Does everyone on the low-end want to sell, or does nobody want to buy?

From the NY Times:

Lower-Priced Homes Lagging

The supply of unsold inventory with asking prices under $400,000 was 26 percent greater than at this time last year, according to a new report by the Otteau Valuation Group, which analyzes multiple listing statistics. The time it would take to sell these properties remains, in relative terms, shorter than for the more expensive homes. Yet in absolute terms, the wait for sellers of homes under $400,000 has done nothing but increase.

As for homes priced from $400,000 to $600,000, the supply of unsold inventory was 17 percent greater than at this time last year, according to the report.

At higher price levels, the market situation is mostly better than, or about equivalent to, last year’s: The picture is virtually unchanged for homes priced from $600,000 to $1 million, with an inventory that would take about 16 months to sell at the current pace.

For homes priced from $1 million to $2.5 million the inventory has decreased, but it is still 20 months worth.

The inventory of homes priced over $2.5 million amounted to slightly under five years worth last year at this time; now it is slightly over five years.

In general, it still takes less time to sell lower-priced homes than more expensive ones, said Jeffrey G. Otteau, the president of the New Brunswick-based company that did the research.

The inventory of homes on the market for under $400,000 a total of 44,288 houses, condominiums and co-ops in that category as of March 1 would take an estimated 13.6 months to sell if no additional homes were to be listed, according to the Otteau report.

This is vastly less time than it would take to sell the 3,442 houses with asking prices of $1 million or more.

But the sales picture for lower-priced homes has worsened significantly in the last year. Part of that shift can be ascribed to the vanished tax credit, part to the now-prevalent mortgage lenders requirement of a 20 percent down payment a hurdle that many first-time buyers cannot leap.

At the same point in 2010, there was a 10.9-month supply of lower-priced homes on the market, and sales were 13 percent higher than they are now.

Mr. Otteau described the overall market as having a faint pulse, sapped by weakness in the entry-level housing category the largest price category by far, and the most important factor in a healthy market since it generates move-up buyers in other categories.

For houses ranging from $400,000 to $599,999, the report showed, the situation has also deteriorated since last year. Supply has increased 17 percent statewide, to 14.9 months worth. In some parts of the state, this price category fared even worse in comparison to last year than did the price niche below it.

This entry was posted in Economics, Housing Bubble, New Jersey Real Estate. Bookmark the permalink.

107 Responses to Does everyone on the low-end want to sell, or does nobody want to buy?

  1. Kettle1^2 says:


  2. Kettle1^2 says:

    From last night:

    Veto 310

    if you calculate homes price in terms of pretty much any commodity they are close to historical lows. if you calculate median incomes in terms of pretty much any commodity they are also nearing historical lows. However, since about 2000 incomes have in terms of commodities have dropped faster then homes price in terms of commodities. On top of that the average american carries a substantial debt load that is consuming an increasing portion of their income.

    From this point of view, shadow stats makes sense. The problem you and i face are 2 fold. First the wonders of globalization means we now have to compete with slave labor in toxic dumps for wages and bernanke and friends are trying to run the printing press red hot.

    And 23% unemployment seems about right to me if you consider it to be U6 with the shenanigans removed.

  3. Jets12 says:

    A huge amount of the under $400K inventory out there are homes purchased in ’03-’07 for $400K+ & $500K+, they’re seriously underwater, the owners are trying to limit the damage, truncate the bleeding and looming pre-foreclosure & foreclosure.

    They set prices mindful of their mortgage, not the market, as a consequence the houses don’t sell. When you see a house on the market for 180+ days without a regular pattern of reductions to reflect the market and to get the house sold, that is a pre-foreclosure in waiting.

    This is how owners ‘tip their card’ they’re reaching to cover their mortgage debt and not meet the market, they’re not making payments and very likely awaiting full blown pre-foreclosure/short status. Just hoping to get the house sold before having to bring in the 3rd party, the bank and admitting to the market they’re a short sale. An example would be this property
    which went from $575K, to $549K, to $449K. It entered the market as a house for sale, no short, no issues. 9 months later the ‘game’ was over, the clock ran out, the property was and is now marketed as a short sale/preforeclosure.

    The owner mistakingly brought the house to market to pass along their over paying mistake made in ’07 and cover their mortgage….in looking for a sucker to buy into their burden, it never happened. Now? expect this property to be slashed to under $400K by June 1 (the taxes are brutal).

  4. xroads says:

    who is selling now? most listings in my area come on at peak or close to and chase price down in $10,000 increments. there is a job relocation down the street moving to california they bought in 06 at 350k put addition on maybe 50k and are selling for 399k don’t know what they put down but i would imagine this is a future foreclosure

  5. Lone Ranger says:

    “Shadow Stats are claiming a 23% unemployment rate right now.
    I fear they’re more sensationalized than zero hedge.”


    Even the liars at BLS admit that U-6 is close to 17%. I’d say that Shadow Stats is very close to the real #. By the way, Shadow Stats does not utilize B/D.

    We are close to the GD #’s; 25% unemploymet. Thankfully, at this time, we are adding bartenders, waiters and miners to the payrolls. Geologists are in high demand.

