From the Express Times:
Meeting with a mix of resignation and disbelief in the Legislature, state Treasurer Bradley Abelow said Thursday an erosion in tax collections means New Jersey’s deficit has grown by about $500 million.
The revised collection figures would mean Corzine is heading into next year with a $5 billion hole in his budget.
“The governor has directed us to find additional cost savings measures,” Abelow said in an afternoon briefing given to reporters. “Literally, we’re still opening envelopes, depositing checks and counting.”
According to Treasury officials, collections of the Corporate Business Tax fell $150 million to $175 million short of budgeted projections while income tax revenue was down about $300 million to $10.5 billion.
While he did not give specifics, Abelow said sales tax collections were on track.
Higher property taxes on the way again.
I know I know house prices are immune to higher interest rates ,higher property taxes ,higher energy cost, stagnant incomes, exodus of people leaving the state, higher health insurance, affordability at record lows and just about anything you can think of.
their is no place else to go to
except the home owner.
and many of the pensions and pay
increases for public workers.
mandated by law.
nj taxpayers continue to take it in the shorts.
you aint seen nothing yet.
we need to see some convictions!
Petillo, previous head of UMDNJ walked away with a 600K severence package even after all the allegations were made public… Pre-K school funding program was a big scam that bilked millions from tax payers. Maybe its time to start axing worthless agencies and overlaps… we need to see people get arrested.. although tax payers will be paying for the lawyers of course..
We’re screwed if we do, and screwed if we don’t.
NJ state and local governments need to be synergized to bring cost savings. how long can this joke of a system last?
check out this articl about boston RE. Grim I think you should link this on the main screen.
40% decline
http://business.bostonherald.com/realestateNews/view.bg?articleid=137808
-K
Grim
on 2020 tonight
Buyers Take Risks in Overheated Markets
http://abcnews.go.com/2020/story?id=1923550&page=1
-K
media vacillating between two real estate industry spin moves
1. soft landing
2. buyer’s market
it’s neither. there is no advantage to buying right now, and the public is catching on despite the spin.
by the end of the summer, watch for realtors and MSM screaming panic just to get sellers to cut prices. realtors can only goso long without a sale
the market is still healthy right now. people here continue to predict doom and gloom right around the corner. until i see blood in the streets things are looking okay right now.
cutting asking prices means nothing, it’s the end sale price and doing compares to prior similar houses sold is the barometer that should be used.
“New Jersey native Jay Lutz didn’t think so when he and his wife purchased a condo unit in Delray Beach’s Pineapple Grove Village that he never planned to move into”
While NJ itself (except for the shore & gold coast) has not seen the same level of rampant speculation as places like Florida, NJ & NY are major sources of the money that has fueled the Florida condo boom. Much of this comes from home equity extractions. If Florida goes down, this will be a major problem in NJ. I suspect some flippers may need to sell their NJ homes to cover the speculative condo purchases in Florida (that is they have enough of an equity cushion).
Richard,
I follow Westchester, so maybe things are different there than in NNJ. In Westchester, 2006 1st quarter sales of single family homes were down to their 1st quarter 2003 level. Admittedly, this is still a decent number, but it’s well below the last 2 yrs.
Inventory of SFH was up 38% YoY at the end of the 1st quarter (condos up 81%). This is the highest level since 1998 and it continues to grow every week.
So while I agree that the market isn’t quite dead yet, there has been a massive shift during the past 6 months or so. The market is very different than it was in early 2005, and it seems to be weakening further every month.
The persistance of ridiculous asking prices tells me that there is still a lot of denial around. I agree that the final selling price is what counts, and we are already seeing the majority of homes selling below asking.
Still, asking prices are not totally meaningless, and I am sure that these ridiculous asking prices are keeping a lot of would be buyers from even looking.
Sellers can’t delude themselves forever if they’re serious about selling. Checking the listings this morning, I was pretty surprised at the number of “new price” “bargain shoppers welcome” and “make us an offer” pitches in the ads. I didn’t see anything like this even a month ago. We are at peak selling season right now, and if sellers feel like they lack leverage now, imagine how they will feel in August or September.
skep-tic: Just for an argument sake. (Although, I do believe prices are too high).
