From the Star Ledger:
Fire suppression systems in new homes is aim of New Jersey bill
Builders in New Jersey may soon have to install fire suppression systems in all new single or two-family homes.
A state bill, the New Home Fire Safety Act, would prohibit officials from issuing a certificate of occupancy for such homes until a fire suppression system abiding by state code is placed.
It was turned over to a Senate committee early this month but has not yet come to the Senate floor for a vote.
Its aim, supporters say, is to protect residents and firefighters by getting a jump on controlling flames early on. But it would also bring added costs for a real estate industry trying to recover from a drawn-out downturn.
Home fire suppression systems basically consist of piping that brings water to heat-sensing sprinkler heads placed throughout the structure. Proponents and leaders in the industry say that they can quickly contain fires at their origin, make firefighters’ jobs much safer and giving much added protection to residents.
…
“This is a simple, commonsense step that will quite simply save lives and property,” Wisniewski, the Assembly’s Deputy Speaker, said.“We know these suppression systems are effective, so there’s really no reason whey they shouldn’t be as commonplace in new construction as windows and doors.”
Green, the Speaker Pro Tempore, agreed.
“Ensuring public safety is among our top priorities, and this would be an important step toward ensuring fire safety in new construction,” he said.
“A change like this can go a long way toward saving lives of residents and firefighters, and that’s always a good thing.”
Good Morning New Jersey
A good read
http://www.washingtonpost.com/business/economy/as-drug-industrys-influence-over-research-grows-so-does-the-potential-for-bias/2012/11/24/bb64d596-1264-11e2-be82-c3411b7680a9_story.htmlhttp://www.washingtonpost.com/business/economy/as-drug-industrys-influence-over-research-grows-so-does-the-potential-for-bias/2012/11/24/bb64d596-1264-11e2-be82-c3411b7680a9_story.html
yome says:
February 18, 2013 at 7:11 am
#34 Joyce says;
“2) …
Thanks to the Desi,Chino and other Asians businesses they brought to the town.
…”
Yeah, strip mall cash only massage “spas” really bolster a tax base.
Challenge with something like this is bleed over into the remodel/renovation case. For example, we were required to retrofit hardwired/interconnected smoke detectors even though the total scope of our renovation was relatively minor (no structural changes, no exterior changes, no new rooms). Retrofit sprinklers? While it might be more cost effective to install when the walls are open, it would be an incredibly expensive job on an existing home. I could see something like this easily adding $10,000-$15,000 cost for an existing 4br CHC.
From the NYT:
Don’t Blink, or You’ll Miss Another Bailout
MANY people became rightfully upset about bailouts given to big banks during the mortgage crisis. But it turns out that they are still going on, if more quietly, through the back door.
The existence of one such secret deal, struck in July between the Federal Reserve Bank of New York and Bank of America, came to light just last week in court filings.
That the New York Fed would shower favors on a big financial institution may not surprise. It has long shielded large banks from assertive regulation and increased capital requirements.
Still, last week’s details of the undisclosed settlement between the New York Fed and Bank of America are remarkable. Not only do the filings show the New York Fed helping to thwart another institution’s fraud case against the bank, they also reveal that the New York Fed agreed to give away what may be billions of dollars in potential legal claims.
Here’s the skinny: Late last Wednesday, the New York Fed said in a court filing that in July it had released Bank of America from all legal claims arising from losses in some mortgage-backed securities the Fed received when the government bailed out the American International Group in 2008. One surprise in the filing, which was part of a case brought by A.I.G., was that the New York Fed let Bank of America off the hook even as A.I.G. was seeking to recover $7 billion in losses on those very mortgage securities.
#3
Just like any town ,this happens. Your town is so perfect
#6
I didn’t claim it was perfect.
But I didn’t claim Edison NJ was a great place to live either, you did. Edison is a third world cesspool used to warehouse cheap back office labor, it’s common knowledge.
It’s apparently a great place to be visited by random violent crime also. I just checked and it’s 15x more likely to happen in Edison than my area. No thanks, you can keep that POS.
Of course the New York Fed is doing favors for Bank of America. Remember on his way out, to try to protect his own legacy, Ken Lewis happened to mention how the fed & Paulson forced him to buy Merrill Lynch. He mysteriously stopped talking and Bank of America hasn’t seen a problem since, despite their awful balance sheet and incompetent business model. I’m not one for conspiracy theories, but the reality is, is that the Fed has pulled all sorts of shenanigans and they are all too willing to grease the palms of anyone who happens to be big enough to be a threat to the financial system.
#7 I did not claim edison is a great place to live. The articles written about the town did. I claim low taxes due to ratables. You can call it what you want, there over 100 thousand people that lives in this cesspool. 5th most populated town. Average home price is 2.5 times average income. This people are wrong to choose to live here. And where do you live? Now cry how high your taxes are
This are the articles that claim it is a great place to live
http://en.wikipedia.org/wiki/Edison,_New_Jersey
#9 I’d rather pay 9k and know my car will be there in the morning than pay 8k and get mugged getting off the train. And I suspect the crime is higher there than reported because I know illegals don’t report anything.
