Home prices fall in March

From MarketWatch:

U.S. home prices fall for first time in 15 years

U.S. home prices fell 1.4% in the first quarter compared with a year earlier, the first year-over-year decline since 1991, according to the S&P/Case-Shiller home price index released Tuesday. A year ago, home prices were rising at an 11.5% pace. The 10-city price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. Thirteen of 20 cities have seen falling prices in the past year, led by Detroit and San Diego. Home prices rose 10% in Seattle. The national decline “is reaffirmation of the pullback in the U.S. residential real estate market,” said Robert Shiller, chief economist for MacroMarkets LLC, and co-inventor of the index.

From Bloomberg:

S&P/Case-Shiller Home Prices Fell 1.4% in March, Index Shows

Declines in home prices in 20 U.S. metropolitan areas accelerated in the 12 months ended in March as the supply of homes exceeded demand, a private survey showed.

Home values dropped 1.4 percent from March 2006, after declining 0.8 percent in the year ended February, according to a report today by S&P/Case-Shiller.

Nationally, home prices also fell 1.4 percent in the first quarter from the same period last year, the fist decline since 1991.

The March index covering transactions in 20 metropolitan areas, showed home prices dropped 0.3 percent from a month earlier, following a 0.4 percent decline in February. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month to month.

S&P/Case-Shiller’s 10-city composite index, which has a longer history, decreased 1.9 percent in March from a year earlier.

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112 Responses to Home prices fall in March

  1. James Bednar says:

    The New York index shows a 1.1% YOY decline for March.

    Housing Derivatives – S&P/Case-Shiller March 07 Data

  2. James Bednar says:

    From the AP:

    S&P Housing Index Shows Decline

    U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 prices have shown a quarterly decline, according to a housing index released Tuesday by Standard & Poor’s.

    “We still don’t see anything that looks like a clear bottom,” S&P index committee chairman David Blitzer said. “We’re still headed down.”

  3. 3b says:

    Clear bootom? Its only starting.

  4. UnRealtor says:

    It’s amazing how many seemingly-intelligent people (doctors, etc), have said “It’s a Buyers Market out there, now is a good time to buy.”

    A few percent off a 100-year-peak is a Fools Market:


  5. njrebear says:

    Beijing ready to exploit U.S. weakness

    China loves Blackstone’s ‘American Dream’
    And Buffett warns about ‘selling off the farm’ to feed our addictions


    Remember America’s so-called “ownership society?” Oh, you forgot that political rhetoric? Well, China didn’t. It’s cashing in on the “American Dream.” Why? The country is tired of lending us megabucks to fund our mega trade deficits to indulge in our mega out-of-control addiction to their “stuff.”

  6. RentL0rd says:

    Question is – How do we get this news to sellers in NJ?

  7. Richie says:

    I don’t get it. First decline in 15 years, although the NAR continues to say prices haven’t fallen since the depression.

    What gives?

  8. skep-tic says:

    heard some interesting info re: gasoline consumption yesterday.

    The average low-income household spends 9% of gross income on gas.

    The average middle-income household spends 5%.

    The average upper-income household spends 2%

    While I’m not sure how “lower,” “middle” and “upper” are defined, the stats were kind of surprising to me in that they seem so low.

    I understand that gas consumption is inelastic, but should we really be worried about consumer spending dropping off the map when gas consumption as a portion of overall household income is so low?

    If we should be so worried, than isn’t this simply a reflection of how stretched financially we believe the average American household to be?

  9. gary says:


    The NAR is led by a group of charlatan’s that would rather gnaw off an arm rather than give up their ritual of extortion and theft.

  10. billz says:

    Something’s gotta give…

    Prices down 1.4%? big deal! House prices went up 100% in the past 6 years. People got in with rates of 5-6% during that time.

    When will the news admit that it’s not the Subprime market or tighter lending, but the fact that prices went up too much too fast and we need a “real” correction.

    I don’t know how people keep putting up with this…income levels did not go up by that much during that time, interest rates have started to creep upwards, disposable income has been hampered by higher heating, electricity, health insutance, gasoline costs, as well as high property taxes..

    Something’s gotta give…

  11. lisoosh says:

    skeptic –
    “I understand that gas consumption is inelastic, but should we really be worried about consumer spending dropping off the map when gas consumption as a portion of overall household income is so low?”

    Well – the percentage is much higher for lower income families and there are far more low income families that high. People tend to discount the buying power of lower income people, but they are in the majority and they spend most or all of what they make, take that out of the equation, or lower it and you may be surprised at how big an effect it can really have. Not on the sale of Prada handbags, but at Walmart and Target and the supermarket.

  12. gary says:


    It’s become laughable, hasn’t it? This state is a real joke… and I mean that sincerely. NJ s*cks and there are a select few who made a lot of money at the expense of a lot of us.

  13. James Bednar says:

    Question is – How do we get this news to sellers in NJ?

    We don’t, it would be futile to try to influence the market in this manner.


  14. James Bednar says:

    From Bloomberg:

    U.S. May Consumer Confidence Rises More Than Forecast

    — An index of consumer confidence in the U.S. jumped more than forecast in May as rising stock prices and a resilient labor market put Americans in a mood to spend.

    The New York-based Conference Board’s index of consumer confidence rose to 108.0 this month from a revised 106.3 in April, a five-month low. The index averaged 105.9 last year.

    Buoyant sentiment will support consumer spending, helping cushion the economy from the effects of declining home prices and expensive gasoline. That raises the likelihood the Federal Reserve’s forecast for “moderate” growth in coming quarters will be borne out.

    “A better job market plus a higher stock market equals a better tone,” said Roger Kubarych, chief U.S. economist at Unicredit HVB, who forecast a reading of 107. “It’s a snapshot of an economy that has improved and is improving. This points in the Fed’s direction.”

    The index was forecast to rise to 105, according to the median estimate in a Bloomberg survey of 65 economists, from an originally reported 104. Forecasts ranged from 100 to 107.

    The Conference Board’s measure of present conditions rose to 136.1 from 133.5. The gauge of expectations for the next six months rose to 89.2 from 88.2.

    The share of Americans who plan to buy a home in the next six months dropped to 2.9 percent from 3 percent, the survey showed.

  15. hoodafa says:

    Americans confident despite falling home prices

    NEW YORK (Reuters) – American consumers and investors became more optimistic in May, while U.S. home prices declined in the first quarter for the first time in 16 years, according to reports published on Tuesday.

    The Conference Board’s index of consumer confidence rose to 108.0 in May from 106.3 in April. That was well above a low of 78.8 just after the start of the war on Iraq, but far beneath highs near 145 at the tail end of the Internet boom.

    “All in all, confidence levels continue to suggest growth, albeit at a slow pace,” said Lynn Franco, director of the private organization’s Consumer Research Center.

    A rallying stock market was also bolstering sentiment among investors, pushing the UBS/Gallup index of investor optimism over 20 points higher in May to 95, the highest since January.

    Record gasoline prices were keeping a cap on confidence however, the two surveys said. Fifty-one percent of investors told UBS/Gallup they planned to cut back on driving this summer.

    More at: http://www.reuters.com/article/ousiv/idUSN2931859320070529

  16. James Bednar says:

    More on the same topic over at Big Picture..



  17. John says:

    I easily see this taking a while to work its way through. I am getting squished in my three bedroom house with my wife, three kids and a dog but I refuse to trade up in a sinking market to a million dollar 60 by a 100 mini-mansion. The trade up crowd does not have to trade up when instead of receiving congratulations from their family on their smart investment they get, “what are you an idiot” and the chance to lose double the amount in a real estate meltdown then their current home. There will be a few false bottoms in this market but usually it takes 36-48 months to find a solid bottom. Think March 2000 t0 March 2003 in the stock market and think 1989 to 1993 in the last RE bottom cycle. It was not until the so so 2006 spring selling season did we start to see a real trend and that was only 14 months ago. We have a way to go!!!

