fell 32% to $155 million, or $1.93 a share, in its fiscal third quarter. Other builders are expected to post similar double-digit earnings declines.
Remember Kara home`s Bankruptcy- the biggest in Jersey Shore so far !!!
FYI.
It’s Wednesday again and Calculated Risk takes a look at the MBA mortgage data:
http://calculatedrisk.blogspot.com/2006/10/mba-mortgage-applications-decrease.html
BW Article: The Dust May Be Settling for Homebuilders
http://www.businessweek.com/bwdaily/dnflash/content/oct2006/db20061011_263089.htm?chan=top+news_top+news+index_top+story
An analyst sees declining inventories and a credible market recovery for 2007, sending investors rushing to buy shares of downbeaten stocks
On the same day, in a question-and-answer session after a speech in London, Dallas Federal Reserve President Richard Fisher downplayed risks of a U.S. housing market correction, which he called one of the “most over-anticipated in history…I don’t think there is any question there has been a severe, sharp correction,” Fisher said, according to Bloomberg News. “The question is the duration. It’s important not to over-fixate on housing. The rest of the economy is running on all pistons.”
he JP Morgan report cites three factors for its prediction of future lower inventories in the first half of next year: few construction starts and permits, far sweeter incentives to buyers, and builders’ efforts to lower speculative inventory levels. That, in turn, should lower cancellation rates, which jumped to 32% in the second quarter and may approach 50% for the third. The analyst suggests a rate of 20% to 25% in coming quarters and predicts “mid to high single-digit order growth” in the second half of 2007.
Rehaut also sees signs of slowing in the number of existing homes available for sale, a key driver for the market’s recent weakness. He pointed out, for example, that markets such as Phoenix, Orlando, Tampa, Las Vegas, and Riverside (Calif.) have slowed from 10% to 15% month-over-month gains in the first half of 2006 to low single-digit gains. Rehaut also noted that, historically, homebuilder stocks have advanced in the six months immediately following halts to Fed tightening in 1989, 1995, and 2000.
“Everyone knew these (homebuilding stocks) would have a terrible second half” for 2006, said Eric Landry, an analyst at investment research firm Morningstar. The real question: Will 2007 be the turnaround year for homebuilders?
where are the buyers coming from to sop up the 40% extra inventory? from nowhere, that’s where. this will have a domino effect causing prices to have to be adjusted lower across the spectrum due to the trade-up buyer domino effect. remember folks the high inventory has just begun and prices haven’t nearly adjusted enough to remove it from the pool. let’s see what another 9-18 months does to prices. not everyone can stay where they are and they won’t meaning prices will come down. we are not at the point of a bottom.
The homeownership rate in NJ has increased somewhat dramatically over the past 6 years, might this be telling us about the pool of potential buyers?
jb
I am glad the speculators are out of the market (well, those who did get the memo)
sellers out there, a few question for you:
could you afford to buy your house today, or any house, if you were just starting out?
who do you think the likely buyer is for your property? Is he/she materially better off than you were when you bought, or similar? If better off, then why do you think this type of person would be interested in your house?
If you are planning on leaving the region, are the taxes at least partly responsible? if so, do you believe the buyer of your house will be able to manage the taxes better than you? in other words, do you see the tax situation as having a negative effect on your home’s value, or do you think it doesn’t really affect it?
if you are planning on trading up, are you hoping to lowball on your next house, but are reluctant to cut your asking price? If so, how do you reconcile this?
if you have not had any luck selling, are you thinking of pulling your property and relisting next spring, or trying to rent it out and wait for the market to bounce back? Why do you think the market will recover next year? What will you do if it does not recover?
thanks for any reponses
skep-tic – I know people who are in their 30’s, bought 5+ years ago. Believe me, they feel like they are entitled to their house appreciation and pat themselves on the back for having the financial foresight to “invest” in a house. They do admit they would not be able to do it now.
…Or you can have the attitude of some baby boomers who bought 30 years ago. They seem to feel that “If we did it when we were your age, then so can you. Get a higher paying job, or a 2nd job, etc”
It is a shame you have been priced out of the market, you should have bought 5 years ago (or have been born 5 years earlier)
That seems to be how the other side feels
so much for the american dream
it will be more like a nightmare when this all
shakes out
“where are the buyers coming from to sop up the 40% extra inventory? from nowhere, that’s where.”