Anyway, here’s more on your great town that your articles omitted.
Despite Edison police force’s upbeat assessment, town sees a spike in crime
“Statistics published annually by the FBI show that while crime dropped across the board in Edison from 2009 to 2010, it increased last year in most major categories, including robbery, rape, property crime, burglary and car theft, which shot up 35 percent. ”
http://www.nj.com/middlesex/index.ssf/2012/12/despite_edison_police_forces_u.html#incart_river_default
Betraying the badge: Edison police produce astonishing record of misconduct
http://www.nj.com/middlesex/index.ssf/2012/12/edison_police_misconduct_bruta.html
Average home price is 2.5 times average income.
I don’t have the actuals in front of me, but I don’t think this is the case.
I lived here since 1985. I have a 2000 volvo s70, 2002 mercedes c240 and a 2006 honda civic park on the street. I have a 2004 mercedes ml 350 and a 2011 bmw 328i parked on my driveway. My son walks to the train station to work in the city No incident through all those years. My neighbors park expensive cars on the street too. I called 911 once cop was in my door step with in 15 minutes.
Thanks for not planning to move in town,less family to pay for
Really sprinklers in homes maybe they should mandate fire retardant PJs as well. How many people ar actually killed in house fires in NJ? Grim your right it will bleed into remodels and will eventually have a retrofit regulation. Big fat wet kiss to unions, plumbers etc which will provide no benefit to actual homeowners but be a net loss cost wise.
NJ and you, We are your parents don’t play with matches.
#12
http://www.zipareacode.net/edison-nj.htm
To be clear, I am not a big fan of Edison, but it is certainly not a cesspool and further there is no reason to slur anyone except from Kentucky.
yome says:
February 18, 2013 at 8:34 am
I lived here since 1985. I have a 2000 volvo s70, 2002 mercedes c240 and a 2006 honda civic park on the street. I have a 2004 mercedes ml 350 and a 2011 bmw 328i parked on my driveway. My son walks to the train station to work in the city No incident through all those years. My neighbors park expensive cars on the street too. I called 911 once cop was in my door step with in 15 minutes.
Thanks for not planning to move in town,less family to pay for
#13
Is for nwnj
My friend lived in an apartment complex in Edison. His Honda Civic was stolen 3 times, each time, found with parts missing. Anyone who steals a Mercedes or BMW is just going for a joy ride. People will jack your civic and chop it up for the parts which move like wildfire.
Why not just opt for Piscataway or Dunellen?
Ben,
I am sure you are not saying this only happens in edison.You know it can happen anywhere.Does it happen more rampantly in edison? The articles wrote about the town alll wrong? Like I said,I bought my house in 94 lived here since 85,my kids went to school here.My youngest is graduating this sem at rutgers.This are all with in town.I had no incident all those years knock on wood
20 – “Best Places” lists tend to be based on algorithmic analysis of public/economic data and geography. In 99% of these, I’d guarantee that the authors have never stepped foot in the vast majority of towns covered. Their formula spits out a list and they take the top 10, top 25, etc.
The reasons they change so frequently is that whoever is generating these lists does so in different ways, weighting certain things more importantly than others.
I wouldn’t put much credence in any kind of “best places” lists.
By the way, the Realtors just LOVE these things, they are so many of them, and the results vary so widely, that just about every halfway decent town in NJ has “won” one of these rankings in the past 10 years.
This discussion dont matter.I am happy where I am.I was able to afford to send my kids to college due to the proximity of my house to Rutgers.I am not looking to make money on sale of my house.I already made money on rent I did not have to pay.In fact,I am just giving it to my kids in 5 years when I retire.
Allow me to enlighten you:
If the tax revenue collected from these businesses help support the cost to send your children to school or use the public parks (and the cost would have been higher if you had to pay for it individually), how is that not a subsidy? Or the tax revenue paid by people with no children, etc.
That was just one example, FYI. And yes it’s been going on for decades everywhere, but still a subsidy nonetheless.
yome says:
February 18, 2013 at 7:11 am
#34 Joyce says;
“2) To answer your question, some people would pay more while others would pay less. But than that would ruin the subsidies you receive at others expense, wouldn’t it?
I dont get subsidies or any in this blog does.I make enough to get taxed and not get subsidies. What keeps our property tax low is the “Ratables”.Thanks to the Desi,Chino and other Asians businesses they brought to the town. Thanks to the Industrial areas that brought job to the town.
