From the National Association of Realtors:
April Year-over-year Sales – Unadjusted
Nationwide -10.1%
Northeast -7.1%
Midwest -8.5%
South -7.7%
West -17.9%
Median Sales Price Changes
Nationwide 4.2%
Northeast 5.6%
Midwest -1.2%
South 3.4%
West 4.8%
Inventory is up a staggering 36.7% year-over-year. Current supply stands at 6 months, up 7.1% from last month.
April Year-over-year Sales (Condo/Coop Only) – Unadjusted
Nationwide -11.7%
Northeast -7.7%
Midwest -7.1%
South -16.7%
West -15.4%
Median Sales Price Changes (Condo/Coop Only)
Nationwide -0.2%
Northeast 3.7%
Midwest 5.2%
South -5.2%
West -6.8%
Condo/Coop inventory is up 62.2% year-over-year. Current supply stands at 7.1 months, up 2.9% from last month.
From Bloomberg:
U.S. April Home Resales Fall 2% to 6.76 Million Rate
Sales of previously-owned homes in the U.S. fell last month, reinforcing expectations that a slowdown in housing will help cool economic growth this year.
Home purchases fell 2 percent in April to an annual rate of 6.76 million from 6.9 million in March, the National Association of Realtors said today in Washington. Compared with a year earlier, sales fell 5.7 percent.
…
Economists expected existing home sales to fall to a 6.75 million rate from an initially reported March rate of 6.92 million, according to the median of 57 forecasts in a Bloomberg News survey. Estimates ranged from 6.4 million to 6.95 million.
Since Condos are the proverbial canaries, here is the Condo/Coop report:
April Condo/Coop Existing Sales
Sales (YOY)
Nationwide -6.3%
Northeast -2.0%
Midwest 3.7%
South -13.5%
West -14.0%
Median Price (YOY)
Nationwide -0.2%
Northeast 3.7%
Midwest 5.2%
South -5.2%
West -6.8%
I don’t think there is very much positive news in this release at all.
I’m wondering if it’s even possible to spin this.
April existing home sales fall 2 percent
The Realtors’ chief economist David Lereah said higher mortgage rates were affecting buyers’ ability to afford homes.
“Right now, the numbers we are seeing are soft-landing numbers,” Lereah said. However, he said the housing industry was closely watching the growing inventory of homes for sale.
There were a record 3.38 million homes for sale in April, representing a six-month supply, the highest since a 6.4 months’ supply in January 1998. The inventory in March stood at an upwardly revised 5.6 months’ worth, the trade group said.
Why didn’t Lereah pointed out this possibility 1 year ago ???? It was pretty evident since Fed started raising rates.
Also, I feel the Headlines always try to project either lower number or estimated number comparison. For e.g. in earlier news they projected 5% increase, but that is not actual number, increase to Projected number, which was reduced earlier. Why not just report plain YOY numbers !!!
Thanks for the news, the reaction to it over the next few days should be interesting.
How long do you think it will be before price goes negitive YOY (May/June/July)?
Good…I was getting sick of Real Estate being the flavor of the week for the past 5 years.
I don’t think there is very much positive news in this release at all.
Usually NAR plasters these press releases across their home page. Today I had to actually look for it.
I’m wondering if it’s even possible to spin this.
It is getting tougher, but hey… this is the NAR and where there is a will, there is a way.
“Higher interest rates are slowing home sales, but we see this as another sign of a soft landing for the housing sector which remains at historically high levels.”
After five years of booming sales, we are now experiencing normal market conditions across most of the country,” said Stevens, senior vice president of NRT Inc. “Inventories levels have come up to balanced levels between home buyers and sellers, so the pressure has come off of home prices and most owners can expect steadier gains in home values for the foreseeable future.”
Grim, the numbers you posted are seasonally adjusted numbers. The actually (still flawed) YOY % change in sales are as follows:
Northeast – down 7.1%
Midwest – down 8.5%
South – down 7.7%
West – down 17.9%
Overall – down 10.1%
I think these are more relevant and definately show a more disturbing trend.
question on inventory –
are we seeing unprecedented numbers as far as inventory goes? obviously sales and price were unprecedented the recent years but as far as inventory goes I was wondering if anybody had any data showing how significant the numbers are. how do they compare with the last bubble burst? are we approaching those numbers? are we there already?
thanks!
Gluts & Gluts Of Inventory Piling up on GSML listings and FSBO
May 25 —– 29,747
May 23 —– 29,626
May18 —– 29,260
May 4 —– 28,209
April 12 —- 26,582
March 6 —– 24,111
The 30,000 mark celebration anyday now ANY DAY NOW!
Bababababa
Boycott Bidding!
Bob
Heard of this saying: “Don`t catch a falling knife”
This sounds similar to “Don`t buy in a falling home prices … you will end up paying a home with rapidly vanishing Equity on it !!!!!
Bet a surge in new listings after memorial weekend.
TOO LATE!
Party over.
Better swithc allegiance to Buyers Starving realtors. Things getting tough. Fight for substantially lower prices so you can buy pay your bills
STARVE!
Boycott BIDDING! NO BIDS!
Bob
US RESALE INVENTORIES
US resale inventory: in millions.
2.270..2003
2.224..2004
2.474..Apr. 2005
2.556..May 2005
2.678..June 2005
2.756..July 2005
2.841..Aug. 2005
2.772..Sept. 2005
2.868..Oct. 2005
2.924..Nov. 2005
2.846..Dec 2005
2.883..Jan. 2006
2.985..Feb. 2006
3.198..Mar. 2006
3.383..Apr. 2006
And the Cheeleader Learah says it’s a soft landing.
Deserving of a lynching by those underwater homeowners who purchased in 2005.
BOYCOTT BIDDING!
Make’em starve.
Bob
Yeah but every head line in yesterday’s papers were that NEW home sales had risen. There’s nary a mention of Existing home sales. That’s the spin. just don’t print it.
Does Mr. Lereah,and any of these other cheerleaders have a definition for a soft landing.
For all that will preach this as gospel, perhaps they will be able to point out past exmaples of soft landings that we have had (hint they dont exist)
Would a 20 or 25% haricut off prices be considered a so called soft landing after the madness of the last few years few years?
In my opinion oh yes and then some.
On another note inventory in my small town has doubled in 2 1/2 weeks, doubled, amazing stuff, but then for us Bears not surprising.
Drain Drain Drain those rediculous prices. Let the forclosures begin!
I’m a huge Bob fan! Boycott houses!!!!!!!!!!!!!
BTW, new tax rates are coming in soon. I’ll let those sellers starve a bit more before I even consider buying. I want realistic prices darn it!
-frustrated with Real Estate idiocy
to those who predict 40% declines…
how is this going to happen? i’m really having a hard time imagining it…
yes i’m sure all of us wish for it but what’s “still ridiculous” for some may be “reasonable enough” for others.
so it would be nice if 600k houses become 360k but I would imagine some people will be satisfied when it reaches 480, 460, 420?
in my mind it would take a “pause” in buying in order to see 40%. don’t know much about the last burst but it’s just hard to imagine that everyone would be willing sit tight and wait.
how will it happen in your estimation?
