Price Reduced! 12/20 – 01/02

Welcome to another edition of Price Reduced!

For all the newcomers to this blog, Price Reduced! takes a look at a handful of significant price reductions across Northern NJ. The purpose of this exercise is to serve as proof that the Northern New Jersey real estate market has long since been overvalued and has started the long hard decline back to the mean. These listings are in no way an endorsement by myself, nor do I believe they are a bargain or a value. Even reduced, I still believe these homes are still grossly overpriced. With that, the listings please!

MLS# 2228700 – Franklin Twp, NJ
Listing Price $389,900
Reduced Price $314,900 (19.24% Reduction)

MLS# 2110525- Jefferson, NJ
Listing Price $355,000 (Reduced from $372,500)
Reduced Price $297,500 (16.20% Reduction, 20.13% off OLP)

MLS# 2206347 – Boonton, NJ
Listing Price $149,000 (Reduced from $169,000)
Reduced Price $129,000 (13.42% Reduction, 23.66% off OLP)

MLS# 2202648 – Mendham, NJ
Listing Price $845,000
Reduced Price $745,000 (11.83% Reduction)

MLS# 2209546 – Montague Twp, NJ
Listing Price $427,000
Reduced Price $377,000 (11.71% Reduction)

MLS# 2091083 – Phillipsburg, NJ
Listing Price $129,900 (Reduced from $139,900)
Reduced Price $115,000 (11.47% Reduction, 17.79% off OLP)

MLS# 2212566 – Wayne, NJ
Listing Price $899,999 (Reduced from $999,999)
Reduced Price $799,999 (11.11% Reduction, 20% off OLP)

MLS# 2207687 – Oakland, NJ
Listing Price $534,000 (Reduced from $559,000)
Reduced Price $474,800 (11.09% Reduction, 15.06% off OLP)

MLS# 2224934 – Teaneck, NJ
Listing Price $353,900
Reduced Price $314,900 (11.02% Reduction)

MLS# 2222617 – Scotch Plains, NJ
Listing Price $759,900
Reduced Price $679,000 (10.65% Reduction)

MLS# 2222830 – Montclair, NJ
Listing Price $369,000
Reduced Price $329,900 (10.60% Reduction)

MLS# 2211166 – Mount Olive, NJ
Listing Price $279,000
Reduced Price $250,000 (10.39% Reduction)

MLS# 2228462 – Mendham, NJ
Listing Price $1,999,000
Reduced Price $1,799,000 (10.01% Reduction)

Now, to all the potential buyers reading this blog, I am not posting this information for you to drool over thinking these are great deals. These are not great deals. These are the first price reductions along a very long road downward. If I threw a knife up into the air, would you try to catch it on the way down? No, you’d wait until it hit the ground and then pick it up. The same rule applies here. Alot of people lost alot of money buying on the downside of the stock market after the Nasdaq crash in hopes of a fast recovery. There will be no fast recovery here. Sit tight, grab some popcorn and enjoy the ride.

I tried to grab an across the board sample of towns and price points for this edition, hope you enjoyed it!

Caveat Emptor!

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35 Responses to Price Reduced! 12/20 – 01/02

  1. Anonymous says:


  2. Anonymous says:



  3. Anonymous:

    Panic started – I don’t think so. As Lord Grim alludes, these prices reduction are just the beginning. Panic will start when we see some “blood in the streets” stories. Until this happens, people are still cautiously optimistic (pessimistic), but still playing with “house money”. Until people are strictly in the red, they can rationalize the losses.

  4. question for anyone, what is Mt. Olive like? I always see beautiful houses for much cheaper than any other towns. I have no clue where it is, or what its like.

    anyone have any opinions on this town, good or bad?

  5. Richie says:

    Mt. Olive is located in western NJ off of route 206, Hackettstown area.

    Unless you get a job for M&M/Mars you’ll be likely spending a lot of time commuting..


