From Inman News:
Real estate forecast calls for soft landing — with turbulence
By Glenn Roberts Jr.
The housing market will not crash unless the job market weakens significantly, though home prices are expected to stagnate for at least five years during this down cycle, according to the latest Anderson Forecast.
Produced by a University of California, Los Angeles, center, the forecast calls for the market prices of homes to hold steady, which equates to a drop of about 15 percent to 20 percent in real terms because of continuing inflation. Also, the forecast calls for a lowering of the Federal Funds Rate from its current level of 5.25 percent to 4.5 percent by mid-2007.
Washington, D.C., could face price depreciation of about 7.5 percent in real terms through 2010, according to projections in the forecast report, while prices in real terms could drop 7.1 percent in California, 6 percent in Hawaii, 5.9 percent in Rhode Island, 5.8 percent in Maryland and Nevada, and 5.2 percent in New Jersey during that period.
These price corrections could take a very long time in some states, according to one of the forecast reports, titled “2005: The Year the Tortoise Won the Race, Whither California Home Prices?” and prepared by Edward Leamer, forecast director. It could take 6.3 years to 16.5 years to work off excess home-price appreciation in California, the report suggests.
“In other words, these problems are likely to be with us for a long time,” Leamer states in the report.
I hate to say it, but I am beginning to think Bergen County really is different, and that we will not even see 2004 prices. Every house priced under 400k in Bergen County with the exception of houses in towns you would have to be nuts to live in like Garfield, Bergenfield, Fairview, etc…is under contract only weeks after being listed. I think that since there are so many people desperate to own a house under 400k, they jump at the opportunity. After all, this is what caused the “bidding wars” we have seen in the past 5 years. People afraid they will be priced out. I still think prices will not go back to the 2004 levels…
“You know you’ve reached the top of the market when the last bear capitulates..”
Don’t know who said that, but it sticks in my mind.
I would love to see the data they used to make this forecast.
As I’ve said before, the numbers in Monmouth County just don’t add up. People making $100K can’t afford a $500K house, and that’s all there is for sale.
Window, things are going to look very different in a few months.
Despite the title, there are some surprisingly bearish quotes regarding the NHS numbers in the NY Times..
Housing Sector Gets a Reprieve
Not only Monmouth, but the whole state!
I agree with you.
-Sapiens
The stagnation in prices is going to be a much bigger problem then people think. The reason is because most people in I/O loans are planning to refianance there homes based on 10% yearly appreciation. They need to refi in order to be able to afford the payments. Once their “equity” stops gaining 10% a year and they can not get their comps anymore, they will be out of luck. We will either see a bunch of short sales or an influx of forclosures.
With all of the risky lending that has gone on, and they huge amount of bad loans and people who are over extended, 5 years of no appreciation may be a bigger problem then people are anticipating. I do not think we have ever seen this type of situation due to the weak lending practices.
I predict a serious national economic downturn and major housing recession within the next 18-24 months.
These so called “Experts” have a very dismal track record with their predictions
“thatbigwindow Says:
September 28th, 2006 at 7:39 am
I hate to say it, but I am beginning to think Bergen County really is different, and that we will not even see 2004 prices. Every house priced under 400k in Bergen County [edit]is under contract only weeks after being listed. I think that since there are so many people desperate to own a house under 400k, they jump at the opportunity.”
Start broken record:
Beware the false bottom.
Cross off 2006.
Pick up needle……
thatbigwindow: I do not know what you are looking at, but I am seeing the exact opposite, For instance their are plenty of houses listed in New Milford now in the low 300’s remmber listed, and they are sitting, its only a matter of time before they drop into the 200’s if the owners have/want to sell.
As far as magical River Edge, what I thought would happen is happening, Many of the 600’s and overs are sitting after substanial declines in asking prices. The high 500″s are now in the mid to low 500’s, and will soon be in the high 400’s, in fact their is a pricing war, lowering prices on a couple of houses for sale right next to each other.
The high 400’s have dropped into the mid 400’s, and the mid 400’s are now in the low 400’s, with one breaking the 399k level, and yet they all still sit, as we move into Oct.
Their are houses in River Edge,where the asking prices are 40 to 50K lower than last summers sales price, so numbers are getting back to 2004, and in some cases right back to 2003, and it is all still starting.
Take a look at the mls and take a drive around next time you are in the area.
On by the way all the castle conods are still for sale, and asking prices are now in the low 600’s. it is my understanding that the taxes are north of 11k a year an up, depending on the unit.
one final note, peole are in shock over the latest tax increase, and those increases are only starting. Next year even worse.
delford:
I would disagree with your stmt. Yes these figures are correct but lets look at which houses are these – these houses are shit holes that were priced way too much – nobody even visits them – so they continue to sit. There are still some houses that come on the market and get sold pretty quickly.
msd. If you knwo the house I am talking about, then you would know that many of them are not sh’s, and in fact many are in very decent shape. Yes ther arre some down by the train station, that are sh’s, a couple of others down ther are decent, but the area is dumpy.
I suggest you take another look, and see hwt I am talking about.
As far as things selling, there has been very little sales activity in RE this past spring and summer, even the realtors admit that.
And many people who were/are looking and might have purchased, are balking at the 8k a year starting property taxes. Another factor which will neagatively impact sellers in RE, they will now have to discount prices further, due to outrageous property taxes;something many sellers are now waking up to. I belive you will see prices in RER go back to 01/02 levels maybe even lower.
I know of a few listings in RE, that allegedly sold, only to have the deals fall through, and copme back on the market. There are over 60 house for sale in town now, not counting FSBO’s.
At this time last year there was under 20.
Hi,
Is there any data about morris county prices?
I have been watching the trends in Parsippany and
montville. Town Homes are coming close 2004 levels according to the sale data from Zillow. But SFH built in 1960’s with 1/3 acres are going
very close to 2005 level. I think it is going to
take more time (>2 years) to see significant
reduction in the price level. If job losses occur
fast, then we have a chance of faster meltdown in
prices. Otherwise people like me have to pay
more for housing and that is a sad thing.
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