It can happen, for sure, in particular in high density areas, like NNJ, that have a lot of rental alternatives, or geographic alternatives with transportion.
Consumers with money have already purchased.
Those middle-income consumers who purchased during 2003-2005 probably paid way more than a safe ratio of their income. They’ll be in trouble at the least blip in their circumstances, increase in mtg., or increase in taxes.
So the house goes on the market.
Who is left to buy all these homes?
Maybe it is a good idea for real estate if the illegal aliens are made permanent/legal so there is a new pool of fools.
I don’t know about 40% either, unless it’s from total stagflation lasting a number of years. If a 600 house dropped to 500K or a little less, or a 750K house was 600K, I’d probably buy. See, I always expect to pay somewhat of a premium to live in the NYC area. I never think we’ll see the 4 bed/2.5 bath houses they sell for 150K in North Carolina and elsewhere. That’s fine with me. Value is always relative to where you live. I still think we’ll see a correction, but not as much as we’re hoping.
“to those who predict 40% declines… how is this going to happen? i’m really having a hard time imagining it…”
Why is it easy to imagine 100% price increases, but hard to imagine 40% price declines?
Speculators are already out (the smart ones anyway), prices are already declining, and the media is finally reporting that inventory is soaring and sales are down.
Watch the fun as July approaches and the time to register kids for school passes, and sellers get even more desperate.
anon12:02-
I would say a range of 10%-50% is very possible.
For example, let’s say a homeowner had bought 20 years ago for $100,000. If the market value of there house currently is $600K, then prices dramatically slip and someone comes along and offers them $360K, they still make money.
So I say the high end of the discount range will come from foreclosures, condos, homes bought many years before the bubble, people inheriting a property and just trying to get rid of it, and homes in bad areas that saw ridiculous run-ups in the last four years.
The low end of discounts from current market values would be “great” houses (this is part objective/part subjective) in top end neighborhoods that don’t see a lot of turnover no matter what the market is doing.
JM
“See, I always expect to pay somewhat of a premium to live in the NYC area.”
Why has NY City moved closer to Northern NJ in the last 5 years to warrant a 100% price increase?
I was under the impression that the real downward movement in pricing was going to come from foreclosures forcing down comparable sales values.
I don’t think that many of the current sellers can reduce the sales prices by that much due to the amount of debt that they are most likely carrying.
I could be completely off track though…
NjGal @ 12:12 PM
I don’t know about 40% either, unless it’s from total stagflation lasting a number of years. If a 600 house dropped to 500K or a little less, or a 750K house was 600K, I’d probably buy. See, I always expect to pay somewhat of a premium to live in the NYC area. I never think we’ll see the 4 bed/2.5 bath houses they sell for 150K in North Carolina and elsewhere. That’s fine with me. Value is always relative to where you live. I still think we’ll see a correction, but not as much as we’re hoping.
Its time for you to buy now … this is a premium good enough for you I guess.
A 40% real (inflation adjusted) drop in housing prices is very possible. Houses fell by 30% between 1989 – 1997 in NNJ last time around. Unless you bought at the peak needed to sell, many people didn’t realize it.
Take a $500k house in 2005
– Lets say it drops 12% in 2006 ($440k) (already down 10% in areas of NNJ)
– Assume it drops another 12% in 2007 ($387.2k)
– In 2008 it drops 5% as the market begins to stabilize ($367.8k)
– For the next 3 years the price doesn’t move ($367.8k)
Assume 3%/year inflation for the period, the house lost 40% of its real value.
“Why has NY City moved closer to Northern NJ in the last 5 years to warrant a 100% price increase?”
It hasn’t. I didn’t say that. I think 100% increases are insane. And I’m not a housing bull by any means, but to pretend that the NYC area is going to go to NC or Texas prices is crazy because it was still more expensive to live here than in those areas even during the 1990s crash. So I will continue to expect to pay somewhat of a premium over the national median to live in the area. That doesn’t mean I don’t think prices won’t drop.
NJGAL,
Houses in NNJ were already at a premium before the 100%+ price increases.
Even with a 40% haircut, a house that was $250k in 2000, doubled to $500k in 2005, and then backed down to $368k by 2011 (nominal$), will still be at a premium compared with the rest of the U.S. (even factoring in higher income) and will still have appriciation from 2000 levels that outpaces inplaftion, but is more in line with historic valuations
JM,
There are very few people who have purchased a home 20 years ago and never refinanced.
Also, buying foreclosures is RISKY – regardless of what price it is.
CNS
That 500K house will be in the 300″s long befor 2011, try 2007, if not sooner.
to those who predict 40% declines…
how is this going to happen? i’m really having a hard time imagining it…
yes i’m sure all of us wish for it but what’s “still ridiculous” for some may be “reasonable enough” for others.
so it would be nice if 600k houses become 360k but I would imagine some people will be satisfied when it reaches 480, 460, 420?
in my mind it would take a “pause” in buying in order to see 40%. don’t know much about the last burst but it’s just hard to imagine that everyone would be willing sit tight and wait.
how will it happen in your estimation?
Take a look here:
Amazon’s Stock Price
Amazon peaked just over $100/share right before 2000. About 6 months later, the price was $50/share. Was it a deal? Yes, compared to $100/share, but look what happens in 2002.
PS: Notice how their stock price has not recovered to it’s high, it’s already been 6 years.
There will always be a premium for the NYC metro area, but again the majority of people who line in NJ, work in NJ, and NJ is not creating well paying jobs. That premium will continue in my opinion to decline.
Rutgers Univ has had several reports out on this sobering news in the last 6 months or so.
Also high cost areas lead to job declines, north Jersey is no longer the attraction it used to be for companies as far as a relo area. The tax savings are just not there like they use to be.
Big corps are going to Syracuse NY, NC, Fla and Texas to name just a few.
NJ people have got to get away from this our proximity to NY will always save us;it is a whole new landscape out there.
“I think 100% increases are insane. And I’m not a housing bull by any means, but to pretend that the NYC area is going to go to NC or Texas prices is crazy…”
Well, I don’t think a single person here or elsewhere ever made such a statement that NJ/NY Metro prices would ever equal NC/Texas prices.
to move housing in
North Jersey.