  6. Route 80 East approaching 287 is death, along with 287 South to 24.

    You have to learn the back roads, but you automatically have a 40 minute commute minimum unless you work for M&M/Mars.

  7. Jeff D says:

    Excellent blog!

  8. Sugee says:

    Some people are asking for all kinds of outrageous prices. For instance, I had posted how a house that was sold in Nov 04 for 375K is now back on the market in Dec 05 asking 460K. Now we all know that even by 2004 the price run-up had been significant.

    There is this not-so-upscale, but close-to-schools neighbourhood in our town. All the houses are the same model, same size 3 bedroom ranches with 1 bath, full basement, attic space. Additions typically are finishing basement with half/full bath, finishing attic with bedrooms, additional bathroom in attic, etc.

    So far the maximum sale price in that area, 2005 included, is 350K. But there are 2 houses on the market now for 399 and 457. Whatever magic they might have inside – new floors, jacuzzi etc. they are all 60 years old. The one listed at 457 now, was originally listed at 484, reduced to 469 and then 457. Does this asking price make any sense at all ? If someone buys this house for even 400 that would be a joke.

  9. Metroplexual says:

    Look on a map. To get from Mt. Olive to Parsippany will take an hour (it is less than 15 miles). That is the nearest major job center. I-80 is brutal, the condition of the highway is bad and will eat your car and the stop and go will drive you crazy. BTW the PA drivers are becoming more numerous and the peak hour for people coming into NJ from PA is between 5 and 5:30 am. It is only going to get worse.

  10. Anonymous says:

    These POS’s don’t even acknowledge or visit or bid. Let’em just rot on the market.
    I see a bunch of these kind of houses sitting on the market 6-8 months all over. You can’t be asking $450-$500k for a POS worth about $250k.evtxprz

  11. Anonymous says:

    When you see an asking just assume it is jacked up 10% higher than last sale and is about 100% higher than 5 years ago.
    This is how the scheme works. Ask 10% higher than last sales and if seller gets it for 10% less well then they got last sales prices.
    We all know last sales price is outlandish. Take 35% off and tell’em take it or goodbye expecially if you have the money to buy it.

  12. hejiranyc says:

    Much has been said about the supposed imminent crash in the bedroom community real estate market in NNJ. I think we can all agree that a lot of areas, perhaps moreso in the West, are very prone to a major correction. However, the NYC market seems to be an especially difficult nut to crack. In the West, especially in areas like Las Vegas and Phoenix, there is virtually infinite potential for expansion. But the NYC area, Manhattan especially, has extremely finite (if any) potential for additional development. Indeed, there are new projects planned here and there; however, relatively speaking, they are all mere drops in a very large, filled-to-capacity bucket. There is so much demand for living in the city coupled with lots of money from God-only-knows-where. Yes, there is a finite limit to which prices can escalate, and whether we have reached this level remains to be seen. But I don’t see any real incentive for NYC to suddenly deflate along with the rest of the country; in NYC, there is just no excess capacity. Unless NYC endures a catastrophic act of nature or terrorism or is under a state of emergency, I don’t see how normal market forces can somehow eliminate all of the demand and money that exists today.

  13. hejiranyc says:

    Question: What does everyone think about the trophy real estate market, i.e., resort areas. The Jersey shore, Fire Island, the Hamptons, etc.? Are second homes as prone to correction as primary homes? In theory, one could argue that second homes will stay buoyant because the market is comprised of relatively wealthy individuals who are not concerned with budgets and mortgages. Plus, waterfront/water proximal land is an extremely finite resource; they just don’t make ’em anymore. And since these areas are usually located among parklands, dedicated open space and usually have strict zoning restrictions, the availability of buildable land is relatively scarce.

