Farewell Summer!

It’s September 1st, as well as Labor Day Weekend, so I’m going to officially close the 2007 real estate season. Unfortunately, the much-hoped-for recovery failed to materialize this year. Given the recent mortgage and credit market crisis, I don’t think we’ll see a recovery in the near future either.

September 1st traditionally marks the end of the real estate season. There are plenty of reasons for this, and we’ve talked about them before, so I won’t waste the space. Instead, let’s take a look at the patterns and sales trends that typically accompany the Fall and Winter seasons.

The first graph displays sales from August to February, from 2000 to 2006. This range was chosen because it illustrates the summer “peak” as well as the typical winter “trough”.

(click to enlarge)

The second graph shows the same sales period and trends, however, it is displayed as the monthly drop in sales from the August “peak”:

(click to enlarge)

By February, monthly closed sales fall to roughly 50% of the volume seen during the summer “peak” months.

Caveat Emptor!

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94 Responses to Farewell Summer!

  1. sas says:

    really tight bars in Sept-Dec for 06-07.

    06-07 shows a significant drop off in sales from the past 3 years. Would be really interesting if you can show the counter part to this graph: Inventory in relation to sales.

    looks like we are back to 01-02 sales levels?

    Its going to be a long cold winter for some… yikes.


  2. Rich In NNJ says:

    Wow, graphs and compliance reports on a holiday weekend!
    Your wife must be very enamored with you right now…


  3. sas says:

    can you get rid of the background shading on the second graph? That grey background makes it hard to follow those data lines.


  4. sas says:

    btw- thx JB.

    now drink that beer while standing on your head…he he..


  5. sas says:

    About what % of total sales does GSMLS represent for NNJ and NJ as a whole?

    I am concerned we might be getting a misrepresntation here.

    Not minimizing your work JB. Just need to know are we talking major %, or is this just a little slice of the total collective pie?


  6. sas says:

    are we sure people are not shifting out of GSMLS service?


  7. sas says:

    But if these graph trends hold true throughout the state. Yikes!

    Clotpoll, you better pack up and move to NC now.


  8. scribe says:

    From the WSJ:

    August 31, 2007, 11:11 am
    After the Mortgage ‘Revolution,’ the ‘Terror’

    housingIn the last 30 years a revolution in the U.S. mortgage market has made homeownership cheaper and more widely available by shifting lending from banks and thrifts to the capital markets through the process of securitization.

    Yet this process has also resulted, at times, in undue reliance on models of past behavior, and in decreased transparency, setting the stage for the current crisis, Richard Green of George Washington University and Susan Wachter of the University of Pennsylvania argue in “The Housing Finance Revolution,” presented Friday at the Federal Reserve Bank of Kansas City’s symposium in Jackson Hole, Wyo.


  9. scribe says:

    From the WSJ:

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    * At Market Close
    • Banking
    Ameriquest to Close Shop
    As Citigroup Buys Up Assets
    September 1, 2007; Page B2

    Ameriquest Mortgage Co., the largest U.S. subprime lender as recently as 2005, is closing.

    Citigroup Inc. said it agreed to buy the wholesale mortgage-origination and servicing assets of Ameriquest’s parent, ACC Capital Holdings, for an undisclosed price.

    The acquisition includes servicing rights on $45 billion of loans, as well as a small amount of other loans and residuals. Citigroup had obtained an option to buy the assets in February as part of an agreement to provide funding to keep the Orange, Calif., firm in business.

    ACC, meanwhile, “is preparing the orderly wind-down of its retail mortgage business, which is no longer accepting applications,” spokesman Chris Orlando said.

    Meanwhile, Accredited Home Lenders Holding Co. rejected a private-equity firm’s attempt to lower its price to buy the San Diego subprime-mortgage lender. But Accredited’s stock soared 43% as investors were cheered that Lone Star Funds still appears willing to do the deal.

    Dallas-based Lone Star agreed in June to pay $15.10 a share, or $400 million, for Accredited. But late Thursday, Lone Star said it wanted to pay $8.50 a share. In exchange for the lower price, Lone Star offered to let Accredited seek other buyers.

    Friday afternoon, Accredited said it had a deal two weeks ago when 97% of the company’s shares were tendered at $15.10 apiece. Accredited shares rallied $2.74 to $9.05 on the Nasdaq Stock Market.

    Lone Star has been trying to back out of the deal, arguing that there had been “drastic deterioration” in Accredited’s financial and operating health.

  10. scribe says:


    Sorry at all the junk that showed up in the cut & paste … JB, can you clean that up?

  11. Bloodbath in Winter 2007 says:

    Question …

    Anyone else writing their local representatives about this bailout plan?

  12. Zack says:

    Below is an excerpt from the last paragraph of Bush’s weekly radio address to the nation:

    “Homeownership has always been part of the American Dream. During my Administration we’ve achieved record homeownership rates. We’ll continue to work hard to keep our housing market strong, to ensure that American families can afford the homes they buy, and to help bring the dignity and security that comes with homeownership to more of our citizens. Thank you for listening.”

    Read otherwise, during my administration we have created this wonderful housing bubble and maneged to convince our brainwashed citizens to buy more house than they can afford and increase the homeownership rate. We will try to kick start this bubble again by convincing citizens that buying a house equates to self dignity and security.

  13. Zack says:

    In other words,

    Homeownership = Dream + Dignity + Security

    regardless of the price.

    What a propaganda

  14. Arr Elle says:

    #11- Bloodbath:

    Good idea, but I wouldn’t know what to say

  15. Bloodbath in Winter 2007 says:

    Short and sweet?
    Risk takers shouldn’t be bailed out with my tax money?
    This will just encourage more risk-taking?
    Let the chips fall where they may … etc

  16. James Bednar says:

    From Bloomberg:

    Fed Gets `F’ for Failures on Housing, Leamer Says

    Federal Reserve policy makers underestimated the role that housing plays in triggering recessions and merit an `F’ grade for their failure, said Ed Leamer, director of an economic forecasting group at UCLA.