Se habla Espanol
and be a gang member
i think the % drop will have alot to do with how the economy fares. if jobs are plentiful and people are getting good wage increases then there’s more money to spend on housing and hence prices can stay propped up more. however, if the economy slows like everyone is saying it will in the 2nd quarter and beyond, things will obviously be worse.
i don’t think it’s safe to assume 100% increases in 5 years could easily turn into 100% decreases in some like time. most of the buyers are in. if there are significant price drops most will stay put and let time/inflation catch them up. the only other alternative is to take a loss (which might not be possible) or foreclosure (another bad option). so the idea that prices are sticky on the way down has some merit.
there’s also people ‘on the sidelines’ like njgal who will buy if prices come down say 10-15%. question is, how many pent up demand and at what price points is out there? my guess is not nearly as much as the media would have you believe.
so what do i think? once we get through all the price gyrations of today and establish a more or less accepted price point (this is due to the fact that no one knows where to price their property but it’s becoming more clear), we’ll see flat to 10% drops through the next 18 months followed by flat prices for the next 24-36 months followed by increases in line with inflation, maybe slightly above. course all this depends on the economy.
forgot my summary. so i’m calling for an inflation adjusted 20-25% drop before recovery in the next 3 1/2 to 4 1/2 years.
“i don’t think it’s safe to assume 100% increases in 5 years could easily turn into 100% decreases in some like time. ”
I think its safe to assume we’re not going to see 100% decreases anytime :-)
richie –
thanks for the response to my question. however, i find it hard to compare the “forthcoming collapse” in housing to what happened with tech stocks.
for one thing, a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. meanwhile, i don’t think amazon.com or pets.com stocks are on a lot of people’s priority list.
“a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. meanwhile, i don’t think amazon.com or pets.com stocks are on a lot of people’s priority list.”
For those retiring in 2000/2001, those stocks were on their priority list, and they have no room to wait for a “rebound.”
I know I am diverting from subject but
Objectively, the time to buy is not when prices drop 10-15% from insane levels, but when NO ONE else wants to buy, and owners are screaming to get out.
Let’s see how 2007 looks.
100% declines?? wouldn’t that be 000,000.00 USD, yen, euro, etc.
nah, don’t think we’re going to see that either ;)
If a house goes up 100% in 5 years it takes only a 50% drop at the higher price to get back to initial starting price.
So $250k to $500k 100% gain but 50% takes back down to $250K.
Many of us are saying 35% falls.
so 500K to $325k correction.
Seems reasonable giving the l-t homeowner a reasonable profit WITHOUT RIPPING OFF NEW HOMEOWNERS
babababababa
BOYCOTT BIDDING!
NO BIDS NO MAAS STARVE!
Bob
CNS-
I actually looked at a house (on a beautiful block by the way). It was inherited from parents about 20+ years ago. Very well built, but absolutely nothing updated. I checked records (I have access to that stuff at work.) and no outstanding financing.
Guess what he wanted…$600K and comparables were in the 400s and it needed at least $150K in work…
He was looking to cash out for his retirement.
I think there are plenty of people who bought and did not go crazy with 2nd mortgages or HELOs/HELOCs. Those are the ones that can take a big drop and still make plenty of money.
As for foreclosures, yes, it can be riskier, but it’s no riskier than buying any house with out a good inspection. Plenty of those buyers were out there the last few years. Some realtors will work with you on finding these properties and I’ve helped renovate a number of foreclosures and you usually don’t end up with that much more work than you normally would on an older home.
JM
Richard, I have a lot of friends on the sidelines like me, all professional couples. We have all decided to at least wait it out until the fall, to see where things go. That doesn’t necessarily mean any of us will buy then. If we start seeing prices come down enough over the summer, there’s a good chance we’ll all wait it out a bit more. So the time spent on the sidelines can’t necessarily be measured by % drops – I’m going more on psychology and if I feel like by the fall there’s a panicky environment, higher (and growing) inventory, I will remain on the sidelines for a bit longer.
A 15% drop, however, would be decent for me – my husband and I hate to move, so we’re looking to be in our place for at least 10 years, if indeed we don’t find our “forever” house right away (we’re still hopeful!). Of course, i understand sometimes life changes things, but that’s the plan we have now.
richard: we are not getting the wage gains on a whole, pretty flat over the last few years. As far as jobs in NJ?, that is not happening either, number on employment opportunity in the state so far this year, was restaurant workers.
The Bergen Record had a silly article (silly paper to begin with), regarding employment opportunities. On the front page of their business section, they had a picture of a local diner, who they were happy to report were hiring, and this was the lead in example for their story.
NJ = NO JOBS
at what point do they begin to throw in the towel.
the bergen record.
se habla espanol
commie rag
I think all these predictions of declines may happen, but I don’t think one should count on them only. The market will correct itself, but at the same time, the Demand is growing.
I personally feel, if we all are facing difficulty in buying an house at today’s prices, we should make political campaign out of it and let legislators know about these issues. Every group that faces issue, raises awareness about it. Even in housing, Homeowners are lobbying hard for Property Tax reduction. Then Why folks who can’t afford to buy a house, complain about it to Legislators ??? After all Housing is important component, and Govt has lot to do with it.
Using following link, I just sent email to Governer’s office to take some action about House affordability issue. If you agree, please do the same.
Working Families Need Affordable Housing.
Contact Governor Corzine today
I believe firmly, in Democracy, if we are all facing a major issue, there is nothing wrong in creating awareness about it.
in trenton you really dont think they are going to listen to taxpayers do you.??
come on ,, New Jersey is gone
No Mass,,,se habla espanol
send emails to the gov. and
your rep. see what they tell you.
good luck..
its the give away programs that
have bk’ed the state.
and it continues,,, all the money goes to intercities, and the give aways…
njgal, i know it seems you know alot of people waiting on the sidelines to buy, but in terms of overall supply do you think the fence sitters will be able to sop up 30k+ houses anytime soon? no way. it’s all about affordability, and if the state isn’t creating high wage jobs prices can’t stay where they are. all the smug homeowners and liars at the NAR think you can maintain a level of prices without the underlying fundamentals (affordability) to support it. makes me laugh.
pesche22: I understand lack of trust in Trenton.
But, I think, at the least we owe it to ourself to raise awareness about this issue. If we don’t do it, who else will.
Personally, I think Governer Corzine is in much better condition then others. Affordable Housing was in one of his 6 main issues listed while running. McGreevy, never even talked about the issue.
Finally, if there is large number of NJ residents facing the same issue, Politicians will have to listen. It may take time, but we are the ones who need to take first step.
Shailesh –
Can you help us find something similar for property taxes?
Richard, no way will the fencesitters be able to grab all the extra inventory – that’s why inventory, more so than interest rates, is my main concern. Besides, I may not even buy in NJ, and some of my fencesitting friends are looking in NY, so I think the fencesitters are spread out over the tri-state area, which may make us a non-entity after all.
grim:
I know the First Amendment and all, but if you continue to allow off-color comments relating race, ethnicity etc. I ain’t going to be hanging here.
Booooyaaaaaaa as they say.
chicago
Shailesh don’t waste your time arguing with pesche22 — he’s a racist nitwit with a victimization complex bigger than the Empire State Building.
The problem is that a lot of the inventory is still grossly overpriced. Fortunately, most buyers are too cautious to fall for that anymore.
At this point, something has to give. Whether its sellers or buyers.
