(Note: 46 Windermere was featured in Comp Killer in early February, you can find the details here.
From the NY Times:
A Market Going Downhill Fast
By ANTOINETTE MARTIN
Published: February 19, 2009
IN the heady real estate days of the summer of 2005, a well-maintained house in a decent school district would not last long on the market. That was when a three-bedroom ranch house at 46 Windermere Road here achieved its peak-value moment.
The red-brick ranch sold that July for $709,000 — fetching $50,000 over asking price — after just 10 days on the market.
Fast forward to the spring of 2008, and a market gone slack, not just in Montclair or Essex County, but in all 21 counties of the nation’s second-wealthiest state. The brick ranch was for sale again, and had been, on and off, for more than a year. The owner had given up on getting his price, and moved out. The bank had agreed to a “short sale” in which it would recover less than it was owed. The asking price was reduced to $599,000.
“That seemed like a really good price when we first saw it,” said John Strong, who finally bought the house with his partner, Heather Carter. “But there were no lights in the house — the electricity had been turned off — and later we could see there were problems, because it had been empty and not kept up.” The final price at the closing last month: $528,110.
Over the course of three and a half years, the New Jersey residential market has headed downhill fast. In September 2006, Jeffrey G. Otteau, whose Otteau Valuation Group gathers data on the residential market for many builders and brokers, said there were 68,000 houses sitting on the market unsold for a month or longer, more than he had ever seen in his experience in this market. By spring 2007, there were 71,000 unsold houses, his firm reported, and by May 2008, that number had climbed again, to 74,000.
At the same time, the pace of sales kept lagging, sometimes erratically, but always headed down, according to monthly reports from Mr. Otteau’s firm, based in New Brunswick. Each December, on a line graph depicting month-by-month sales during the year, the squiggly line ended in a deeper valley than it had the previous year.
More than a year ago, Mr. Otteau announced that his calculations indicated there would be a long wait before prices returned to 2005 levels. Not until 2014, he said at the time — and that prediction was made well before Wall Street quaked, the mortgage lending market foundered and unemployment statistics started to skyrocket.
As of January, the state had a 17-month supply of houses on the market, according to Otteau Group figures. That means that even if no other houses were put up for sale, it would still take 17 months to sell those already available, under current market conditions.
In Bergen County, it would take an estimated 15 years and 4 months to sell all the houses now on the market priced at $2.5 million or more. In Morris County, for homes priced from $1 million to $2.5 million, it would take seven and a half years, and in Warren County, for homes priced from $600,000 to $1 million, five years and one month.
With unsold-house inventories like those, and the probability that the economic malaise will continue for some time, Mr. Otteau’s most recent prediction is that New Jersey home prices will continue to drop.
Prices have declined by an average of 15 to 20 percent in every county in the past three and a half years, contract sales data indicates. At the start of 2009, some real estate professionals said they had noticed a few sellers starting to “see the light” and agreeing to slash asking prices by 10 to 20 percent, sometimes even 25 percent.
James Bednar, who writes the real-estate blog njrereport.com, said last month that it was high time for both buyers and sellers to face reality. He proposed a new mantra for them: “Home prices can fall. Home prices can fall. Home prices can fall further than I believe possible. Home prices are falling and will continue to fall.”