  6. xroads says:

    “They set prices mindful of their mortgage, not the market, as a consequence the houses don’t sell. ”

    I would gamble to say that sellers who own outright list according to ask price just to see if they can get top$ therefore everything that comes on is overpriced and the sad thing is they occasionally find the sucker

  7. Ben says:


    We shouldn’t be comparing home prices to commodities. The majority of the cost of buying a home is in the land and labor required to build it. Both should be going down. In fact, empty lots are every bit as overpriced as homes. The cost of commodities shouldn’t have more than a 10% correlation with the cost of a home. In fact, I might argue that you can’t even use historical values. Homes used to be build with quality materials. Now they are layered with plywood and fake wood floors.

  8. It’s all over, except for the crying.

    Oblivion, dead ahead.

  9. Tick, tock…

    “The Fed, in bailing out the world (a meme that has only now received popular acceptance following the release of formerly classified Fed documents, despite our claims precisely to that end from back in October 2009) has become the world’s largest hedge fund and with a DV01 of over $1.5 billion by now, has taken on virtually unlimited interest rate risk (a topic discussed back in April 2010). As such controlling inflation expectations, or more specifically, Long-Term rates (the part on the curve that Quantitative Easing is powerless to control) is the most critical aspect of the viability of the monetary system. Stunningly, today we learn that to keep long rates low, the Fed may have resorted to nothing short of the same suicidal trade that destroyed AIG FP and brought the entire system to its knees. Namely, Ben Bernanke is now quite possibly the second coming of Joe Cassano, since in order to keep rates low, Bernanke is forced to a last resort action of selling billions upon billions of Treasury puts to “pin” rates low contrary to natural supply-demand mechanics. If so, the Fed is now basically AIG Financial Products, although instead of being synthetically long mortgages (and thus betting on a rate decline) and selling hundreds of billions in CDS to amplify its bet, Bernanke has done the same thing, only this time with Treasurys. Of course, Ben has the printing press on his side apologists will claim. Alas, that will have no impact whatsoever, if indeed the Fed has been reduced to finding ever fewer counterparties to a synthetic bet to keep long-term rates low, as very soon, with inflation ticking up, all hell may break loose in an identical replay of what happened to AIG once the Fed’s put is called against it. Only this time there will be nobody to bail out the ultimate backstopper, resulting in the long overdue end of the current failed monetary system experiment.”

  10. Neanderthal Economist says:

    “if you calculate homes price in terms of pretty much any commodity they are close to historical lows.”
    This is similar to adjusting to cpi. Problem is that it doesn’t tell me much. Its similar looking at affordability in relation to an overpriced stock, ie home prices to appl stock.
    Price to med income makes much more sense to me. Most buy homes with med income, not gold or apples.

  11. Neanderthal Economist says:

    Repost from yesterday…

    Westy came up with the ingenious idea to use shadow stats, i like those real prices a lot better…

  12. Neanderthal Economist says:

    Agree with ben at 9…

  13. yo'me says:

    If at a worst case scenario,the US filling for bankruptcy.Countries that went through it got back on their feet. Argentina was back in a couple of years.Russia is as strong as ever.Bernank have stated before ,having the US dollar being the trading currency is alot of responsibilities.

    Lets just picture this as if this is the plan.It would be painful for everybody for awhile.
    World deep recession might not be an avoidable.What does the US really have to loose?Lost of value of the dollar.We have been doing that.Bank runs.Lets wake up those rich people.

    More and more I agree with some posters.Let it go down the Sh!t hole and build from scratch.

  14. yo'me says:

    If at a worst case scenario,the US filling for BK.Countries that went through it got back on their feet. Argentina was back in a couple of years.Russia is as strong as ever.Bernak have stated before ,having the US dollar being the trading currency is alot of responsibilities.

    Lets just picture this as if this is the plan.It would be painful for everybody for awhile.
    World deep recession might not be an avoidable.What does the US really have to loose?Lost of value of the dollar?We have been doing that.Bank runs.Lets wake up those rich people.

    More and more I agree with some posters.Let it go down the hole and build from scratch.

  15. yo'me says:

    If at a worst case scenario,the US filling for BK.Countries that went through it got back on their feet. Argentina was back in a couple of years.Russia is as strong as ever.Bernnk have stated before ,having the US dollar being the trading currency is alot of responsibilities.

    Lets just picture this as if this is the plan.It would be painful for everybody for awhile.
    World deep recession might not be an avoidable.What does the US really have to loose?Lost of value of the dollar.We have been doing that.Bank runs.Lets wake up those rich people.

    More and more I agree with some posters.Let it go down the hole and build from scratch

  16. yo'me says:

    If at a worst case scenario,the US filling for bankruptcy.Countries that went through it got back on their feet. Argentina was back in a couple of years.Russia is as strong as ever.Bernank have stated before ,having the US dollar being the trading currency is alot of responsibilities.

  17. Kettle1^2 says:

    Ben, veto

    what do I know, I’m just a janitor?

  18. yo'me says:

    If the US filling for BK.Countries that went through it got back on their feet. Argentina was back in a couple of years.Russia is as strong as ever.Bernank have stated before ,having the US dollar being the trading currency is alot of responsibilities.

  19. yo'me says:

    What could be so wrong if the US goes BK?Others did it,their back on their feet

  20. yo'me says:

    What if we went BK and spend just what we have.