Could we see 40% declines ? Not without a dramatic slowdown in the economy.
I’m not trying to be a smart-ass but if we don’t see 40% declines, rather 10-20% would that still be considered a collapse?
where do you draw the line between slowdown/correction and collapse/bubble burst?
while pesche might be a racist i don’t see anything wrong with his statement that a good chunk of tax dollars are going to supporting the poorer neighborhoods. it’s a fact folks and it’s a problem. this is why essex county is in the predicament they’re in and morris isn’t. it’s worthy of a discussion instead of angry diatribes.
richard: You may be right, that’s the system NJ citizens have chosen by electing representatives. To some extent, NJ remains largely segragated economically. There are Rich towns with small population and hence legislators & Poor towns with more legislators. That will result in pro poor town Policies. The larger the discrepancies, you will see large difference of opinion.
My take is, Rich towns should not be so much up-tight. They should allow middle class to come in by allowing development of small Single Family houses. That will give them more clout in state level policy making.
Everyone in this world wants to move up the value chain. Poor wants to move to better house, similar to middle class needing to move up as well. The situation in NJ is where upward mobility is restricted, and hence you create more segregated society.
BTW: I agree no one should make racist offensive remarks.
“where do you draw the line between slowdown / correction and collapse / bubble burst?”
Probably where houses start selling below their inherent value (not what some Greater Fool would pay, but following a long term value trend).
while pesche might be a racist i don’t see anything wrong with his statement that a good chunk of tax dollars are going to supporting the poorer neighborhoods. it’s a fact folks and it’s a problem. this is why essex county is in the predicament they’re in and morris isn’t. it’s worthy of a discussion instead of angry diatribes.
Fine, its worthy of a discussion, but pesche22 isn’t giving us a discussion here or earlier, just rants (quite often ignortant rants) against everyone — immigrants, Hispanics etc. that suits his bigoted mind.
And while taxes are a legitimate topic for discussion, what does that have to with rising housing prices, which s the main purpose of this blog ?
Shailesh, you have an unusual way of looking at the world.
There is no class warfare, and people from lower income areas are not held down by anyone but themselves.
I put myself through college, thanks to federal loans, grants, and scholarships, and the key: hard work.
People unwilling to work hard, are not entitled to anything in my view.
America is the land of opportunity, for those willing to work hard to achieve success. It’s not the land of entitlement and handout, though some would like to make it that way.
JM,
Sorry for the delayed response.
I believe you about the house that you saw. One soft issue that you have to think about is leverage in negotiations. The homeowner asking for $600K probably did not have any pressures to sell. He must have thought he could name his price. Bad assumption and poor tactics. Even in a seller’s market, the seller must respect the buyer (and vice versa of course).
When I referred to buying foreclosures, I meant people who are so bent on “getting a deal”, that they take cash/cashier’s check to a Sheriff’s auction and bid on the houses there. A novice will never know the risks involved in this. Buying pre-foreclosures from realtors is okay but the “deal” isn’t as great, buying pre-foreclosures from banks takes a little more knowledge and a little more risk.
CNS
Incidentally, even most rich towns in NJ typically have some cheaper houses. I’ve seen houses in Milburn that were 400 – 450 K. Not great houses, but certainly livable.
However, I do agree that the trend in some towns to tear down cheaper housing and replace with McMansions is reducing the stock of cheaper housing drastically.
“buying pre-foreclosures from banks takes a little more knowledge and a little more risk.”
Ever see that show “Flip This House”?
Great show, they buy houses on the courthouse steps, and have 50 people fix them up in 10 days, and do it over again every 10 days.
Great show.
Here’s the website/TV schedule:
http://www.aetv.com/flip_this_house/
Sometimes the lose money, but they target houses, and have access to all sorts of data, and even have an in-house realtor to perform research and before, and sales after.
The owner is LOADED.
Good night.
To all those starving realtors and desperate sellers you’ll need a good sleep. Maybe a few cocktails will help the misery.
Boycott BIDDING!
NO Bids NO MAAS
Cheers
Bob
Median sales price still increased over 5% in the Northeast – that’s not so bad, so why is everyone on here so happy?
se habla espanol
secure the borders
no amnesty
aggressive deportation
no benefits
no work
english first
no birthright citizenship
Excuse me,, Most Americans fell that way.
We are being sold down the river
Anon 1:34:
“a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. ”
I hear a lot of this kind of statement – as if there are lots of buyers just refusing to hand over their cash. The OK Corral of housing – the great stand off. Truth is – most people are just priced out. The average hardworking professional makes between 40 – 70k a year. For a young couple, especially one with young kids, a house is just out of the question.
There is no game here. They won’t buy “eventually”. They will buy when they can afford it – when the prices drop.
I’m with Chicagofinance.
Enough with the racism.
Unrealtor – your comments are also offensive. There are lots of people working full time for peanuts, $250 a week for a full 40 hours, maybe they can bring in $24 thousand a year working two jobs.
Poor does not necessarily equate with lazy.
how bout illegals being
granted Social Security
Illegals are being rewarded
for criminal behavior,
and our tax dollars pay for it
thats what it has to do with
taxes and the price of housing.
HOw about if we begin to
develop bird flu,, where do you think it will be : Summit, Chatham
Westfield,,,
No : Paterson, Elizabeth, Camden
Trenton..
And of course that will overtake the
already burdened Healthcare systme.
Suggest you buy som Asian Flu
type stocks.,,,
want some symbols?
whenever people tell the
truth,, people love to
cry Racism,,
thats over,,,
I think most americans
have had enough..
And of course many of us
watch to much CNN, Fox
and believe the crap
that we are being fed.
how bout illegals being
granted Social Security
They don’t. .
thats what it has to do with
taxes and the price of housing.
It has nothing to do with the price of housing.
HOw about if we begin to
develop bird flu,, where do you think it will be : Summit, Chatham
Westfield,,,No : Paterson, Elizabeth, Camden
Trenton..
1) Firstly, the large majority of people in those towns aren’t even immigrants. Your problem seems to be people who aren’t white.
2) Lets see how many hypotheticals there are. If we develop bird flu, it will be in city x, city y ? What are you ? An epidemiologist ? A doctor ? No, just a pathetic loser. Why should your word possess any credibility ?
And you haven’t been telling the truth, pesche22. And you seem to be incapable of distinguishing between illegal and legal immigrants, or with people who aren’t even immigrants.
Lets face it — you have a huge victim complex and you blame others for your own pathetic failures.
“Unrealtor – your comments are also offensive.”
LOL, Shailesh claims people in lower income towns are ‘held down by the man’ and I responded with facts (my own experience in this case) that prove he is wrong.
And I never said or implied “poor equals lazy” but to anyone who has ever been in Newark it will be obvious that there are reams of lazy people who do not pick up garbage on their own lawns, clean up the street, remove painted graffiti from the walls, etc, etc.
There’s “stereotyping” and then there’s generality based on fact — I’m not stereotyping.