Selling is actually more important only to folks who have,
1. Bought other place (upgrade or downgrde)
2. Are planning to move out of NJ
3. Investment property that they want to make profit
What I see is that many folks are not in these situation. Many are just listing to see if they can sell at high prices. And if they are able to sell, then they will think of either moving or downgrade or renting.
Is it possible that though inventory has gone up, but majority sellers are not desparate. In that case, they will just pull house from market if not sold.
:::thinking of moving out of Jersey:::
“Is it possible that though inventory has gone up, but majority sellers are not desparate. In that case, they will just pull house from market if not sold.”
I am sure there are some people out there who are just “testing the waters,” but it’s a major pain in the *ss to put your house for sale. You got to keep it spotless, vacate it on the weekend for open houses, and you’ve also got to look for another place to live. So while I’m sure there are a few of these types in the mix, I would be shocked if they turn out to be a large percentage.
Building inventory is better explained by the exit of flippers from the market, new construction coming on line, adjusting ARMs, and changing demographics (i.e., aging baby boomers looking to downsize).
Flippers may be purged from the market relatively rapidly this year, but the other factors are increasing in importance. Builders are still building like crazy. ARM payment shock is only going to get worse next year. Finally, the demographics train is just getting started. Rapidly increasing property taxes should only fuel the incentive for long time homeowners to downsize
Time..
Time..
Time..
Seems like many readers here think this is going to play out in a matter of days or weeks.
That isn’t the case, the time scale we need to keep in mind is one set in months, if not years.
We’re only half a year past what I called the top of the market.
http://www.youdovoodoo.com/80sbubble.htm
And if we look back at the last downturn, we’re currently somewhere around 1998 or 1989.
Will it play out faster or slower this time. History rhymes, it doesn’t repeat.
Shailesh Gala,
Good points, but you need to add:
4. Bought a place and realized you can’t really afford it.
Many buyers used riskier mortgages just to get into the game. They assumed that their home value would keep going up, so refinancing would always be an option. With rising interest rates, ARMs resetting, I/O and Option-ARM teaser periods expiring, many are realizing (or will soon realize) that they can’t afford to make the mortgage payments on “their” (actually the bank’s) house.
Even outside of risky mortgages, people still lose jobs and need to sell. Others simple won’t be able to cope with rising property taxes and rising energy costs.
You are right though, many people will just hold on. This is why an RE bubble burst is a long and painful process.
I agree with Grim….patience my friends. This will take awhile to play out. Real Estate is not the same as a stock which could “correct” much more rapidly….
Housing Bust…
Ba ba ba ba ba ba ba BOYCOTT HOUSES!
Remember how you were treated during the bubble?
In a few more months sellers and realtors will be kissing your feet for any bid.
Bid 25% less and walk away.
BOOOOOOOOOOOYAAAAAAAAAAAA
Bob
No MAAS!
Just Say “NO” to RIPOFF house prices.
Ba ba ba ba ba ba BOYCOTT HOUSES!
Seller arrogance turned into denial leading to our next phase Pa pa pa pa pa PANIC!
BOOOOOOOOYAAAAAAAAAA
Bob
i agree with most that we’re passing (or have passed) the peak of real estate prices for the next few years. i don’t believe we’ll see 30-40% drops in prices during this time either. most likely prices stagnate to go slightly downward (~5%) for a year or two before stabilizing. add in inflation eating away at the $ value and you’re looking at an inflation adjusted drop of ~15% in a few years time IMO.
i think much of this has to do with the health of the overall economy, if job and income growth continue to post decent gains then house prices won’t slide as much as if this didn’t happen. as it was in the late 80’s/early 90’s it’s ultimately going to be about the quality and quantity of jobs.
Richard-
sort of agree, but not really. i say go back to 2000-2002 prices add in inflation (3-5%) multiply by the # of yrs from then until now.
back of the envelope calc’s
2001-2006 price increase
something like 4% x 5 yrs = 20% increase
example base 2001 price = 250
current 2006 price = 500
more realistic price = 250 x 1.2 = 300 (give or take few grand)
difference = 500-300=200
% decline possible = 1-300/500= -40%
Even if you you through in a few more percentage points for dollar devaluation, etc., it’s more like a 20-30% decline in prices based on more historical pricing…
yes, bob, i do remember when the realtors were shoving overpriced crap down my throat…those very same elite are now inundating me with phone calls and emails… thankfully there are delete buttons.
