From NJ1015:
As interest rates rise, the NJ real estate market’s new twist
Interest rates have already been raised several times this year by the Federal Reserve but what’s expected to be another big hike on Wednesday will push the cost of getting a home mortgage in New Jersey even higher.
As a result, Jeff Otteau, the founder of the Otteau Group Real Estate Valuation and Consulting Co. in Matawan, and managing broker at Hudson Atlantic Realty, said the housing market in New Jersey continues to unravel.
He said over the past two years, home prices in the Garden State have increased about 35% while interest rates have increased 4.5%, making homeownership 75% more expensive — “and that’s just too much.”
…
Otteau said more and more homes are sitting unsold on the market and sellers are no longer calling the shots.
“That script has now flipped to the point that we are transitioning into a buyer’s market, where the buyer has more control over negotiations and is likely to offer less than asking price in order to secure a home,” he said.
He said for the rest of this year into the first part of 2023 we can expect to see interest rates go even higher.
“We’ve gone from August of last year with a 2.7% 30-year fixed rate mortgage to more than 7% today, we’ll see very sluggish home sales,” he predicted.
Otteau said it’s likely as interest rates keep climbing home prices will actually begin to decline, but “we’re not expecting it to be a large drop in home prices, we are calling for about a 10% drop in the value of homes in New Jersey over the next couple of years.”
First
Rich are paying cash the interest rate means little to them …….Once again the rich get richer and the poor get left out in the cold …
“He (Otteau) said over the past two years, home prices in the Garden State have increased about 35% while interest rates have increased 4.5%, making homeownership 75% more expensive — “and that’s just too much.”
Then Otteau says: “We are calling for about a 10% drop in the value of homes in New Jersey over the next couple of years.”
So, the house that went for 370K two years ago is now at 500K and will back down to 450K by 2024? At 7% interest, shouldn’t it be closer to 400K? The rise from 2.7% to 7% is exponential, not linear, so, I don’t understand the numbers.
That’s because you aren’t a highly educated real estate expert.
I’m not worthy (bows head).
I’m surprised the Otter admitted any decline in housing prices.
Fast: We have the highest paid residents with double incomes and lots of money. Not to mention they are all handsome, beautiful, and really hot. As well they are great conversationalists, and can read War and Peace in one weekend. This is just a little blip for them, what with all their attributes, oh and the huge demand. This is what Otteau is referring too.
“If you are not making combined $300,000 income, perhaps New Jersey is not the state for you?”
Barry Diller on CNBC for the last 30 minutes. I was glued to the interview, very compelling individual including a 5 minute discussion on politics where Joe Kernen butt heads big time with Diller. Diller is obviously a staunch democrat. All in all though, Diller is fascinating to listen to with his wealth of knowledge.
3b,
Yes, we’re prestigious, what was I thinking. Don’t forget the bugaboo baby buggies and the blond hair pulled through the back of the Yankee cap. Oh, and don’t forget the French Bulldog, too. Puggles used to be the rage, so passé now. How dare I try to think rationally when perception is reality and rationale is defined on how you feel!
https://archive.nytimes.com/query.nytimes.com/gst/fullpage-940CEEDC1130F93BA25756C0A96E9C8B63.html
After initial 15% price drop, the Otter called for another 5% in the NY Metro. n total, housing prices ended up dropping 40% in price.
That bubble went from 120 to 220 before dropping back to 160.
The current bubble went from 200 to 280. Based on the last bubble burst’s range, gotta figure we will at least drop to 240. 240 is a mere 9% higher than the peak in 2007. So to calculate where “I” think houses are going, I would just add about 9% to your 2007 peak price. My multi was worth 675k in 2007 and 900k in 2022. So it should be able to be had at 736K at the bottom of this cycle. That would represent a 22% price decline from peak. I think that’s about right.
Fast: Yes, we are it took me years to understand this , but now I finally do. Oh, if you really want to keep up with being sophisticated and special , it’s preferable to have 2 dogs, one big one small is even better. That started in the city, but is now required here to as well. And please don’t forget your Vineyard Vines shorts and shirts. You need the whole look.
Going to be one of those periods when a higher percentage of sales are due to death, divorce, job loss and foreclosure. Doesn’t appear to be a lot of foreclosures in the NJ pipeline.
So did the math at my current place. I can sell today and rent a place for 3K a month for two years and this would save me about 93K. Not too shabby. Too bad there is nothing available to rent in my town.
“Doesn’t appear to be a lot of foreclosures in the NJ pipeline.”
Not yet.