I don’t know what you call people who leave garbage on their lawn, but I call them lazy.
my my have we developed
a little hysteria
tell a little truth
and the libs go wild.
watch as nj continues to
its slow fall.
would you like those
housing stock symbols
to short, so you can at least make some cash?
or would you rather continue
to watch as the world goes by.
never confuse brains with the truth.
and buy some gold as inflation
continues to devalue the dollar.
keep talking and ill give you a little education.
tell a little truth
and the libs go wild.
I’m not a lib, but in any case, you have been telling lies. Using incoherent English, no less.
would you like those
housing stock symbols
to short, so you can at least make some cash?
I’ve plenty of cash, thanks.
never confuse brains with the truth.
Well, you seem to have neither.
libs have a nasty road to
navigate on.
no maassss
se habla espanol
and buy some silver
boy oh boy this is some
soapbox.
you could start a trend
just for transparency
i live in a housing
project and collect
ssi, welfare, food stamps
and have a driver take me to the doctor.
and dont forget the emerging
markets.
china, brazil,, austria, mexico
and dont forget the emerging
markets.china, brazil,, austria, mexico
a) You can’t even write a coherent sentence. Not surprising.
b) Since when did Austria become an emerging market
c) What does this have to do with the price of housing ?
Wow!
Now buying in Summit will not only give you an exclusive zip code, it will also automatically provide you with complete immunity to all communicable disease!
Now THAT is worth a $200k premium!
now thats what your paying for
now you got it.
austria,,,, emerging market..
great money maker
buy some euros
housing , great investment in
new jersey.
however,,,, buy low sell high
now you do that in trenton,
camden,,, newark, (but you got to be on the inside) paterson
fixers
dont forget linden,,, dover
great rental markets.
regarding the depth of housing price declines, we’ll see a Fibonacci retracement on prices before it’s over.
that is correct
and dont forget the mexican
cement company that is consolidating our domestic market.
already made about 12 deals.
go long eww and short the dollar
yo,
grim ghost
,,,,,
where you go HOmes
dropped your grills?
or watching MTV
Here is my two cents.
To all bloggers who think there will be a correction (read reduction) of prices in the range of 40% or more to bring the housing market to normal sustainable level, don’t bet on it. In reality only 20-23% correction spread over two year period is all required. Here is my theory
Assuming a nice 2000 sf colonial in a decent town was worth $360,000 in North Jersey in the not so distant year of 1998. This same house is / was worth $700,000 at the peak of the market (i.e. summer of 2005). Not far fetched scenario.
Assuming we had a normal housing market where real estate appreciates just ahead of inflation and in pace with median wage increases or about 5% a year. In year 2005 same house would be worth $506,556 (using 5% appreciation rate). Add another two years of appreciation; the same house would be worth $558,472 in Year 2007.
Now watch this.
A price reduction of modest 8% from the peak market of 2005 (from the bubble price of $700,000) would make the same house worth $ 636,364 in summer of 2006.
Another more robust reduction of 15 % from the 2006 price (after reality sinks in for in- denial sellers) would make the same house worth $ 563,607 in summer of 2006.
Now compare this $563,607 price to the would have been normal price of $558,472, it is a virtual match.
My opinion the market will stabilize at the end of 2007 based my humble analysis. I am not a financial analyst and not a realtor for that matter, but have an advanced degree in engineering, so (I may say ) know how to add or subtract (no big deal).
Note I posted this message a while ago, I thought it still has some relevance to the discussion on this thread.
Cliffy
Hi Cliffy
A friend of mine owns a 200 year old house for which they initially paid $30. Do you want to now buy that house for .5 mil?
My point is that the 5% year over year increase does not apply to all houses.
Shailesh-
I really believe that the quickest, smartest, fairest way to get affordable housing back is to get rid of the funny money loans.
Can you imagine how cheap homes would be if we had to pay for them with cash?
Now check out the other end of the spectrum: how expensive can they get if all kinds of bizarre loans are available to any Tom, Dick or Harry who wants one?
Somewhere in between there is the happy medium where a person works hard, gets a reasonable loan that they can EXPECT to pay off in 20 years or so.
I am hoping that problems with Fanny Mae lead to a meltdown in the home loan industry.
I’m quite sure that the ONLY reason homes are so expensive is because of the loan standards right now.
Better standards would bring homes into line with incomes quickly, IMO.
Anon @ 9:53,
While you make a lot of good points, I want to clarify a couple of things. Fannie Mae is not responsible for the “funny loans” now in prevalence. By no means am I defending Fannie or its problems with accounting, but without Fannie Mae as an agency, your regular loans (the “unfunny” ones) are going to be LOT LOT LOT more expensive and hard to obtain. Be careful of what you wish for.
CNS
CNS:
There are other financial institutions that have already stepped up to fill the Fannie Mae void. Fannie Mae’s importance is overstated, and the public perception has been warped by an effective marketing campaign waged by the company for the last 10 years. It’s a hollow claim.
chicago
Chicago,
Yes and no. I agree with you that other financial institutions seem to be able to step up and take the load.
But a lot goes on behind the scenes. For instance – the massive purchases of Fannie securities by FCB’s (Foreign Central Banks) over the last year or so that helped Fannie reduce the size of her retained loan portfolio significantly. This “bailout operation” was obviously planned (at least a little) by the Fed. The Fed could not have done this if Fannie wasn’t a quasi-government agency.
CNS
Cliffy,
Your calculation brought a good point to consider. However, I do think that 5% is a bit on the high side. I would do with 3%, the average inflation during these years. With 3%, I got $442K, now the story could be different. (I have a MSEE :)
The price of townhouse in my area jumps from $240k (2002) to $400k (2005). If you tell me at 2002, that the price will jump that high, I still will not buy, since I think you are out of your mind. Now I am out of my mind, I still can’t believe this house worth that much. (2 beds, 2.5 bath, 1 garage).
For Westchester County, NY observations, see http://westchesterny.blogspot.com
anon @ 10:31 & Cliffy,
Inflation over the past few years has been MUCH more than 3 or 5%. The inflation stats release by the goverment are heavily doctored with substitutions, hedonistic assumptions etc
CNS
unrealtor,
What is your thought on this one?
mls# 2272625
Unrealtor: There is no class warfare, and people from lower income areas are not held down by anyone but themselves.
I put myself through college, thanks to federal loans, grants, and scholarships, and the key: hard work.
People unwilling to work hard, are not entitled to anything in my view.
America is the land of opportunity, for those willing to work hard to achieve success. It’s not the land of entitlement and handout, though some would like to make it that way.
I agree with you 100%. I am for Hardwork, and the things you mentioned earlier, I have done myself too.
You are looking at my approach as entitlement. In fact, I am totally against entitlement and subsidies.
My approach is not to ask for Govt to give money, but to ensure that correct policies are set. Current setup in NJ has resulted in wrong priorities. The towns are very restrictive in allowing development of homes with Kids. Also, as Metro explained earlier, Acts such as Highlands, promote building of McMansions over large tract of land at the cost of vast damage to environment. The high cost of living results in economic segregation, that causes imbalance.