    The NYT described the problem facing developing and rich countries as they try to reverse imbalances in trade:

    “The problem is that developing nations, losing business from their best customers, hope to replace sales by increasing domestic consumption — selling to the same customers developed nations are trying to reach.”

    Actually this should in principle not be a problem at all. It would mean that people in developing countries have rapid increases in their standard of living. This is what is supposed to happen in the world economy as the developing world catches up to the rich countries.

    Due to incredible mismanagement of the world financial system in the wake of the East Asian financial system (i.e. Alan Greenspan, Robert Rubin, Larry Summers) capital flows reversed course in a big way to go from poor countries to rich countries, especially the United States. The harsh conditions that the IMF imposed on the countries that fell into crisis led developing countries to accumulate massive amounts of currency reserves to avoid ever being in a situation where they would be dependent on the IMF for help.

    This reverse flow led to the large imbalances seen today. It is understandable that the developing countries would not want to be in a situation where they are again borrowing heavily from abroad and therefore could need outside assistance at some point, but this is because they cannot count on an international financial system that protects their interests rather than just the interests of rich country banks.

    Dean Baker

  21. Funny listening to Bojangles last week, claiming we’d throw the whole world into recession if we don’t raise our debt ceiling.

    Last I looked, the whole planet- with a few exceptions- has been in full-blown depression for close to three years.

  22. BK, declare all the debt odious, lob a couple of bombs at somebody and hit the reset button.

    All busted out. Tilt. Nada.

  23. Kettle1^2 says:

    Here is my take on the whole ridiculous enchilada

  24. gary says:

    In general, it still takes less time to sell lower-priced homes than more expensive ones, said Jeffrey G. Otteau, the president of the New Brunswick-based company that did the research.

    And if I chopped my dogs b@lls off, his name would be Janice! /sarcasm off/

  25. morpheus says:

    from previous thread:

    productive v. non productive people. Seriously, these ayn rand fantasies are getting a little dull.

    I do not believe anyone on this board is in the upper 1% of income distribution. Therefore when the SHTF, no one is going to be spared (sorry clot for the infringement). We are all going to feel a shit-load of pain. Even investing in gold and silver will not save you. In fact the only metal worth investing in is “lead”. Also camping supplies and canned goods are worthy investments.

    When the SHTF, individuals by themselves are totally f**ked. Face it people, you are all members of the community and you will need the community’s help in order to survive. Are you on good terms with people who live next door? might be a good idea.

    OK. . . i will step off the soap box now. Think I need more coffee.

    PS. . . I am not knocking PM as an investment against inflation. However, I do not believe that it will totally protect you if and when the USD collapses. When that happens, I believe your ability to barter goods and services will increase your chance of survival.

    Of course, what the hell do I know. . . .I am a dirty renter! Excuse me while I go pimp my hos.

  26. Essex says:

    22. True. Yet somehow there will be those who are insulated somehow. Not me. We just had our best year ever….with very little (Besides being current on bills–yawn) to show for it. We clocked in at $300k for the year. Yep. But at that rate you would think we would have been able to sock away more. No more turning in cars every 3 years. Whittle away the debt. Eliminate the cards. Done and done. Now I start my two year plan. SAVE, SELL and GTFO. Yep.

  27. Essex says:

    Yet, it was the ‘savers’ who were decimated last time around. Go figure. Mattress > Stock.

  28. jamil says:

    taxes are for the little people, and helping elderly parents is for suckers.
    just ask Holder brothers.

    “April 17, 2011 US Attorney General Eric Holder and his brother failed to pay the property taxes on their childhood home in Queens, which they inherited last August after their mother died, The Post has learned. And because their ailing mom, Miriam, was already behind on two quarterly tax bills when she succumbed to illness on Aug. 13, the charges went unpaid for more than a year — growing to $4,146. It wasn’t until The Post confronted Holder last week”

  29. Ben says:

    Morpheus, plenty of countries have gone through hyperinflation in modern times. We don’t deevolve into mad max. Hyperinflation is the end of your bank account, not society. It’s basically a reset button that erases debt. It also means that people have no disposable income for a few years. Generally, countries emerge very rapidly from hyperinflation because there is no debt overhang for the average citizen or the government. As far as your lead comment. I never understand it. You do realize you can buy both lead and gold/silver, don’t you?

  30. morpheus says:


    I took the position contrary to this blog: I invested in stocks. I saved. bought a fair amount of canned goods. Bought water purification equipment. Bought some additional camping gear.

    Besides wanting to buy a house. . . . .I really do not “consume” a great deal. Frankly, there are not a whole lot of consumer goods I really need or want. I do not need the latest I-Pad or doodad. I do need land!

    Though, I have been researching a coal/wood stove for the future homestead. I expect gas/oil prices to rise. We still have a lot of coal in this country. PA still produces a lot of coal.

    Oh well. . . .got to take a shower and make beer.

    Nom . . . .Did you try the williams brewing malt extract pouches? Eventually, I have to swing by chez nom to pick up my wayward brewing equipment.

  31. morpheus says:

    26: I am not saying a mad max situation is possible. SHTF can comprise many different situations.