Agreed. This whole “buyers waiting on the sidelines” idea is nonsense. From discussions w/ friends, families, and co-workers, most people around here do NOT understand what’s going on in the market. People think it’s a buyers market and we’re still seeing declines. That’s what makes the small price declines even more meaningful. People absolutely would buy now if they could, but they cannot. Sentiment has not really changed, it’s just that there are no eligible first time buyers.
Right now it’s pure economics driving the small declines. When the “bubble” sentiment kicks in in at the end of the spring, it’s going to get ugly. My prediction is that we’ll see 10%+ declines starting in July ’07 vs July ’05 prices.
From a former (?) realtor:
After a very successful 28 yr career in Telecom sales I found myself a casualty of corporate downsizing. With a BS in EE and an MBA in hand I decided to sit out the telecom Nuclear winter by entering the Real Estate Market as a Sales Agent. With advanced sales and marketing skills I felt I would have an advantage over the majority of the existing agents in my area. After getting my RE license and paying about $2,000 in ridiculous RE fees, MLS, local org, national, org Errors & omissions insurance, etc, etc, I joined a large nation wide firm.
I was surprised to find that 85% of the 108 agents in my office had about 5% of the computer skills that I had. I couldn’t believe that in 2006 these folks couldn’t even figure out how to check their e-mails never mind trying to read or download an attachment. Even my 12 yr old has more advanced computer skills that the agents in my office. Basically I found the RE industry to be about 50years behind corporate America.
In my 1st year I shot up to the #2 realtor in my office out of the rag tag group of 108 Agents. Sound to good to be true, but…what the #2 spot equated to after I deducted all the silly RE fees, office charges, MLS fees, processing fee’s, paying my own health insurance, etc, etc I was left with $41,507. Not bad for working 7-days a week 15 hrs a day. Oh, and did I mention how during those 12-months I was cheated out of $67,462 in commissions by 11 different agents, lied to by 20 or 30 more and actually spit on by two surly customers.
I have to say that the one thing I have personal found to be 100% true is that this is the most un-ethical business I have ever been involved with. The Real Estate code of Ethics is beyond a joke, it’s completely unenforceable I was hard pressed even as an insider to find agents who cared about ethics at all.
The majority of agents are beyond unethical, unethical is actually a compliment to most as their action are actually criminally prosecutable offences as they lie, cheat and steal from their customers and especially from other agents. Most agents actually laugh and brag about just how unethical they are as they exchange their “I did something worse than you” stories with each other. It’s an every day occurrence to hear stories about agents stealing from customers at open houses or drinking their liquor and even using their pools on weekends when their customers are out of town.
Forget all the arguments about 5% or 6% commissions, this is an industry cesspool of rejects and degenerates who are allowed to steal and cheat people out of their hard earned cash. And who are RE agents kidding about their “Secret” knowledge on filling out forms and contracts, any idiot with a 12th grade education can fill out the same forms as good as or better than most agents. The legal binding contracts that many of these blithering idiot agents bungle their way through ends up costing their buyers & sellers thousands in wasted $$$. It’s time for a radical change; consumers deserve more for their money than a bus full of clowns masquerading as professionals.
http://housingpanic.blogspot.com/2006/09/hps-message-to-realtors-of-america-gig.html#c116044573752852895
“consumers deserve more for their money than a bus full of clowns masquerading as professionals.”
This guy is right on the money.
SAS
skeptic,
To answer a couple of your questions:
I believe a large amount of buyers could come from people upgrading from parts of hudson and passaic counties into bergen county.They would capitilize on there recent appreciation by selling.Bergen offers in most cases better schools,lower crime larger lot sizes which make it more ideal for raising families.
It is a shame you have been priced out of the market, you should have bought 5 years ago (or have been born 5 years earlier)
Wouldn’t this have just caused the bubble to form 5 years earlier than it did?
jb
optimisticseller,
That’s a very good point. But who’s going to buy their houses?
Young couples from Bergen County wanting a starter home price? I doubt it.
Rich
“My prediction is that we’ll see 10%+ declines starting in July ‘07 vs July ‘05 prices.”
We’ve already seen 10%+ declines from July 2005. Add another 10 to 15%+ price declines for 2007.