For solving this issue, I am for Govt coming up with right policies to promote economic growth. The word affordable is not just for poor people. It is applicable for someone earning $100K as well. Family earning $100K can afford a house about $300K, with right policies more SFH can become available. This is not entitlement, it is just correction of policies. For e.g. In NJ it costs $80K in regulation alone for 1 house. If Govt reduces that cost, the house price will have effect.
Hi CNS,
Yes, I have the same “feeling” as yours. One gallon of milk went from $1.99 to $3.50. Gas went from $1.20 to $2.95, not to mention $4.00 last year. However, the government CPI does NOT count the jump in house price. They count on “owner’s equivalent rent”. I just have myself educated via this link: http://www.bls.gov/news.release/cpi.nr0.htm
I would say, historically, house price rises in pace with inflation, or slightly higher. Even if I take 10% inflation YOY between 2002 and 2005, that house would go from $240K to $320K. But not $400K!
Anon @ 11:15,
I agree. It is not just a feeling. The government has changed the way it calculates CPI over the years. to deliberately understate it. If you use the same formula as was used in the 70’s or 80’s, the true CPI would be calculated to be between 12% to 15%. Look up http://www.shadowstats.com for a good read on this.
CNS
State buys golf course to curtail development
Continuing a trend, the state’s Green Acres program today purchased the Cream Ridge Golf Course in Monmouth County for $10.5 million. The town of Upper Freehold paid an additional $3.5 million for an adjacent farm.
State officials said the course was struggling financially and in danger of being sold to developers for housing. Builders and environmentalists have raised concerns about whether such purchases are an appropriate use of the state’s dwindling open-space funds.
But John Watson, deputy commissioner at the state Department of Environmental Protection, said development posed an imminent threat to the course in a region dominated by farms. Western Monmouth County was once farm country, but many have turned over to large-lot subdivisions in recent years.
Before last year, the state owned just one golf course, a purchase that dated back decades to an altered reservoir project. But the 186-acre Cream Ridge purchase now brings the total to four, with the state’s Green Acres land acquisition program negotiating to buy three more.
Contributed by Steve Chambers
State buys golf course to curtail development
Cliffy and all,
Being a former engineer, I appreciate your numerical analysis, but I think we are missing a big point. Economic forecasting at some point requires a guess and trying to distill down future home price increase/decrease seems to be a big guess. In business school, I learned that all those fancy economic or financial models required a guess at some point. I thought it was funny that on the one hand, the experts would say, “Past performance does not indicate future performance,” but past performance is used as a starting point for a guess for the future in financial models. If the price of a home is the price someone is willing to pay, in some respects it will be dependent on human behavior in addition to supply/demand. Since most of us here feel that housing prices moved way out of line with fundamentals, what would be a reasonable guess for the future? Reversion to the mean? Thus, my bet is “big” change to get that. (In addition, to all the other contributing economic factors, higher interest rates, low real wage growth, falling dollar, higher energy prices, higher inflation…I believe the gov has been understating it) Whether this big change happans over the long or short term, I have no idea and I feel everyone else is “betting” too. I think I convinced my fiancee to wait on buying a house. (As others have said here before, there are a lot of expectations to buy a house as soon as you even announce your engagement!!)
Andy
BTW Grim, as a former road racer, I hope your race went well. You ever go out to T-Town? I went out there this April to sell all my old stuff for cash for savings @ the flea market
BTW Grim,
Thanks again for all your effort with this site. I am addicted to it. (Before I found it and others like it, I could not understand how so many people could “afford” homes!)
And thanks Everyone who comments on the site. I look forward each day to reading everyone’s comments, even famous Bob!
Andy
What do you think of MLS# 2614666?
And what is the deal with West NEw York in terms livability(crime, schools etc)
West New York
se habla espanol
and contact unrealtor
Andy –
Me too.
This is a great forum for all points of view.
If I read a far left opinion here, then a far right opinion, I go out and find “expert” articles, then come up with my own plan.
It has helped me to believe, at least, that herd emotional mentality is the most important factor in predicting where things are going. No matter the analysis and facts, I gotta stay out of the way of the thundering herd.
It reminds me of what an old neighbor told me [he played the horses AND the stock market when I was a little girl]. “Go the other way.”
New Jersey Real Estate Mogul- Solomon Dwek, 33 y.o. owns more than 350 properties arrested by the FBI !!!
The Jersey Shore Real Estate Bubble: List of Dwek Properties
Andy – I agree.
You pointed points such as, higher interest rates, low real wage growth, falling dollar, higher energy prices, higher inflation.
I feel all of the above change in Long term (3 to 5 years), they don’t happen overnight. By that time, you have demand increasing by people getting need for more housing. And I think hoping that prices will come donw 40% in next 3 years, is just that a Hope.
So instead on focusing things that we cannot control, I would rather like us to focus on things that we can control. We have few options, either wait, move out or try to influence the policy makers. There is real Demand/Supply issue in NJ to keep up with Population growth. This is one of the main reason why Prices in NJ goes by much higher percentage then for say PA or DE. If that was not the case, the prices should have gone up in all areas of the country same, as other factors such as Interest Rate are same all over USA.
There are lot of experts who have mentioned the over regulation aspect in NJ that restricts the supply. Hence, I feel the best course of action we all can take is raise awareness and ask Policy makers to debate this issue. After all they also need Citizens for Vote, Right.
“My approach is not to ask for Govt to give money, but to ensure that correct policies are set.”
This comment is subjective by definition, and further, many “policies” result in the government giving money away.
Don’t use New Jersey as a yardstick to measure policy throughout the United States.
New Jersey is a closed system that is run with an outdated structure, has moved beyond its origins, and has become this bastardized and bloated albatross. Hopefully, Corzine can find a way to blow it up and start over. If he has nay political courage and cares about his legacy, he will push for demolition and rebirth.
“I thought it was funny that on the one hand, the experts would say, “Past performance does not indicate future performance,” but past performance is used as a starting point for a guess for the future in financial models.”
Andy: Don’t compare apples and oranges. The quote is from marketing departments that have to be vetted by compliance and the prevention of litigation. Also, many investors’ idea of past performance is looking at year-2005 returns to make 1Q06 decisions. Obviously, as you learned, past performance IS an indicator, it is just necessary to look at long-term trends, data, and other relevant empirical evidence and analysis, and not some mutual fund company’s IRA advertisement.
chicago
chicagofinance: Agreed to some extent. I feel it is still in better interest of state to make itself grow economically.
I think with Corzine, there are many positive things. First he is not from old Political group, secondly he has Business mindset. I have had chance of being very up & close with many Senators & Congressman, and have witnessed Political wrenglings in Washington. Its Ugly. The influence that Lobbyist have is not understood by majority.
