Preliminary May sales data for Northern New Jersey is in..
The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the y-axis, it is set to 1000, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.
The second graph displays the same sales data (2003-2006) for the first four months of the year. Again, please not the y-axis, this time it does cross at zero.
For those who prefer the hard numbers:
January
Average Sales (2003-2005): 2000
2005 Sales: 2013
2006 Sales: 1705
(Down 15.3% Year Over Year)
February
Average Sales (2003-2005): 1583
2005 Sales: 1578
2006 Sales: 1395
(Down 11.6% Year Over Year)
March
Average Sales (2003-2005): 2193
2005 Sales: 2256
2006 Sales: 2033
(Down 9.9% Year Over Year)
April
Average Sales (2003-2005): 2322
2005 Sales: 2383
2006 Sales: 1817
(Down 23.8% Year Over Year)
May
Average Sales (2003-2005): 2615
2005 Sales: 2725
2006 Sales: 2298
(Down 15.7% Year Over Year)
Data above is GSMLS Sales for Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren Counties.
Caveat Emptor!
Grim
January – Down 15.3% YOY
February – Down 11.6% YOY
March – Down 9.9% YOY
April – Down 23.8% YOY (the “spring bounce”!)
May – Down 15.7% YOY
That spring bounce looks promising, as Liareah would say, a “moderation” of the market.
the pattern is clear. if you look at the inventory #’s it really becomes a shocker. think about it. there are almost 31,000 properties for sale and last month ~2300 sold.
i got 1 word. yikes.
More than 700 on the market in the past week!
“Currently, there are 30,721 properties advertised for sale in NJ on our site. For Residential Properties that are Multiple Listed with Garden State, 99% are available to be searched on this site.
http://www.gsmls.com/
…but it’s only 427 less than last year’s which is supposed to be the hottest year.
besides the fact that this year is not as hot as last year’s pace I still don’t see any hard evidence of significant price declines or that we’re definitely heading there. or the bottom falling out as some say.
what’s going on?? I sure hope we start seeing some hard indisputable evidence we can bring with us while shopping for houses!! need house now!! :)
I would love to see the numbers for 1999 to 2002 included. Too bad they are not available, then we would be able to see what normal looks like.
I would think that the 2006 numbers are still higher than 2002.
June is going to be very interesting.
It’s a standoff between buyers and sellers. Sellers don’t want to sell for less than last years prices and buyers don’t want to pay for last years prices.
Sellers are in denial right now.
And Yet the sellers are still not getting it, and inventory continues to increase.
I think I saw something on Grim’s message baord, and it makes a lot of sense, and that is there is no sense where the market is right now.
Sellers in many cases have increased asking prices, in my area at least from 10% to 20% over last year, so to get any kind of discount, you need to slice away that nonsense. At the same time there are instances where people who purchased last year are under water now, vs. the same houseg that are on the market now.
Yet those houses that would appear to be “attractively” priced are also not selling, and many potential buyers are not going to pay 05’s peak prices either.
So I think by the end of the summer this thing should sort itself out, and those that truly do have to sell will sell at the prices that will move the house
I think we will easily see prices go back to early 03 levels possiibly 02, and it will be sooner rather then later.
While the market was booming, and prices wer rising people howver wrongly followed that market. Now the landscape has changed and changed abruptly.
Potential buyers now that prices have stopped rising, but who wants to bid now, when you do not know form what level you are bidding at. Bidding and buying at 05’s peak prices is a non starter.
Delford, where are you seeing prices go up?
I’ve yet to see that in Summit, Chatham, etc, and in fact am watching prices steadily go down as houses sit for months.
According to the latest Office of Federal Housing Enterprise Oversight report dated June 1st, here’s the 5 year appreciation of the hottest U.S. Markets
DC 124.01
CA 115.21
HI 113.36
FL 111.53
NV 106.1
MD 101.33
AZ 93.49
NJ 86.4
What this means to me is to expect NJ to go down but not as much, in percentage terms, as some of the others above it. NJ will go down but won’t tank like DC.
Sorry, thats percent;
DC 124.01%
CA 115.21%
HI 113.36%
FL 111.53%
NV 106.1%
MD 101.33%
AZ 93.49%
NJ 86.4%
Starting to get interesting:
MLS# 2273011 – Blairstown Twp.
Listed 5/1/2006
Original List Price: $589,000
List Price: $539,000
Last Sold 9/6/2005: $559,000
Unrealtor: i am not seeing sales prices going up, but I am seeing asking prices going up. Just when you think you might start to see sellers starting to manage their expectations, you see someone else come on with a new listing with an absoultely bizzare asking price, and you just shake your head.