  14. Metroplexual says:


    First of all Vegas is quite constrained, it is surrounded by federal land which only sometimes goes to auction. On Phoenix you are correct. As for NYC, I assume you mean the region. It is set for a fall and here is how I see it happening. IO loans are set to go up this year and next. If you bought a house using IO or ARM for that matter you are pretty marginal as a borrower. (I think I remember last year it was 38% IO in Jersey) Throw in higher cost for everything that they did not factor in i.e. heating, food, fuel, taxes, and minimum credit card payment are doubling. (new BKTCY Law) Add to that incomes going down as well as many layoffs this past year and coming this year and you have a formula for a glut of housing coming when people desperately sell or get foreclosed on. What you may see is rents going up which they haven’t for a while due to the glut.

  15. hejiranyc:

    Metroplexual has the correct take on NJ. It is a deeply troubled state, and you don’t need to look that far for the evidence.

    Look at the roads. Every person has basically taken their housing wealth and bought a BMW, Benz, Lexus, Audi or Acura. A depreciable asset.

    The state economy was founded on pharma and telcom. Both these industries are in deep trouble (think Merck/Vioxx, and SBC of TX buying NJ icon AT&T).

    Without writing a dissertation on the NYC market, the steps would basically following this pattern: NJ baby boomers cash out and move south, real estate cools, consumer spending goes down, recession hits, Wall Street is affected, banks downsize, non-NYers who moved to this area to work in the financial industry leave, – POOF.

    Housing demand here is MUCH MORE elastic that you it appears on the surface.

    I love NY to bits, but there are many people who live here for a job. If the job goes away, why stay? Family? Most people’s kids can’t afford to buy around here, so they have established their lives elsewhere.

    There is a price to paid.

    Why do you think Mr. Bednar calls himself “grim”?


  16. Anonymous says:

    Hi guys since you are discussing new york. My agent just send me the above listing in westchester county this morning:another one on revolutionary road. (like the one for 899k that had the huge basement)

    this one is 799K, indoor swimming pool, but a much smaller lot.
    Note ossining schools,
    prices are coming down.

    What do the pundits out there think?

  17. grim says:

    I think these two quotes sum up the situation:

    “A rising tide lifts all boats”

    While some markets have appreciated more than others, all have gone up stratospherically. The traditionally high priced localities (no need to quote them now, we all know what those towns are) have always carried a price premium, it’s not a recent phenomenon. The ratio between these prestige markets (and the rest) will always be maintained unless there is some abrupt shift in the local market to change it. For example, someone builds a rail transit system from Phillipsburg into the metro area. Take a hypothetical.. If on average all local markets went up 50% (both upper end and lower), why can’t both fall by the same amount? The ratio between the prices in both markets has been maintained. It just doesn’t make sense to me that local market X would retain all it’s past gains but market Y would fall significantly.

    That leads me to my next quote:

    “It’s only when the tide goes
    out that you learn who’s been swimming naked”

    Big money didn’t inflate the bubble, it was funny money and lax lending, in all markets, from the lower end to the upper.

    Sorry, but proximity to NYC has always been a factor in NNJ prices. We paid for the premium long before the bubble, and will continue to pay a premium relative to the rest of the country post-bubble.

    It seems that every regional market can come up with a list of reasons why the bubble won’t burst their. Heck, the NAR has been busy pumping out that propoganda to agents and realtors.


  18. hejiranyc says:


    Thanks for the response. Indeed you point out a number of could-be, what-ifs and other phenomena that may/may not play out in reality. But anecdotally, in the recent past, NYC real estate has surged despite some major shakeups that had the doomsayers coming out in droves:

    -The post-2000 recession.
    -The tech stock crash.
    -The post-9/11 market spiral.
    -2005 interest rate hikes.

    I suppose the thing that numbers and statistics don’t quite capture is the fact that living in Manhattan is a way of life that people cling to dearly, moreso than merely a place to call home. People that are here just to work or are indifferent about NYC are the ones who are perfectly content with living in northern NJ or Long Island. People who live in Manhattan do so by choice and desire- it certainly is not an easy way of life. And it seems like there are 1,000 people lined up behind every individual who decides to pack up and leave. Indeed, there are plenty of boomers who will decide to cash in for the sunbelt, but there are also plenty of empty nesters who move into the city for its activities and public transportation. And one could argue that the higher cost of real estate in the city is amply offset by the ability to live without a car and its myriad of expenses.

