Northern NJ Weekly Inventory Update
Weekly Inventory Update for 10/5/2005 - 10/12/2005
GSMLS
Total
10/5 - 12611 10/12 - 12745
Bergen
10/5 - 833 10/12 - 852
Essex
10/5 - 1918 10/12 - 1934
Hudson
10/5 - 100 10/12 - 97
Morris
10/5 - 2540 10/12 - 2568
Passaic
10/5 - 1408 10/12 - 1425
Somerset
10/5 - 1677 10/12 - 1711
Sussex
10/5 - 1560 10/12 1572
Union
10/5 - 1767 10/12 - 1777
Warren
10/5 - 808 10/12 - 809
NJMLS
I had issues with the NJMLS service on 10/5, so my last datapoint is 10/4. Please realize that my figures include an additional day.
Total
10/4 - 5542 10/12 - 5675
Bergen
10/4 - 4005 10/12 - 4106
Essex
10/4 - 381 10/12 - 393
Hudson
10/4 - 382 10/12 - 382
Passaic
10/4 - 774 10/12 - 794
(All figures are Residential Single Family, Condos/Townhomes. Multifamily residences are not included in these figures).
I'll let you all draw your own conclusions from the numbers.
Caveat Emptor,
Grim
GSMLS
Total
10/5 - 12611 10/12 - 12745
Bergen
10/5 - 833 10/12 - 852
Essex
10/5 - 1918 10/12 - 1934
Hudson
10/5 - 100 10/12 - 97
Morris
10/5 - 2540 10/12 - 2568
Passaic
10/5 - 1408 10/12 - 1425
Somerset
10/5 - 1677 10/12 - 1711
Sussex
10/5 - 1560 10/12 1572
Union
10/5 - 1767 10/12 - 1777
Warren
10/5 - 808 10/12 - 809
NJMLS
I had issues with the NJMLS service on 10/5, so my last datapoint is 10/4. Please realize that my figures include an additional day.
Total
10/4 - 5542 10/12 - 5675
Bergen
10/4 - 4005 10/12 - 4106
Essex
10/4 - 381 10/12 - 393
Hudson
10/4 - 382 10/12 - 382
Passaic
10/4 - 774 10/12 - 794
(All figures are Residential Single Family, Condos/Townhomes. Multifamily residences are not included in these figures).
I'll let you all draw your own conclusions from the numbers.
Caveat Emptor,
Grim
22 Comments:
timbeerrrrrrrrrrrrrrr!!!!!!
Mortgage rates rise again
Seems that Greenspan's conundrum is beginning to slowly resolve itself. Bond yields have been on the upward move (almost across the board) lately, the 10Y is up to 4.44 today. I don't even believe this weeks mortgage update includes the recent movements we've seen, so expect mortgage rates to increase next week as well (and likely into next year).
I'm going to firmly stand my ground at 30Y fixed rates in the 7's next year.
-grim
If your 7% target is hit next year bewteen the higher rates and tougher/normal credit standards, the housing market is toast.
7% mtgs with conventional mortgages will require prices to just collapse down.
many using risky mtgs to get in at these crazy prices. No more crazy buyers due to no more crazy loans = home price pummeling.
I bid on a house this weekend; 20% less than ask. The seller snubbed the bid. According to the seller's realtor, they were insulted. I responded by saying i was insulted by the price that is about 85% higher than 5 years ago. I was not going to be stuck holding the bag losing money while they have made a fantastic return.
by the way the house was asking $499k and about 45 years old. Basic junk.
$400k was my insulting bid. After a few days of contemplation I wouldn't bid anymore than $325k for the crap box.
As a matter of fact they can shove it.
A little daily hotsheet update..
New Listings 129
Back on Market 30
Total Added 159
Sold 72
Price Changes 131 (Almost entirely reductions).
Alot of very interesting big number reductions, some as large as 10%. I am even starting to see reductions in towns that typically saw overbids (Chatham, Madison, South Orange, etc)..
Caveat Emptor!
-grim
Thanks for all your hard work on this blog. My wife and I have been seriously in the housing market since July and have been observing the dropping of prices steadily in the Morris County area. However, interestingly enough, the town that we truly want to move into has NOT experienced a reduction in asking prices. Rather, the sellers seem content to keep the listings open at the original listing price. Is there a rational explanation for this phenomenon?
In what towns have you been looking?
There are still towns in North Jersey where bidding wars and paying thousands over asking are commonplace. I think a few of us on here have mentioned some of them. Some of these towns are 'prestige towns', you know, the places where noses are held a little higher than others. These folks will come up with hundreds of reasons why their real estate will hold value, but everything else will collapse around them.
It's going to take a long time for psychology to shift. My guess is this is going to be measured in years, not weeks or months. July really wasn't all the far away.
Maybe you can take some solace in the fact that it's the places where people hold out the longest, that get hurt the worst. Instead of dropping the price quickly now and cashing out of the market, people in these places hold out until the bottom has fallen much further.
I don't ever expect anyone (except myself) to follow my advice. But you certainly aren't missing any boat. We're heading into what looks to be a very slow winter season. The absolute worst case scenario? You'll have more of a choice of overpriced homes to choose from..