James Bednar Says:
October 11th, 2006 at 10:52 am
It is a shame you have been priced out of the market, you should have bought 5 years ago (or have been born 5 years earlier)
Wouldn’t this have just caused the bubble to form 5 years earlier than it did?
jb
no
rhymingrealtor Says:
October 11th, 2006 at 9:41 am
A very simple formula is this, you purchased your home in 1999 at whatever, can you purchase it today? At whatever interest rate.Have your wages gone in accord with you homes value? Who can purchase your home?
KL
sellers out there, a few question for you:
could you afford to buy your house today, or any house, if you were just starting out?
who do you think the likely buyer is for your property? Is he/she materially better off than you were when you bought, or similar? If better off, then why do you think this type of person would be interested in your house?
Okay I said it first – but you said it better!
KL
“We’ve already seen 10%+ declines from July 2005. Add another 10 to 15%+ price declines for 2007.” Link? I’m talking nominal declines for the entire northeast. The August ’06 number was -3.9% versus August ’05.
optimisticseller Says:
October 11th, 2006 at 10:51 am
skeptic,
To answer a couple of your questions:
I believe a large amount of buyers could come from people upgrading from parts of hudson and passaic counties into bergen county.They would capitilize on there recent appreciation by selling.Bergen offers in most cases better schools,lower crime larger lot sizes which make it more ideal for raising families.
Question:
1) What areas in Bergen county are you talking about that are reasonably priced, and are they near the train?
2) What happens to the houses these people are leaving (upgrading) from?
I don’t care if interest rates go to 10%, houses aren’t affordable when you do the math. I have good shopper leverage too: cash-buyer cert for $500 + VA Loan with no PMI due to disability… but when I do the math I can’t afford the monthly mortgage breakdown, nor will I drop 20% down on these prices just to eat oatmeal & ramen.
I’m not buying the realtor’s daughter’s house by the high-power lines because the price is dropped $10K or $20K. What % is that to me when the asking is twice what it was purchased for 15 years ago?! What a great investment though, sell me the bridge too so I can live under it.
Even if in a nice location, a house with no improvements or hastily or retail-purchased doesn’t warrant a seller to double their purchase price over 10-15 years. How can they justify that?
Their pay, my pay, the avg. pay hasn’t gone up that much… & then tack on the taxes?! Your house isn’t ExxonMobile unless you was out shootin’ & up came a bubblin’ crude… and if you’re a condo owner you probably aren’t allowed to be shooting anything but your foot. Speaking of condo’s, my rent is equal to avg. taxes, what advantage is there? I can paint the walls? If I really want to paint I could buy a house without improvements, but those improvements mean dumping another 1/2, if not more, of the purchase price. & for those that have anticipated that & done some improvements, take note, I’m not paying x-tra for your retail-purchased pergo* hardwood floor. Granite* counter tops? Oh how very 1990-kelly/hunter-green of you. By the way, I love your TJ Maxx antiques* & glassware, that’s not only hot but real quality!
I’m very pessimistic waiting for the correction:
– I see price drops, but nothing realistic; buyers still have just as much fear they won’t get in as the sellers do now that they won’t get out.
– I don’t see wages increasing to compete, esp. not with other large personal investments, i.e. tuitions, health-care, retirement (lack of SS, less pension or 401k matching, & mandatory 401k just makes dividing up the profits that less profitable) & taxes.
– Money saved isn’t; instead being recirculated; spending dropping fuel & house prices on CRAP. Thank you sir, may I have more credit! Oh, & can you make it like an ARM since I’m stuck ankle deep in debt?
– Globalization* & all things internet are about peaked*, much like the 1st railroad, are about as expanded as they can get… too much, too fast, too soon… boom… er… hiss… or fizzle, etc.
Paint the walls !!! if its against the lease paint them back when you leave!
KL
Crowd Seeking Housing Vouchers Gets Unruly In Orange
http://www.wnbc.com/news/10051364/detail.html
ORANGE, N.J. — A crowd seeking subsidized housing vouchers turned unruly Wednesday morning when 500 people showed up at city offices to get a crack at 200 available applications.
The crowd at the Orange Housing Authority offices turned violent, The Star-Ledger of Newark reported on its Web site, as people pushed and shoved to get to the front of the line.
Video of the incident shown Wednesday morning on News 12 New Jersey showed a uniformed man spraying the crowd with some type of liquid. But Police Director Aric Webster said he could not confirm whether authorities were using any sprays or other type of force to calm the crowd.
Police from neighboring towns were called in to help calm the crowd, Webster said.