  18. James Bednar says:

    From the Record:

    Architect sees lucrative contracts following political gifts

    A Hasbrouck Heights architectural firm that is a big contributor to the Democratic Party has emerged as a favorite contractor for Bergen County government, landing deals worth hundreds of thousands of dollars.

    Since 2000, DMR Architects and its executives have given at least $120,000 in campaign contributions to candidates and political committees, including $42,750 to the Bergen Democratic Organization from 2002 to 2004. Democrats have controlled Bergen County government since 2001.

    Since then, the 16-year-old firm has received a steady stream of large public contracts, including $350,000 to study the feasibility of putting the Bergen County Police headquarters, public works station and central municipal court in one spot.

    The firm’s political connections raised enough questions at the state Meadowlands Commission that it recently revised its bidding guidelines after the agency was criticized for awarding a controversial contract to DMR.

  19. John says:

    Suffolk County Clerk’s Office
    Judith A. Pascale
    Suffolk County Clerk

    Press Releases

    Apr 23, 2007 Dan Panico


    (Riverhead, N.Y.) – Suffolk County Clerk Judith Pascale announced today that the month of March, 2007, was the busiest month in the history of the Suffolk County Clerk’s Office with respect to the number of notice of pendency actions (lis pendens).

    Filed by a lender, a lis pendens is the formal notice that starts the foreclosure process. In the month of March, 2007, the Suffolk County Clerk filed 708 lis pendens. This marks a dramatic increase from the previous year.

    Year to date, the Suffolk County Clerk has processed an astounding 2,374 lis pendens. This number is nearly half of the total filings from the prior year, despite being only one third through the year. In 2006, 5,819 lis pendens were filed.

    “If the trend continues, this year will mark the highest frequency of lis pendens filings in Suffolk County history,” commented Suffolk County Clerk Judith Pascale. “It is important to realize that if you are facing financial trouble, you are not alone.”

    The Mortgage Bankers Association reported that more than 2.1 million Americans with a home loan missed at least one payment at the end of last year.

    “In an effort to combat these rising numbers, Suffolk County Executive Steve Levy has announced a foreclosure prevention hotline, in collaboration with Long Island Housing Partnership. It is crucial that all homeowners facing the loss of their homes due to foreclosure utilize the County Foreclosure Prevention Hotline at 631-853-4800. This hotline may provide much needed financial counseling and access to low interest bridge loans from trusted sources,” concluded Suffolk County Clerk Judith Pascale.

  20. Lindsey says:

    Re post 8


    As lisoosh noted, what low income people spend on gas is rather significant to those households, but I think you’re not really considering what those numbers are saying.

    Even at 5%, gasoline is a very significant expense. People are spending $1 of every $20 on something that is only a part of something else. If gas is 5% what about the other components of transportation, i.e. the car itself, insurance and maintenance?.

    If middle class in NJ is the median income of about $60K that means people are spending $3K on gas. If the price rises by 1/3 they are up to $4K.

    I could certainly think of quite a few things I would prefer to use a couple thousand dollars for instead of gasoline.

  21. Seneca says:

    I have a lot of relatives wondering why I would bother renting for a year when I can purchase a home in this “buyers market”.

    They agree prices will come down but don’t understand why I would wait 12-24 months and spend $25k-$50k on rent only to get a $25k-$50k price reduction on a home. I don’t bother explaining it anymore.

    Just wondering if anyone has any good zingers they use to respond to these type of eye-rolling questions.

  22. x-underwriter says:

    1. What you’re spending in rent would pretty much be going out the door for taxes alone.

    2. Who says the drop will only net you a $25k-$50k price reduction. It may go farther than that

  23. gary says:

    Is anyone here very familiar with the Lehigh Valley area? I’d be willing to hand my email address over through JB if anyone is interested in sharing some info about the area. Thanks.

  24. dreamtheaterr says:

    #22, how about equating it to a new $50K BMW you drove out of the dealership without insurance. You were looking around to make eye contact with the first stranger to admire you in your new car, missed a turn and drove into a ‘oops, suddenly-appeared’ electric pole, which conveniently sliced your car in half. Unfortunately, you financed your now 1-in-2 car through a 30 yr loan. So 360 more $330/month payments, and going back to driving your 86 Corolla. Only upside – you keep it in your garage for rememberance sake.

    Seriously though, paying additional $69K interest on $50K overpaid on a property should be enough for folks to sit up and take notice.

  25. New-to-NJ says:


    The sellers that we are currently negotiating with are looking to trade up. They have 2 kids with one on the way (due in August) and want to move before the older daughter starts school in the fall. They bought their current house in Feb 2001 for $210k, and our final offer was $385k, so even if they take that (which is much lower than their asking price of $419) they will still see a gain of $175,000 over 6 years. I don’t have much sympathy for them if they trade up to a $500,000 house and then prices tank by 10% more. After all, if prices fall by 10% across the board I would lose $38,500 of my hard-earned savings, while they would lose $50,000 in funny money, or whatever you want to call it.

    Anyway, for those who might be interested in an update, we did go up to $385k last Wednesday and told them it was our final offer. They came back on Friday and said $389k (down from recent counter of $396k). We went to look at the place again and thought about it over the weekend. We called yesterday and told them we won’t do $389k and at this point we are second guessing $385k.

    Silly sellers…if they had come back right away last week and agreed to $385 we would have jumped at it, but now we will probably turn down $385k if they come back and agree to it.


  26. MBaldwin says:

    New-to-NJ Says:
    May 29th, 2007 at 12:41 pm
    Silly sellers…if they had come back right away last week and agreed to $385 we would have jumped at it, but now we will probably turn down $385k if they come back and agree to it.

    You’re screwing around on a house over $4k — and then the capper of your last statement? Sounds like you aren’t all that serious. Seller will prob. be better off without you.

  27. 3b says:

    #26 Good for you guys, I know it can be hard, but stick to your guns;tell them to go scratch with their house.

    Personally, if they were smart, they would not be moving at all

  28. 3b says:

    #27 M Baldwin, The same thing could be said about the sellers, they are jerking around over 4K? Sounds like they need every last dime, dont you think?

    The point is these buyers are sticking to theri guns, and for what its worth I think that is great.

  29. John says:

    You know what is funny is what does the price they paid for the property have to do with anything? The bottom line is what is it worth today? Plus that is six years ago and they could have under or over paid or got fair market value for the house and who knows what they did to the house. I bought my place in 2000 in a save foreclosure purchase and put 60K in renovations in. If someone looked at my 2000 price it would be meaningless.


    The sellers that we are currently negotiating with are looking to trade up. They have 2 kids with one on the way (due in August) and want to move before the older daughter starts school in the fall. They bought their current house in Feb 2001 for $210k, and our final offer was $385k, so even if they take that (which is much lower than their asking price of $419) they will still see a gain of $175,000 over 6 years. I don’t have much sympathy for them if they trade up to a $500,000 house and then prices tank by 10% more. After all, if prices fall by 10% across the board I would lose $38,500 of my hard-earned savings, while they would lose $50,000 in funny money, or whatever you want to call it.

    Anyway, for those who might be interested in an update, we did go up to $385k last Wednesday and told them it was our final offer. They came back on Friday and said $389k (down from recent counter of $396k). We went to look at the place again and thought about it over the weekend. We called yesterday and told them we won’t do $389k and at this point we are second guessing $385k.

    Silly sellers…if they had come back right away last week and agreed to $385 we would have jumped at it, but now we will probably turn down $385k if they come back and agree to it.


  30. Larry says:

    Same thing happened to me on a house that was list at 479. I offered 465 then went up to 467500. Seller wouldn’t go down from 472500. As much as I liked the house and thought it was a good deal, the sellers need to realize it is a buyers market and if they dont want to sell their house for 5 k less they are playing with fire.

  31. New-to-NJ says:

    Actually, I do think we are being a little silly, but not over the $4k (I would point out that $4k should be less of an issue to the seller, who still stands to see $175k in appreciation).