    In summary, my feeling is that NYC proper will probably be resilient relative to what goes on in NNJ or other parts of the country. At the worst, there may be a slight decline or flatting over the next couple of years, but it will be fleeting.

  19. hejiranyc says:


    I agree with you totally about maintaining the ratio between premium markets vs. less expensive markets, and that this ratio can be affected by shifts in the local market. In the case of Manhattan, I think there is a lot that has changed since the real estate slump of the 90’s:

    -It’s cleaner.
    -It’s safer.
    -It is arguably more family friendly, e.g., Disney-fied, yuppified, etc.
    -The sky high cost of commuting- gas, tolls, parking, trains, etc.
    -The worsened congestion on roadways.
    -The national trend towards urbanization- the post white-flight backlash wherein city centers are considered desirable once again.
    -Popular culture. New York has never been more omnipresent in the media.
    -The strong Euro has spurred European investment in the “bargains” that can be found in Manhattan real estate.

    Another thing to keep in mind about the Manhattan real estate market is that a very large percentage of the housing stock is in coops. And having dealt with plenty of coop boards in my time, they are VERY, VERY strict regarding the applicant’s finances and income. Most require a hefty downpayment (20-40%) as well as a very low monthly income to housing cost ratio (no more than 25%) in addition to ample liquid assets. Additionally, coops usually require owner-occupancy, which pretty much eliminates the potential for speculation and flipping. The net effect is that this is not a city full of “naked waders” who are stretched to the max.

  20. Anonymous says:

    But anecdotally, in the recent past, NYC real estate has surged despite some major shakeups that had the doomsayers coming out in droves:

    And it has also collapsed in the past, in the 70s, in the late 80s/early 90s. Manhattan is no more immune to a shakeup than any other market. A lot of the Manhattan market is driven by the same assumption that drives a lot of other markets — that RE prices always go up so it doesnt’ matter if you spend $2.5 M for a 2 bedroom.

    A financial crisis (we’re due for one now, the last one was 1998) could do it easily.

    And one could argue that the higher cost of real estate in the city is amply offset by the ability to live without a car and its myriad of expenses.

    VEry doubtful.

  21. hejiranyc:

    Your points are well taken, and balance out my concerns.

    For no other reason that discussion, I just wish to point out a couple of items:

    #1 I predict a slowdown in spending on the horizon from consumers, who are responsible for rough 2/3 of all spending in U.S. – hence a pending recession

    “Jan Hatzius, Goldman Sachs’s chief U.S. economist, estimates that consumers withdrew $887 billion from residential real estate in 2005. He expects that to decline to $552 billion in 2006 and $363 billion in 2007.”

    ouch – 60% drop in money used on the margin as WITHDRAWALS, not refinancing

    #2 The Mortgage Bankers Association recently estimated that $330B of ARMs would reset in 2006 and $1.3T in 2007.

    To quote Homer Simpson – “doh!”

    These are merely more facts to be scrutinized, not necessarily extrapolated into any kind of trend. However, shifts in marginal spending, even if it is a small percentage of total spending, is critical to forecast.

    Obviously, unbiased analysis of all ongoing data must trump any theory.

    What really bothers me is the lag inherent in new data, its penchant for being revised in later months, and further, the creative manipulation in reporting by individuals with an undisclosed agenda.

    I am more than willing to be a doomsayer, because of the endless drivel that has been foist on the public, that has been well documented and lampooned by grim et al.


  22. grim says:

    Prices began rising locally around 1997, it wasn’t until post-nasdaq crash (2000) that we started seeing very rapid price increases.

    In fact, the bulk of the increase has been seen in the last 4 years, which means many of those changes were priced in prior.

    I find it difficult to justify a single local market when it’s clear that speculation, not improvement, has been the cause. Speculation ran rampant in every other bubble market, but NYC maintained a clear head, and appreciation there was due to fundamental changes in the market?

