August Otteau Report

From the Otteau Group:


The residential market rebounded slightly in August as buyers took advantage of softening prices and declining mortgage rates. August contract-sales activity ran 6% higher than July, suggesting the overall market deterioration is beginning to slow. Also noteworthy is that the Unsold Inventory of homes on the market increased by only 1% in August, as compared to a 47% increase over the 1st 6 months of 2006.

Also contributing to the August sales performance are declining mortgage rates and unemployment rates as the Economy continues to create new jobs. According to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®), the 30-year fixed-rate mortgage (FRM) averaged 6.31 percent for the week ending September 28, 2006, down from last week when it averaged 6.40 percent. Rates have declined for 8 of the last 9 weeks and are at their lowest since March 2, 2006, when they averaged 6.24 percent. Last year at this time, the 30-year FRM averaged 5.91 percent.

A closer look at Unsold Inventory indicates an overall supply of 8.5 months, down slightly from 9 months in July. One year ago, Unsold Inventory reflected a 4 month supply. When analyzed by home price, the market continues to show the greatest strength below $600,000 with a 7.5 month supply as compared to 23.6 months above $2.5 million (see table above).

Next months report will be a key indicator of future trends as September marks the one-year anniversary of the current market cycle when home sales began to decline and Unsold Inventory started rising. The results of that analysis will be released at our Fall Market Workshop Series which begins in October.




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9 Responses to August Otteau Report

  1. James Bednar says:

    Shrunk the image to get it to fit, use this link for a better view:

    Otteau August

  2. BklynHawk says:

    That image from the link isn’t much easier to read.


  3. vb4203 says:

    I think the prop in August was because the school year starts in September. These buyers must have waited till the last minute.

  4. BC Bob says:


    That and how many buyers fell for the “incentives”??? Buyers may be thinking that it’s a bargain with the free options, mortgage payments for 6 mos-1 year, buying out an existing property, etc… What will the next round of incentives entail???

  5. James Bednar says:

    You really need to compare with last month to see where the changes were.

    I’m working on a side-by-side. Personally, I don’t think August was much of a “pop”. Nothing we didn’t already know from the preliminary data posted much earlier in the month.


  6. gary says:

    Thank God the slide is over!!! Now my house will start appreciating at 12% per year again! You side-liners better buy quick before you’re priced out forever!

  7. bubbletuner says:

    I’m optimistic about a continued slide in home prices of about 10-15% per year over the next 2 to 3 years until prices stabilize. It’s the progression of the normal real estate cycle just like the early 80’s and early 90’s. It’s amazing to me how many people are so naive and just refuse to listen to the experts about how real estate cycles operate. I have been following real estate in northern nj for the past year. It’s amazing what has happened in such a short time. Inventories have skyrocketed just as demand has plummeted. Until the surpluss of houses starts to come down, prices will keep coming down slowly. It’s going to be nice to watch as the market continues to deflate.

  8. bubbletuner says:

    One more thing-
    It’s so interesting how market psychology begins to creep in. I know 2 people who have houses up for sale. Both people of course want to sell high and then buy low (take advantage of all those desperate sellers out there). But of course no one wants to be a desperate seller themselves. But of course with time, houses will have to be sold at current market prices. Life goes on, life, death, divorce and the like. Builders in northern NJ will also have to cut their losses and sell existing vacant lots at “discounts” from highs of the past. For example, I heard of one prominent McMansion builder in Monmouth county “Kara Homes” can’t seem to sell out left over lots and may have to file chapter 11. That’s from reliable insider info from company employees. Can’t wait to see the headlines. All you renters out there, patience is a virtue. It’s starting to brighten up out there. The word on the street in Bergen and Essex counties in the 1 million-1.5 million range is that the market hasn’t “slowed down”, it’s “evaporated”….virtually no traffic, no bids without deep cuts in prices.

  9. PMD says:


    Are you really sure that prices are dropping – I have been following the realestat in NNJ for morethan a year – I just see a drop of 10 to 20 K for a 1/2 mil house. This is not a price drop !!

    Sellers are just adamant and not letting go the high price. The shitty houses are over priced and just sitting on the market and nobody even looks at them. Those who had good houses are out of the market by delisting or selling them to a dumb fellow.

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