    My lead comment? Read some of the prior entries on this blog.

    gold/silver. . .. I just do not believe it is the ultimate insurance policy. As part of well balanced portfolio . .. . yes it has a place.

    Now I really must take a shower. bye

  32. 30 year realtor says:

    Ben #9 – Lot value is a lower percentage of the end value of new construction than at any time since the mid 1980’s. In 1990 I could buy lots in less desirable areas of Bergen County for $50,000, build a 36 X 24 bilevel with hot water heat, central air, garage, deck and some cathedral ceilings for about $75,000 hard cost. House would sell between $175-$190,000. Today that house sells for around $300,000 and I cannot make a reasonable profit buying the lot for $50,000.

  33. 3b says:

    If the 20% down is a problem for buyers, why are they not going FHA?

  34. grim says:

    If the 20% down is a problem for buyers, why are they not going FHA?

    FHA isn’t the only option. PMI is still readily available for conventional loans up to 90%.

  35. 3b says:

    #31 Undestood. So why then does every article mention the 20% as a problem.

  36. xroads says:

    whats your credit score have to be in order to get fha or %90 w/ pmi?

  37. Comrade Nom Deplume says:

    [27] morph,

    I have not picked up anything yet, but would like to plan my next two batches. As for coming by, I am embroiled in tax season and a better quarter than expected for legal work, so I have had to go back into the day care market instead of being a full time dad. After this week (after tomorrow, really), I will have a lot more time than I do now.

    And yes, your brewing measure is still here.

  38. grim says:

    33 – Conventional with PMI will be 680-720ish, insurers generally charge higher rates for lower scores

  39. Comrade Nom Deplume says:

    Time to do the taxes now. TTFN.

  40. Shore Guy says:


    Just write a large check, send in an, extension, and do taxes sitting on the beach.

  41. Comrade Nom Deplume says:

    [26] Ben.

    As for lead vs. shiny, understand that shiny is a medium of exchange without any utility value. It acts as an alternative to pure barter.

    If there is Armageddon, shiny may have no value because there may be no exchange and barter rules. In that case, shiny is essentially worthless because no one will accept it, and you can’t eat, drink, hunt, keep warm, or treat with it.

    Now, I agree that there are levels of TSHTF that are not Armageddon, and that Shiny continues to have value. Toward that end, I have both shiny and lead. But Morpheus’ point is that you can devolve to a point where shiny drops off but lead retains its value for barter and utility.

    Okay, back to taxes. Bye all.

  42. Comrade Nom Deplume says:

    [37] shore,

    May still do that, but taxes this year are not that hard. Some NQ stock and disqualifying ISO dispositions are as complex as it gets. Harder part was rounding up all the 1099s that, for some reason, still have a hard time finding us.

  43. Comrade Nom Deplume says:

    [26] ben

    ” Hyperinflation is the end of your bank account, not society”

    Which reminds me that, when I was going over finances, I found that we have nearly all of our non-retirement assets in cash or equivalents, and a sizeable percentage of retirement funds in cash or equivalents. All told, it is a nice piece of coin for the banksters to play with, but not helping us any.

    Got to get off my ass and put that to work.

    And if I wanted to put most of the eggs in one basket, I could buy a nompound on my own. I still think it is a waste of money for it to sit empty, which is why I don’t.

    Aurgh. Must. Go. And. Stop. Checking. Board.

  44. morpheus says:

    Nom: thanks for keeping the equipment safe. Made a new “stick”: cheaper than driving to your house and getting the stick. Good to have an extra one.

    question: the last batch you made–did you save any? Might taste better now that it is aged.

  45. Shore Guy says:


    I long ago gav e up trying to mess with the 1099-miscs that i need to track, instead I have a dedicted account for receipts from clientw who should issue 1099s to me, I make no deposit into it that is not from such clients. At the end of the year, I just count the deposits, and voila. I also indicate on the deposit record which state or nation the money came from, so as to allocate correctly. This prevents under reporting due to someone not sending me the form.

  46. Shore Guy says:


    I am beginning to think that any nompund needs to have access to open water, like some inland areas in nc that hav access to the varius sounds. It allows for fishing, salt production, and escape.

  47. Neanderthal Economist says:

    Ben and morph, I think a currency collapse would hurt the us more than argentina, iceland or russia because our living standard was/is so much higher. Those other countries were living relatively within their means when they fell from grace and none enjoyed reserve currency benefits, which just makes a bigger bubble.

  48. NWNJHighlander says:

    Thanks to Kettle and Neanderthal for the graphs.

    You all in the 201 are missing out on the fun of land prices in the NW of 973.
    Res land went down 80% in the core zones of the Highlands Act. The developers if not bk, are desparately trying to sell the land to Green Acres programs, either government or private non-profit for the tax benefits and to get cash in hand. The banks once they repossess are begging to donate land as a tax writeoff. Gov Green Acres is penniless, private groups also affected with maor loss of donations, and trusts which lost principle.

    Just like San Diego and the heavy land use restrictions in the hills, the loss of new land for suburban/exurban sprawl is going to artificially inflate the value of existing housing stock in 201/973. Just like San Diego county, we’re going to see a teardown culture evolve and pop. density increase as builders start going vertical. This was outlined in Corzine’s plans to increase mass transit in the 973/201. Christie has had no inclination to change policy direction, afaik.