In any event, I don’t think there is any formula that can accurately predict the outcome here. There are too many variables. It’s simply a tide and time situation.
In the meanwhile, I’ve removed myself from the RE market equation and will just watch and wait…
“i think much of this has to do with the health of the overall economy, if job and income growth continue to post decent gains then house prices won’t slide as much…”
The problem with this logic is that housing has largely BECOME the economy. They are inseparable at this point. Most new “good” jobs in NJ have come from construction and other RE related fields (agents, brokers, lenders etc.). If RE simply stagnates, the economy is in trouble. Many in RE related fields will lose their jobs, which are dependant on unsustainable growth. Additionally, the use of home equity extraction to fund consumption will slow significantly. The savings rate can not stay negative forever. Also, with $8.6 trillion in outstanding mortgage debt in the U.S., a significant portion of future income will go to meet debt service.
South NJ MLS 4660689. This seems to be on way to be listing with record number of reductions.
Flipper bought this on 03/15/2005 for 254,000 from the earlier owner who bought new in 2004 for 197,654.
01/11/2006 310,000
02/23/2006 299,900
03/13/2006 294,900
03/27/2006 292,900
03/30/2006 292,000
04/21/2006 291,900
04/28/2006 291,000
05/05/2006 289,900
“In the meanwhile, I’ve removed myself from the RE market equation and will just watch and wait.”
A good plan, I think. Otherwise it’s just a constant drain to look at crappy houses that are over-priced. Even if you can afford the price, who wants to live in a crappy house that’s also dropping in value every month?
In 12-18 months, it will be time to start looking. Until then, it’s fun to watch the interest payments from the bank each month.
For those who think that prices will just level off and then start increasing again – to this I ask you – where is this new influx of money going to come from? In ten years, the boomers are going to be in one small house or checking out, and they wont be taking their houses with them. Were talking a huge constant stream of supply coming on the market. From where – the govt? Last I checked, we have trillions of entitlements coming down the pike that no politician wants to cut. No money there. How about the taxpayers? Well, the govt is going to have to get the money to buy their votes from somewhere, so the taxpayer wont have it either.
In short, I see a crash coming on, and then a long slow bleed or stagnation, kind of like what we’ve seen in Japan for the last 15 years. To move this behemoth housing market up after the crash is going to take a huge influx of capital. Capital that wont exist anywhere.
If RE simply stagnates, the economy is in trouble. Many in RE related fields will lose their jobs, which are dependant on unsustainable growth.
This is largely true. RE has been the engine in the US economy since 2001 providing a lot of jobs. However, in the best case scenario, the rest of the economy has finally picked up and become strong enough so it can absorb all those RE agents, brokers and construction workers.
Of course, it cannot absorb all RE workers, but at least it should be able to smoothen the effects of RE bust.
I’m a renter and I hope and believe that there is a price decline (~30% in real terms in 4 years) but at the same time I hope the economy won’t crash (I don’t want to lose my job).
Anon 3:28pm
I believe you will be right on the money with your rational forecast.
“The savings rate can not stay negative forever
true, but it can stay negative for alot longer than you might think. as long as our foreign central banks continue to drive their export driven economies by lending us ever more money, the show will go on. of course the ending is disasterous, but that may be a slow decline that takes decades to achieve. in the meantime like a drug addict we as a nation continue to live off cheap and easy credit provided by our own central bank and others as asset bubbles continue to expand. if real estate truly takes a big nose dive i think we’ll all have bigger things to worry about. this isn’t the early 90’s when so much of the economy wasn’t driven by RE.
Richard,
I haven’t done the math, so this is just an off-the-cuff, but I believe that the personal savings rate returning to historical levels (lets say 6%) would have more of an impact on our economy (GDP) than the real estate bubble collapsing.
Keep your eye on the personal savings rate. Yes, it’s bad that it’s down, but if that starts to swing upward before the economy can compensate, we’re in a world of trouble.
While I don’t believe the Fed would cut rates to protect housing, they’ll certainly do it when they see the savings rate jump up.
grim