No one deserves help at the expense of others, unless it is voluntary (and the govt doesn’t do anything voluntarily)… f-ck you, pay me. Why do people like yourself who love to be charitable with other people’s money never look at the second half of the equation? People get help (maybe) = other people get stuff taken away from them, their money. Do they not have the same rights? Of course not… f-ck you, pay me!
yome says:
February 18, 2013 at 6:33 am
joyce says;
“that there are people who can’t afford to buy homes because the prices have not been allowed to fall not bother you at all? ”
Nationally the prices of homes are down almost 30% from the peak of 2006 and interest rate are down to 3.5% from the peak of 6%.From this statistics a $600,000 house from the peak can be bought for $420,000 today.A $600,000 home has a mortgage of 30yr fixed at $3,597.30 a month.A $420,000 home today at 3.5% interest is $1885.99 a month. THIS SHOULD STILL BOTHER ME?
There are people that wants a house but will not be able to afford a house at any reasonable price and there are the ones that can afford but speculated for a price drop and still waiting.
The people that bought homes that continued to pay their mortgage and squezzed where given relief through HARP 2.0.Dont they deserve the help?
16. Kentucky is great if you have a little money.
Anyway. If you are from the northeast you might not know any better, But I am starting to think “Mitchell” from NC was on to something.
responding to a 911 call within 15 minutes is long wait
Probably not, but 2.5 – 3 times income is where Real Estate markets becom real markets. Somehow I think the rest of the country will learn this before NJ does, but learn it she will.
Average home price is 2.5 times average income.
I don’t have the actuals in front of me, but I don’t think this is the case.
#23 and #24 Joyce,
What you describe about taxation is true in any country in the world.Some are worst than the US.You may not like it or I dont ,but it will keep on going.It has been going ever since they started taxation.And it is practiced all over the world not just the USA.
You cant always get what you want
Where’s Freedy! The Spring market is on fire! We went to two open houses yesterday; one in Westwood and one in Washington Twp. The Westwood one was adverstised as a 3 bedroom but one of the bedrooms was a big closet. The Wash. Twp. was an end unit townhouse because again, when the buffet table is empty, you start looking at the crusty piece of cheese when nothing else is there.
The town house also was advertised as a 3 bedroom but the one bedroom was 8 x 10 and had no closet. That’s not a bedroom. And, it wasn’t updated since originally built in 1982. The monthly fee is currently $425 on top of the $10,000 in taxes. And fyi, the owners paid over 600K, six years ago and current ask is the mid 400s. Sure, possibly a bargain if two bedrooms and no property @ around 15K per year in taxes and fees works for you.
Inventory seems to be shrinking; I suspect that this is the new normal as people try to hold their breath while underwater. It’s gonna be a real long time. From 2004 through 2008, there were a zillion transactions in Unicorn County. Either the victims are gonna hold and pay the ransom mortgages or fold and walk away without a choice. And, you know the banks are gonna release these homes in drips and drabs; no way they’re gonna take a beating on their investments.
I was just thinkng exactly this thought. The next leg down and the “real” inventory will only come when the “real” sellers decide to sell. It’s already happening in sales with no realtors.
And, you know the banks are gonna release these homes in drips and drabs; no way they’re gonna take a beating on their investments.
(29)
Thank you for confirming what I said.
Probably not, but 2.5 – 3 times income is where Real Estate markets becom real markets. Somehow I think the rest of the country will learn this before NJ does, but learn it she will.
So, I’ve spent lots of hours running through price/income scenarios and data since our last discussion on that point. Probably too many hours, and I’m still spending hours looking at those numbers.
Here are my thoughts, I’m not yet ready to share my spreadsheets.
1) Home-Price-To-Income measures are much more volatile than a statement like “long term averages show a P/I ratio of 2.5-3x” would suggest. The statement somewhat implies that the market has spent long stretches of time in a 2.5-3x range, when this has not been the case. There have been short, 1-2 year periods of time that have been significantly better than others.
2) Volatility decreases when you aggregate larger areas into the mix, as expected, however that tends to result in the case that I’ve argued here before, specifically the “you can’t buy a median house” argument. When you’ve got a hollowed out market with low priced homes on one side, and high priced homes on the other. The long term P/I will utilize the “median” or “average” home price in the equation, yet there are few homes in that price range. This creates a situation where the statistic is misleading. If the housing market was a standard distribution, the stats would be more meaningful, but that’s not the case, even moreso today.
3) A 2.5x times number is very low. I’m having a hard time finding anything near that number using local statistics in recent history. We were in the low to mid threes in the mid-90s, a period that I’ve routinely stated as having been the best time in recent history to have purchased a home in NJ. Even into the mid 80s you only dip into the low 3s. I’m having trouble finding enough local statistics to determine whether or not there were any specific sub-regions that saw lower numbers. The only time is not so recent history we’ve been near the 2-2.5x number at a state level was around 1970, 43 years ago. Problem is #4 below.
4) In order to yield an number that can be compared over long time periods, you need to correct for housing size and quality. We can’t overlook this factor, there are significant costs that come into play for not only increased home sizes, but increased costs from code and building changes, etc. Some moderate correction scenarios show the ratio being pulled upwards by as much as 0.3, a pretty sizable uplift.