    Keep that in mind going forward when trying to calculate the value of land in Bergen/Passaic/Morris counties. (and elsewhere, I don’t know the RRE market south of Millburn, so no comment on it)

    For the first time since Radburn, Fair Lawn NJ was built in 1928, there is no longer new subdivisions being built en masse in NNJ. It’s a whole new world.

    Grim, thanks again for the blog

    P.S. is ”Michelle” with the hubby as public worker’ an alt ID or not? Of all the funny stuff I read on here, so believable, yet somehow not authentic.

  49. NWNJHighlander says:

    Shore Guy,
    NC coastal inlets were once beautiful, however the swine/poultry industrial farms have so polluted the inlets it’s not safe to swim in them a few months a year.. and forget about eating shell fish from them.
    Pfiesteria piscicida outbreaks and the like.

    Also, I wouldn’t want to be an outsider in that area in the SHTF situation. My friend’s wife is from the area, her family has been there since the 1790’s, the simple truth … the growth of the last 10 years is simply unsustainable in a SHTF scenario, and the industrial farms would have to cull their herds and abandon most of the industrial farming processes without access to pharamceuticals.

  50. Neanderthal Economist says:

    “The loss of new land for suburban/exurban sprawl is going to artificially inflate the value of existing housing stock in 201/ 973.”

    Nwnj. Insightful stuff. Dont know much about the act but I’d imagine there’s a lot to that and its affect on prices.

  51. Shore Guy says:


    Interesting point about the chicken farms. It reminds me of the Eastern Shore and Maine, where industry has seriously reduced the quality of many waterways and reduced the % of desirable land.

  52. Shore Guy says:

    The first entry on a Google search:

    The Ohio River received the greatest amount of cancer-causing chemical discharges, followed by the Catawba River in North and South Carolina

  53. Shore Guy says:

    Last spring I took my daughters on a weekend trip to Camp Sea Gull, a YMCA camp on the Neuse River. We heard that it might not be safe to swim in the river due to hog farm lagoon spills upstream, and I had read that the state government attributed massive fish kills in the area throughout the previous two years to low oxygen content in the water related to an oversupply of nutrients from pollution of that type.

    Then this summer I read “And the Waters Turned to Blood” by Rodney Barker and got an education-albeit a sensationalistic one-in environmental politics. The waters in North Carolina weren’t actually turning red-a biblical reference alluding to “red tides” caused by toxic algae. No, the newly discovered Pfiesteria piscicida organism, now thought to account for about 30 percent of fish kills on the East Coast, was not quite as contagious or rapidly fatal as the Ebola virus.

    The book tells the story of JoAnn Burkholder, a researcher in aquatic botany at North Carolina State University, and her serendipitous discovery of an unusual dinoflagellate that kills fish in polluted waters through immunosuppression and the production of a neurotoxin. The action takes place between here and the coast, and it reads like an Oliver Stone screenplay complete with government conspiracy theories.

    At the least, it makes an interesting scientific detective tale with a new and potentially important discovery by an obscure researcher meeting resistance from the scientific establishment. The plot rapidly transforms, however, into one of political intrigue as it takes on the most controversial topic in the state-the water quality of our rivers.

    Throw in allegations of environmental mismanagement by the North Carolina Department of Environment, Health and Natural Resources, anecdotal reports of human illness attributed to neurotoxin exposure and a few anonymous death threats directed at Burkholder, and you have a full blown case of “Pfiesteria hysteria.” The complaints of short-term memory loss and other neurologic symptoms by laboratory workers-including Burkholder herself-and fishermen exposed to Pfiesteria were made more credible by the fact that Duke environmental toxicologist Ed Levin has demonstrated significant learning deficits in laboratory rats exposed to Pfiesteria.


  54. Shore Guy says:

    Is there anyplace near the coast that we have not thoroughly abused?

  55. NWNJHighlander says:

    Shore Guy RE: #51

    I’ve driven north and east of Belfast Maine past Acadia N.P. and to the Canadian border, it’s pretty pristine albeit it was clearcut many times and the fishery is depleted. If TSHF I’m pretty sure us southerners would freeze to death there though.

    Mainers can take 20 years to first say “hello” to out of staters who move in, my family is from up there and are founders of three towns, and if I can’t get that info out in the first minute I meet someone there, I’ll get the cold shoulder for years at a time. Once I get it out though, it turns into the warmth of a family reunion and offers of bbqs and fishing trips.

  56. Shore Guy says:

    Yup, if one is “from away,” one is not going to feel the warmth.

  57. NWNJHighlander says:

    one last comment:
    “Does everyone on the low-end want to sell, or does nobody want to buy?”

    I am in my early 30’s and could buy now in 973/201 with a standard 20% down mortgage. I however acquired a degree in “the dismal science” and can’t bear the idea of losing anoth 8 to 16% in value AND get stuck with infinitely increasing liabilities for property taxes.

    Friends my age are buying foreclosures in 973(in the western part, not Paterson) for under 100k, fixing them up, and moving in, with expectations to keep property as long term rental once they have their own kids. One guy just bought a house built same year (1964) as my parent’s first home purchased in 1979 and paid the same price as 1979. Another is targeting foreclosures with bad septics, and one is looking for properties with additions that didn’t have permits pulled. Guess what line of work those guys are in… but if you can’t put in the sweat equity, the market still isn’t low enough.