    We had been looking fairly seriously at homes from Feb to April and then told our realtor that now was not the right time for us to buy, considering the market. We planned to start looking again in Sept/Oct at the very earliest. We only went to see this house because it is a FSBO and they were having an open house. Anyway, the house turned out to be perfect for us, and so we got caught up in that, and put in an offer. It was sort of silly considering our decision to stop looking in April. I guess we figured if we got a great deal it would work out well. At this point we don’t think $385k is a great deal.


  32. New-to-NJ says:


    First, we know that they didn’t do any major renovations because they told us so. The kitchen/family room addition and deck were put on by the previous owners. Second, the reason I am interested in knowing what they paid is to give us some idea of their wiggle room as far as negotiations (assuming they didn’t cash out all their equity with a HELOC). It seems logical to me that someone who paid $210k six years ago will have more room to negotiate than someone who paid $395k last year, for example.

  33. 2008 Buyer says:

    New home construction in the U.S. may take until 2011 to return to last year’s level, said David Seiders, chief economist for the National Association of Home Builders in Washington.


  34. Richie says:

    Hmm, my interpretation of how a pre-foreclosure converstation would go…

    Agent: “Hello, this is the foreclosure hotline, how can we help you?”

    Borrower: “My house is being foreclosed on, what can I do?”

    Agent: “Pay your mortgage payment. Thank you, have a nice day.”

    I mean really, what the hell can people do?

  35. otis wildflower says:

    #25: You can finance a new car without getting comprehensive insurance? Last time I leased a car (lease ended 6 years ago) I had to carry comprehensive.

    (and after 1 accident during a snowstorm, my comprehensive went from $3600/yr to $7600/yr.. So I paid off the lease early and bought a Benz that now costs me $700/yr to insure.. Learned my lesson..)

  36. hoodafa says:

    CNNMoney.com: Prospects dim for quick home-price recovery

    Investors appear to be betting against any rapid rebound in home prices.

    NEW YORK — Home prices fell over the last 12 months for the first time in 16 years, according to a survey released Tuesday, and investors seem to believe that prospects for a quick recovery are poor.

    The S&P/Case-Shiller national home price index revealed that in 13 of 20 metro areas surveyed, home prices fell an average of 1.4 percent in the 12 months ended March 31, with half of that decline, 0.7 percent, coming in the first quarter.

    More at: http://money.cnn.com/2007/05/29/real_estate/home_price_recovery_appears_unlikely/index.htm?cnn=yes

  37. John says:

    It is like a suicide prevention hot-line. Now put down the gun sir or I will have to put you on hold and make you listen to bad music.

    I should volunteer at that thing and see if I can get some cheap houses. Lets see you can’t afford that 100k home equity loan on your southampton home your bought 40 years ago cause you are 102 years old, don’t worry I can help you out!

  38. John says:

    Then give them your offer non contigent with an expiration date and stop the negotiations.

    I wish your theory that people who paid less would have more wiggle room but it seems the opposite, every estate sale I went to with more than one heir the kids all thought the parents house was worth a fortune even though they paid 17K for it 50 years ago.

    First, we know that they didn’t do any major renovations because they told us so. The kitchen/family room addition and deck were put on by the previous owners. Second, the reason I am interested in knowing what they paid is to give us some idea of their wiggle room as far as negotiations (assuming they didn’t cash out all their equity with a HELOC). It seems logical to me that someone who paid $210k six years ago will have more room to negotiate than someone who paid $395k last year, for example.

  39. ithink_ithink says:

    unrelated to the topic:

    if i tour a house with an agent from a diff. company than who is representing the seller, do i have to use the one that showed me the house? have they become my buyer broker?

    if i call the list agent of a seller but then they have someone else from their agency meet me at the showing, have they become my buyer broker?

  40. gary says:

    The sellers suck.. and I’m a home owner. These drunken fools think they’re entitled to a lottery winning. If you like a house, offer at least 15% under asking; if they don’t like it, move on to the next one.

  41. afe says:

    #22 Seneca,

    I know what you mean. Just today someone was trying to talk me into buying in this “buyer’s” market. They repeated over and over again that I can go in and low-ball by 20% in communities like Millburn (where this person lives). I said, that is good to hear but what if prices fall or even stagnate and I want to move in 2-3 years. Then what?

    When someone asks me ‘when am i going to buy’ my immediate response is to ask them if they are thinking of investing in any properties in this “buyers” market. Shuts them right up.


  42. 2008 Buyer says:

    Redfin Forced to Shut Down While CBS and NAR Fight On

    There is some additional news and a bit of a sidebar to the story about the 60 Minutes feature on Redfin a week or so ago and the strong reaction of the National Association of Realtors to that story.


  43. New-to-NJ says:


    We are in a tricky spot because we hope to be in New Jersey for 5-7 years. So we aren’t comfortable buying today, because prices could fall or stagnate and not rebound by the time we want to sell. But, if we wait another year or two to buy there may be no point in buying, because we may want to leave in 2-3 more years. I envy people who can buy a house with a fair amount of probability that they will be there for 10 years or more.


  44. 2008 Buyer says:

    Those Canadians are a goofy bunch….

    ’16 Minutes’ spoof continues discounter debate

    Just when you thought the heated debate over the “60 Minutes” segment on the real estate industry had subsided, a spoof video has stirred the issue of real estate commissions and discount practices to a boil once again….


    The video


  45. 2008 Buyer says:

    JB…awaiting moderation

  46. chaoticchild says:

    Hey Chicago,

    Off topic, I know you are a financial planner. Sometime ago, you gave some information on finding financial planners.

    Could you pls give me those info again. What title should I look for CFA vs CFP…….and the website to look for them.

    I am looking for a non-commission based planner. Either % of my asset or hourly rate.




  47. Rich In NNJ says:


    Check your email, I think I found THE place!


  48. John says:

    To the Barricades! Property Taxes Spur Revolts: John F. Wasik
    May 29 (Bloomberg) — When it comes to property taxes in the U.S., often you are blessed and cursed.

    In a rising market, the local assessor will raise his estimate of your home’s worth, which usually results in a higher real-estate tax bill. Your property taxes, particularly in a high-growth area, then pay for new schools, fire and police stations and other public services.

    Yet the price of growth can be burdensome when property taxes outpace the rate of consumer inflation or income growth. Anyone who lives in New Jersey, Florida, Illinois — or any area where real-estate values have jumped dramatically — can attest to this often negative reality of homeownership.

    Tax revolts from North Dakota to Florida have proven one thing: If you lower the local tax bill, you still need revenue from other sources. You end up swapping one levy for another.

    Nowhere has the burden incensed more taxpayers than in New Jersey. The state has the dubious honor of having the highest property-tax bills in the country, averaging $6,300 last year, a 7 percent increase over 2005.

    After years of citizen activism in New Jersey, a recent proposal called for a 20 percent reduction in property taxes in exchange for higher state sales taxes, estimated to cost the average household an additional $275 a year, according to Citizens for Property Tax Reform, a state taxpayers group.

    New Jersey Revolt

    “This is neither relief nor reform,” says Cy Thannikary, chairman of the Allentown, New Jersey-based group, which claims to represent 500,000 homeowners and 57 community organizations. “The reduction is not constitutionally guaranteed.” The Garden State collected almost $21 billion in property taxes last year where local levies are twice the national average.

    Homeowners just can’t keep up with property-tax increases in many states. From 2000 to 2004, personal income grew almost 16 percent while property-tax collections increased about 28 percent, according to the Tax Foundation, a Washington-based educational organization.

    That’s why tax revolts have spread across the country and are gaining momentum.

    Stymied by stubborn bureaucracies, many of these insurrections have stalled. Once taxing bodies set funding levels, it’s extremely difficult to get them to cut back. Public-employee pensions are guaranteed by law, fire engines need to be replaced and libraries need to buy books. When property taxes are flowing in during robust real-estate markets, politicians spend heartily instead of giving taxpayers a break.