In Bergen county the market is dead, from the less desireable towns all the way up to the Saddle Rivers and Franklin Lakes.
Open house signs on every corner yesterday, and now Saturday,and even Friday evening open houses.
the ‘new’ house prices will be set by those who have to move due to buying another property, death, divorce or job transfer. i’ve already seen bigger decreases on houses where the owners are into another house, sometimes out of the house completely. i’ve also seen a few relocation companies take over properties that the now moved out seller was trying to sell themselves.
interesting times. the key here folks is inventory and how many have to sell versus just testing the waters and not liking it coming back another day. another 3-6 months should reveal more of this.
X-Underwriter said…
“What this means to me is to expect NJ to go down but not as much, in percentage terms, as some of the others above it. NJ will go down but won’t tank like DC.”
IMO, DC is less vulnerable than NJ. Alot of Homeland Security startups in NOVA and Government grew under this administartion meaning more jobs. Fairfax and Loudon counties have downzoned reducing supply like many places in NJ.
Metroplexual,
I do know that Loudon County, VA had around 600 listings last spring and now has over 4,000 which is quite compelling
http://www.virginiamls.com/charts/Loudoun.htm
We’ll just have to see what shakes out of it all
X-Underwriter,
You may be right. This is all uncharted territory. I bought in the last bubble and somehow this one feels alot crazier. Maybe people down there are over extending to get in like elsewhere in the bubble areas. My Sister and brother-in-law assure me that DC is different somehow and they are kind of plugged in down in Faifax (for that matter almost everywhere).
NJ is going to tank just like any other bubble area, and in fact a reasonable arguement can be amde we may tank more so.
Our property taxes are out of control, fiscally our state is a mess, and the driving economic engine of our state pharma and telecom, aint what they used to be.
But hey we are creating lots of restaurant jobs.
So what should I do?
Bought this place in 1975 for just under $200K. Mortgage long since paid off. Took out a home equity line to make some improvements over the years (kitchen, baths), but that’s all paid off now, too.
Last year at this time, a house very similar to mine sold for close to ten times what I paid for mine. Yes, you’re reading that right–10 times more. The town I live in has great schools and very restrictive zoning, and no more land to build on. Taxes are very reasonable, too.
I’m starting to think about retiring and moving south, but there’s no rush. Do I sell now, as you folks are urging? Or do I just plan to hold on and hope things recover?
Sell now and don’t get greedy. Just get a buyer
It won’t be worth this much for at least 5 years
Metro, I have some data covering that time period, I’ll see what I can dig up.
jb
look out below…
NEW YORK – Low-ball bidders, persnickety buyers and cancellations are now the rule in once-hot housing markets.
Rising interest rates and sky-high home prices have cooled real-estate investment, “particularly in high-end markets in some juiced-up parts of the country where speculation was most rampant,” said Mark Zandi, chief economist at Moody’s Economy.com.
The record low interest rates and speculators that once drove prices higher are gone. Observers expect housing prices to stagnate or decline slightly, though a steep crash for housing prices is unlikely. As the market slows, both builders and buyers are getting used to the changes.
On a recent conference call, Ara K. Hovnanian, the president and chief executive officer of homebuilder Hovnanian Enterprises Inc. said that real estate investors “have largely pulled out.”
“Investors were a bigger part of the market than many thought, including ourselves,” said Hovnanian, whose company builds primarily in the Northeast. Would-be flippers are not only not buying new properties, they’re selling what they already own, adding to the record number of homes already on the market.
Stocks in the sector have fallen dramatically. Hovnanian, for instance, is trading near $30 a share, down from its 52-week high of $73.40. Rival Toll Brothers Inc. trades around $27 a share, down from a 52-week high of $58.67.
Wachovia last week cut its rating on builders including Pulte Homes Inc., KB Home and DR Horton Inc., citing a sharper more rapid downturn in the market than expected.
Developers have started canceling projects. Plans were scrapped last week for a 4,400-unit Las Vegas condo resort complex that had been backed by actor George Clooney and nightclub owner Rande Gerber. The development company for the project said rising construction costs and slow sales forced it to rethink the plan.
With land prices falling in some areas, Hovnanian has walked away from about $5.6 million of deposits on land parcels it had options to buy, lopping 5 cents a share off the company’s second-quarter earnings.