By about 9:30 a.m., there were no arrests and police said it was unclear how many people may have been injured.
Webster said the crowds of people seeking the housing vouchers came from several northern New Jersey communities and New York City. Orange is about 17 miles west of Manhattan.
Karen Paterson, an Orange resident, told The Star-Ledger she arrived at 11 p.m. Tuesday hoping to be among the first in line, but found that about 75 others were already there.
The housing program provides subsidies that low-income people can use to rent market-rate housing
spoke to a co-worker of mine today. she put her house on the market in somserset about a month ago. she got only 4 families to look at it. 1 had a contingency to sell another property, 1 wanted more space and the other 2 were just browsing. they were in contract on another property and just bagged out of attorney review because they got no interest in their current residence. they are relisting in the spring hoping the buying pool is better.
folks this is called the domino effect. it’s going to kill this market as there aren’t nearly enough buyers to move the chain up. spring will start with a healthy bounce and then hit a brick wall. this time next year will be a sad place for sellers as the effects of a corporate earnings/job slowdown puts further stress on already shaky fundamentals. sit tight folks. every month you rent isn’t ‘throwing money away’ but avoiding purchasing a highly leveraged asset that’s depreciating and hasn’t found a bottom yet.
“skeptic,
To answer a couple of your questions:
I believe a large amount of buyers could come from people upgrading from parts of hudson and passaic counties into bergen county.They would capitilize on there recent appreciation by selling.Bergen offers in most cases better schools,lower crime larger lot sizes which make it more ideal for raising families.”
***if prices in Bergen have gone up the same % as these other areas, how do these people make the transition?
for sake of argument, let’s say you bought in Passaic for $300,000 5 yrs ago and now sell for $600,000. A similar house in Bergen might have gone from $500,000 to $1,000,000. Even if you made $300,000 from the sale of your Passaic house, your mortgage on a similar property in Bergen will be $700,000– more than doubling.
In effect, you seem to be saying that the people buying in Bergen today are financially better off than they were years ago, yet house price appreciation alone can’t account for their supposed greater purchasing power.
One thing that is going to accelerate on the way down, which I doubt many of you are keeping an eye on -is what’s going on on Trenton. Expect the following:
-Countywide school districts: Pros-will lower cost of education on property tax bill; Con- There goes the incentive of a “good” school system. As the lest say Essex County District will control & balance out needs of both Newark & Livingston or in Bergen County a Hackensack & Ridgewood. I predict education issues are going to go the way of the south & west states -if you want “above average” education for your kids you got to pay for it. Moving to it will no longer suffice.
– 9 memeber commission to pick & choose town mergers & services to county government. Pro= Will reduce property taxes Cons= Forget about living in a Franklin Lake with your own Police Dept to harrass out of towners. 911 services will county run; look for towns mergeing occurring to fit a population dnesity, geographical size or already shared services. Ex. in Bergen County – Cliffside Park, Fairview & Ridgewood. Fort Lee& Edgewater. Expect county to take over health, fire & building inspections services. A town mayor will handle things like parking issues & enforcement, zoning, & DPW -street cleaning.
All of the above is going to take away from the “not in my backyard/in my town we do it this way/we dont want outsiders/we are special” – thing that is very prevalent in a lot of small fiefdom town in jersey -were people a lot of time pay a premium to live there because of it.
“I’m talking nominal declines for the entire northeast.”
I’m talking the zips where I intend to buy (Millburn area).
“The homeownership rate in NJ has increased somewhat dramatically over the past 6 years, might this be telling us about the pool of potential buyers?”
JB,
How true!! What % of future buyers has this mania/toxic loans exhausted. The herd plowed in. Now they get sheared. Who’s left??? I don’t see new businesses knocking our door down to get in.
Not coming from there. First time home buyers?? Forget it. H-B1/illegals??? Sell,Sell!! To whom,to whom???
Westchester County saw a 28 percent decline in people between the ages of 20 and 34 from 1995 through 2005
Journel News 10/04/06
http://tinyurl.com/em9pp
Other suburban areas of NYC likely saw similar declines in this demographic. Very bearish for demand going forward
BC Bob-
If I remember correctly, a NY Times article graphic showed NJ was in the 10% range for IO ARMs, etc. Grim/JB, I think you had that linked at one point…
JM
Skep-tic,
Check out the Matrix post where you commented on broker commissions. Seems as if Mr. Miller has gotten under Mr. Nadel’s skin.