    Prosperity Boosts Coffers

    Why are some areas taxed higher than others? Growth is a big reason. Where infrastructure is needed, the disproportionate burden falls on homeowners in most places.

    Each taxing jurisdiction — more than 54,000 of them in the U.S. — accounts for portions of your property-tax bill.

    Taxing bodies raise or lower their levies for various reasons. Sometimes they need the money to expand or build new structures. Local governmental bodies account for the largest portion of real-estate taxation — 73 percent — according to the Tax Foundation. About half of all taxes go to local schools.

    New Jersey is again a case in point, ranking as the state with the highest per-capita property-tax rate, according to 2004 Census Bureau data. That translated into more than $2,000 per person on average, or more than 5.2 percent as a percentage of income.

    Pennsylvanians Taxed Less

    In comparison, neighbors in Pennsylvania, which ranked in the middle of the pack of the Census Bureau survey, the per- person average was about $1,000, or 3.1 percent of income.

    Five of the counties with the highest local taxes relative to median home values are in upstate New York: Niagara, Monroe, Onondaga, Wayne and Chautauqua. That’s based on the 2005 Census Bureau data.

    While it’s politically expedient to advocate tax reform, it’s very difficult to get it done.

    Does the “rob Peter to pay Paul” method of shifting tax burdens work? Often politicians seek to ease the pain of tax increases by shifting gambling revenue to schools. Several states are considering higher income taxes and sales levies.

    You have some recourse in this struggle. You can ask local taxing bodies to account for and trim their spending and to eliminate waste. School board members as well as village and county government officials are all elected. In New Jersey, taxpayers can vote on school budgets.

    At the assessment level, you have a right to appeal your market value and property description.

    You can also challenge the assessment process itself, which is a much tougher road to follow. If you don’t like what your legislature is doing — or not doing — do something about it.

    Fight Injustice

    In Illinois, my neighbors and I have organized to examine local assessment practices to see if they are unfair.

    Like millions watching real-estate taxes climb unabated every year, it’s easy to feel apathetic and powerless.

    It may take years to obtain relief. Yet as the 18th-century revolutionary Thomas Paine once said: “It is time to dismiss that inattention which has so long been the encouraging cause of stretching taxation to excess.”

    (John F. Wasik, author of “The Merchant of Power,” is a Bloomberg News columnist. The opinions expressed are his own.)

    To contact the writer of this column: John F. Wasik in Chicago at jwasik@bloomberg.net .

    Last Updated: May 29, 2007 00:04 EDT

  49. afe says:

    New to NJ,

    Yeah, it is tough figuring out what the right strategy for each individual case. Given your situation, why not wait 1 to 1.5 years (end of 2008) anyway? The way I see it, even if you have to move 4 years after that, you at least can save yourself “lost equity” that will happen in the next year. Who knows, maybe it will take longer, no crystal balls here, but watching previous housing markets, it is clear that the stagnations can take a long time to work themselves out and timing an upswing can be brutal. Maybe you won’t make any money but at least you won’t be “catching a falling knife”.


  50. fanshawe says:

    Slow day today…

    Does anyone have any stats on median household income for:

    a) Families who recently bought a home;
    b) Families that are not retired.

    I’ve saw some reference yesterday or a few days ago to the effect of, “Ridgewood’s median income is ~$100k, and I make more than that, but I can’t afford a house in Ridgewood.”

    I’ve wondered about this situation myself. But wouldn’t it be more accurate to look at income for people still actually working and/or look at median income for the people with whom you’re competing to buy a house in Ridgewood (or any other town) instead?

    I know that people talk about affordability a lot here, but I’m just trying to quantify just exactly what a reasonable expectation for price corrections is in order to reach a that magical “affordability” floor.

  51. d2b says:

    #40 ithink…

    I would say no. The selling agent has a responsibility to the buyer, so they are referring you to another agent to act on your behalf. You should not feel obligated stick with a person that you did not directly hire.

    Hire your own selling agent. Ask around for referrals. I would want an agent from an entirely different firm so you know that the agent truly works for you.

  52. UnRealtor says:

    #52, keep in mind that the majority of people in Ridgewood owned their homes before the bubble started.

  53. chicagofinance says:

    chaoticchild Says:
    May 29th, 2007 at 4:49 pm
    Sometime ago, you gave some information on finding financial planners.
    Could you pls give me those info again. What title should I look for CFA vs CFP…….and the website to look for them.
    I am looking for a non-commission based planner. Either % of my asset or hourly rate.

    website – FPA Planner Search

    CFA [Chartered Financial Analyst] is a credential for an asset manager.
    CFP [Certified Financial Planner] is a credential for a financial planner.

    The site will ask for some personal information, do not be concerned about supplying it. It is an organization of high integrity.

    Just one point…..if you are not investing a large sum of money, commissions actually may be substantially LESS expensive. As an example, I basically cannot do anything in less than 2 hours, so by definition my minimum charge is $300 by hourly rate on practically the most basic issues.

    A Catch-22, the type of CFP’s you have stated a preference to consult often have investing minimums. Hopefully you have enough to make the cut. Otherwise you may be forced to go commission based.

    Personal bias…..stay away from the large wirehouses – just my opinion.

    Due to liability concerns, I cannot endorse or dissuade you from using anyone within my own field. However, if something sounds fishy or you want a clarification of an issue, I’ll do my best to fill in the gap.

    Good luck and happy hunting.

  54. honest-realtor says:

    I have told you guys many times, now is great time to buy. don’t miss the bottom. Do someting for your future! don’t waste your time reading the confusing non-professional posts. we are the ultimate source of your reliable information.

  55. 3b says:

    #57 honest: I LOVE YOU!!

  56. 3b says:

    #54 unrealtor:True, but Ridgewood us a big town, and a lot of housing stock has turned over in that town in the last few years.

  57. njrebear says:


    For immediate release

    The Federal Reserve Board on Tuesday announced the discussion topics for its June 14 public hearing under the Home Ownership and Equity Protection Act (HOEPA). The purpose of the hearing is to gather information about how the Board might use its rulemaking authority to curb abusive lending practices in the home mortgage market, including the subprime sector, in a way that preserves incentives for responsible lenders to provide credit to borrowers.

    Hearing participants will discuss whether the Board should use its rulemaking authority to address concerns about certain terms and practices related to home mortgage loans, including:

    Prepayment penalties
    Escrow accounts for taxes and insurance on subprime loans
    “Stated income” or “low doc” loans
    Consideration of a borrower’s ability to repay a loan

    Participants will also discuss the effectiveness of state laws that have prohibited or restricted these and other terms or practices, and whether the Board should consider adopting similar regulations to curb abusive lending practices. The Board is also soliciting written comments from the public. Comments are due August 15, 2007.

  58. njrebear says:


    Homebuilder Pulte to Cut 2,000 Jobs

    It had 12,400 employees in 2006, down from 13,400 in 2005, according to its 2006 annual report.

  59. Clotpoll says:

    New (26)-

    Do you have a second (and third) choice home lined up?

    If not, what do you stand to gain by walking on the one offer you have tabled on the only home you want to buy?

  60. Clotpoll says:

    John (30)-

    Are you new here? You seem new. Your comments exhibit far too much common sense to place you in the bunker-dweller category.

    Don’t you love the whining about other people’s “excessive profits”? Or does all the griping about why the market won’t drop 20% in a week float your boat?

    Like if these guys were in the sellers’ shoes, they’d be undercutting and underselling all their competition.

    Yeah, right.

  61. Clotpoll says:

    Larry (31)-

    The only person playing with fire is YOU…if you don’t have a second choice lined up.

    I’m all for buyers using all the leverage at their disposal…however, that doesn’t include cutting off one’s nose to spite one’s face. The availability of choice means that a buyer must exercise it to “win” the game. Skulking away- and back into the rental-bunker- from your one and only home of choice is not exercising negotiating leverage; it’s losing, pure and simple.

    A buyer who does that isn’t a buyer…he’s a wannabe.