Buyers in some cooling markets know they’re in the driver’s seat.
Rachel Moehl, a real estate agent with Weichert Realtors in Jersey City, N.J., said she almost saw a deal for a three-bedroom condo fall apart over what proved to be a $400 problem — moisture between window panes.
The buyers “were saying the week before the closing, ‘We don’t really love the apartment. We’re ready to cancel the deal over the windows,'” she said. The seller gave them a $400 credit.
Other agents say clients are putting in bids well below the sellers’ asking prices, or simply waiting.
“Home prices have risen to where buyers can’t afford to buy,” said Keith Gumbinger vice president at HSH Associates, which publishes consumer loan information.
The national median existing home price was $223,000 in April, according to the National Association of Realtors. While that was a 4.2 percent increase from April 2005, the organization predicts that prices this year will rise only 0.8 percent.
Others aren’t so sure they’ll rise at all.
There was a 4-month supply of unsold homes on the market in April 2004; it rose to 5.8 months in April 2006, according to the Department of Commerce.
In suburban Philadelphia, where the inventory of unsold homes has soared, Zandi asked an agent months ago how anyone could get a mortgage for a home listed at $3.2 million.
“They were almost snooty,” he said. “The girl said, ‘People who buy these homes buy with cash.'” The house is still on the market, now listed at $2.8 million.
Part of the backlog is 128,000 unsold new homes, the highest level in history, said Mario Ricchio, housing analyst at Zacks Investment Research Inc.
“(H)omebuilders may not be able to push all this supply through the market,” he said.
Contract signings for new homes are down sharply and cancellations are up.
“It’s a more difficult market and our salespeople are no longer just taking orders; they have to sell,” Hovnanian said on the call.
Most observers say housing prices will only slide dramatically if the Federal Reserve continues to raise interest rates.
The Fed’s target short-term rate is currently 5 percent. If it passes 7 percent, “then things get very tricky,” Zandi said. “Many home owners will have trouble making payments. We’ll see significant mortgage credit problems develop.”
By the end of 2004, 35 percent of buyers had adjustable-rate loans, up from 18 percent the previous year, according to the Federal Housing Finance Board’s interest rate survey.
Those buyers could see a steep increase in their monthly payments if interest rates spike. That, in turn, could cause increased defaults and foreclosure sales at low prices.
“The higher mortgage payment may lead some overstretched owners to default on payments, adding supply to an already glutted market,” said Ricchio at Zacks Investment Research.
http://news.yahoo.com/s/ap/20060612/ap_on_bi_ge/market_spotlight_housing_prices_1
Anon 1975 Buyer,
Depends on your age. If you’re near retirement age, and are open to living in another part of the country, I’d strongly consider ‘cashing out.’
Last year is over, but say you can get $1.6M, that’s a boatload of cash.
You can buy a palace in Raleigh/Durham North Carolina for $600K, and live off the $1M left over.
Some compelling numbers.
Do some searching online, you’ll probably find some choice properties in choice locations (e.g., overlooking a golf course), for well under even $600K. Check out realtor.com
Thanks Grim! I think it will give us an idea of what normal is.
Great thread over on The Big Picture. $ graphs pointing toward the downturn in the economy and housing. A compelling argument and as always a very informative blog.
http://bigpicture.typepad.com/comments/2006/06/housing_leads_t.html
I meant 4 graphs. I am so used to using the shift key at the beginning of a sentence.
May Sales
Year/Sales
2000: 2467
2001: 2359
2002: 2478
2003: 2456
2004: 2663
2005: 2725
2006: 2298
This is from the same dataset as I provided in the main post.
grim
I am a strong believer that RE will decline over the next 5 years and will hot rock bottom (anywhere from 32-40% less than peak 2005 prices). Unfortunately I am not in a position to wait that long and have to buy a house soon due to reasons out of my control. Now I hear about these new Schiller Options/Futures available on the CBOE to hedge against housing price declines in select markets, the tristate area being one of those markets. They have started trading very recently. Has anyone heard of how to play these and if they are really reliable? Would really appreciate some insights. Thanks…
I would think that the 2006 numbers are still higher than 2002.
What do you think now?
grim
Grim,
Did you see the data from June 5 on New Jersey MLS?
If so, any thoughts?
Thanks, I am impressed. We are going down and this is just the beginning. Do those same data sources have number of units on the market in a given month?
Seeing a bunch of “Motivated Seller” and “Seller Motivated” in listings.
Wonder if it’s a trend worth noting?