5) Impossible to use single series data to pull long term views. I think I’m using half a dozen different data sets to attempt to build a long term model. In many cases I need to fall back on census data for 70s and earlier, which results in a very rough view. Likewise, I’m assuming a linear interpolation of all datapoints for which I don’t have data, which is probably a bad assumption.
I lived in North Edison for a year. My parents moved there in 2006 to ride out the housing bubble in a townhouse rental. 6 years later, they are still there though my dad swears this is the year they move out. However, I wouldn’t want to raise a family there. The town is way too spread apart.
But I also would not live in Manhattan either with small children. Parking is a nightmare. Groceries are literally double. Applications, interivews, and 5 digit tuitions for admission to preschool is ridiculous. We can barely afford a 1 bedroom which is so cramped for 2 of us, where are we supposed to put in a kid?
(34)
Ask JJ… I’m sure he could help you build some kind of crib that hangs from the ceiling fan.
Edison is a third world cesspool used to warehouse cheap back office labor, it’s common knowledge.
I would defy anyone to explain why Fairview,North Bergen,West NY,and others are not a cesspool like Edison.
Third world? Some of these towns have been Third World for a few decades now.
NJ the Welfare state and moving quickly
Where’s Freedy! The Spring market is on fire! We went to two open houses yesterday; one in Westwood and one in Wash.
Most of the Morons in these townhouse complexes do not understand Taxes, and then the Main. fees to live with the guys farting on his deck.
In Wash township no less, the Mexicans are on the move into Westwood,Hilldale,give em some time it will be like Fairview
33 – I will say that you can get some VERY interesting results if you shift incomes by 5 or 10 years in comparison to median home price at time of purchase. There have been time periods where incomes have spiked relative to prices resulting in very low ratios over the “term of ownership”. This is perhaps the most interesting finding.
For example, imagine you purchased in 1980, you’d have purchased at a time when the ratio was 3x:
NJ Home Price (1980)/Household Income(1979) = $60,200/$19,800 = 3x
Why this is so incredibly interesting is, in just a few years after purchase, incomes *doubled*, yielding an incredibly beneficial situation for the buyer who purchased in 1980:
NJ Home Price(1980)/NJ Household Income(1989) = 60,200/40,927 = 1.5x
However, by this time, NJ home prices were in the $162k range, making the ratio for a new buyer in 1990, 162,300/40,927 = 4x, significantly more painful than 10 years earlier.
[24] Joyce
I feel the same way when our government gives millions of my tax dollars to foreign countries as “aid.” I feel the same way when I am told that I will get less from Social Security than I put in, yet grandma gets a raise again this year. I feel the same way when a retiree gets Social Security at 62, yet I am to wait to 67 to collect. I feel the same way when I hear one retiree gets a “real pension”, that I have to help pay for , but since I am not “grandfathered”, I get shafted. These things are also a form of redistribution, but find me one old goat who won’t say ” I paid my dues and deserve it”, even though they paid in 10 cents and are taking out 20.00. A baby born today is born into debt. That is a crime.
No offense to goats.
Mike [27];
responding to a 911 call within 15 minutes is long wait
+1. That’s why nobody needs a gun or more than 7 bullets for self defense — just call a cop and wait 15 min.
We had a Colts Neck cop on our property in 3 minutes from our 911 call.
Mike says:
February 18, 2013 at 9:50 am
responding to a 911 call within 15 minutes is long wait
You’re expected to pay 6.5x to 7.0x average salary for a house that is one level away from painful all for the privilege of being prestigious. Tack on property taxes and a disguise to hide the misery of trying to keep pace with the other insolvent m0rons and you’ll be a proud member of Haughty Valley.
[33 & 38] grim – Thanks for the data points. I, too, spent way too many hours in one day trying to analyze P/I ratios over decades from several different data sets. I’m on vacation right now with just an iPad (and a blue tooth keyboard) so I don’t have access to my spreadsheets but they were actually fun to look at once constructed. IIRC, prior to 2000 or so you could see very strong correlations between P/I nationally. The places you’d “want” to live seemed to never go much above 3.4 or 3.5 (rare exceptions like Hawaii and Irvine and San Francisco) but would go as low as 3.1 or so (I’m going just from memory). Also of note were the places you would never want to live and how relatively immune the P/I ratio was to the housing cycle. I think Buffalo, NY, for example just stayed locked in around 2.5, maybe rising to 2.6 in 2007. It was just crazy sick to see how P/I s flew up to ridiculous levels (5-9, I think?) during the bubble when virtually nowhere had ever been above the high 3’s. Next week I’ll pull out my data and take another look.
BTW, Verizon LTE rocks on an iPad. It feels like broadband. The only thing that sucks is that the Verizon app that should tell you how much data you’re using doesn’t work. I bought the top monthly plan at $80 for 10GB, but plan to cancel the plan after 30 days and renew again the next time I travel. For no extra charge at any data level you can use the iPad as a hotspot for other devices/PCs. I’ve prohibited my kids from watching Netflix or Youtube here as it appears with LTE you can blast through your entire plan in a couple hours.