  62. Clotpoll says:

    New (33)-

    Does a 385K-389K price represent market value net of the potential commission (and maybe 3-4% on top of that)? If so, this place could be a buy.

    If 385K-389K still has commish “built in”, why would you ever pay a FSBO a bonus…especially in this market?

    FSBOs that don’t represent an extreme bonus are not worth a second look. There’s a winner and a loser; if you aren’t gonna be the winner, why bother?

  63. Clotpoll says:

    New (33)-

    Plus, as you’ve discovered, FSBOs tend to be idiots as negotiators. They are the perfect mix of greed and stupidity. If you can’t Sun-Tzu that to your advantage in this particular case, why get all hot and bothered…there’s a zillion more where they came from.

  64. Clotpoll says:

    think (40)-

    Your agent is whomever YOU choose…whenever you decide to choose.

    Someone who walks you into a house doesn’t automatically become your agent just because of that.

  65. Clotpoll says:

    gary (41)-

    When did you become such a bitter, self-loathing homeowner?

    When you finally decide to pull the plug, sell your house and leave NJ, please post the particulars of your home’s heavily-discounted listing here. I’ll expect it’ll be priced 15-20% below the competition, right?



  66. profuscious says:


    i come for a visit, and all I see are the corpses scattered from Clot’s at-a-tat-tatting.

    sorry, got a to go (before I get hit)

  67. profuscious says:


    what the he** double chopsticks

  68. Clotpoll says:

    The RE market is moving faster than the Pistons-Cavs game.

    God, those two teams suck.

  69. chaoticchild says:


    Thx, I will look into it.


  70. AntiTrump says:

    #22 Seneca:

    Let me explain. If you rent for two years and spend $25k-$50k. That’s all you loose. if you buy and your house drops $25k-$50k in two years you have lost $25k-$50k + the interest you paid for the two years which I presume would be in the $25k-$50k range. That’s called a double whammy. Not to mention you will have a better choice of homes in your price range if the price drops $25k-$50k.

  71. Richie says:

    Plus taxes, upkeep, utilities, repairs… the whammies are growing.


  72. RentinginNJ says:

    Don’t forget closing costs, opportunity cost associated with a down payment (downpayment fund could be earning interest somewhere) and 6% comission upon sale.

  73. UnRealtor says:

    The good news: you can watch the entire season of “Jericho” at CBS.com, for free:


    The bad news: the geniuses at CBS recently decided to cancel “Jericho,” their best show in years.

  74. fanshawe says:

    54, Unrealtor:

    Of course, I understand that the majority of houses changed hands way before the run-up. But let’s face it, current prices and affordability levels are defined by the current breakdowns of buyer income, not by historical affordability levels.

    What I’m trying to determine is what exactly the current buyers can afford today. If, for some reason let’s say, the make-up of buyers has really changed and deviated from historical norms — ie, the concept of Wall Street money and NYC salaries driving prices of Manhattan commuter towns permanently higher — then this should be evident in median incomes of buyers outside of who currently live in those towns, no?

  75. UnRealtor says:

    fanshawe, with speculators tearing down homes and building larger homes over the last few years, they have actually permanently changed the makeup of a town’s housing stock.

    Any large-ish lot, will have a $600K 1950s ranch knocked down and a “million dollar” crapbox built in its place. After awhile, there are are few ‘starter homes’ remaining in these tony towns.

    So ‘affordability’ in these towns is forever changed.

    As for median incomes and affordability, look at the total number of homes in Ridgewood (25,000 according to city-data.com), and how many of these homes sold before ~2001 (probably a few percent).

    Most households aren’t selling or dying or retiring and don’t notice the bubble effects. But HELOCs may be a factor…

    I’m waiting for ‘affordability’ to return to historical norms in relation to rent, rather than in relation to income.

  76. Pulte cans another 1,900. Too bad we don’t know the true REIC layoff number

    read: http://housingpanic.blogspot.com/2007/05/pulte-cans-another-1900-too-bad-we-dont.html

    1,900 more get the axe at Pulte today, but the real story on homebuilder layoffs will never be known, since the people who built all these unwanted homes were never “employees” – just contractors and illegals mainly.

    But no matter how they’re counted (or not counted) the jobs are gone.

    And yes, that means a lot of people who aren’t able to make their mortgage payment anymore, or buy new GM trucks, or take their family to PF Changs, or wire money back to Mexico (that’s why they were booing).

    The true REIC layoff number with housing and homebuilding having totally collapsed is likely in the millions. Don’t forget ramen eating realtors don’t show up in the government reports either.

    We’ve lost another American industry folks (thank you Alan Greenspan). The country who no longer builds things now doesn’t even build houses.

  77. thatbigwindow says:

    Looks like the Meadowlands commission and the surrounding towns in the Meadowlands will have to pay for Xanadu with providing affordable housing.

  78. Rich In NNJ says:


    U.S. May Hudson employment index falls 0.6 to 106.9
    Workers more anxious about finances: Hudson
    Hiring expectations slip 1 point to 32%: Hudson

  79. skep-tic says:

    It doesn’t seem plausible to me that the income level of buyers has changed drastically in recent years. Yes, there is a ton of money at the top, but median incomes have not changed drastically. What did change was the availability of credit. The relationship between credit tightening and the death of this year’s spring market seems fairly obvious. If people actually have to pay for things with cash, most can’t do it.

  80. skep-tic says:

    from USA Today:

    The cost per U.S. household of unfunded promises made by federal, state and local government:


    Social Security

    Federal debt

    Military benefits

    State and local debt

    Federal civil- servant benefits

    State and local retiree benefits

    Other federal obligations


  81. John says:

    Population, total and by age Ridgewood, NJ vs. Places in USANJ Chart all
    Total population (2000) 24,936 Chart | Rankings
    Projected population (2030) N/A Chart | Rankings
    Population density (people per square mile) (2000) 4,308.954 Chart | Rankings
    Pct. population under 18 years old (2000) 29.6% Chart | Rankings
    Pct. population 65 years old and over (2000) 12.1% Chart | Rankings
    Housing unit estimates (2005) N/A Chart | Rankings
    Population estimates (2005) 24,790 Chart | Rankings
    Population by race/ethnicity (2000 def.) Chart all
    Pct. non-Hispanic White alone population (2000) 84.7% Chart | Rankings
    Pct. non-Hispanic Black/African American alone population (2000) 1.9% Chart | Rankings
    Pct. non-Hisp. Asian, Hawaiian and Pacific Islander alone pop. (2000) 8.5% Chart | Rankings
    Pct. non-Hispanic American Indian/Alaska Native alone population (2000) 0.0% Chart | Rankings
    Pct. non-Hispanic other race alone population (2000) 0.1% Chart | Rankings
    Pct. non-Hispanic multiracial population (2000) 0.8% Chart | Rankings
    Pct. Hispanic/Latino population (2000) 3.9% Chart | Rankings
    Household size and type Chart all
    Total households (2000) 8,582 Chart | Rankings
    Average household size (2000) 2.9 Chart | Rankings
    Pct. married-couple hhlds. with own children under 18 years old (2000) 41.9% Chart | Rankings
    Pct. single-parent-headed hhlds. with own children under 18 years (2000) 3.8% Chart | Rankings
    Pct. family households without own children under 18 years old (2000) 33.9% Chart | Rankings
    Pct. nonfamily households (2000) 20.5% Chart | Rankings
    Education Chart all
    Pct. persons 25+ yrs. old with no high school diploma or GED (2000) 4.1% Chart | Rankings
    Pct. pers. 25+ yrs. old with a bachelors or graduate/prof. degree (2000) 66.7% Chart | Rankings
    Income/employment of residents Ridgewood, NJ Chart all
    Median household income last yr ($) (2000) $104,286 Chart | Rankings
    Average household income last yr ($) (2000) $148,793 Chart | Rankings
    Poverty rate (2000) 3% Chart | Rankings
    Unemployment rate (2000) 3.1% Chart | Rankings
    Pct. pop. 16 years old and over who are employed (2000) 62.2% Chart | Rankings

  82. John says:

    If you go to dataplace.org you can check any town stats for free. Ridgewood has a $148,793 household income. BUT – back out all the retirees, civil service workers, people who were able to buy before 2003 and any of the very few apartments above the store etc. and get down to the minimansion new money crowd buying the trade up homes nad I guarantee you they are making a heck of a lot more than the $148,793 average household income. That is who is buying the houses and pricing you out.

