From the Asbury Park Press:
It would be premature to declare the real estate bubble is about to burst. But the latest home sales reports show the air is starting to seep out of it.
…
Rising housing prices are always good news-bad news propositions. They are found money for homeowners gaining increased equity. In recent years, that’s been particularly welcome, as stocks have underperformed and pay raises in many job sectors have failed to keep pace with inflation. For many people, real estate has been their only avenue for asset appreciation. But the down side of rising prices, clearly evident in New Jersey, is the negative impact they have on first-time homebuyers.
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In the first six months of the year, there was a nine-month supply of houses on the market in both Monmouth and Ocean counties, compared to about 4 1/2 months in the first six months of 2005. That spells a continued decline in housing prices. For most people — the two-thirds who own their own homes — that’s bad news. For those waiting for prices to fall to an affordable level, it provides a ray of hope.
“It would be premature to declare the real estate bubble is about to burst.”
No, it would be incorrect to declare the real estate bubble is about to burst because it already has.
The seeping started last year, its possible that as early as September the changes will be so obvious that even people whose job it is not to see a market crash will see a market crash. It is almost impossible that they will not see it by the end of the year.
Lindsey
HOUSING CRASH!
Seeing lots of inventory piling up in the snoot raised towns.
Huge amounts of inventory are on the market. One would think that noticable price reductions would be apparent. I just dont think the sellers are ready to accept this new market. They are not feeling the pain yet.
Lindsey, I think you are right – pricing should start to come down sooner (by year’s end) than later in 2007.
jj
Unwillingness to accept the bursting bubble is strongly correlated with being leveraged to the hilt, I think. In the last downturn, price lowering was far less painful. Now, it’s the last step off the financial cliff for many, and may result in some becoming housing sharecroppers for the rest of their lives.
No wonder people are strongly in dennial. I think the pausing before the panic will be longer in the case of this bubble, because sellers have so much more to lose. Be patient though, the panic will set in, and believe me, it’ll be a panic.
To anon 11:42:
I am getting pretty tired of the sellers saying “Just make an offer!” How about lowering the asking price more than $1000.00. When I come in to lowball them they will act hurt and insulted IF the RE even presents the offer.
who cares about sellers feelings?
How about the buyers feelings?
I told one realtor a few months back, I was interested in a house, but wanted to make a low offer. The house was @569k, and had been reduced a few times. I said @500k and she was completely insulted and discouraged me from making the offer.
I was walking past the same house the other day, I think they took it off the market, and these trucks are tearing up the road in front of it. I asked what is going on and they told me the area floods terribly and they are trying to fix the problem! I haven’t been looking for the past 4 months – just taking Chicago’s advice adn crossing off 2006!
jr
Jr,
That real estate agent who was “insulted” at your offer really needs to get over him/herself.
This is business transaction, plain and simple; purchase offers have nothing to do with “insults”. But if realtors want to play that game, tell them how insulted you are at these ridiculously high asking prices.
And interesting point about the flooding. Just when were you going to find out about that from the seller or the realtor?
Probably never, IMHO.
P.S. I thought your offer was more then reasonable, in fact very generous, given the current state of the market. This buyer obviously needs to hold the property a little longer and lose some more money.
What does IMHO mean?
Clare –
I believe IMHO means In my humble opinion
“I said @500k and she was completely insulted and discouraged me from making the offer.”
Give me a break. Should I be insulted that they’re asking 30% more than this $hitbox is worth?
Spare me your hurt feelings – business is business. My financial advior just asked my when Im planning to buy a house. My answer – “When I can bring a seller to tears.”