7x? Ratios aren’t that bad…
Upper Saddle River
Median Income: $180,429
Median Home Price: $927,600
5.1x Price/Income
Upper Montclair
Median Income: $158,529
Median Home Price: $653,400
4.1x Price/Income
Short Hills
Median Income: $229,222
Median Home Price: $1,000,001
4.4x Price/Income
Ridgewood
Median Income: $154,348
Median Home Price; $702,900
4.6x Price/Income
(Incomes and Home Prices 2007-2011)
Clifton is actually more “unaffordable” for the median income than Short Hills is.
Clifton
Median Income: $63,106
Median Home Price: $361,000
5.7x Price/Income
what ratio were taxes to gross income in 1980? did they hit 10% of gross take home?
speaking of cesspools . Clifton may qualify
48 – sorry, i meant to say 10% of median gross take home
Paterson
Median Income: $34,302
Median Home Price: $318,700
9.3x
Newark
Median Income: $35,696
Median Home Price: $282,400
7.9x
14
A union plumber hasn’t been involved in building a new home in NJ for at least ten years.
It’s a big fat kiss to the Import pipe and fitting companies and the plumbing contractors who hire immigrants.
44 – I think what I’m finding is that for all intents and purposes, a comparable 2.5x number never really existed in NJ, it may have existed nationally, or in specific submarkets, but never really here.
While the ratio started to dip into the mid 2s in the 70s and into the 60s, that’s a raw, uncorrected 2.5x.
http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf
https://www.census.gov/hhes/www/housing/housing_patterns/pdf/Housing%20by%20Year%20Built.pdf
Correcting for smaller home sizes in the 1960s and 1970s, you push that 2.25-2.5 back upwards again, like I said, by an easy .3. And I’m not even talking about correcting for quality.
Lastly, the question running through my head at this point is, can you even compare the numbers over 50 years time, or longer. We can correct for size and quality and inflation, but is it even relevant? If in the past 50 years we didn’t see 2.5x, why are we going to see it tomorrow?
Just back from a few days at Wildwood. We should give South Jersey to Delaware or Maryland.
Lots of Confederate flag bumper stickers.
NJ – Median Home Price/ Median “FAMILY” Income
1960 – $16,500 / $6,786 = 2.4x
1970 – $23,400 / $11,403 = 2.1x
1980 – $60,200 / $22,906 = 2.6x
Median Family Income is approximately 10-15% higher than Household Income over the overlapping periods I have in datasets, so correcting using only a conservative 10% reduction.
1960 – $16,500 / $6,107 = 2.7x
1970 – $23,400 / $10,263 = 2.3x
1980 – $60,200 / $20,615 = 2.9x (Household income for this period was actually $19,800, making the ratio 3x)
So this is before correcting for house size over that period.
I can include 1950, but that again uses an alternate method for estimating household income in NJ.
1950 – $10,408 / $4,300= 2.4x (My estimate may be too high considering median income was $2,389 in NJ, with only 18% of residents having an income of $4,000.
Other interesting statistics, this one should illustrate how seriously volatile the index is compared to the “national”.
1940 – NJ Median home price was 54% higher than the national average
1950 – NJ Median home price was 42% higher
1960 – NJ Median home price was 31% higher
1970 – NJ Median home price was 38% higher
1980 – NJ Median home price was 28% higher
1990 – NJ Median home price was 105% higher (can you say NJ Bubble?)
2000 – NJ Median home price was 43% higher
Most expensive ‘states’ to buy a home in 1940.
#1 – DC – $7,568
#2 – CT – $4,615
#3 – NJ – $4,528
#4 – NY – $4,389
National – $2,938
Clifton
Median Income: $63,106
Median Home Price: $361,000
5.7x Price/Income
20% down based on a $361,000 purchase and $9,000 in taxes will cost you 50% of your NET income to pay for the monthly PITI. So, you’re left with $2100 per month to pay for gas and electric, car payment, car insurance, phone/cable/internet, house maintenance and what’s left is discretionary income. This is based on the fact that you had $72,000 to put down not counting the closing and moving costs. Again, we’re talking about a mere “starter” home in a town that’s moving in “another” direction rather quickly.
Best thing that’s come from Clifton is Giuseppe Rossi.
Some good Chinese restaurants there, though.
Gary #30: There is a cape being completely gutted and redone with an add-a-level on Hickory St. in WT. It is clearly a flipper; it sold for $275K as a foreclosure after sitting empty for over a year. It is on the market but not really listed as yet. My guess is that it will be listed in the low-fives. You want new/updated and don’t want to spend a fortune? There’s your house.
Jill,
How do you know it’s on the market? Do you have an address (number)?
Meat,
The best Chinese restaurant is in Denville.