I’m not taking sides on anything, I just find it very interesting.
Also, you posted some excellent follow-up comments at that post!
Rich
This thread is the “sticky” for the day, new topics will be posted under this on the main page. I’m sure most know the drill by now, just give the main page a scroll down every one in a while to make sure you didn’t miss something.
jb
From Marketwatch:
2:00 PM ET 10/11/06
FOMC UNCERTAIN ABOUT EXTENT OF HOUSING WEAKNESS, SPILLOVER
2:00 PM ET 10/11/06
FOMC: CORE INFLATION EXPECTED TO EBB GRADUALLY
2:00 PM ET 10/11/06
FOMC: SEVERE SLOWDOWN ‘COULD NOT BE ENTIRELY RULED OUT’
2:00 PM ET 10/11/06
FOMC SEPT. 20 MINUTES SHOW LENGTHY DISCUSSION ABOUT HOUSING
2:00 PM ET 10/11/06
FOMC SAW ‘MODESTLY BETTER INFLATION OUTLOOK’
2:00 PM ET 10/11/06
FOMC: DECISION TO HOLD STEADY IN SEPT. WAS EASIER THAN AUG.
Rich,
Yeah, I saw the thread on Matrix. I respect Miller Samuel for trying to bring some clarity to the NYC market, which is about as informationally opaque as they come. On the other hand, it’s clear that brokers are his big clients, so it shouldn’t be surprising that he goes to bat for them when someone writes a report saying they’re anti-competitive.
I do wonder, however, whether businesses like his ever consider how much bigger they could be if they just bypassed brokers and marketed their info directly to consumers.
To answer the zany hypothetical being posed on this board:
I could easily afford to buy my home today, because I’m me; I would definitely give myself a really good price. And if I balked at my own price, I’d sweeten t he pot with a flat-screen TV–I’ve always wanted one of those!
Heck, I might even let me sleep with my wife to close the deal.
wife just called a small plane crashed in or around 72nd and york ave
not an airliner
small plane not a terrosist atttack i believe
maybe a HELICOPTER
I guess its no longer a Housing Bubble, its now a Housing Bust.
http://www.economist.com/world/na/displaystory.cfm?story_id=7971153
New numbers released this week by the National Association of Realtors (NAR) suggest that the median price for existing homes fell by 1.7% in the year to August, the first such national drop since 1993
I don’t think Median price does justice to Home Price declines. If a buyer has budget of buying $500K house, he may still buy house at that price but may be better house (probably one sold for lets say $600K in 2005. The Median price ignores this fact. I think this is to benefit NAR, as it does not show how much actually houses are selling for.
I think everyone (except newspapers with real estate ad revenue and NAR hangers-on) realizes median is inflated right now.
Jamey, great post.
Looks like Lereah is very wrong, even big money market makers are going to wait:
From:
http://www.realestatejournal.com/indinvestor/20061010-corkery.html
“Yet trying to time a rebound in this sector is an extraordinarily risky game, because the fundamentals of the overall market still look so weak, even to the builders. Many builders aren’t giving earnings guidance for next year because the outlook is so murky. Moreover, builders are still using incentives to lure in buyers, which eat into their profit margins. A report by Moody’s Economy.com said house prices could keep falling until 2008 or 2009 in some areas. Private-equity groups — investment pools that look for companies they can buy on the cheap, fix up and resell — have been looking at the battered sector, but are expected to hold off taking any companies private until the housing market bottoms and begins to stabilize.”
NAR Press Release:
Home Prices Correcting, Buyers Returning to the Market
Well, they have to try something.
Does anyone actually believe that people
will be upgrading from Passaic County to
Bergen. Whats left in Passaic?
Remember, it’s a daisy chain. The chain is only as strong as its weakest link.
Dear Seller,
I can afford to buy a Porsche, or two or three – but I chose not to.
I can eat out every night of the week at Daniel, Cafe Boulud, Danube, Il Buco, etc. – but I chose not to.
I can afford to buy jeans by designers like Valentino, Roberto Cavalli, D&G, etc. (Seven Jeans are for the nouveau riche at best and wanna-bes at worst) – but I chose not to.
I can afford spa treatments every week at the Peninsula and the Mandarin – but I choose not to.
… and, I can afford to pay you $740,000 for the house you bought 4 years ago for $520,000 – but I chose not to.