    “Something’s wrong here,” Leamer wrote in a paper presented to a conference in Jackson Hole, Wyoming, attended by Chairman Ben S. Bernanke and other Fed officials. “Housing is the most important sector in our economic recessions, and any attempt to control the business cycle needs to focus especially on residential investment.”

    Housing is vulnerable to “persistent” trends that, once under way, are difficult to restrain, Leamer wrote. The Fed ought to have raised interest rates more aggressively to head off the “bubble” in home prices that grew from 2003 to 2005 and should have lowered rates by now, he said.

    “What I’m calling for is monetary policy which at this point in the cycle would be stimulative because you’re trying to keep the housing sector from crashing” even further, Leamer said in an interview before attending the economic symposium.

    House prices in some U.S. cities may fall by as much as half as the housing bust continues, according to an earlier paper delivered to the conference, which is organized by the Kansas City Fed. Yale University professor Robert Shiller, who wrote the article, said the slump in home values could be “much more” than the 15 percent drop in the last housing recession.

    Leamer said in an interview today at Jackson Hole that some former “hot markets,” such as pockets of California, may see declines of 30 percent to 40 percent.
    (emphasis added)

  17. gary says:

    Ok, it’s September 1st, did I miss the armageddon?

  18. sas says:

    Bloodbath & Arr Elle,

    Patrick has a generic letter on the link that you can email or snail mail your local Senators & Reps. He also have a search engine on it where you can look up there emails.

    I did my share.. now it your turn and write your local yocal.



  19. sas_kicks_ass says:

    “The Fed ought to have raised interest rates more aggressively to head off the “bubble” in home prices that grew from 2003 to 2005 and should have lowered rates by now”

    I agree, but I wouldn’t have lowered them by now… maybe hold steady to cool some jets.

    But hey, cheap credit has replace middle class incomes.

    Remember that the nest time you goto Walmart & Target.


  20. lisoosh says:

    I happened to peek at a couple of high end Forest Hills homes in Newark. Absolutely stunning! One was built for Louis Tiffany.
    I imagined some ambitious kid 60-70 years ago riding by on his bike and dreaming about owning one some day.
    Just goes to show how neighbourhoods can change.

  21. Rich In NNJ says:

    Woodcliff Lake
    SLD 24 CAMPBELL AVE $1,275,000 7/15/2005

    ACT 24 CAMPBELL AVE $1,375,000 4/7/2007
    PCH 24 CAMPBELL AVE $1,299,999 5/31/2007
    ACT* 24 CAMPBELL AVE $1,299,999 6/27/2007
    U/C 24 CAMPBELL AVE $1,299,999 7/6/2007
    SLD 24 CAMPBELL AVE $1,262,000 8/31/2007

  22. James Bednar says:

    From the Times Trenton:

    Forclosure woes touch all Mercer towns

    Mercer County has been swept up in the mortgage meltdown affecting the nation, as foreclosures increase and residents face the re sults of taking out subprime mort gages with higher interest payments.

    Foreclosure filings have risen from 728 through Aug. 20, 2006 to 928 for the same period this year, a 27.5-percent increase, according to the Mercer County Clerk’s office.

    Some of those who can’t make their mortgage payments should never have received approval for the loans, according to Phyllis Sa lowe-Kaye, executive director of New Jersey Citizen Action, which provides mortgage counseling.

    “They target low- and moderate-income minorities in urban areas,” Salowe-Kaye said of subprime lenders. She recalled one New Jersey resident with a $40,000 income who took out a $400,000 mortgage by claiming that renters would cover much of the mortgage cost.

    New Jersey Citizen Action has provided counseling to hundreds of residents at its loan counseling center in Trenton.

    The problem isn’t limited to cities like Trenton. While County Clerk Paula Sollami-Covello said the number of foreclosures in Tren ton traditionally has led the count, the past year has seen foreclosures increase in suburban municipalities such as Hamilton.

    While mortgages that are listed under foreclosure in public notices often are resolved before an actual sheriff’s sale, the increase in foreclosure notices in some Mercer municipalities has been stark.

    Trenton had 166 foreclosure no tices in the first seven months of this year, an increase of 29 over last year; Hamilton increased from 40 to 50; and Lawrence increased from 13 to 23, according to Jeff Posner, owner of SheriffSalesOnline.com, a Web site that tracks both initial filings and notices.

    The root cause of many recent foreclosures is the wave of subprime mortgages, according to mortgage experts. Subprime mort gages are given to people with low credit scores due to missing payments or having limited credit histories. Subprime mortgages have higher interest rates and fees than conventional mortgages.

    In recent years, mortgage brokers offered more and more subprime loans. This trend peaked in 2005 — when 21 percent of Mercer County mortgages were subprime — and continued through 2006.

  23. Richie says:

    Was driving through Kinnelon earlier today. Saw a for-sale sign from Century 21 with the top-frame of the sign saying “BANK FORECLOSURE”.

    No area is immune.

  24. Clotpoll says:

    sas (7)-

    Not going anywhere, champ.

    About to cash in on the chaos.

  25. Clotpoll says:

    Gary (17)-

    The sound of housing Armageddon is silence.

  26. UnRealtor says:

    Richie, I wonder when banks will finally decide to unload foreclosed properties.

    I’m seeing some listed at ‘full retail’ and they sit, and sit, and sit…

  27. Ed Sanders says:

    Just wondering, since all those years prior to this one were considered to be “up” years for RE, isn’t it likely that the drop off could be even worse?

    Just letting my typically negative attitude get into the game.

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