From the New York Times:
Why Sellers May Be Disappointed
HOME sellers beware. Despite what real estate industry data might suggest, sales prices were down by 10 to 20 percent around the state last year — and prices are still flat in most locales, according to an East Brunswick analyst who keeps day-to-day tabs on New Jersey residential transactions.
The analyst, Jeffrey G. Otteau, who heads the Otteau Appraisal Group and issues the monthly Otteau Report to subscribing brokers, offered this current reading on the overall market: “It is just beginning to recover.”
Many of the state’s largest real estate agencies subscribe to the Otteau Report, and hundreds of brokers and agents attend his periodic seminars.
Although agency executives frequently quote him, Mr. Otteau does not show the same sort of reverence for the National Association of Realtors and its recent rosy numbers about sale prices in New Jersey.
The association’s year-end report, for example, cited major jumps in home prices in two cities in the state. For the last quarter of 2006, Atlantic City was singled out as the metropolitan area with the largest single-family home-price increase in the whole nation. The median price of $339,800 was 25.9 percent higher than for the fourth quarter of 2005, according to the association.
In addition, the Trenton-Ewing area was credited with having the third-highest jump in median home prices nationwide, rising 18.9 percent, to $289,000. (The Salt Lake City area came in second.)
That sounds like great news for longtime residents of Atlantic City and Trenton ready to sell their homes, but Mr. Otteau begs to differ. “The problem is, they are not comparing the same housing stock from year to year,” he said.
In both Atlantic City and Trenton, communities badly in need of rehabilitation, a number of spiffy new town-house developments were completed last year and hundreds of units were sold. “That skewed the median price in both those places,” Mr. Otteau pointed out.
The median price represents the price at which an equal number of houses were sold for more and for less. Real estate statisticians tend to rely on it rather than the average price because the average can sometimes be skewed by the sale of a relatively small number of houses at either end of the price scale.
But Mr. Otteau contends that the meaning of the median-price figure is often misperceived. “It is important to realize,” he said, “that median prices do not reflect the same house being sold in two different years, but rather a changing mix of house sales from year to year.”
…
One place in the New York area that has been experiencing a rise in the median price is Hudson County, which includes the cities of Hoboken and Jersey City, where redevelopment has been rife and numerous new condos have come on the market, Mr. Otteau said. The median price for housing rose by 2 percent there in the fourth quarter of 2006.At the same time, however, the sales price for comparable individual condos in Hudson County declined by about 10 percent. “When you spot-check comparable condos — I mean, check the same size condos in the same building year to year, as we do — prices have fallen and not risen,” Mr. Otteau said.
In Bergen County, a more suburban area, the median price for a condo fell by 13 percent, according to the Otteau Group’s statistics. Less new housing construction — and far less condo construction — is going on in Bergen than in Hudson.
Mr. Otteau said that he is not interested in pillorying the National Association of Realtors, but only in pointing out that the trade association’s method of reporting may overstate the strength of the housing market in some locales.
…
“The truth is always somewhere in the middle,” Mr. Otteau opined. “Last year, when there were cries of a real estate market crash, and people were practically jumping out of windows, the N.A.R. talked about a ‘gentle adjustment’ going on with the market.“The reality was the market definitely did not crash, but it definitely did correct itself, with significant buildup in inventory of homes for sale, and lower sales prices.”
The Otteau Group’s latest figures, for January, to be officially released this week, by the way, indicate the market “correction” has ended. Statewide, there were 10 percent more contracts signed in January 2007 than in January 2006 — and in booming Hudson County, sales volume was up a whopping 40 percent.
I put North Jersey contracts up approximately 4-5% in January (GSMLS, Bergen, Essex, Hudson, Morris, Passaic, Somserset, Sussex, Union, Warren).
Jan 07 – 1943
Jan 06 – 1861
February contracts are up a bit higher.
Feb 07 – 2384
Feb 06 – 2239
The results seem extremely mixed, with some counties showing strong increases, but others showing strong decreases.
For instance
Bergen
Jan 07 – 144
Jan 06 – 96
Sussex
Jan 07 – 122
Jan 06 – 154
Union
Jan 07 – 285
Jan 06 – 323
As far as Hudson goes, GSMLS puts the contract volume up 30%. You read that right, a full 30%.
Jan 07 – 13
Jan 06 – 10
(Sometimes it helps to show the actual number of transactions).
jb
Ok, too hard on Jeff. For those new here, GSMLS doesn’t really cover Hudson county, so my comparison wasn’t really fair.
jb
Jim
Hudson County as you know is also divided by NJMLS and Hudson County MLS – Very hard to get good numbers for it.