The person who bought my multi put 3% down and has a 873,000 mortgage to service on a place that can generate at best $5,500K a month. The mortgage and escrow alone at 3% was like $7,500 a month and that’s without any maintenance. The upstairs unit that I rented for $2,600. Has now sat vacant for nearly two months. She listed it for $3,000. Unless she plans to take a hit and then convert the place to a single family and resell it at the next peak, she’ll be sending the keys in.
Do the math. If she just pays the taxes and energy and collects $2,500 rent. She can live for free in a $3,000 apartment until evicted. She’ll pocket about $500 in profit each month too until evicted.
“To dream the impossible dream.”
If the owner makes 150K a year and lives rent free for three years. Who cares about damaged credit. She’ll have half a million in the bank and can rent for 7 years. Heck, she can pay the entire rent up front and will still have 250K left.
“To fight the unbeatable foe”
Now try buying a desirable house. Good luck.
“Too bad there is nothing available to rent in my town.”
Lib,
there was a case my friend had to deal with in Westfifeld. A woman, circa 2006 bought 7 or 8 homes in Westfield. All were underwater on adjustable rate resets. But she rented them out and also hired a lawyer, to just delay the process as long as possible. Last I heard about it, she was able to drag it out for 3 or 4 years while collecting $4 or 5k in rent per home. $25k a month in rent, pay the lawyer, and eventually, they do take it, years down the road. She was collecting half a million in rent a year. I’m sure she didn’t give a crap about her credit after that.
Who needs credit at the point. And the truth is. It takes 7 years to clear your record, but only 3 to 5 to get your score back to excellent. The only problem is, the mark is still there. But who needs credit when you have 500K in the bank?
“Hudson Valley residents are feeling pain at the pump and at grocery stores, what have you done, and what do you plan to do to help solve our inflation problem?,” (Sean Patrick) Maloney was asked.
“Yeah, well, I grew up in a family where, you know, if the gas price went up, the food budget went down,” Rep. Maloney said. “So by this time of the week, we’d be eating Chef Boyardee if that budget wasn’t gonna change. So that’s what families have to do.”
Is this better than eating cake?
Quick Leftwing,
I need a Chef Boyardee Long Call Butterfly Spread.
I read an interesting article in The Atlantic magazine last eeek on why the Democrats have lost working class white Americans and are now losing Hispanics and other minorities. I don’t know if I agree with all of the analysis but certainly truth to it. Basically, the article states that the aforementioned groups have economic concerns, and the white “ educated “ ( the quotes are mine) Democratic voters are concerned with cultural issues. As I said I believe there is some truth in that analysis.
The powerful Russian businessman and a close Vladimir Putin ally Yevgeny Prigozhin has admitted to interfering in US elections on the eve of a midterm vote in which Republicans will seek to take control of Congress and state-wide offices across the country.
“Gentlemen, we interfered, we are interfering and we will interfere,” Prigozhin, who has previously been accused of influencing the outcome of elections across continents, said in a statement posted by his catering company, Concord.
“Carefully, precisely, surgically and the way we do it, the way we can,” Prigozhin, 61, added.
I am not that terribly bothered by Russian interference in our elections, much as I am a really big supporter of free speech and allowing people to choose what they want to believe.
3b,
Thats exactly what it is. Basically the wealthy educated members of the D party gave the middle finger to the white working class who were once the bedrock of the D party. From the Mills to the Mines, they were all D. In the NE, there is a disdain amongst the educated D for the working class whites and DT picked up on it. He made this disenfranchised group feel good about themselves which is what they like and remember.
All the D party had to do was get a bigger tent instead of throwing out a chunk of their core base. But, how has this group benefitted from supporting Rs? No steel production in Sparrows Point, Homestead or Struthers. Snobby east coast Ds have never seen an economy so bad they stopped buying deodorant or toothpaste. No awareness or empathy.
White, educated, democrat voters: Pelosi said we need the Hispanics to pick our crops. You know, so the liberal elites can enjoy the prosciutto-wrapped melon at their affairs in the Marina District, hob-nobbing among Stanford and Berkeley alumni while sipping their Louis Latour Corton-Charlemagne Grand Cru.
“roup feel good about themselves which is what they like and remember”
By lying about “made in USA” renaissance then stoking hatred of Blacks, Muslims, Hispanics, Gays then by default, Jews as well because white uneducated America needs ‘the usuals’ to blame. Yep, he made them feel good.
“If you are not making combined $300,000 income, perhaps New Jersey is not the state for you?”
Source? I mean, 21% of NJ HH’s are > $200K. I bet that extra 100K slices this by more than half.
By, agreeded. Pure psychological manipulation but it worked and continues to do so. What neither party did was provide much help to them to try to save their jobs, wages and dignity. The unions in many cases were a problem too. Many factors, cant pin it on one thing. I hope re-shoring continues.