But at the same time, I feel, we have a system where we can influence many things. The most important of all is use of Media. The politicians listen if Media talks. If so many of us who live in NJ, earn decent incomes, but can’t afford decent house, that is something Politicians will take note of. The question is are we willing to talk about this ??
The bottom line is, even if a family makes $150K (assuming 2 incomes), they can not afford Single family home in decent town (assuming $450K house range). Now don’t tell me everyone should live in Newark where houses are available for $250K. I feel we owe it to ourselves to raise awareness of this issue. I gurantee that if we don’t no one else will.
shailesh
Appreciate your posts. America is corrupt not at the level of most countries, but nevertheless sold to the highest bidder with the most influence.
Politicians are bought by industry lobbyist. The RE lobby group is NO good.
Young people and homebuyers are being RIPPEDOFF today by a manipulative self-serving group of bandits!
BOYCOTT HOUSES & BIDDING!
Think for yourself.
Protect yourself and your financial well being.
Booooyaaaaaaa
Bob
Chicago,
Point taken. I was generalizing and trying to be “funny.” As you said when developing a pro forma model you look at past performance, adjust for long-term trends, etc. At some point you are still guessing; it is an educated and well-reasoned estimate.
Shailesh,
Your points are interesting, but I would be very hestiant to look to the government for help. Government isn’t the solution, but part of the problem
Chicago,
Point taken. I was generalizing and trying to be “funny.” As you said when developing a pro forma model you look at past performance, adjust for long-term trends, etc. At some point you are still guessing; it is an educated and well-reasoned estimate.
Shailesh,
Your points are interesting, but I would be very hestiant to look to the government for help. Government isn’t the solution, but part of the problem
Forgot to add,
Andy
BTW I bet a conference call with some of the regulars on this blog would be quite interesting….
Andy
still no sign of grim…must be caught up with that mess with the race.
Chicago & Andy:
Is there a model for RE to forecast? Can one potentially see impact of past Interest Rates increase/decrease and then apply it in future?
for me… the bottom-line is… my wife and i are going to most likely leave NJ because of it’s out of control spending… taxes are high now… and they will continue to increase for years to come at a very rapid pace.
how different is it in PA? is the difference in cost of living almost negligible or significant?
Andy and Chicago –
If we’re going for the looonnnggg-term analysis, in theory, keep money in cash! Build a house around our families with the piles of cash, I guess.
I have graphs from an actuarial course I took years ago to “prove” it.
The problem with some analysis is that it keeps us from living our very “short-term” lives.
Shailesh Gala said…
Is there a model for RE to forecast? Can one potentially see impact of past Interest Rates increase/decrease and then apply it in future?
11:18 AM
Shailesh:
Did you review the Monclair Biking thread? Metro and Andy posted a great link to a talk by a Anderson economist. If you have an hour this weekend, make a bowl of popcorn, skip the movies, and enjoy a real show on your computer.
Check the next thread!
my response to Metro
=====================
Metro:
As you stated, this video is well worth the time to view. Clear language, and an energetic and engaging speaker.
I used my lunch time to watch it. For anyone else, you can skip the first 12 minutes until you really get into the meat and potatoes. Although, if you have the time, watch the whole thing. Given the drivers of the CA economy, I wonder how similar NJ is, likely A LOT! Just replace Wall Street with Entertainment and Tech.
Briefly:
Minute 21 – when do prices go down?
Minute 23 – US Real Housing Prices
Minute 24 – asset returns
26 – why are homes more valuable?
30 – what is a bubble?
33 – what is a real estate bubble?
36 – how does a real estate bubble happen?
37 – how does it end?
39 – common housing myths
43 – don’t think trends, think fundamentals
45 – when is it going to end?
50 – housing markets are not the same as stock markets
52 – advice
1:01 PM
Anon 11:25
I’m in PA. What do you want to know about Pennsyltucky?
Bucks County is a great alternative for Hunterdon, Middlesex, Mercer.
Northampton Cty. – same for NNJ counties.
Depending on where you work, you’ve got apply a factor for giving up an extra 10 to 37 hours per week on the commute.
What you pay in taxes in some places in NJ can pay for 30% of your mtg. in PA or half rent.
Also check this….
chicagofinance said…
Yesterday’s Bloomberg on the Economy – first half
http://tinyurl.com/lmm2j
4:02 PM
if you live in pa do you still have to commute to nj? are the good jobs mostly in the philly area? how’s the cost of living in that area?
Anon 11:44
SE PA is kind of a NY suburb like Morris Cty – but it’s a lot farther, so homes are cheaper. Instead of paying 650k for a nice place in a great neighborhood, you pay $375k and taxes are maybe $5500 versus $8000.
Check the local real estate sites like kellerwilliams.com or c21davis.com. Then knock off $30K from the prices listed-that’s about the current discount for median homes. Keller lists street addresses- so you can cut&paste address in zillow.com for comparable sales through January.
If you have kids, avoid Bristol Twp. school district. Since real estate costs are the biggest difference in cost of living, that will help you understand.
You asked about SE PA and commuting. You’re going to commute, usually, no matter what. It’s just a matter of how (train/car), and how far. You could live in Philly, and walk to work, I suppose, if you can get a job there.
There ARE good jobs in Bucks and throughout Philadelphia County, but generally, they don’t pay as well as NJ /Route 1 corridor (with some exceptions). The competition for the best jobs is fierce. For professionals with average job history, it might take a year of looking, plus a recruiter, but eventually the job is there.
chicago
RE:”50 – housing markets are not the same as stock markets”
Shiller’s futures mkt will change that. Might take a couple of years, but it will change.
Shailesh,
Two points. One – a family making $150K should be able to afford a house well north of $450K. Two – the price of a house (or a stock or anything else for that matter) is always determined by what a buyer is willing to pay for it. If you extrapolate this logic (i.e if government helps people buy houses e.g. subsidizing loans, regulations etc) – it only serves to increase the prices of houses even more because the pool of buyers is higher now.
BTW, I think both the Fed & the state government should stay out of trying to influence house prices. Market dynamics will take care of that.
CNS
BTW, I think both the Fed & the state government should stay out of trying to influence house prices. Market dynamics will take care of that.
I’ll second that.
The Fed has already done enough damage by creating an environment where money flows like water. Over the longer term, markets are generally efficient, rational and self correction. Just let the market do its job.
thanks anon 12:29!
“unrealtor, What is your thought on this one? mls# 2272625”
I’m not thrilled with the whole Wyoming area of Millburn (everything East of South Mountain Reservation), and that house in particular is only a few feet from Maplewood.
It looks like a decent house, but I think $550K will probably go further in Parsippany, for example.
Regardless, your $550K will almost certainly go farther everywhere in 2007.
Personally, I’m not making any offers, or attending a single open house, until at least 2007. No sense in looking at over-priced houses.
FYI, here’s the sales trend for zip 07041 (Millburn)
https://melissadata.com/lists/ezlists/ezHomeowners.aspx?zip=07041
(triple-click to select long links)
Just change the zip to see another town.
