Here is perhaps the most interesting of the October data. I provided this chart for the first time last month, and will continue to update it in the future. The chart overlays the monthly sales data for 2003, 2004, and 2005. The data is not seasonally adjusted so that you can view the actual sales data and make your own assumptions about trends in activity. This data is based on sales activity for Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren Counties. This chart is based on GSMLS data only.
I think it’s quite obvious to see that sales this year have dropped off rather significantly after the end-of-summer peak. We’re headed into the early winter slump rather quickly and steeply. It will be very interesting to see how this data plays out over the next few months.
Caveat Emptor,
Grim
I applaud you for your efforts in reporting the facts. NOT SPIN. I just hope this information may help a few people not get sucked into the real estate lunacy.
I suggest you send this information to various media outlets. The FACTS need to get out.
this year’s pattern could take an upswing if enough aggressive price reductions occur. unfortunately they won’t. the 2 month chart looks really ugly. didn’t Great Adventure have a ride similar to this called Free Fall?
its kinda of cool seeing the big price cuts. granted, most are from retarded levels to begin with…
however, a realtor just sent me a couple of reduced listings and one in Montville (new construction on a main road) just chopped down from $819k to $749k.
almost 10%…not bad. builder also claims it will be ready for delivery in 6 weeks. and I actually believe it, since this is one hot potato they surely want to unload fast.
after looking at this chart (great work GRIM), makes me wish we could $ cost average into a house like you can with a mutual fund. ;)
oh well…guess i’ll just have to wait it out with all the other bubble sitters.
Unfortunately price reductions go from insane to insane. Ran a 7% compounded growth (I think this is very generous growth) in several N. NJ areas and prices are about 34% overvalued to get to that 7% trendline. If it was at 5% it would be about 43% overpriced to the 5% trendline.
Prices are ridiculous and the drops are a joke.
Agree with the 30% overvalued estimate. No matter what models and scenarios I run through (be it rent/buy, earnings/home prices, rent/home prices, inflation/home prices, wage growth/home appreciation) the ~30% figure seems to always come up. At this point, I really have no doubt about my overvaluation estimates.
We’ve got a long way to go until we hit the bottom. Aggregate, I don’t think we’ve seen more than a ~2-3% reduction off peak prices yet.
grim
grim and others, check out this deal. $200k off in Long Hill. actually doesn’t seem like a bad deal, IF the market wasn’t on the downswing. thoughts?
http://listings.gsmls.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFul.asp?prp=Mls&MlsNumList=2094470
i know this is a Northern NJ blog, but take a look at the following in Westfield, a very overpriced town. This house has been reduced twice and is now at $559k. Let’s forget for a minute it’s on a corner and quite small. Similar houses earlier in the year were easily going for $600k. Shows you how things are changing, and fast.
http://listings.gsmls.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFul.asp?prp=Mls&MlsNumList=2201344
I agree, the radically overpriced homes have are dropping significantly as of late. However, I’d still hesitate before I called anything a ‘deal’ in today’s market.
I think the tough part is so many of us have become numb to the prices.
grim
I see I have to bring you back to reality..
108 Hazel sold for $307,000 in 2000
107 Hazel sold for $208,000 in 2000
110 Hazel sold for $250,000 in 2001
Judging from the comps, I see that they probably bought the house updated, and didn’t do the work themselves. 80% in 5 years? Sorry, I don’t buy it. That house should be priced just about at $400.
grim
grim, i agree the price should be if anything in the $400’s. my point was prices are starting to backtrack. i think it’ll drop quicker than people think but not quick enough to get to 2001 levels. that might take a few years.
Now banks are starting to worry…
As rates rise and demand for loans drops, will mortgage banks get too aggressive?
Bankers worry about risky lending techniques
I pray every night that there won’t be a taxpayer (i.e. fed) bailout of the big lenders when this thing falls apart. Taxpayers, will ultimately, get the shaft for the reckless lending. Not unlike the Long-Term Capital Management (LTCM) bailout. For those new to economics and the Fed, grab some popcorn, a drink, and read about the LTCM fiasco (plenty of good articles via google). It’s pretty interesting from an econogeek point of view.
grim
The Real estate industry is built on taxpayor subsidies and guarantees. This BS needs to end. Keep the primary mtg writeoff and eliminate everything else.
House contruction does not add lots of value to make an economy competitive especially when the citizens are going into deeper debt and leveraging the future to a house.
A house is meant to be lived in not speculated or traded.
Prices are ridiculous and the drop is going to be harsh and swift. At least the first wave down. 3 waves down and then the regret and bankruptcies and hate for real estate surfaces.
Prudence and thrift will be rewarded. The Facts are on our side. Anyway way you want to dice it.
“I see I have to bring you back to reality..
108 Hazel sold for $307,000 in 2000
107 Hazel sold for $208,000 in 2000
110 Hazel sold for $250,000 in 2001”
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talk about a buzz kill…
if I was stupid enough to pay those prices, i’d severely limit my HELOC potential. :)
“i know this is a Northern NJ blog, but take a look at the following in Westfield, a very overpriced town. This house has been reduced twice and is now at $559k. Let’s forget for a minute it’s on a corner and quite small. Similar houses earlier in the year were easily going for $600k. Shows you how things are changing, and fast.”
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JMHO….but the real problem with Westfield, is that its on the wrong side of RTE 22 & most of the homes are older than Yoda.
however they do have a good school system, some nice parks & a mid-town direct train, to go along with a decent downtown.
what kind of premium price tag do you put on that???