Wednesday, September 21, 2005

Northern NJ Hits Top


I'm calling "top" of the market for Northern NJ, from here on out I think we're going to start to see an even greater increase in inventory and the beginnings of a significant drop in prices. If you haven't sold yet, there isn't a better time to lock in the gains, if you are thinking about buying, my suggestion is to hold off, you've got nothing to gain and everything to lose.

September GSMLS Active Listings

Bergen 688
Essex 1734
Hudson 90
Morris 2314
Passaic 1274
Somerset 1465
Sussex 1509
Union 1552
Warren 779
Total 11405

Bergen 782
Essex 1881
Hudson 94
Morris 2487
Passaic 1339
Somerset 1609
Sussex 1580
Union 1690
Warren 803
Total 12265

This is a 7.5% jump in inventory for the first 21 days of September. At this rate we may see a 10% increase this month. Now, I'm not a "Realt*r" or even a real estate professional, but I do know some basic economics, and what this is showing us is that supply is increasing. If demand doesn't increase to match, prices come down.

So how does demand look? Sales look to be taking a hit compared with last month, GSMLS sales for August came in a 3662, the September numbers to date are only at 2040. Given the 9 days remaining in the month, I'd estimate this months sales to come in at somewhere around 2900. If this isn't evidence of demand dropping, I don't know what is.

GSMLS doesn't give a good picture for certain counties, namely Bergen and Hudson, so here is the NJMLS data:

September Active NJMLS Listings

Bergen 3623
Essex 341
Hudson 343
Passaic 674
Total 4981

Bergen 3832
Essex 364
Hudson 365
Passaic 713
Total 5274

The active listings increase looks to be similar to the GSMLS numbers (keep in mind there are overlapping listings, you can't simply add these figures together).

Now, it's easy to be persuaded to call "TOP" on a quickly increasing market, a number of people thought the housing bubble peaked last year, but I preferred to gather my own data and wait until I saw a real downturn develop. It certainly wasn't last month, but September definately looks like the peak. One last tidbit, keep in mind sales data is a lagging indicator, the peak very well may have been August or even July in certain counties.

Caveat Emptor!


Blogger NJGal said...

Thanks for this Grim!

I'm in Hudson now (Hoboken) and it is a very strange area with little data. But anecdotally, there are way more open houses, way more places sitting on the market and a lot more reductions - Hoboken is a place for young kids out of college. It's a nice town and seems to be continually improving, but the 2 bed/2 bath new condo market is oversaturated (despite the "no new land" argument) and these young kids (most of whom I suspect are funded by the bank of dad) are not going to pay 700Gs for that condo.

I think Hoboken has hit the top. Jersey City is probably not far behind.

9/21/2005 11:25:00 AM  
Blogger grim said...

I spent some time at Stevens Tech in Hoboken, and spent at least the same amount of time at the bars on (and off) Washington.

I understand the desire to be in Hoboken, a short path ride across the river from Manhattan, great restaurants and nightlife. Heck, you could probably get away with not owning a car (I wouldn't want to have to deal with a car in Hoboken). So, I'd expect there to be a 'premium' associated with living there. However, it seems like no matter where you live, there are all sorts of 'premiums' associated with living there. So if every place has it's own special something, does any one place stand out as special anymore?

As for "no new land", really? I remember when River Street was actually on the river and there were nothing but fenced off piers over the water. So, at least in this one case, they were able to make new land, and I'm sure they'll continue doing it as long as they can dump fill into the river (or convert old warehouse and manufacturing space).. :)


9/21/2005 01:53:00 PM  
Blogger NJGal said...

They're building like mad in Hoboken now and converting a ton of rentals into convos. And there are still a lot of old timers who own crappy buildings on valuable land that I'm sure are on their last legs - developers are probably salivating in anticipation of the day an old guy dies and the developer can buy his place so they can rip it down and build new condos.

Look, the commute is great, but the taxes are way higher than places like Brooklyn, parking is a bitch and most of the condos built are 2 bedrooms - not particularly conducive, in the minds of many, to raising a family. Places like Brooklyn have many old brownstones and what not. Hoboken is too small and doesn't have nearly enough single family homes. Some people are cool with apartments, but many of the new Hoboken crowd are suburban kids whose dreams are of giant homes in NY or NJ 'burbs, not Hoboken. So while it's attractive, I just don't think the prices will ever reach NY heights, no matter what.

Besides, there will always be that "eew, NJ" sentiment from NYers.

9/21/2005 01:59:00 PM  
Blogger grim said...

I just went through some rental & sales listings for Hoboken and pugged those numbers into the "rent vs. buy" calculator I use:

The results were pretty much similar to ever other simulation I've run through it, there has never been a better time to rent.. :)

For anyone currently renting and looking to buy, I strongly suggest running the numbers through the calculator. If you don't understand the numbers you are being prompted for, find someone to help you understand them.

Just a note, some rent versus buy calculators use preset values as part of their calculation that look like they skew the calculation in favor of buying. You need to use a calculator that lets you adjust all the varables in the calculation to get a realistic view. Oh, and buy the way, don't go plugging 25% in the housing appreciation field.


9/21/2005 02:56:00 PM  
Blogger NJGal said...

Yeah, the 25% appreciation in those fields is ridiculous. But some folk seriously believe that. Sad.

9/22/2005 07:53:00 AM  
Blogger fbl said...

Can you include Middlesex county? Since it should be in sync with other NY metro area. For commuting to the city, it is even closer for certain townships such as Edison, East Brunswick and etc. I sampled 8 up-scale towns in Essex, Middlesex, Mommouth, Union and Merser counties and found it was consistent with your data. It was up 9% from Sept. 8 to Sept. 22.

9/22/2005 10:03:00 AM  
Blogger grim said...

Absolutely, my pick of counties for 'North Jersey' were entirely arbitrary, I included Somerset in my research just because I contemplated buying a home in Peapack & Gladstone. I'm not really familiar with Middlesex so if you'd like to offer up data or information, I'm sure many of us would appreciate it.


9/22/2005 11:01:00 AM  
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