    Sorry, don’t buy it.


  23. Metroplexual says:


    Manhattan is a different animal. I see it weathering the coming storm. But NJ has problems. Its economy is losing its high paying jobs. Cendant outsources most of its computer tech jobs, and where jobs that pay over $75k/yr in 2000 Pharma made up 35% now it is 30% in 2005 the industry is hemmhoraging good jobs. Most of the new jobs that have been created in the last 5 years were in Gov’t.

    While the trend over the last 5 years does not predict the future it is still “grim”.

    Also, as part of 9/11 the finance industry was told to spread their offices around instead of concentrating them in the NYC further undercutting the NJ economic base.

  24. Grim Ghost says:

    ? In theory, one could argue that second homes will stay buoyant because the market is comprised of relatively wealthy individuals who are not concerned with budgets and mortgages. Plus, waterfront/water proximal land is an extremely finite resource; they just don’t make ’em anymore.

    A lot of second home owners are not superwealthy any more. Many are looking to build real estate, the one sure way to build wealth. Smart Money had an article on this a few months back.

    The most elite areas — Jackson Hole , Aspen etc. may be hit less. A lot of second string areas will probably be hit much worse than first string areas.

    As for “not building waterfront area any more”, that is a common comment I’ve heard. In Edgewater, I’ve lots and lots of waterfront areas created ? How ? By demolishing old factories and warehouses. And after 10 years of development, there are still plenty of industrial sites, old offices, old diners besides the river which could all be redeveloped.

    Incidentally, I have seen fairly cheap waterfront (not Hudson river front, but general waterfront) property in NJ in areas like Morris TQownship, North Brunswick etc.

  25. Richard says:

    NYC will not weather the coming housing slowdown. % wise it will drop along with everyone else, though not to the extent that the true build-out bubble areas like Phoenix will. it happened in the 90’s when nationally everything dropped, so what’s so different about today? being a former NYC resident for 10 years, i’ve seen the place change, some for better and also for worse. it’s getting even more prohibitively expensive to live there and the influx of immigrants is starting to weigh down the quality of life. while you have many that are lawyers, doctors and wall streeters, that doesn’t make up the bulk of the population. nyc will not be immune IMO.

  26. Anonymous says:

    my favorite rationale for immunity from a stock market decline is lack of land / no more building permits / Manhattan is “special” etc..etc..etc..

    Didn’t Tokyo real estate collapse 60% and never come back? and they have more people per square foot than any city including New York.

  27. The simple answer is that you will be disgusted at what $350K will purchase.

  28. grim says:

    Can’t believe I missed that part about $350k, I read through it much too quickly.

    Once you see what $350k will buy, you’ll wish you hadn’t left your apartment in the city.

    That price point won’t even buy you a small home in poor condition into a midrange town. In any upscale community a home at that price point would sell almost immediately to a flipper or developer as a teardown.

    Entry level into a nice community is about at the $500k mark at this point, and it doesn’t even buy you a ‘nice’ home.

    Homes that a good wage earner from Manhattan (100-200k) would buy, 5 or 6 years ago, are well into the millions at this point.

    Caveat Emptor,

  29. Anonymous says:

    Can someone point me to the MLS site where I can look up these listings? The NJ MLS sites I find don’t have any such listings.

  30. landgrab says:

    Thanks for the brutally honest comments, folks.

    That being said … if prices are ALREADY being reduced 20k and 30k … am I too optimistic thinking that some of the 400k and 500k places will drop to the 300-400k range come July?

    If this free-fall as bad as some of you folks think … why is is crazy to think some prices will fall up to 100-150k?

    We’re not looking for some amazing SFH home in the poshest NJ burb. We’re both in our 20s, no kids, not married, but making decent money, and looking for a starter place.

    A townhouse would be good; A SFH would be great. We’d be happy in an apt, but it’d have to be a 2 bedroom (an office is necessary).

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