  83. 3b says:

    #84 Ar you forgetting all the garden paratment rentals in Ridgewood?

  84. skep-tic says:

    or it is the same $150,000 couple who now borrows 5x their annual income rather than 3x.

    This seems far more likely to me than a wholesale demographic change in terms of income levels.

  85. 3b says:

    376 All these tony towns as you say fell in price before too, nothing is permanent.

    Some towns will always be more expensive, but this idea that there is permannet new class in these towns is mistaken.

  86. Seneca says:

    Talking Points for Those Who Decide to Rent vs. Buy (Compare to NAR Talking Points below)

    – The maximum money ‘lost’ on a rent decision amounts to your rent.
    – The maximum money ‘lost’ on a buy decision is the decline in your homes value, plus the interest you are paying on the mortgage*, plus property taxes* and upkeep, closing costs and the opportunity cost associated with the down payment.
    – You have a very good chance of having an even larger selection of homes to choose from at lower prices a year or two from now.

    Compare and contrast:

    * Some buyers may have a tax advantage due to the deductibility of property taxes and/or mortgage interest but if you are hit with the AMT, you may not be able to take advantage of these. Please consult with your accountant.

  87. UnRealtor says:

    “All these tony towns as you say fell in price before too, nothing is permanent.”

    Well, the new mega-houses remain standing, and the tiny ranches, a dying breed.

    “Some towns will always be more expensive, but this idea that there is permannet new class in these towns is mistaken.”

    I hope you’re right, as I’m one of the people priced out due to speculators knocking down modest houses and building mega-houses. I see transactions from five years ago, and houses sold for $300K, which could be 3X income for many. Six months ago a house that sold for $300K five years ago, sold for close to $800K (with absolutely no improvements), because it was on 1/3 acre.

    I see it happen over and over.

    The entry level has changed, and is seemingly gone, as long as builders remain in the picture, driving up the cost of any decent-sized lot.

  88. 3b says:

    #89 Builders will only remain as long as demand remains, and I believe the demand is drying up for these things.

    I believe there are a lot of small one truck builders who are getting hammered right now, due to rising inventory.

  89. John says:

    The bottom line is that it is a myth everyone has the right to buy a dream home. The financing for everyone regardless of ability to pay and low monthly payments as a result of adjustable 4% interest loans that made it possible to borrow 500K for 2k a month caused buyers to flood the market with poor financial skills and no worries about overpaying for houses as they thought housing prices only go up and interest rates only go down.
    If you have more buyers in a densely populated area where you can’t build new homes quickly prices rise. And if you build a ranch on a 60 by a 100 plot or a minimansion on a 60 by a 100 plot and one nets you 75K in profit and one nets you 200K in profit which are you going to build, (can’t blame the builders there). The fact of the matter is William Levit only build capes and ranches on his 60 by a 100 plots in Levitown as the returning servicemen had limited incomes and their VA sponsored loans were strict on mortgage amounts and income limits. Plus with their 3% raises and stay at home wives with kids soon to follow they were smart enough not to overspend on a home. Today’s crowd is a must have it now crowd and realtors, builders and mortgage brokers are not exactly the most ethical crowd so if the fools are willing to buy crap they can’t afford they are more than happy to sell it to them. Our old friend Mr. Levit I am sure would have built McMansions back in the 50’s if Uncle Sam were stupid enough to finance them and the servicemen were willing to get deep into debt.

  90. skep-tic says:

    I think everyone understands that not everyone can buy a dream home– the question is what happened in this area in the last 5-7 years that caused ordinary homes to double or even triple in value.

    There is ample evidence that loose credit played a role, but very little evidence of changing demographics (i.e., the rich crowding everyone else out).

  91. 3b says:

    #91 John: And now those morons will have to pay, simple as that.

  92. John says:

    What is your definition of high income? I was chatting with my young and married cousin last Sunday who is 28yo and she told me that since she has a masters in Speech Pathology she is making close to 70k teaching and is getting $75 for 45 minute sessions on the side. She is doing ten sessions a week which is 3k a month on the side plus her 6k a month teaching and she has a low level bank officer husband who at 28 with bonus makes around 84K a year or 7k a month. So that couple has a gross of 16k a month which a bank will allow a 28% mortgage or a $4,480 a month mortgage. At 6% (bank employee rate) they can go almost up to a $750k mortgage at 28yo and neither have ivy league backgrounds or steller jobs. They live in a 600K condo that they can easily afford as they put down 60K at 26yo (wedding money and savings). She will hold off till 32 to have kids so she can get out of the condo into a house, even then she will continue working. Remember the young couples also drive the market and the kids who graduated college in 2001 in the bad market who went straight to grad school and graduated in 2003 in a hot field have been riding double digit raises and bonuses. My old firm in the SOX boom actually sent the undergrad class of 2004 with girlfriend/boyfriend to Disneyworld for an all expense paid trip prior to their start date as a signing bonus and gave them all 13% raises their first year. The mid career managers in non financial companies salaries however were stuck in the 3% mode between 2001 and 2007 and these dual income kids have overtook them in household income very quickly as the midcareer person also often has a stay at home spouse. So in my cousin example above that 28yo couple is bringing home 190k a year and most mid career managers with a stay at home wife after 20+ years of work are nowhere near that salary and it is hard for them to imagine that the “kids” have that much cash!

    skep-tic Says:
    May 30th, 2007 at 10:23 am
    I think everyone understands that not everyone can buy a dream home– the question is what happened in this area in the last 5-7 years that caused ordinary homes to double or even triple in value.

    There is ample evidence that loose credit played a role, but very little evidence of changing demographics (i.e., the rich crowding everyone else out).

  93. skep-tic says:


    Glad to hear your cousin is doing so well, but do you really believe $190,000 is typical income for a couple in their late 20s?

  94. John says:

    Of professional dual income couples with at least a college degree who are in a profession such as IT, Financial Services, Law, Consulting, or even a Good Surburban School District, highly paid nurse or Surburban Cop I would say yes. Look at salaries of even nurses or cops five to six years into their career.

    Plus money breeds more money. I recently left a big four accountig firm where new hires start at 55K and make manager in 5 – 6 years which gets them to total comp or 90K. Those guys work a lot and at my old firm since all the new hires are young and single they tend to date each or meet someone at a client such as Merril, Goldman etc. I have seen plenty a wedding of 28yo couples at 180K who within five years at least one make Partner and are pulling down 250K as a new partner at 33. But I have seen plenty a person get a crappy degree and get a crappy job and meets someone at the crappy company and complain they can’t afford a house. The salary disparity is growing very quickly. IBs, Private Equity, Hedge Funds, BDs, Consulting, Banking, Insurance swallow up a lot of business graduates in a hot market and pay out the cash for a chunk of your youth and a lot of hours of work. Years ago (ten) NYC companies paid an extra 5-10K to cover the cost of your commute into the city over a suburban job. Now in a hot market they are paying at least 50K to 100K more to hit the train and head to the city and Wall Street. That is a lot of cash. I hear this all the time from my neighbor the CPA who is always amazed at the returns he does for young people. The market may crash soon and we will be back to 1991 when the people in the safe lower paying jobs govt jobs were riding high!! But for now the Wall Street guys can cash out some deferred comp and restricted stock with a phone call and get a down payment without touching their savings and that is tough to compete with!

    Of course people with no college in a non high paying union job or people with low demand college degrees such as history, sociology etc are doing poorly but they are not the crowd buying in the better neigborhoods.

    skep-tic Says:
    May 30th, 2007 at 12:31 pm

    Glad to hear your cousin is doing so well, but do you really believe $190,000 is typical income for a couple in their late 20s?