CNS & RentinginNJ:
Well I posted similar note earlier to unrealtor’s response. I am not for Govt throwing money or subsidizing.
I am for Govt to create policies that promote Housing development that is needed for NJ citizens. Also they can promote infrastructure to support that. At present most Towns resist housing development that will increase number of Kids. Govt can help by centrallizing certain aspects and cutting cost. The state can share some infrastructure costs with Towns that allow for middle class housing development.
If you read some expert opinions, there are many many various policy decisions that do not require Govt throwing money, but just provides incentives for certain types of activities. For e.g. instead of building 1 house on 5 acre land, the Town may now think of allowing 20 houses on 5 acres. That will increase supply. More the supply, better the chance of prices becoming more realistic.
More the supply, better the chance of prices becoming more realistic.
check out inventory numbers. the market will take care of itself. all you need to do is refuse to pay current prices.
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?
I’m a capicorn
Anon 2:33 :
Bob! we missed you!
off the topic. Does commercial realestate follow the same trend as the housing market? How volatile is it? Does it follow the interest rates or inflation?
GOOD WEEKEND TO ALL. THAT INCLUDES STARVING DEPRESSED REALTORS AND DESPERATE GREEDY SELLERS TOO!
BOYCOTT BIDDING!
BOOOOOYAAAAAAAA
Bob
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?
Bob’s looking for a roomie…until prices come down.
Booooyaaaaaa
On this blog, under the “Home Prices Do Fall” article, the chart says median home values in NJ dropped from ~350k in 1990 to ~250k in 1995.
These numbers seem quite fishy. Where is this info coming from?
NJAR stats don’t seem to go back this far and NAHB stats show the median for the Northeast to be steady around 144-147k during this time. It amazes me that NJ would register a 33% drop and not have it show up anywhere else in the Northeast.
Does anyone remember the average NJ home being 350k in 1990?
There’s no way the median NJ home in circa 1989-1990 was 350k.
I’m new in the area.
I love this site. I want to
rent in a gay community .
Any ideas?
How about Woodbridge?
I hear a former Governor is looking for a new friend.
“off the topic. Does commercial realestate follow the same trend as the housing market? How volatile is it? Does it follow the interest rates or inflation?”
Completely different market. It’s more geared toward business fundamentals and strategy.
“Anonymous said…
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?”
Where do you work?
What kind and length of commute is acceptable?
What kind of amenities are important to you?
FYI – I don’t think there are gay communities per se in NJ. I would think “gay-friendly” would be a better objective.
finance
could you post a pic.
chicago,
I have been reading this blog and I value your comments. Does it mean that it is save to invest in
401K real estate accounts? I think it is safer than the stock market for people going to retire within the next five years. If the stock market goes down it seems to me that these real estate accounts are managed by a group of people that knows what they are doing and will be quite safe. What is your take on this?
“Anonymous said…
finance
could you post a pic.
5:18 PM”
I said last week that my sister-in-law said to my wife that I look like Taylor Hicks. :(
While this thread seems to have descended into an abyss, in an earlier thread there were some concrete examples of buy vs rent, which use the same house:
http://nnjbubble.blogspot.com/2006/05/toxic-or-more-toxic.html
(triple-click to select long link)
The reealtor has a few houses listed on both the “for rent” page and the “for sale” page, so it makes for some interesting comparisons.
Have a good long weekend all, and stay away from Open Houses! :-)
Anonymous said…
chicago,
Does it mean that it is save to invest in 401K real estate accounts? I think it is safer than the stock market for people going to retire within the next five years. If the stock market goes down it seems to me that these real estate accounts are managed by a group of people that knows what they are doing and will be quite safe. What is your take on this?
5:21 PM
I am generally uncomfortable offering advice without knowing the context. That said, a five year time horizon is not very long at all, and I would be concerned with focusing on real estate only.
Make sure the portfolio is well diversified. Also, if you already own a home, that is PLENTY of real estate to own. Again, given your short-timeframe to retirement, I would certainly not own any more residential real estate beyond your home, and devote no more than 5% of other investable assets to this class.
Spring of 2006 is not a good time to get paid for taking risks.
As a rule of thumb, assume EVERYTHING is risky in some form or another, and even smart and seasoned investment managers can make a decision that loses money in a five-year time period.
What did Andy say? Past performance is no indicator of future results? ;)
Chicago, that’s the catch , we do not own a home. We moved here from the south eight years ago and was sticker shock. It is too late to buy a home now at this market. The money set aside to buy a house was put in a bank will only give less than five percent at the current market. Thus we feel it is save to move the retirement fund from a safe part of the portfolio that is making around 5 % per year to commercial real estate account that seems to be doing better and seems not too risky considering that it is quite diversified, they bought all over the country and outside of the country. 2002 the worst year 3.4%, 2003 7.5% ,2004 12.5% ,2005 14.02%.
Average annual total return 5 year 8.68 10 year 8.86.
Thanks for your advice.
Anon @6:05,
I’m a little confused by your message. Are you asking about investing the saved money for a downpayment or are you reallocating your 401k? If it is the money you have saved for a house, then I totally agree with Chicago and that money should be in something with either very little risk of principal loss such as a money market or even better something riskless like short term CDs or gov bonds like t-bills.
If you are talking about reallocating your 401k, again I agree with Chicago that commercial restate funds (I assume you mean REITS and similiar stuff) should be a very small % of your portfolio, esp if you are close to retirement. If you are within 5 years of retirement, you should be thinking of preserving $$ with less risky stuff. REITs and commercial real estate can be all over the place with returns. As Chicago said don’t expect past returns in the future.
And please, do not assume that the people managing the funds are “smart” and know what they are doing and hope for the best. That’s your money that they are investing and they can just as well as anyone can make or lose money. The WSJ used to have a competition matching a portfolio picked entirely by random (I think throwing darts at the paper on a wall) against the professional money managers and the random portfolio often beat the others.
Andy
What are these guys smoking?
Bought townhouse in 03/2006 for 283K now selling it for 429k!!!
buying price
selling price
Please tell me something is wrong.
I forgot to add, be careful looking at past years performance. You said the worst year was 2002, but was that only of the last 5 years? what about before that? How did the market do over the last five years? Maybe all REITs did well over the same time period (a rising tide lifts all boats….)
Andy
unrealtor,
Thanks a lot for your comment about Millburn area.
Downtown Jersey city is very gay especially in the historic areas, Van Vorst Park area is called the west, west village. While the neighborhood is very mixed, people of all walks of life, “gay americans” (McGreevey term) are a large part of the neighborhood.
Anon @ 4:16,
The numbers are “real”, adjusted for inflation. You can’t compare the price of two assets over time without taking into account the change in value of the exchange medium that asset is priced in.
A dollar from 1989 is nothing like a dollar in 2006.
grim
fiance
post a pic.
come on you can do it