The PMI Group released their updated housing risk index on Tuesday. New Jersey finds itself situated firmly in the top 10 highest risk areas:
In fact, as of the latest release, the Edison, NJ (473) and New York-Wayne-White Plains, NY-NJ (447) MSAs have a higher risk index than Las Vegas (418). The Newark-Union, NJ-PA follows close behind with a risk index of 365. This release saw the risk index of Newark, NJ, New York, Edison, NJ jump more than 100 points.
Caveat Emptor!
Grim
Forgot to add this disclaimer to the post.
Please keep in mind that the PMI Group is in business to provide mortgage insurance. They make money when buyers are required to take mortgage insurance. They walk a very fine line in their analysis.
Caveat Emptor!
Grim
How desensitized have we become? My wife and I said back in 1999-2000 that house prices were getting insane. We got lucky in early 2001 and finally found a house through friends of the family and it was far from what we were looking for. We would love to trade up but we think these people are nuts. We go to open houses just to piss off the realtors… and lately, we’re the only ones there. Even as a current homeowner, I still hope this whole f***ing housing thing goes crashing through the floor. All my friends and relatives say “but you’ll lose all that money, what are you stupid?” I have to explain to them how I would be able to save and invest if housing costs were normal. They don’t get it. They also know nothing about investing either, so I guess it’s only fitting. Of course Northern Jersey is seriously out of whack.
Remember this: no asset has ever failed to revert to the means after a warped run-up in price. Real estate is not exempt.
How can you lose money that you don’t have?
It’s just like stocks. You don’t win or lose until you sell that stock. Call it a paper-loss or a paper-gain. It’s only worth what someone is willing to pay.
-Richie
Most brokerages will only let you buy stock on 50% margin. You need to put up 50% of the cost.
Most lenders will happily let you go over over 100% margin on a home.
grim
Housing Tsunami fist wave hitting. The 2nd and especially the 3rd wave are going to be devastating.
many just do not understand they are in real precarious financial position.
Watch as the fallout unwinds.
Be patient. Long uptrends take time to unravel. Remember Fear is greater than greed. That’s why things take longer to go up than down. next 18 onths should be ugly for in over their head homeowners.
Do NOT buy a house with a risky mortgage scheme the RE industry is pushing. It’s your risk and life.
This corrupt industry will be in turmoil for years to come. Class action lawsuits going to be flying every which way. From builders realtors appraisors to Mtg Brokers.
It’s going to be ugly.
Kick back observe and learn.
Anonymous’s: Most of the people who bought homes or thinking of buying homes using IO/exotic loans aren’t the people who are reading these forums. The people who are reading this forums are cost-conscious watchers/buyers who are eager to purchase a home at ‘the right price’. The price that is based on years of fundamental research based on economic factors such as incomes.
The sad truth is, only a fraction of the population does the research to determine that something is wrong in the valuation of homes. The other huge percentage is made up of ‘herds’ of people who all follow eachother because they see it on the news/TV.
It all has to do with marketing. If you market a bad product the right way, it will sell a hundred times more than a superior product that isn’t marketed at all.
-Richie
The Newark-Union, NJ-PA follows close behind with a risk index of 365.
I really believe my area has to be part of this higher risk index (border of Bucks/Montgomery counties in PA). In the graph, PA looks lower risk than many other states, but I think suburban Philly is much higher.
For those who are a bit unclear on how these areas are broken down for statistical purposes, please see:
Wikipedia NY/NJ Metro Divisions
I just came across it this morning, it’s a very good definition of the areas.
grim
Originally posted this on another thread. It was meant for this thread.
” I’m in process of buying a townhome in Nutley.
The bad: All the “crash” talk flying around gives me agita. It is a bit confusing since I neither have a crystal ball nor the economic-forecasting chops.
The good: We are going doing it the old-fashioned way – 20% down, 30-yr loan and intend to stay there for a while.
For the armchair economists on this board: what do you’ll make of the school of thought that says prices may soften or go down some but after each such cycle the plateau is raised, i.e., prices don’t revert to previous levels.
A recent NY times magazine article said NJ will be the first state in the country to be fully built out within the next few years. It also mentioned that Europeans live in smaller houses and pay a lot more for it and that US may be headed in the same direction.
Also, isn’t NNJ heavily dependent on NYC’s economy? If the NYC job market is booming would prices drop even if the bubble bursts in places like Miami? Conversely, if NYC suffers economic downturn how badly would it hurt RE in this area, all other things being equal?
Again, these aren’t my opinions. I’m just interested in what the pundits on this board have to say.”
This may be of interest of some readers here –
http://money.cnn.com/2006/01/19/real_estate/homestrategies_money_0602/index.htm?cnn=yes