Many parts of Bergen county however are only in NJMLS so GSMLS figures for Bergen are also skewed a bit.
KL
I don’t think Otteau or the reporter did a particularly good job here. While Otteau is basing his “recovery” on awfully slim data (one month, and not a particularly active one) I find it interesting (and troubling) that the reporter called the bottom. “…indicate the ‘correction’ has ended.” at the end of the story.
Otteau was a little craftier with his “recover” comment, in that you can have a bit of a recovery before resuming a downward slide.
The inventory in Monmouth County and the tightening of lending standards, and the pile of bad loans out there make me think this “recovery” will be short lived.
As much as it might seem a copout, I think there’s no point in trying to tell 2007’s story before Memorial Day.
If both March and April disappoint significantly (I suspect they will, but Lord knows I’ve been wrong before) then you will hear the pain in people’s voices throughout the summer.
If March and April are so-so to good (within 10% of 06) then the balls remain in the air, but there’s definitely a guy standing over there with some knives who wants to liven up the juggling act.
No matter what, September is not good, because they knives will be out and the jugglers are going to be way too tired.
what i dont understand about the bottom calls from Otteau to Leraeh is the overlook of the affordability index. Have the small price declines caused houses to be more affordable?
remember this housing slowdown started because of affordability not mass layoffs or a spike in interest rates. well they did come up last year but not for long.
JB can you find a chart for affordability? please
NYT & Otteau are telling the people what they want to hear. Thats all I got from this story.
People want to hear that there is a recovery and that the worst is behind us.
NYT is one of the biggest mouth pieces for the NYC/NJ real estate cartel. The NYT figured they would use Otteau to make it look like they are doing credible reporting. But, Otteau looked like he was more concerned about the photo op.
SAS
The bottom was in Dec,the buyers are numerous what we really need is invetory so they can have a pick,anything priced right is going fast .With a drop in intrest rates this should be a good year for existing home sales ,buyers must act quickly in this market
ignoring afforability again #7
I can rent a much nicer house then I can buy. why?
I have to put %60-%70 down to get same monthly payment as rent. Why?
Sally,
Spin somewhere else. Not here.
SAS
“It is just beginning to recover.”
You’ve got to be kidding…it is just beginning to correct (collapse?). The smart buyers will be sitting back for a few years to see how this plays out. If you didn’t buy in ’05 or ’06, why in the world would you now? These type of corrections take several years to play out and anyone that thiks they can accurately call a “recovery” this early on is a fool.
Sally,
Please drop me an email, jamesbednar at gmail dot com.
Thanks,
jb
Oh Sally, please. The bagholders have already been established. Nice try.
The Jersey shore is a Very Strong markets for those who have the means to afford it. It remains one of the best places to invest in real estate. Beachfront homes are fabulous and command a hefty price tag. Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.Although subprime loans could be problematic in some areas I don’t see it affecting prices much in beachfront homes .
Sally,
If you provide me with aggregate statistics for the shore area (MOMLS), I’d be glad to post them. Which brokerage are you with again?
jb
I’m still waiting for your email.
jb
Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.
Yeah, they’re called morons.
buyers must act quickly in this market
Please, take the tired old sales pitch from the NAR playbook somewhere else. When posting here, please show facts, data and support your assertions with sound economic theory & facts.
The Jersey shore is a Very Strong markets for those who have the means to afford it.
The problem is that not many people can afford it. According to the Wells Fargo Affordability index, only 17.9% of people can afford a median priced home. This means the area is unaffordable. For the NY metro area, only 5.1% of people can afford a median priced home, making it one of the least affordable markets in the country. Who is going to buy all these homes if the vast majority of the population can’t afford a median home?
http://www.nahb.org/page.aspx/category/sectionID=135
Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.
Thank you for pointing this out. This is pure and simple lunacy. It’s the very definition of a Ponzi scheme. How many greater fools do you think are left to buy these homes from these “investors”? At some point the music stops and someone becomes the bag holder.
Anytime something like this happened in history, it ended badly. In 1929, the last time I/O loans were popular, people cashed out equity in their homes to buy stocks. The results were devastating.
The smart money is out of real estate at this point. The dumb money always piles in at the end.
Crossroads,
Please see the link in my post above for data on affordability
“I’m still waiting for your email.”
Sally must be too busy with the numerous buyers that don’t want to miss the great opportunity that has been laid before them “down the shore”.
Looks like its the story of GoldenSally and the three RE bears!
Sally you must be smokin some good sh*t.