  95. fanshawe says:


    Maybe it’s not exactly typical, but there are plenty of people and jobs that support $100k salaries (which of course leads to couples with $200k of combined income).


    Read the comments, they are actually quite interesting. Including this one: “I live in northern new jersey and i am a union truck driver this year i will break the 100k mark with this new company.”

    I will say that I am in the early 30’s group and among my peers — college educated, mostly bachelor’s, different industries (don’t get me wrong, this is still a statistically insignificant sample, I know) — very, very few of the people I know make less than $100k salaries.

  96. fanshawe says:

    Revision to #97 above: when I say “bachelor’s”, I meant bachelor’s degrees.

  97. 3b says:

    #97 fan Very few make under 100k, or so they say

    200k in combined income is still very rare, even in prestigious minutes to NYC Bergen county.

    Salaries did not explode these last few years to justify these price increases. And here we are almost into June, and inventory is still building.

    Prices on the low end are simply unafffordable (funny money is gone)The only missing peice in all of this now, is the sellers realization that the party really, and truly is over.

  98. John says:

    Six Figures? Not Enough!

    Published: February 27, 2005

    AUREEN SPILLANE, an executive at a shoe and handbag maker in New York, always thought a $100,000 salary equaled serious success. Like many professional people, however, when she finally broke the barrier, she was a bit deflated to learn that it was hardly salvation. It still took her several years of “hoarding away” and avoiding standard Manhattan indulgences – fancy food, fancy clothing – in order to afford a down payment on a one-bedroom fixer-upper on the Upper West Side.
    “It’s not the big shiny number that you think about when you first get out of college,” said Ms. Spillane, who is in her mid-30’s. “Don’t get me wrong, I’m making a nice living, I enjoy what I do. I’m certainly in a better position than a lot of people.”
    “But Melania and I don’t shop in the same places, let me tell you,” she said, referring to the latest Mrs. Trump, Melania Knauss. “I’m not jetting off to the Bahamas.”
    There was a time not long ago when earning six figures was a significant milestone among upwardly mobile professionals. If you were young and single in one of the nation’s big cities, you could live in a building with a doorman, drive a European car, eat at fine restaurants and vacation in Jackson Hole. For married people it meant a suburban home and college savings accounts for the children.
    Beyond the lifestyle, $100,000 was a psychic achievement; it meant joining the meritocratic elite. The prospect of “six figures” kept white-collar workers toiling for 20 years, confident that hard work would be rewarded and that the American social contract was securely in place.
    Certainly $100,000, which is more than twice the national median household income of $43,527, is still a princely wage in most of the country, placing you in the top 5.2 percent of American wage earners with full-time jobs, according to the 2000 census. Even in New York City, only 7.5 percent of full-time workers make that much. But $100,000 isn’t what it used to be. It has been devalued, in the practical sense by inflation and psychologically because it is now a relatively common salary for newcomers in fields like law and banking. For today’s executive strivers in the more affluent cities, there is a new grail: $200,000.
    “It’s the new black,” said Bill Coleman, senior vice president in charge of compensation at Salary.com, an online career service based in Needham, Mass., that tracks executive pay. “There’s a lot of bunching between $100,000 and $150,000. That’s the vast majority of the people who used to aspire to $100,000. Now they are aspiring to $200,000 or $250,000.”
    “It’s the players,” he added, echoing a common sentiment, “who make $200,000.”
    While a salary of $100,000 is still “rarefied,” said Jared Bernstein, a senior economist at the Economic Policy Institute in Washington in charge of its living standards program, in many regions “it’s not uncommon for households in that range to feel pinched.”
    Housing in cities like New York, Boston and San Francisco can cost three or four times that of the national median, Mr. Bernstein said, to say nothing of the escalating prices of big-ticket items like education and health care.
    “There are certainly cities in this country where it takes an income of a couple of hundred thousand dollars to start to genuinely feel affluent,” he said.
    Not for nothing did Senator John Kerry propose rolling back tax cuts during the presidential debates on those earning more than $200,000, symbolic of “the rich.” Not for nothing did the Nestlé candy company change the name some years back of its $100,000 bar. It is now the 100 Grand bar. It seems $100,000 doesn’t summon the old magic.
    Passing the $200,000 threshold these days appears to be a ticket to the good life much in the same way that crossing the hallowed $100,000 barrier was during the prime yuppie years of the 1980’s. About 1.9 million tax filers (or less than 2 percent) reported gross adjusted incomes between $200,000 and $500,000 in 2002, the last year for which the Internal Revenue Service has compiled statistics. The year a similar percent of tax filers had incomes between $100,000 and $200,000 was in 1987.
    In the 1985 film “Lost in America,” Albert Brooks’s character was able to build up a big enough nest egg as a $100,000-a-year advertising executive that he could abandon the white-collar life before he turned 40 to travel the country in a luxury motor home with his wife.
    “Twenty years ago a person would have thought that if they were making $100,000 they were rolling in the dough,” said Karen Ramsey, a certified financial planner in Seattle. Now, she said, clients “will be making $100,000, $120,000, and they’ll be looking at me and saying: ‘We’re just getting our kids through school. If we have any left over for a vacation,

    Adjusted for cost-of-living inflation in the New York metropolitan region, a $100,000 income in 1987 would be worth about $170,000 today. And yet it still seems that another $30,000 or more is needed to be a “player.” Part of the explanation may be the almost perverse escalation in the price of commodities favored by upwardly mobile professionals: whether $170 Diesel jeans, which have replaced $30 Levis; $3.95 lattes from Starbucks versus 25-cent coffee from a deli; or the must-have $449 iPod that supplanted the must-have $75 Sony Walkman of the Reagan years.
    When Patricia Belden, a 39-year-old developer of affordable housing in Boston, was a student at Cornell University in the mid-80’s, she dreamed of a six-figure income. “I would be satisfied with the life that would buy,” she recalled thinking. Ms. Belden passed that milestone and is not complaining. But when she and her husband, a violin maker, recently shopped for a home in Boston for themselves and their newborn son, they settled for a loft in the city’s trendy South End.
    Sounds chic, Ms. Belden allowed, except the family has subdivided a space the size of a large studio into a three-bedroom apartment, what she calls “a ranch house in the sky.”
    The couple’s big extravagance was a permanent parking space for $20,000. “My father told me, ‘Honey, don’t worry, we paid $20,000 for our first parking space,’ ” Ms. Belden said. “But it came with a house and a garage.”
    Compensation experts said the expectations of many white-collar workers were turbocharged in the late 1990’s, during the long run-up in the stock market and the high-tech boom.
    “Only in the latter half of the 90’s did starting salaries break $100,000 a year,” explained Hussam Hamadeh, a co-founder of Vault.com Inc., a Web-based career services company. “At that point $100,000 stopped being an eye-popping salary and started to become routine. After all, if ‘everyone you know’ is making at least $100,000 a year, there’s nothing very exceptional about it.”
    By the time professionals in certain high-earning fields are in their mid- or late 30’s, they’re at least within striking range of the new $200,000 goal. A senior creative executive at a major New York ad agency, for example, earns about $170,000, according to salary statistics compiled by Vault.
    A senior vice president at a major public relations firm typically earns up to $160,000, with perhaps another $15,000 in bonuses. In the high-technology field the majority of “e-commerce marketing directors” surveyed by Salary.com earned $120,000 to $150,000 in total cash compensation. The top quarter, however, earned an average of $204,800.
    The legal profession is perhaps the most clear-cut example of changing expectations due to changing pay scales. “There was a time when if you were making $100,000, you were a partner, and that wasn’t that long ago,” explained Jon Lindsey, a managing partner of Major, Hagen & Africa, a national legal recruiting firm. “In New York they now look at $100,000 as a living wage, but not much more.”
    Last year the median base salary for first-year associates at firms with more than 501 lawyers was $120,000, moving up to $185,000 for eighth-year associates, according to figures from the National Association for Law Placement.
    Noble Black, 29, hardly considers himself living it up. He earned his law degree from the University of Virginia a few years ago, moved to New York and took a job in securities law in the Manhattan office of the firm McKee Nelson. His starting salary, he said, was $135,000.
    “You think you’re going to be making all this money, but it all goes so quickly,” said Mr. Black, who left after a few years to work as a consultant to the television show “The Apprentice” (and is now an associate real estate broker for the Corcoran Group in New York).
    Mr. Black didn’t find much sympathy from his family back in Mississippi, where $100,000 is still a country club income. “You go home and tell them how much you’re making, and they think you’re doing so well, but then you tell them about the rent,” he said, recalling the $4,650 monthly rent for the apartment he shared with a friend in Symphony House, near Columbus Circle.
    It was only when his annual compensation began to approach the new affluence threshold that he began to feel he was building real equity. “A couple of years making close to $200,000 puts you into that good place,” Mr. Black said.
    Robert H. Frank, an economist at Cornell said: “A lot of people think this is about spoiled people who can’t keep up with the Joneses, but it’s really deeper than that. There’s a consumption standard that every group has. If you ask, ‘How am I doing?,’ it’s always, ‘Compared to what?’ And people hardly ever look down.”
    If they did, it might seem a bit odd to see a number they had spent much of their lives staring up at longingly. Then again, Mr. Coleman of Salary.com is not sure people will ever quite strive for the $200,000 life in quite the specific way they dreamed of a $100,000 one. The latter “is a natural milestone,” he said. “It’s a power of 10.”
    “One hundred thousand is magical because it is 100 – 100 is perfect, remember when you’re in school?” he said.
    The real point, perhaps, is the dreaming itself, the sense among many professionals that there needs to be some light flickering on the horizon to get you through the long hours and the stress of a career. In that sense, Mr. Coleman said, the dream salary of today is the same as it’s always been. “It’s beyond reasonable expectation,” he said, “but not beyond hope.”