When I bought my first house in 94 I paid 2x income.Mortgage plus taxes is equal to rent I was paying in one of those luxury apartment condo.In less than 10 years income has tripled making payment for the house peanut.Vacations domestic and abroad were easy.It got to a point,the question was if we can take off from work and go on vacation with no planning.Money did not become an issue anymore.I did not carry any debt.I paid everything when the bill comes. Iwas able to save and at the same time take care of my responsibility of educating the kids.
What I am trying to say is,If you pay more than 5x income today,I dont know if you can catch up or just work to pay for a house all your working life with no extra for anything else.That is assuming you stay foot,not upgrading to buy another home to start over again with the same grind.
In my case starting with 2x income worked very well
Grim says;
For example, imagine you purchased in 1980, you’d have purchased at a time when the ratio was 3x:
NJ Home Price (1980)/Household Income(1979) = $60,200/$19,800 = 3x
Why this is so incredibly interesting is, in just a few years after purchase, incomes *doubled*, yielding an incredibly beneficial situation for the buyer who purchased in 1980:
NJ Home Price(1980)/NJ Household Income(1989) = 60,200/40,927 = 1.5x
However, by this time, NJ home prices were in the $162k range, making the ratio for a new buyer in 1990, 162,300/40,927 = 4x, significantly more painful than 10 years earlier.
#65
Income is 2x less than JJ common standard income around his neighborhood
Gary – Median income for an area doesn’t necessarily represent the median buyer for the area. Common misconception, we’ve talked about that ad nauseum here.
So while the price/income ratios are interesting to look at from a comparative affordability standpoint, it doesn’t represent the median/average buyer.
Median home buyer income in NJ in 2010 was $110,000. This is compared to the median household income for NJ in 2010, which was $67,681.
To say it another way, the median NJ home buyer in 2010 had an income that was 63% higher than the median income of all households.
For the Clifton case, you’ll need to assume that the median homebuyer income for Clifton is 63% higher, a household income of $103,000.
20% down based on a $361,000 purchase and $9,000 in taxes will cost you 50% of your NET income to pay for the monthly PITI
At 3.5% interest and 9k takes, $1k ins, this is 25% of gross.
In 2010, in NJ, 20% of homebuyers had a household income of $200k or higher. That is one out of every five. One in 5, $200k.
31% of homebuyers had a household income of $150k or higher.
56% of homebuyers had a household income of $100k or higher.
Approximately 90% of homebuyers in NJ in 2010 had a household income higher than the median state household income of $67k.
To say it another way, the median NJ home buyer in 2010 had an income that was 63% higher than the median income of all households.
Fair enough. In 2006, they were giving mortgages to monkeys. So, since that stupidity went on for way longer than it should have, we still a huge correction in the making. Everything got pushed forward, so it’ll be another decade of declines and shake out before we resemble anything that’s normal again. Do you get what I’m leading to here?
The washout needs to happen eventually; they can delay all they want. Even for a POS at 361K, a lot of people don’t have $80,000 plus to be tossing around with room to spare. And for a household income of $103,000, do you really think Muffin is going to settle for a house that’s listed at $361,000? And if so, are they prepared to pony up for a new bath, sanded floors, spackle, paint and a handful of other “costly” issues? There’s way too many non-variables here to plug into the equation. I understand it, I’ve been a house owner for 18 years; the majority of the masses have no idea. That’s why the big unravel is still in the middle innings.
Jerry Buss owner of LA Lakers dead at 80
67 20% + 31% + 56% = 107% ?
70 – Every category includes the category above it ($XX and higher)
Grim,
“Median income for an area doesn’t necessarily represent the median buyer for the area.”
I don’t dispute that at all. But when the statistic is thrown about regarding 2.5-3x income … whether or not it ever existed in NJ … is it referring to median income levels of buyers only or of all of the households in the area?
grim says:
February 18, 2013 at 2:07 pm
Median income for an area doesn’t necessarily represent the median buyer for the area. Common misconception, we’ve talked about that ad nauseum here.
So while the price/income ratios are interesting to look at from a comparative affordability standpoint, it doesn’t represent the median/average buyer.
What percentage of houses purchased between 2004 and 2008 are currently underwater?
in NJ, not nationally.
But when the statistic is thrown about regarding 2.5-3x income … whether or not it ever existed in NJ … is it referring to median income levels of buyers only or of all of the households in the area?
All of the households.
(75)
Ok. Than it may be useful to note what the median income of homebuyers are, but if the trend was/is 3-4x household income for NJ we should include all them for a fair comparison.
74 – http://www.corelogic.com/research/negative-equity/corelogic-q3-2012-negative-equity-report.pdf
In Q3 2012, 19.9% of mortgaged properties in NJ were underwater. Approximately 2/3rds of homes are mortgaged, 1/3rd owned free and clear.
That means approximately 13.3% of all homes in NJ are underwater.
Now, we can get a good idea of where those are by using the Zillow map tool:
http://www.zillow.com/visuals/negative-equity/#10/40.8055/-74.4358
It’s clear that the vast majority of these are in the mid and lower tier areas. For example, 25% of homes in Clifton vs 5% of homes in Short Hills.