I have a friend who told me the same condo’s in Wildood Crest are $100,000 less on the asking price from last summer. The condo was in the $450,000 range now asking in the $350,000.
Furthermore I had a nice conversation with a tax assessor in the shore area in Monmouth County….Basically she reported that the new condo’s over $400,000 were not selling at all…the developers have zero activity! Anybody want to take a guess what city it is? Tons of speculative hype!!!!
sorry about the grammer!
grammar
Sally, my excuse is that i’ve had a couple of drinks, what is yours?
I can say one thing for sure, more people in Monmouth County are listening to Sally than to D.R. Horton’s CEO. Listings have been coming on slowly, but they are coming in at higher prices.
In Eastern Monmouth the median SFH and Condo prices rose $10K and $9K respectively and Western Monmouth houses also saw a $10K jump since mid Feb.
These people are really twisted. I’ll put the numbers for today up shortly.
Here are the numbers for inventory/median ask price in Monmouth county
All data from:
http://tinyurl.com/32u9ln
Date MLS sfh MAP MLS sfh MAP MLS sfh MAP
3-10 E.Mon 2362 $460K W.Mon 1641 $560K S.Mon 558 $799K
2-19 E.Mo n 2283 $450K W.Mon 1628 $550K S.Mon 549 $799K
Date MLS c/th MAP MLS c/th MAP MLS c/th MAP
2-19 E. Mon 768 $340 W. Mon 273 $320 S. Mon 135 $419
3-10 E. Mon 784 $349 W. Mon 274 $320 S. Mon 131 $424
sorry, that page is incorrect.
This is where all the data is:
http://tinyurl.com/2r2gsd
I’ve been watching Ocean and Monmouth Counties. Houses are selling, a bunch under contract and prices are still very high. I have not seen any sign of a correction here yet. I do think if the house is priced right it moves fast – and that the “right” price is still extremely overpriced.
” Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.Although subprime loans could be problematic in some areas I don’t see it affecting prices much in beachfront homes .”
People who cash in IRAs don’t make enough to live on the shore…. in my experience.
Let me guess… the shore is different?
Lets put it this way:
The gold coast has lost its glitter.
SAS
Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.
SAS,
She’s got it backwards, people are cashing out their equity and selling their homes to speculate in stock.
jb
Sally Realtor writes:
“anything priced right is going fast … buyers must act quickly in this market”
If houses “priced right” are moving, then it’s sellers who are acting quickly to lower prices so the market responds.
Keep up your pressure on sellers to “price right”, because until they do, you won’t have any transactions, and hence no commission checks.
Dear Sally,
BWAAHHHHAAAAHHAAAAAA!!!!!
Could I have a toke?
Grim,
I like the “again” as in “which are you with …again”
Commercial RE – which town in Monmouth with lots of hype?
There is an ex-realtor I know who used to work in Spring Lake/Belmar area . She did so well between 2000-2005 and she thought that good times will last forever. She took every kind of vacation, bought every kind of name brand bags, BMW, beach house, etc.
After summer 2005, Zero deals for a year. She has nothing under her name now — no BMW, no beach house, no nothing. She kept trying to get a low paying job from a major bank but without much luck.
Whatever Sally is smoking, I want some. After all, I am an old Berkeley guy. I miss those days.
Many people are cashing in their IRAs and selling their stocks to buy homes at the Jersey Shore.
Um, Yeah. People do foolish things all the time. Kind of like when you see someone swerve across 5 lanes of traffic from the far left lane to make an exit at the last minute on the Jersey Turnpike.
The Jersey shore is a Very Strong markets for those who have the means to afford it.
Sally,
If you have to cash out your IRAs/401ks/403bs to purchase a house anywhere, doesn’t that suggest that you can’t afford it?
Some food for thought about the Jersey Shore Real Estate market. The market is extremely localized just as it is everywhere else. In one town there may never have been a correction and in another there could have been a big one. Places like Avalon and lavalette which saw a huge runup saw a bigger correction. Places like Tuckerton and Forked River (Which never saw the same runup their oceanfront counterparts did) have not seen much price adjustment. Has anyone noticed all the commercial development going on in these smaller mom and pop towns along route 9? These economies are still growing.
Also if you think the sub prime issue is going to effect million dollar vacation homes you’re dead wrong. People who took out these wacky mortgages are of the lower income level (who should still be renting) who stretched themselves financially just to buy their first home. Think about it. A rich executive who has good credit isn’t going to take out one of these wacky (floating 12% in 5 years) mortgages on his millon dollar home.