Truth be told Eddie, the migrants harvest exponentially faster than US citizens could. Would be nice if they were treated better but they get some health care from the migrant health program but i get your point. Your boy exploites the WWC’s sense of patriotism because false hope is better than no hope. Net Net, some of our elected officials do work hard and try to do the right thing but its few and far on both sides. It would be great to have a highly skilled interviewer talk to our elected officials and really pin their ears back on what verifyable things they do to help constituents either by procuring funding, sponsoring and passing legislation that makes an impact. The pols that make the most noise are like empty oil drums. Back out a couple of wedge issues and you likely have agreement as to what needs to be accomplished with divergence in magnitude or the road to get to the desired result. The screaming and mostly bad theatre distracts due to either ineffectiveness or incompetance.
Nomad: I agree, you can hear the contempt in many of their voices for the blue collar workers, and their contempt and ridicule for things/ issues that are important to them.
Bystander: Lots of anti Semitism on the the left side as well, perhaps more . It may be quieter than some on the right, but it’s there As for racism in general, just watch how
Quickly a liberal will turn racist when you suggest low and moderate income housing in their towns.
Man you folks are bitter. Long winter ahead, eh??
Ex: Actually some of us don’t give a f@uk! What’s the point? Both parties blow, the respective Dems and Repubs on this board can talk about why their side is better, but in the end they both blow.
That’s easy to say. But isn’t much help now is it?
Ex: There is no help, there is no answer. They both blow.
Dr. Doom says US to face a long and painful recession.
If you find auto drivetrain tech of interest, VW apparently working on hydrogen fuel dell w 1200 mile range. Toyota and Honda have not abandoned fuel cell either. I wonder if this or other tech sneaks up on EVs and crushes them. Carvana mkt cap now < $1B. was over $70B at one point. Used car values tank again in Oct and dealers sitting on stuff that they may need to sell at a loss.
https://hydrogen-central.com/new-hydrogen-car-travels-2000-kilometers-single-tank/
3b,
..except you get street cred by wearing a Camp Auschwitz shirt at liberal rally. I consider that a big difference. Real racism is quiet and handled via economics. Both sides yes, but the blue actually have to deliver at some point.
don’t get.
With everyone and their mother expecting a painful recession, maybe it’s not going to be that bad. It’s when the economy breaks and no one sees it coming is usually when it got bad based on past history.
Is everyone ready for the potential end to democracy tomorrow?
Bystander: I don’t do the what aboutry, both sides are bad, and neither party cares about the average American in this country, whatever their racial or ethnic religious or any other background.
Nomad: Keeping an eye on those used car prices. If I can’t find an older Telluride before the new model made it look like crap, I would love to pick up a 2 year old RX 350.
Tomorrow?
https://youtu.be/qxmKJlDqYC4?t=245
Kanye, Kyrie, now Whoopie…all getting tossed for racism. They thought the tolerance to racism against white people also applied to Jewish people.
Makes some good points…building a house isn’t getting cheaper. Also, not a huge supply of available homes due to the huge swing in rates in such a short time. Has this ever happened before?
“Real estate WILL NOT CRASH just because interest rates are higher.
1. Real estate is not a single-issue asset class. Local job growth, inflation of materials, builder costs all factor into a real estate market’s prices. Notice the latter 2 are going up. That means it’s more expensive to replace houses now….
2. Real estate is LESS LIQUID now. Less demand AND less supply. No one is wanting to sell and lose their 2% mortgages. ARMs are at all time lows with existing mortgages. Realtors are screwed, home owners are not.
3. Labor/material costs are far higher and rising. Blue collar workers who are building new houses are demanding higher wages to show up. Materials are up too. You think someone can still cheaply bring on more housing supply? Think again”
So let it be written, so let it be done.
5:17 I think we are at a point where our thinking
has begun to take on a new understanding. Yes,
Cynicism has crept in, but also we’re being manipulated
by the media to think in terms of extremes. The binary choices we are
Assigned suck ass. We know it.
Allentown Plaza truck stop in PA… no diesel.
So it begins.
The parties have realized that moving to extremes excites their bases. The problem is, by moving to the extremes, there can be no compromise. So the party faithful have gone from accepting the minor changes that each other’s parties made when they got into power, to abhorring the drastic changes that each party now makes since every single issue is now a non-comprisable wedge issue.
It’s why Biden won’t drill and the SCOTUS won’t accept anything less than All (or nothing) on Roe.
Truth is, it’s the PAC money and the lobbyists that are killing the country. The politicians are only doing what they are being paid to do by the American oligarchs.
Lib: We’ll said. And, that’s why they both blow.
Nomad,
When I was in college, hydrogen was the expected next generation car to be developed. The greatest obstacle being the lack of fueling infrastructure and entrenched petrol interests.