    I figure I can wait another year or two and pay all cash at a sheriff’s auction if the NJ Supreme Court, NJ AG, the banks and mortgage processors can reach an agreement to get the pipeline flowing again. Or I’ll flee the state. My 10 year HS reunion showed that over 60% of my classmates have left NJ, and not many ended up in NYC of those.

  58. 3b says:

    JC From yesterday. We took a drive around today in WT, and pretty much liked what we saw, and will concentrate there. We theink we are going to concentrate on the area closest to Forrest Ave, which will allow me to drive to Oradell for the train; that is the only draw back, hacing to drive to the train. Could go into Westwood or Emerson, but parking is more of an issue there.

    We will skip Hillsdale simply because we dont need the whole blue ribbony thing, and they are having the same funding fight with the regional school system as RE & Oradell. Westwood is a little too congested for us, so we will skip that too. We will take our time (within the next year), as prices will IMO continue to fall, (certainly not going up ).Thanks for all of your help. I will keep you posted, and will continue I am sure to have questions.

  59. yo'me says:

    I have been to Bar Harbor,Maine many years ago.I remember the beauty of the place.

  60. JC says:

    3b #56: If you’re talking about the area south of Ridgewood Road between, say, the high school and Lafayette/Forest, yeah, that’s near my neck of the woods. I’ll keep my eyes open…and if my friends’ neighbor’s house drops in price again I’ll let you know.

  61. A.West says:

    N.E. (13), problem is that if you deflate median income with shadowstats cpi, you probably also get plunging incomes, and as you note, people buy houses with income, not inflation.
    I think it’s pretty fair to say most people buy nominally priced houses with nominal income.

  62. Barbara says:

    #3 Jets

    exactly, soon, most sales will be short sales.

  63. Barbara says:

    the new middleman is the homeowner.

  64. DL says:

    The reason no one wants to buy in the low end is because the people who used to move into starter homes are still paying off six figure student loans while burning their fingers on the deep fryer.

  65. Kettle1 says:

    A West 59

    The point of the inflation adjustment is to allow you to make an apples to apples comparison of prices at some tie in the past. Given the dollar is constantly inflated you have to use some form of adjustment (i,e cpi) to do that.

    people buy nominally priced houses with nominal income.
    absolutely. but if you want to compare the economics of a purchase today with one from 10 years ago you need the adjustment.

  66. A.West says:

    While I was watching the talking financial heads this weekend, complaining about speculators driving up oil prices, gold prices, etc., a thought that I’ve had before came into my mind. If the Fed hadn’t been keeping interest rates consistently and artificially low for the last ten years, people wouldn’t be forced to speculate on real estate, stocks, gold, oil, and so forth. I’ll bet there are a lot of people who would be happy to save money in a bank or CD paying 2 or 3% above inflation. But the Fed and the government doesn’t want people to save, so they make sure that savings rates produce inflation adjusted losses, and then complain that people no longer enjoy “saving”, i.e. locking in real losses, and are surprised that banks use super low rates to generate all kinds of leveraged financial products that have nothing to do with chanelling savings into productive investments.
    People in government don’t even see what’s going on. They’re just moving from one manipulation to the next, always trying to “stimulate” someone to spend more than they have, like a corrupt CEO trying to fudge the numbers to “make” next quarters’ EPS numbers, justifying it like Keynes by rationalizing that “in the long run we’re all dead”.
    Inflation is running at 2.7% now, if the Fed wasn’t rigging savings rates, banks would normally be offering 4-5%. But the Fed hasn’t allowed savings rates to get over 4% during the past 10 yrs. I’d much rather get a positive real return denominated in a solid currency than be forced to speculate on gold and silver and so forth to counter the conscious and consistant devaluation of the currency and savings. But unfortunately that’s not the kind of world we live in.

  67. Barbara says:

    50. ShoreGuy

    you just put me in a deep, dismal funk. Days like today I wish I was a dispensationalist.
    Of course, its the dispensationalists who are largely responsible for this.

  68. 3b says:

    #58 JC Thanks. I follot the njmls, so I too will keep an eye on it as well. Its funyy all the years I have lived in the area, and except for driving through on occassion, I never paid any attention to the town. It never gets much press, good or bad;perhaps that is a good thing. I have to say, I thought it was very nice,

  69. Barbara says:

    Re: Down East Maine. Everyone should drive the down east coast toward Canada, over seeing the Bay of Fundy. Very dramatic scenery. Cross over into NB Canada, drive north along the Fundy Bay coast, cross over the land bridge over to Nova Scotia and onward to Cape Breton. Hike, explore, get out and whale watch on Fundy Bay (I saw 13 Humpbacks within a few hours) and Bay of St Lawrence. The park at the top pf Cape Breton is teeming with moose who are very tame. I hiked an easy trail and the would walk right by, so quietly too. Acadians, folk dancing, French and Scottish cultures…. Anyway, Cape Breton is listed as one of the world’s wonders and its easy to get to.