Whatever you do, buy sensibly and buy carefully.
grim
I was discussing Long Valley earlier. It doesn't seem to be pretentious, the way that Chester or Mendham can be, but there does seem to be a desire to continue to price homes at the very top of the scale. I am determined to wait out the market for a sensible price! It just does not make any sense for me to pay astronomical asking prices for houses that are simply "nice."
What's a sensible price?
How many times your total income you willing to pay?
Currently and for last 3 years prices have been insane. So how much of a fall makes them sensible?
Bond Yields up again today, the 10Y hit 4.49 a little after 9am this morning. The market was spooked a bit by this mornings economics reports. Tomorrow is a big day on the calendar, if the CPI numbers come in above or at estimates, it'll all but seal the deal (in my mind) that short rates are going to increase at the next 3 fed meetings and 30Y fixed mtg rates won't see sub 6% again for a long long time.
Home prices are going to need to come down at least 30% to be in line with norms.
How did I come up with 30%? A number of ways, but somehow this keeps coming up. It almost seems like it is a 'magic number'.. or is it?
If we go back to say 2001 or 2002, and increase prices for a slightly elevated yearly inflation rate (say 5%). Todays median price would need to fall by about ~30% to come back into line.
If you look at the gaps between wage growth and home appreciation, again, you find that same ~30% haircut necessary.
If you look at the gaps between rent and cost of owning, again, you see similar numbers emerge, again, need to drop some ~30%.
Why does this seem like the magic number? Because the fundamentals (wages, inflation changes, rents) have been increasing at a very similar rate, while home prices have been detached from fundamentals, rocketing sky high for no reason other than speculation of further increases.
(note, I'll put together some actual calculations with references to illustrate my claims, until then, please just take this as anecdotal).
Caveat Emptor,
-grim
It's going to take years. If prices drop significantly and quickly, buyer psychology might view this as a bargain and buying opportunity. Thus, we'll likely see a nice upwards spike in home prices as sellers think the mania is back on (i.e. dead cat bounce).
It won't be until there is real pain felt that buyer psychology shifts (i.e. why try to catch a falling knife?).
What will cause pain?
1) Tightening lending standards cutting back on buyer demand.
2) Increases in both short term ARM and long term mtg rates.
3) ARM recasting into significantly higher rates putting pressure on over-leveraged owners.
4) ARM holders unavailable to refi after their period due to the fact that new assesments don't justify the mortgage amt.
5) Proposed changes to the tax codes that would cut down the mortgage interest deduction from 1 Mil to ~300k. (this will be the last straw, it will all but destroy amateur speculators).
6) Elimination of the cap gains deduction on second and vacation homes (this is a wish list from myself).
grim
Buy when you find something you like at a price you feel is fair. Keep your eyes open and think with your head, not emotion. Be prepared to walk away from a house you love because the price is high.
I have multiple agents, I still look at homes regularly. I've made bids on homes (only to be overbid excessively), no sweat off my back. Do I want to get into a home I really love soon? You betcha, but I will not leverage myself to the hilt and risk my future because of it. The thing that always changes my mind is realizing how much spare cash I'll need on hand to cover a 400k mortgage should I or my wife lose their job, come into financial distress, etc. Secondly, I question whether or not I'm going to stay in this area in the long term (10 years or more). This factors into my decision heavily, should there be a steep decline, I'd prefer not to be underwater on a mortgage or lose a huge amount of my hard earned down payment.
There is no sense trying to time the market or try to get in at the absolute bottom, but like I've said before, I'm not so sure about buying in at the absolute top either. While I don't know when the bottom will be, I do know with some certainty that we've hit the top.
Caveat Emptor,
-grim
30-Year Mortgage Rates Top 6 Percent Level
"Frank Nothaft, chief economist at Freddie Mac, said he expected mortgage rates to keep rising gradually in coming months and predicted that the 30-year mortgage could hit 6.4 percent in early 2006."
-grim
Prices can go up 15-20% a year but can't fall 20% in a year. Bologne.
I expect a 30% drop in next 16 months. Then I will bid less than that and be "greedy" homebuyer.
TC
You can just feel the desperation building as those leveraged up to their eyeballs change course.
Jim
Found this web. Thank god. Tired of hearing people who own a house tell me prices are not high. Lets see if they say this in a year. HA.
This is a great site.
I am in Warren county and am seeing houses taking longer to sell based on how long the for sale signs remain on the lawns.
My parents just sold in Mount Olive. Small 4 bedroom ranch,nice lot on a dead end. Asked 380k and got it within 2 days.That was July. The deal fell through and they relisted...had to settle for 360k Last month.
No dought many are buying more then they can afford. I have a friend who is a cop in Mount Olive and he tells me of patroling these new developments with all these huge houses with big windows all lit up at night.funny thing is he says there is very little furniture in those rooms!
I actually read in some magazine a quote from an finance guy "If your not taking the equity in your home and using it for other investments you are unsophisticated"
I bought my home 4 years ago with a 30yr fixed at 7%.refied down to 6% at 20yrs then did it again at 4.75% at 15yrs.
Hey one question,how many sq ft to qualify for a McMansion?
Normally you would think inventories would be dropping going into holiday season?
TC
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