# 67 – re: Incomes
There were over 16,000 announced layoffs in the financial industry recently. Bonus numbers are in for most bankers and the bonus pools were up to 40% lower except for the Vampire Squid. In NJ about 8 percent of incomes are derived from the financial sector where it is 14% in NY. Less jobs and smaller bonuses should be having a direct and immediate effect on Retail and Housing. It will take a few months for it to appear, but could make spring selling season a real dud.
Gary #62: It’s #341 Hickory. Sold October 20 for $275k: http://www.bergentagsales.com/housesalesoct16-31-2012.htm#washington%20township
This was a cute house before it went into foreclosure. It is pretty much being gutted to the studs, tear-off roof, full 2nd level added. As this sort of add-a-level goes it seems to be better than most. It’s a quiet street, a little over a mile to the strip mall (and more importantly, to the Dog House Saloon!!), 3/4 of a mile to the high school. It’s about as close as you’ll get to a new house for LESS money than the houses you’ve been looking at that have knotty pine family rooms and eurostile kitchens.
There are 375, 790 mortgages that are under water in nj out of 3, 562 , 553 as of 2011 census. That is 10 percent of all homes in NJ are underwater
3, 562, 553 total homes in nj
It’s all rotting from the inside out.
Jill,
Thank you for the information.
Fast Eddie [63];
Denville? Where?
Moose,
On the main street off of route 46. Is it called Hunan House or something like that? You can’t miss the building, the architecture allows it to stand out. Their food is all home made and like nothing I’ve ever had that was considered Chinese food. Everything tastes so much differently than the standard fare.
grim: Would Jayne want to adopt Pinky the cat?
http://www.youtube.com/watch?v=xcdkaUmZGqs
Re P/I ratio
Is a 2x income at 7.5 percent interest rate in the 90s equal to 5x income at3 percent interest rate today? I guess so, if monthly mortgage payment is equal . No?
China Chalet in Florham Park is great for those who like spicy Sichuan food. Very authentic if you order the right dishes.
TakeOut:
http://billandharrychinesecuisine.com/
When Sally Herigstad and her husband wanted to buy a house recently in their Seattle suburb, they ran into some unfriendly numbers.
They owe the bank about $360,000 on their existing home, but a sale would bring in only the low to mid-$300’s: they’d have to close the deal with a big check.
So the couple went ahead and bought the house they wanted–and then rented the first. Still, Sally finds being a landlord a hassle. “If I could sell it and get my money out, I’d do it today,” she says of the first home.
Read more: http://www.thefiscaltimes.com/Articles/2013/02/12/Underwater-Homes-Remain-a-Dark-Spot-in-the-Recovery.aspx#page1#ixzz2LI1cKHXh
“There’s a sense among homeowners that if they can simply hold onto their property for 4 to 5 years, they’ll recapture the equity they had prior to the housing collapse,” he says. That’s turned greater Seattle into a seller’s market—the number of listings has dropped 46 percent year-over-year since this time last year, he says. Home values in Seattle proper jumped almost 13 percent in 2012, according to figures from real estate data provider Zillow.
The number of people with troubled loans is affecting the market nationally too. For all of the good news about 2012’s home price rise, it hasn’t made a serious dent in the number of underwater homes, according to the latest figures from data and analysis firm CoreLogic. Between the third quarters of 2011 and 2012 (the latest data available), the percentage of owners with loans who owe the bank more than their house is worth fell only from 22.1 to 22.0 percent.
That’s taking out a chunk of the inventory of homes on the market as would-be sellers hold on, waiting for rising prices to turn their mortgages around. And while home prices are rising, only 17 percent of those currently underwater will escape negative equity over the next year if prices continue to grow, CoreLogic’s figures show. The inventory of existing homes for sale nationally in December fell to only 4.4 months’ worth at the current pace—the lowest level in more than 7 years, according to data from the National Association of Realtors.
I believe it Hunan Taste
Mr Chu, rt 10 east Hanover, order off the Chinese menu if you want authentic.
Ally throws in the towel .
http://finance.yahoo.com/news/ally-banking-subsidiary-sells-mortgage-205355097.html?l=1
gary (85)-
Hmmm. Sounds like a creative use of the long pig may have something to do with the unique flavors.
“Their food is all home made and like nothing I’ve ever had that was considered Chinese food. Everything tastes so much differently than the standard fare.”
freedy (92)-
Hunan Taste, or Human Taste?
Soylent Green is people.
Just saying.
Ally = GMAC bank
They tried to hide behind a new name.
sx (91)-
For every “housing rebound”, there’s a boomerang default.
http://www.zerohedge.com/news/2013-02-14/boomerang-foreclosures-are-back-bernankes-second-housing-bubble-begins-pop
grim (97)-
Expecting that whole thing to end very, very well. Leaving all involved with a minty fresh smell.