Grim,
Those May numbers are shocking, to say the least. Seems like the whole market is unraveling at a rather quick pace, but since asking prices are still sticky, this thing could take a couple more years to play out.
Did you see WCI’s warning today? Sales for the first two months in its second quarter are down 50% (down 42% for homes and 84% for condos). WCI is in Florida and the Northeast – they have a very high end property on the Gold Coast. I think the number of investors over the last year will probably be much higher than anyone in the industry anticipated.
DebtVulture
(waiting to swoop in)
Grim,
I wonder what the data will look like if you take a look at NJMLS.
I noticed that there were more listings under NJMLS for Bergen County than GSMLS.
Grim,
Also, when will you start posting Real Meat on the new board?
I like the new board much better than this one.
https://njrereport.com/forum/
Something must be happening, because I have these bloodthirsty posters on my home site raging for my freaking head.
Grim – Have you heard of this site:
http://www.corzen.com/realestate/index.aspx? Is it reliable if they use NAR data? Thanks.
jj
It will be fun watching the greedy money grubbing sellers and the realtors feuding.
BOOOOOOOOOOOOOYcott Houses!
Bob
Be a pro be polite BUT BLEED”EM DRY!
Do get sucked into to the spin-game of motivated seller and price reductions.
You should bid at least 30%+ less than PEAK 2005 summer prices. Watch for the phoney markdowns from inflated levels.
Tell’em NO MAAS!
Bababababababa
BOOOOOOOOOOycott!
Bob
The new blog would be live if it wasn’t so difficult to migrate old posts and comments to the new software.
The software comes with a tool to automagically migrate the data. It’s supposed to work like a dream…
All I can do is get it to crash.
But because my net access is going to be spotty over the next week, I’m hesitant to make any other changes now.
I’m going to be out of the country for the next few days. Don’t know how available internet will be.
grim
http://www.usatoday.com/money/perfi/housing/2005-08-17-housing-valuations.htm
According to this we are only 23% overvalued – I have done absolutely no research on what they used as their basis for this, but I figured someone here has and that they might be able to piece it together.
If it is a legit study, how does this affect the predictions for a correction?
Another 40 added since 2:00PM:
“Currently, there are 30,768 properties advertised for sale in NJ on our site. For Residential Properties that are Multiple Listed with Garden State, 99% are available to be searched on this site.”
http://www.gsmls.com/
The average sales per month for the past five months is 1,850 and when divided into the current inventory of 30,768 we get 16.6 months of inventory for Northern NJ.
Let me repeat: there is currently 16.6 months of inventory for Northern NJ.
JJ- I saw that on inman today, linked to it, and asked about it on Grim’s new forum, under both NJ Bubble and National Bubble, so maybe check there to see if anybody comments.
Pat
Check out this article on CNNMoney.com entitled “Overpriced Housing Gets More Overpriced.”
http://money.cnn.com/2006/06/12/real_estate/overvaluation_even_worse/index.htm
According to this we are only 23% overvalued – I have done absolutely no research on what they used as their basis for this…
It’s just as legit as any other statistical analysis across housing markets. Two points. 1. The data is a year old at this point, prices have gone up since then. 2. Interest rates are a factor and they havce also gone up since then
WCI has a huge building going up in North Bergen on the so called Gold Coast. Its called the Watermark and prices are high. Taxes in North bergen are high too.
unrealtor — you probably should use seasonally adjusted numbers to get a good idea of inventory.
Thanks Pat
Not making any move buying RE without running info. through these blogs!
jj
“you probably should use seasonally adjusted numbers to get a good idea of inventory.”
Do you have them? I averaged the last 5 months of sales, and divided into current inventory of 30,768.
RE investor is conspicuous by absence
Anonymous said…
RE investor is conspicuous by absence
6/12/2006 10:01:53 PM
As I indicated here recently to some other anon (and it may have been you), I don’t have limitless time to post here thousands of times everday as I am often busy. Are you monitoring everyone else? I noticed that you accused no one else here is accused of conspicious absence. Bob didn’t post his usual fifty times in this string. Is he conspiciously absent or quiet?
Perhaps you need to stop being so capricious with your observations as to who’s here and who’s not.
Come on RE investor, share with us.
How many properties are you currently holding? Are they single family? Renovations? Tear downs?
@RE Investor
missing bob??
check out
6/12/2006 06:51:59 PM ,
6/12/2006 06:55:01 PM
You don’t seem to be thinking straight. I hope everything is fine.
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