The reason I can afford to pay more is because I am a saver and an investor (of the buy low sell high variety). People are trying to part me from my money dozens of times a day. I exercise restraint. I am patient. More patient than you, I promise. You will have to sell your home sooner than I will have to buy it.
I disagree with those on this site who say there are no buyers waiting in the wings. Indeed, there are many like me. We ARE out there, but we are not foolish and we are not motivated by the acquisition of material goods. If you want us to buy what you are selling, ask for a fair price. Flippers aside, there is no reason a long term hold on your real estate investment shouldn’t provide you a healthy return. The longer you hold out for a jackpot, the worse off you will be.
There’s a lot of people who can afford 2 or 3 Porches but do not own a home?
From Inman News
National foreclosures remain high
Property foreclosures nationwide remained high in September as housing markets continued to cool across the country.
The number of residential properties entering some stage of foreclosure during September was 112,210, down 1 percent from the previous month, and up 63 percent from September 2005, according to foreclosure tracking service RealtyTrac.
The national foreclosure rate now stands at one new foreclosure filing for every 1,030 U.S. households, the third-highest monthly foreclosure rate reported this year, the company said.
More at the link above
Actually, there seems to be a lot of negative news over at the InmanNews site. A lot of mortgage fraud articles, loan application drops, etc.
Rich
I can afford 5 or 6 Porches. But I would like see if my nissan can make to 250,000 miles.
I sold my two houses and my new employer paid for closing. I am renting.
Does anyone know who bought the Berkeley-Carteret Hotel in Asbury Park ? The newspaper just says it is a developer with substantial New York holdings.
Seneca,
I hear you. The sellers will at some time.
“There’s a lot of people who can afford 2 or 3 Porches but do not own a home?”
Maybe a lot more than 2-3.
Seneca-
Right on girl!! No doubt, there are many like us who look at a property and think… “naaa, there is no way that cape is worth 750k” and walk away. My first thought nowadays is what the heck would buying a house right now get me? Insane property taxes, maintenance costs, and a one-way ticket for my money to the bank. I think I will wait and wait, even if I have to rent someone else’s investment…at least I don’t have a 30 year vice keeping me beholden to a depreciating asset and not allowing me the pleasure of a trendy car if I so choose, or an occasional spa day. The fun part is, I rent, and then get to enjoy my life.
AFE
Hi Skeptic,
Why are prices falling everwhere else but are still rising in Westchester? I am looking to buy in southern westchester: rye, bronxville, scarsdale etc.
http://www.thejournalnews.com/apps/pbcs.dll/article?AID=2006610050310
I’m wondering if it’s finally time to take a poll of reader demographics..
jb
Asbury Park
Seneca,
You seem to be quite thrifty with your money,which is quite alright.Some people just would rather rent than to own.I on the other hand prefer to own than pay someone else their mortgage.The tax benefits are also quite good.I have owned my house outright for several years so I too can be quite patient while I test the waters.
Optimisticseller:
I actually hope you are right about the several years theory. If homes are priced right in several years, that means either houses will come down by half or more, and people can afford them again, sooner than later, or wages (YEAH BABY!) like mine, in New Jersey, will triple (Real) over the next several years, to catch up with housing prices and beat real inflation.
I wouldn’t mind that. Just don’t see New Jersey suddenly having a three year boom that triples wages.
If all sellers were in your shoes, bought low, and could sit until the economy wraps itself around housing prices, this blog and a lot of others would be jokes.
But that’s not the case. There are some good ideas floating around for economic fixes, but several years is a pipedream.
OPTIMISTIC,
I would rather own than rent. However, not at this time. The price to own vs rent is too far off the scale. You talk about tax benefits. I have run every analysis and it doesn’t add up at this time. Also, suppose you are looking to buy a house for cash. Where are the tax benefits?? Prop taxes??? Hardly worth the miniscule tax saving for the present risk. I will own again, not now though.
WOW I am Exited – 510K!!!! ONLY!!! Really!!! I can believe it!! thats so dirt cheap!!! (ranted my salary have een flat since 2001 (actually in 2001 it dropped 6% and then have been flat) and I am in one of R&D/Manufacturing oil companies. PLEASE let mt buy it. OH WAIT!!! THE INTEREST on this loan is about 1.5 times BIGGER THAN MY SALARY AFTER TAX!! How di this happen? Dont I have one of these high paid mnagement gobs with postgraduate degree at MAJOR OIL COMPANY??? EVERYBODY REFERS TO US IN NJ AS WE SHOULD BE RICH….. I guess I need to go to my boss and say: hey I need you to double my salary or I QUIT!!!!