“GMAC Bank” does have a better ring to it than, say, Shitcan.
re #94 – I would not be surprised if Ally has a portfolio of GM Auto loans that are comprised mostly low interest or 0% interest sub-prime loans and backed 100% by the taxpayer.
Is the government trying to sell the auto loan division to to Wells Fargo?
http://blogs.wsj.com/deals/2012/02/21/kicking-the-tires-on-allys-auto-lending-unit/
Holy from another planet… This kitchen was the inspiration for the transporter in Star Trek.
MLS#1301170
I think late this Spring the patient “true” homeowners (50-100% equity) will come into the market to sell and eat the lunch of underwater occupiers and heel-dragging banks. This surge of quality inventory will find buyers very quick and then run out of buyers as the inventory swells. We know what happens next.
There are homeowners out there that can sell very quickly at market price. That’s your true shadow inventory.
#23 Joyce
You forget the one of the main points of government is to regulate when self regulation fails. So my property tax pays for the towns heath inspector to ensure the restaurant are not poisoning the customers or the neighborhood.
I would looove to get a local dem rep to float a proposal to repeal Sec. 121 of the Code. If that ever got more than a moment’s traction, it would cause a spike in inventory.
#102 grim
I was thinking more along the line of “Fondue night at the Star Chamber!”
juice (101)-
0% auto loans to deadbeats…all sold to Wells Fargo…sounds to me like a circle jerk of lepers.
Of course, the US taxpayer is the biggest leper. And, the biggest dupe.
expat (103)-
I think you far overestimate the intelligence of the entire pool of potential sellers.
We’re well into the territory in which all possible outcomes will be the worst possible outcomes.
#104 redux
The video is a winner. It shows its true glory.
http://www.youtube.com/watch?v=lk2-MCSz0WE
If Expat’s prediction comes true, you will find me quickly going back into real estate. I’ll hang my license at the most expedient brokerage, and go to writing contracts.
Disclaimer: I do not believe this will actually happen.
gluteus (104)-
You’re so cute when you demonstrate your belief that gubmint can do anything right.
Things gubmint does right:
1. wage war
2. grease donor constituents
3. collect money
4. print money
5. write checks
Hunan Taste yeah, won’t miss that one driving by. Thanks, Eddie… will have to try.
Grim – Mr. Chu is already high on the list, just a little far from home for take-out though. I’d like to go shopping through that asian supermarket in the Costco plaza when I get a chance.
Hunan Cafe on Springfield Ave. in Morris Plains is good, and right on the way and not far from home.
#112 Clot
As cute as those small government wannabes that think that any industry can self regulate.
Re: GMAC/DiTech/Ally —
Not much of a stretch to argue that riding bareback in the housing market with their captive finance arm during the bubble is what kept GM out of bankruptcy as long as they were.
gluteus, the real problem is that most major industries in Amerika have long ago captured their regulators and turned them into co-conspirators.
Let’s look to the Russian model of gubmint for solutions:
MOSCOW (AP) — The body of a Russian lawmaker was found cemented in a barrel, and a former government official has been accused of ordering the killing over an $80 million debt, officials said Monday.
Mikhail Pakhomov, 37, went missing last week. He was a member of the local legislature in Lipetsk, a city some 350 kilometers (some 215 miles) south of Moscow. He was last seen last Tuesday when three unidentified men pushed him into a car outside a restaurant in Lipetsk and drove away.
Russia’s Investigative Committee says several suspects were detained, and that authorities found Pakhomov’s badly beaten body in a barrel of cement in a garage.
#93 grim
I always liked Royal Buffet in the strip mall beside Home depot and opposite KamMam food.
The place in Denville was good but not outstanding.
You forget THE main point of government is to protect individual rights. But do me a favor and keep using the strawman of self-regulation failing. (1) It’s not self-regulation. Business are (supposed) to be regulated by the customers, competitors, and other stakeholders of the industry. (2) If you think for one second that there is one major industry left that doesn’t fully control its regulators, than you are the most naive and dumbest person on here… which is saying A LOT! The ‘revolving door’ of government/lobbyist/corporation has been around so long that no one seems to care anymore. It’s expected; they’ve written rules to make corporate lobbying official. Just like the gift receiving ethics rules for our lovely congressmen; the rules of course should be ZERO is allowed. But they write the rules and the laws, so once again F U pay me. The executive branch regulators are established purely as a way to control industry for a particular group of large firms. That’s it. Sorry, if you can’t take it and still believe in the tooth fairy. The FDA is the one that allows food companies to market things as “broccoli” while they’re covered in toxins; other companies that also sell broccoli have to (proudly) label them as all-natural, organic, etc etc. In a free society, it would be the other way around. Store 1 sells broccoli. Store 2 sells GMO-broccoli.
Fabius Maximus says:
February 18, 2013 at 7:16 pm
#23 Joyce
You forget the one of the main points of government is to regulate when self regulation fails. So my property tax pays for the towns heath inspector to ensure the restaurant are not poisoning the customers or the neighborhood.
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