  99. fanshawe says:


    I agree with $200k combined income is still in the upper percentile for salary. And I absolutely agree that there was an unjustified housing bubble.

    I’m just playing a bit of devil’s advocate to the entire “median salary of a town’s residents” argument. House values are clearly driven by what buyers are able to spend, not how much existing home owners make.

    I do also think there is a widening gap between the haves and the have-nots in NJ and I think sometimes people here underestimate exactly how “haves” there are because overall median income numbers include retired, semi-retired and poverty-level families.

    I am not saying current prices are sustainable; what I am saying is that if you want a house in the Upper New Haughtyvilles of NJ, you’re still going to be competing with these young couples with plenty of real money.

  100. John says:

    FYI that article is over two years old. I would say that $250,000 is the new $200,000 for the people that are in the article above.

  101. John says:

    I agree in principal that the govt statistics make it appear that 200K household income is a lot. But since most inheritances, real estate gains, muni bonds, off the books income, FSA, 401k and restricted stock/defered comp may not show up in the tax return that statistic is only reported income, not actual spending money.

  102. skep-tic says:


    I’m not doubting that there are more high paying jobs in the tri-state area than most places, but I still say there is little evidence of disproportionately large groups of wealthy young people relative to the past.

    For example, I know that Westchester County, NY and Fairfield County, CT (where house prices generally are even higher than NNJ) have seen at net loss of people age 22-35 during the last 10 years of roughly 30%. It would not surprise me if there has been a similar outmigration of this age group from Northern NJ.

  103. Poser says:

    #94, and related posts:
    I think John is right about the income and demographics here in the NNJ area. I work in 1 of the mentioned fields and the salaries are true. And all these young couples from Hobo,JC, or NYC, that come into these towns in NNJ or let’s say Westchester, or wherever in the tri-state area, do have combined incomes of at least $150k. Once they are in their 30s they are easily be making $200k combined. I work with these people, I come into contact with them at companies that are clients of my firm and their are many of them in this area. I don’t have exact stats but no one should be surprised at the effect it has had on the RE market in NNJ. I’m not saying it’s the entire demographic, but certainly a decent percentage. Whether the metro NY area is going to offer these salaries and jobs in the future, I have no idea, but it is certainly the present state of things.

  104. skep-tic says:

    I work in one of those industries as well, but just because everyone I work with is high income does not mean that this is typical.

    Look beyond finance, law and medicine and people are not making that much with 5 years or less experience (the age group we are talking about).

    What are the other major industries in NYC? Fashion and media are a couple of the biggest and very few young people in these industries make decent money. Similarly, teachers, cops, etc with 20 yrs experience do well, but teachers with 5 yrs experience make $75k tops.

    I think the high income professions are a lot more visible near NYC than in most places, but the number of these jobs is certainly not the majority

  105. RentinginNJ says:

    If we are seeing a mass gentrification of Northern NJ by wealthy 30 somethings, it’s not showing up in the income statistics.

    For example, between 2000 and 2005, Bergen County per capita income increased by $51,219 to $56,725; about a 2% increase per year. Aggregate Bergen County income increased from $45.4 billion to $51.3 billion; less than 3% per year.

    Median family income in Bergen County increased from $72,600 in 2000 to $87,500 in 2006, again, less than 3% per year.

    While income roughly kept pace with inflation over the first half of the decade, Bergen County home prices nearly doubled.

    If there were enough high-income 30 somethings to bid-up the entire NY metro area real estate market, I would expect to see some indication of that show up in the income statistics.

    Also, the number of home sales were very strong over the first half of the decade. We aren’t talking about prices rising in some thinly traded market where a few marginal sales to wealthy 30 somethings skewed prices.

    For example, 102,592 home sales were recorded between in Bergen County between 2000 and 2006. There are 346,000 housing units in BC. This means on average, almost 1 in 3 homes changed hands. Again, not a thinly traded market.

  106. John says:

    In the book “the millionaire next door” it states that the majority of teachers are women in dual income households where the husband works and among male milionaires in the united states the number one professsion of their wives is teaching! I am an old 44 with a 42 stay at home wife, but in the 25-35 range I noticed the shift where there are a lot more dual incomes and the women have great careers and salaries and were brought up in day care themselves and are ok with sending their kids out to day care and continuing to work. That is a lot of purchasing power.
    Also people in the high income fields would have loved to become lifeguards, struggling actors, social workers, non-profit workers and do something they love or give back to society. But bottom-line is they chose to do something they like less for more money. The people who chose to do something for less money get their joy 9-5 and in their reduced stress and less work hours. Or they simply did not want to study their butt off for four year and play the game and confirm and wanted the long hair and the tattoos and guess what they get paid less. But that was their choice. I bugged my younger brother-in-law to get his MBA while his company paid for it and he refused and then he switched to do something environmental. Now he is 35yo in a cape with a kid and his wife is forced to work against her will and his in-laws have to cover him for baby sitting cause he can’t afford day care!!! Hey that was his choice.

  107. 3b says:

    #105 poser: still no not even close to enough people to justify these house prices.

    Cheap credit, lax lending standards,a nd fear and greed drove prices, plain and simple.

  108. 3b says:

    #101 fan; Time will tell, higher incomes or much higher debt loads, me thinks its the latter.

    This area wealthy as it is, is stillonly paying these big bucks to a tiny minortiy of people, plain and simple.

  109. John says:

    I agree that most people are not making the 200K money and the gap is growing. But just wanted to point out that double income college educated couples in their late 20s and early 30s have some serious cash. I guess I am guilty of comparing my salary to the 5% above me and forgeting about the 95% below me! I have no clue at all how the bottom 50% in NJ/NY make it anymore. When I was broke in the 1991 to 1998 era at least everyone else was broke and things were cheap.

  110. fanshawe says:

    109, 3b:

    “Time will tell, higher incomes or much higher debt loads, me thinks its the latter.”

    I hope so, too, because I just don’t see the value right now in buying a house.

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