HMMM but wait my company just opened 2 new refineries – on in Singapoor and on in China…
I wonder if they will just LET ME GO insead and hire somebody in SINGAPOOR – SO WHATS YOUR BET ON THIS???
By the way about job market: It took me 2 full years to fing this job (and remember i have one of those wonderful postgraduate degrees you all talking about and I work in r@d/ manufacturing in a management position)….THERE IS NO MANUFACTURING JOBS IN THIS COUNTRY – HOW CAN THIS CONTRY EXIST???? WAS NOT IT THE REASON WHY US WAS SO POWERFULL IN 40-70TH – A LOT OF PRODUCTION OF GOODS??
BUT OHH WAIT WE HAVE GOT OUR HOUSES!!! LET’S SELL THEM ALL FOR BILLIONS. FOREIGH BANKS ARE STUPID – THEY WILL BUY OUR OVERINFLATED DOLLAR THEY BELIEVE THAT ONE HOUSE IN US COSTS 1000 TIMES MORE THAN AN IDENTICAL A HOUSE IN CHINA…
Al,
Foreigners are getting a geat deal on US real estate. We have bastardized our dollar to the point where it may make sense for foreigners to buy. Depending on the currency, they get a 30-40% discount, as compared to 2001. Maybe they will be our savior.
Your story is much too common in NJ.If people don’t get their heads out of their a**, and realize what is happenning around the globe, they are in for one rude awakening.
well euro was 0.94$ at is’t lowest, now it is 1.25$… So there is about 30% there – but euro got more expensive as more countried joined the EU, but enev if it is dollar devalvation – it is still only about 32% decrease. How is it cheap if house prices doubled and tripled in last 5 years???
In addition foreghners do not buy our houses – at least not a investment, they buy Federal reserve Bank NOTES which i referred to – thats where al of current money in US come fron – mostly it is nor european banks but China and India and mid-asia region, SO in effect they are funding US consumers – that is if we are assuming that the inflation if higher that yield on the official bank note (5.25% it is right noww???) so the moment our goverment will admiot real inflation size, foreign banks will stop buying this stupid paper, goverment would have to raise the Interest on the Bank note significantly to attract attention – all pas notes wilkl be devalvated in real value and countries like China and India who invested heavilly into them will be even more screwed.
I see huge inflation as the only way US EVER going to pay off current budget deficit, anddebt of the nation, yes we will screw all other world once again.
BC Bob: people in NJ will not get their heads out of you no where , unless it has to do with Sports, or reality TV, or Tom Cruise’s baby, most people do not care.
I Talk all the time to friends and neioghboes about all diffrernt subjects, and most of them arefor the most part clueless, be it world affairs all the way down ot lcoal issues. It is amazing.
“Hi Skeptic,
Why are prices falling everwhere else but are still rising in Westchester? I am looking to buy in southern westchester: rye, bronxville, scarsdale etc.”
I don’t really know the answer to this, but here are some ideas:
change in the mix of units sold
seller incentives masking the true price
buyer’s fooled into thinking they’re getting a discount based on a price cut from original list which was higher than 2005 prices.
factsrule you are right.. Iraq war thousands dead.. unjustified military action… who cares whats on Grey’s anatomy!
Al,
You are preaching to the choir. I was being sarcastic about foreigners being our RE savior.I agree with all you’ve said about the dollar.
“unjustified military action…
Only if you have no problem putting your fate in the hands of a psychotic dictator.
The question is , even though off topic, is which psychotic dictator do you take out, or do you take out all of them, and the world is full of them.
Howver, the US is not in any shape ot oile more on its plate right now. We are stretcjed over seas, and have serious problems that need to be addressed here first.
“which psychotic dictator do you take out, or do you take out all of them”
Prioritize them, and take them out one by one.
In 2002, some said “Iraq is the most serious and imminent threat to our country.”
http://freedomagenda.com/iraq/wmd_quotes.html
“We are stretcjed over seas, and have serious problems that need to be addressed here first.”
The exact same statements were made by the ostrich crowd during World War II.
The options available aren’t a) easy, b) difficuly — but instead a) difficult, b) more difficult.
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