  70. A.West says:

    Thanks for the chart of real estate predictions yesterday. I think your prediction is the best case scenario. The Grim et. al outlook of further declines followed by flat pricing for an extended period is my base case scenario. Meaning that inflation and taxes will continue to eat away the value of homes even after nominal prices stop falling.

  71. 3b says:

    #67 Still more than a few people there too in NS, who speak Scottish Gaelic as there everyday language; wonderful place.

  72. 3b says:

    We had a hired young guy recently with student loan debt (undergrad/law school) of 250K, throw in the girl friend with another 100k; they will not be buying a house any time soon.

  73. cobbler says:

    To understand the direction the RE structure in NJ is moving, we need to go back to the early 20th century. Then, if you excluded the farmers’ homesteads and look at the old houses in places like Chatham or Summit, you’d see a clear bimodal distribution: nice victorians, tudors, etc. on fairly large lots – and small capes and multi-families. This is pretty obvious spread for the town populated by the rich and their servants, with the small middle occupied by the small shop owners, office clerks, police officers, etc. Had someone suddenly dropped on 1910 Summit a bunch of split level homes, there’d be no takers – the rich wouldn’t want them, the servants wouldn’t be able to afford them.
    The whole idea of RE moving as some monolith is dependent on the persistence of the society’s structure that includes middle class as a major part. Once it disappears or is largely shrunk, there is a quantum shift in the quantity of housing of each size and price range that is needed. We can expect the whole towns to be gone, unable to support their infrastructure and governance – and others to become the Summit of 1910. I doubt anyone can clearly predict which town will become what 20 years from now.

  74. Neanderthal Economist says:

    west, we’re only 5% away from a 30% crash so I see your point but im expecting increased inflation and continued hoarding of foreclosures to keep the nominal crash from getting much worse. If i had a chance to change it now, id probably go a little further down, but not much.

  75. All going to end in tears.

    At least my Grizzlies beat the Spurs today.

  76. Baseball going broke.

    (ESPN, 4-17-11)- The New York Mets might not be the only baseball team looking for outside help to escape financial trouble.

    In order to meet payroll obligations, Los Angeles Dodgers owner Frank McCourt took a $30 million loan from Fox last week, according to the Los Angeles Times.

    This marks the second time since the end of last season that Fox has helped McCourt cover expenses.

  77. yo'me says:

    Shoenberg, who now teaches a business class at Columbia University, said his income is usually “north of half a million a year.” But 2009 was a bad year for investments, so his income dropped to a little over $200,000. His federal income tax bill was a little more than $2,000.

    “I simply point out to people, ‘Do you think this is reasonable, that somebody in my circumstances should only be paying 1 percent of their income in tax?'” Schoenberg said.

  78. sas3 says:

    Yome, nice try, but logic has left the building a long time ago.

  79. Comrade Nom Deplume says:

    Well, the taxes are done, and the Deplumes will suffer an effective total income/payroll tax hit of 32%. That’s right, nearly one of every three bucks forcibly extracted to support Hope and Change. Feh. Add in property and sales taxes, and it is probably closer to 40%. I feel so European.

    If TSHTF, it won’t be enough for me to be a passive Nompounder. In Clot’s oblivion world, I am planning on doing some serious counter-redistribution of wealth. I figure the voter registration lists will be a good place to start. Or Obama bumper stickers.

  80. Comrade Nom Deplume says:

    [43] shore

    The thought had crossed my mind. Unfortunately, it makes for an expensive, and not terribly defensible, Nompound.

    There was a blueberry farm in NE Maine I looked at once. But that was a risky venture for so far north.

  81. Comrade Nom Deplume says:

    [41] morph,

    Still have some. Hasn’t improved any.

  82. A.West says:

    yo’me (76),
    This guy Schoenberg sounds like a leading contestant for Biggest Douche of the Universe. He feels so guilty about inheriting mommy and daddy’s money, why doesn’t he just give it all away? If he wasn’t such an idiot he could do a better job of that than the government, and skip the middleman. But no, because of some tax miracle which I certainly have never experienced, he somehow had one year where his taxes were low, and he thinks he needs to go to the media and publicize how rich he is and how unfair the world is for not taxing other people like him more.
    In the meantime people in his tax bracket and above are actually already paying the biggest share : people making over $400k earn about 20% of total national income, while paying 40% of total income taxes.
    Schoenberg should go give ol Warren B. and G.Soros a back massage. They’ve all got theirs, now they want to make sure other people don’t catch up by keeping what they earn, while earning publicity kudos for volunteering to burn other people’s money.

  83. A.West says:

    Comrade, (78)
    Only 40% you paid in taxes? Then the government “spent” 60% of your income by letting you keep it. Time for more “shared sacrifice” you greedy rich person. You are your neighbor’s keeper, after all. In 2013 the words “my” and “mine” will be forbidden. We must only use the term “ours” when speaking of wealth and/or income, to keep us in the correct frame of mind.

  84. yo'me says:

    We got $1T in 10 years on the Bush tax cut to start with,$5T more to go without cutting benefits for the elderly and poor.
    If half are not paying taxes after deductions,millionaires and companies using the tax code loopholes,eliminating tax deductions for companies and individual tax payers,and letting the Bush tax cuts,how long will it take to cut the deficit by $5T?

