Housing boom's final hurrah?
Sunday's Star Ledger contains a special section on the real estate market..
Housing boom's final hurrah?
The statewide average sale price of $352,420 for the first six months of 2005 was more than 13 percent higher than the same period last year, according to the analysis. The study included every sale recorded in the state, making it the most thorough assessment of the market possible.
It also marks four consecutive years of double-digit gains, a wave of price appreciation that has touched nearly every corner of the state and all types of residential real estate.
But with interest rates rising, and sharp spikes predicted in home heating costs this winter, some are speculating this summer might be remembered as the housing boom's last hurrah. Analysts will be watching for the National Association of Realtor's report on home sales for the third quarter of this year, scheduled to come out on Tuesday.
...
TRYING A HOME PAGE
Still unable to find a house, Bednar channeled his frustration the modern way: He started a "blog," an online diary, devoted to observations on "our small part of the largest asset bubble in history."
The blog is among a handful of sites where users exchange information about the housing market -- all with a pessimistic bent.
"I felt there needed to be a counterpoint to all the glowing coverage of the rising home prices in the press," said Bednar, a software engineer who is studying for his master's in business administration.
...
After a real estate agent contacted him out of the blue, Kevin McGinley sold his Stone Harbor townhome this spring for more than $900,000 -- and made a $400,000 profit in just 30 months.
He then bought five more beach houses for about $5 million, using $3.5 million worth of interest-only mortgages.
McGinley said he's not worried about the market taking a downturn.
"I think I can put any of these properties on the market today and they'd be gone within a month," he said.
Hughes said even if the market slows, it's unlikely prices will free-fall to pre-2000 levels. The last time the market collapsed, in the late 1980s, the overall decline was 13 percent -- a small fraction of the 150 percent prices had risen throughout most of that decade.
"Only the people who bought at the very end of that period were hurt badly when prices fell," he said.
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Well I suppose there is no real reason not to use my real name around here anymore. Earlier this week I spoke with the author if this piece, Bob Gebeloff, about the bubble and this blog. I provided my markedly bleak outlook on the market as well as shared some anecdotal stories about my real estate experiences. Only wish that Bob included a link to the blog from the article.
Caveat Emptor,
James
Housing boom's final hurrah?
The statewide average sale price of $352,420 for the first six months of 2005 was more than 13 percent higher than the same period last year, according to the analysis. The study included every sale recorded in the state, making it the most thorough assessment of the market possible.
It also marks four consecutive years of double-digit gains, a wave of price appreciation that has touched nearly every corner of the state and all types of residential real estate.
But with interest rates rising, and sharp spikes predicted in home heating costs this winter, some are speculating this summer might be remembered as the housing boom's last hurrah. Analysts will be watching for the National Association of Realtor's report on home sales for the third quarter of this year, scheduled to come out on Tuesday.
...
TRYING A HOME PAGE
Still unable to find a house, Bednar channeled his frustration the modern way: He started a "blog," an online diary, devoted to observations on "our small part of the largest asset bubble in history."
The blog is among a handful of sites where users exchange information about the housing market -- all with a pessimistic bent.
"I felt there needed to be a counterpoint to all the glowing coverage of the rising home prices in the press," said Bednar, a software engineer who is studying for his master's in business administration.
...
After a real estate agent contacted him out of the blue, Kevin McGinley sold his Stone Harbor townhome this spring for more than $900,000 -- and made a $400,000 profit in just 30 months.
He then bought five more beach houses for about $5 million, using $3.5 million worth of interest-only mortgages.
McGinley said he's not worried about the market taking a downturn.
"I think I can put any of these properties on the market today and they'd be gone within a month," he said.
Hughes said even if the market slows, it's unlikely prices will free-fall to pre-2000 levels. The last time the market collapsed, in the late 1980s, the overall decline was 13 percent -- a small fraction of the 150 percent prices had risen throughout most of that decade.
"Only the people who bought at the very end of that period were hurt badly when prices fell," he said.
----
Well I suppose there is no real reason not to use my real name around here anymore. Earlier this week I spoke with the author if this piece, Bob Gebeloff, about the bubble and this blog. I provided my markedly bleak outlook on the market as well as shared some anecdotal stories about my real estate experiences. Only wish that Bob included a link to the blog from the article.
Caveat Emptor,
James
6 Comments:
hey grim -- nice photo.
But that article was terrible. It made the Bergen Record articles look great.
For one, why give data from the first 6 months of the year ? They could have taken county records from the 3rd quarter as well. [ Even that shows a bit of a lag, but its better than going by data thats that out of date, since a sale that shows up in the 2nd quarter was likely negotiated in the 1st quarter).
Also, there are 2-3 examples cited of bidding wars, but those are very rare these days. More likely, your house will languish. Why no examples of that ?
Also, at no point does the article mention the dread 'I' word -- inventory. Its piling up.
The article also doesn't mention the problems with going via average sales price. Its a rough indicator, but can often be inaccurate as a guide to how much an invidual house might have appreciated especially if a lot of newer more expensive houses are built.
Finally, worst of all, the reporter has someone at the end quoted as saying that only people who bought at the end of the boom were hurt lsat time, citing examples of the last burst. The investor says that last time prices fell only 13 % (in fact, I think it was more than that), it doesn't mention that houses fell over 7-8 years, so that on an inflation adjusted basis the fall was far greater. Also, the early 80s boom at least had a solid economy while the lsat 5 years, the economy has been static.
Also, the article mentions that theres only anecdotal evidence of slowing. Err no, in NJ we have a serious drop off in number of transactions and an increase in inventory and days on market.
Trash like this just keeps the bubble going.
Yeah I was hoping for the link to drive more 'joe-sixpack' traffic to the site..
jb
HAHAHAHA. This clown compares today's isanity to 15 years ago.
We know from the facts that this one is the mother of all bubbles. It's a fact.
Appreciation rent to incomes you names any measure it's insane.
This clown will have regret written all over his face in about 6 months to year from now when he wishes he sold now like immediately as the decline picks up pace.
Prices, I'm guessing, will fall, but can't really compare this to the stock market bubble.
Real estate just isn't as liquid an asset as stock are, and that makes a huge difference.
As long as people can hold on to their properties at the prices they purchased, they will. And in NJ, with the highest per capita income in the country, that could be a while.
It's also not clear how a price fall will be reflected. We could have inflationary pressures driving up the prices of other goods, commodities etc. for years and years while real estate prices remain flat (which, indirectly, would be construed as a fall if adjusted).
That being said, prices have fallen in the past. The individual who bought the beach houses is mistaken about the 13% drop - it had been far greater in the late 80's, early 90's. Of course, the economy had been languishing at the time as well.
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RickJ
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