  85. Ben says:


    the fed, the media & the keynesian economists blame speculators on rising prices all the time. Yet, they ignore the fact that the actions they cheer, like interest rates close to 0% allow these speculators to leverage their bets at no cost. I love how these economists cheer for inflation targeting because they want the price of everything to go up. Then, when it goes up in crude oil, they scream bloody murder. Meanwhile, when oil was bottoming slightly below $40 at the end of 2008, there were plenty of people on this board telling people to buy buy buy. The media and economists have it stomped into their head that they somehow have a right to $30 oil.

  86. nj escapee says:

    Inflation in China Poses Big Threat to Global Trade

    May be a good time to bring production back to the states.

  87. Fabius Maximus says:

    #78 Nom

    As a tax guy hanging out his shingle for the first time you might want to keep that 32% number under wraps. Ex Doesn’t make good marketing Exercising the NQ’s as a result of the displacement of your previous employment are a pain as they just head straight to the income side.

  88. Carmelo Anthony = Tim Thomas

    Fugazy, punk-ass bitch baller. I hope one of the Celtics knocks his teeth out. He’s an insult to the game.

    His mom had to be a crack ho.

  89. sas3 says:

    A.West, would you support Schoenberg if he complained that his 1% rate is too high?

  90. Fabius Maximus says:

    #71 Yome,

    Watching the bigger endowments and funds moving through the markets used to be like whale watching in Pudget sound. Until you saw them up close you didn’t get to fully appreciate the enormity of their movememts. It is sad to see them just start to dump into ETF’s

  91. Comrade Nom Deplume says:

    (86) fabius

    That’s what happens when all of your income is w-2 income. There’s simply no avoiding it.

    This year, I have the shingle– that will provide us with much more shelter.

    As for nq and ISO exercises, the stock tanked shortly after, so it seems a smart move. Also, I wasn’t keen on so much exposure to one company in an industry that the left is trying to nationalize. We got burned a couple of years ago when hope and change tanked her prior employer and killed options worth tens of thousands.

  92. Juice Box says:

    re: Taxes – gotta love the extra $300 penalty I get hit with for contributing to my IRA. Apparently I am too rich to save for retirement. Thankfully I bought some precious metals with that money. FU uncle Sam!

  93. Comrade Nom Deplume says:

    [91] juice

    I am loading up the nondeductible contributions to a traditional IRA. Will put another 5K each in the wife’s and mine tomorrow for 2010.

    When they are converted to Roths, there is no tax on the principal, only on the gain. It’s a back door around the income limit on Roth IRAs. I’ve been loading up my IRA for years, and the wife has as well (when she remembers to do what I tel her).

    So we will be able to fund 50K worth of Roth IRA for no tax and no penalty. Then just load up another traditional IRA in 2011 with nondeductible contributions for rollover later. Rinse and repeat.

  94. Comrade Nom Deplume says:

    [86] febus

    BTW, the 32% is all income taxation, including state and payroll taxes, as well as those little taxes no one knows about, such as NJUI and FLI. It is a true effective tax rate, not the rate usually bandied about.

    Most pay more and not realize it. They focus on the US marginal rates. That is why getting away from W-2 income is important.

  95. Shore Guy says:

    Topic for tomorrow, Bayes’ Theorem and its application to real estate purchases in NJ.

  96. Shore Guy says:

    If the probability of one being overtaxed is 1.000 and the probability of a wise buyer putchasing a home subject to overtaxation is 0.000, what id the condutional probability if a smart buyer purchasing a home in NJ?

  97. Mike says:

    Good Night New Jersey and have a pleasant tomorrow

  98. cobbler says:

    With the worldview you’ve got, what is the point of putting the money into an IRA?

  99. sas3 says:

    Nom, 30-40% overall [NJ and Fed, including some FICA for consulting income*]
    has been more or less standard for us. The rates have been going down in the past couple of years even though incomes have been inching upwards a little bit [result of more deductions, W/O’s tax cuts, O’s 2% cut this year, O’s 8k freebie in ’09, etc.]

    *I am not counting property taxes, sales taxes,… and what have you that some folks (a vocal minority) here throw around when complaining about the black man in the white house.

  100. Ben says:

    Melo has always been overrated. He’s a ballhog with a mediocre field go percentage. He can’t play defense. The guy is born to lose. How can you play basketball all your life and be so clueless? It was clear the second that Allen hit that three that the Knicks had no idea what to do. Melo thought it was best to take a shot 5 ft back from the three point line instead of driving. They only needed a two.

  101. Fabius Maximus says:

    #90 Nom

    “That’s what happens when all of your income is w-2 income. There’s simply no avoiding it.”

    90% of the tax argument is summed up in that statement. It is not left/right rich/poor, Dem/GOP. If you are W2 you have no choice but yo pay your way. If you are not W2, then the the likelyhood that you pay a proportional share is low. Be it working off the books, the cash business that is not decalring all income, the business that will pay itself in dividends (cough) or the self employed writing all expenses off against the business and then shift $100K/yr towards “retirement”.

  102. Noah Wien says:

    jumbo post you procure

  103. debt advice says:

    […] Does everyone on the low-end want to sell, or does nobody want to buy? | New Jersey Real Estate Report […]

Comments are closed.