Anonymous comments allowed

Sorry to everyone I put through registration hell. Comments are no longer limited to registered users. I was trying to keep the blog free of spam and other nonsense. Settings were changed to allow for anonymous comments, so first timers and regulars should be able to post without going through the blogger registration process. I did turn word verification on, so just make note.

I've been receiving quite a bit of email from blog readers lately, if you are a reader, please leave a comment or two so I can get an idea of the user base.

Thanks for reading..
-grim

September Sales Plummet

Sales data is in for September, and it doesn't look good. Well, for the sellers anyway.

15% decline in September sales

Totals for (Berg, Es, Hud, Mid, Mor, Pas, Som, Sus, Un, War)
June - 3590
July - 3716
August - 3791
September - 3223

Just a side note, this numbers do include the Middlesex numbers, so if you are looking to calculate DOM using sales (remember its a lagging indicator), and the current inventory numbers the number you want to use for this month is 3108 (which comes in around 4 months). However, sales are on a downtrend into the winter slump, and listings are skyrocketing. Also, keep in mind these are gsmls numbers only, they don't include njmls or fsbo sales. This is useful for trending, but you shouldn't treat these numbers as gold. Also again, I can't stress this enough, sales data is lagging, what we are seeing now are closed sales that went under contract months ago. So this data really applies to parts of June, July, and August.

Bergen (16% decline)
Jun 218/Jul 200/Aug 243/Sep 203

Essex (14% decline)
Jun 570/Jul 651/Aug 647/Sep 556

Hudson (too low volume)
Jun 23/Jul 9/Aug 13/Sep 10

Middlesex (11% decline)
Jun 135/Jul 142/Aug 129/Sep 115

Morris (23% decline)
Jun 739/Jul 729/Aug 799/Sep 615

Passaic (11% decline)
Jun 397/Jul 378/Aug 387/Sep 343

Somerset (22% decline)
Jun 475/Jul 534/Aug 564/Sep 439

Sussex (17% decline)
Jun 296/Jul 328/Aug 317/Sep 264

Union (4% decline)
Jun 546/Jul 541/Aug 508/Sep 488

Warren (3% increase)
Jun 191/Jul 204/Aug 184/Sep 190

With trends like this, I don't know how these peak prices can stay elevated for much longer. I called it a week back or so. This is the top of the bubble, I think we're only going down from here.

Caveat Emptor
-grim

September Inventory Skyrockets

September inventory numbers are in! Since I do my data gathering around noon each day, I'm going to post this data up a bit earlier than I was planning. I'd still like to wait until sometime after close of business tonite to tally up the sales data for the month, just to be sure the last minute additions make into the stats (I don't want to be accused of somehow doctoring or being selective about my stats).

For new readers, I define Northern New Jersey as the following counties: Bergen, Essex, Hudson, Morris, Somerset, Sussex, Union, and Warren (Sorry, Middlesex numbers weren't included this month).

Now, I admit I was expecting a jump in numbers, but by the half way point I knew my guess was way off. So here it is, without further ado, the figures please..

10.5%

Yes, 10.5% increase in active listings on GSMLS in one single month. Why? Are more people listing? Are fewer selling? Unfortunately, I wish I had access to the database to run some more complex queries and stats, but I don't. If anyone would like to make that data available to me, I'd love to see it. Anyhow, back to the topic at hand, it looks like the jump was a bit of both. Last minute sellers trying to catch the bandwagon before it's long gone, and a serious drop in sales in the September numbers (you'll need to wait until tomorrow to see those).

So lets see the numbers (Counties include: Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren).

9/1/2005 - 11405
9/30/2005 - 12612

There was a steady rise each day, with only a single day drop. I think the graph can help illustrate the trend.

It's hard to argue that prices will remain stable with supply increasing at this rate. If this trend continues there will be significant pricing pressure on sellers in the near future. I expect this trend to continue through the winter months as we're heading into the winter sales slump. While I don't believe we'll see large price changes in a short period of time (due to both buyer and seller psychology), I do believe we're past the peak of this parabola. Nowhere to go now but down.

Buyers, please don't feel like somehow you are going to be 'priced out' or are 'missing the boat'. If you buy at this point you are the greater fool. Don't be pressured into a sale by your agent, family, or friends. Believe me when I tell you that you have nothing to gain and everything to lose.

Caveat Emptor!
-grim

Northern NJ Weekly Stats

I'm going to try to start posting weekly statistics instead of holding out with the full month data. I'll do this from Wednesday to Wednesday updated sometime Thursday morning.

GSMLS Active Listings
9/21 - 12265
9/28 - 12535

An increase of ~2.2% this week, we've been seeing increases like this for all of September.

NJMLS Active Listings
9/21 - 5274
9/28 - 5455

A very surprising increase of ~3.4% this week.

I'm sure many of you are looking forward to the full month data, I'm going to have it posted Saturday morning. Keep your eyes out, it's going to be very very interesting.

Caveat Emptor!
-grim

A Look At Five Homes

Was a slow weekend, so I decided to go through some listings & tax data to see how "overpriced" a representative sample of homes were. I picked communities that some might think were a bit more 'upscale', however I do think they are representative of the area as a whole. The towns picked were Mendham, Chatham, Wayne, Montclair and Ridgewood.

I went through listings one by one until I found a home that sold between 1990 and 2000. I thought this was far enough back to illustrate the gross difference in current asking prices and what I believe the asking price should be. Addresses were not included, as to protect the 'innocent'.

Now, in order to come up with the fair asking price, I assumed 5% appreciation per year over since the year of purchase until now. Now, you might say 5% is too low, however I think 5% is generous given the fact that buildings are assets that depreciate. To this value, I assigned the name, "More than fair price", since I believe, it's more than a fair number for a home. In fact, in many cases, over a long time period you would have been hard pressed to make the same gains in CDs, Bonds, or the Stock Market. I picked homes that did not have any major remodeling, construction, or updating done to the house, as to not confound the 'value'. So lets take a look..

Home A - Mendham, Morris County
Sold 1997 $354,900
More Than Fair Price $524,000 (8yr @ 5%/yr)
Asking 2005 $819,000 (8yr @ 11%/yr)

Home B - Chatham, Morris County
Sold 1995 $525,000
More Than Fair Price $855,000 (10yr @ 5%/yr)
Asking 2005 $1,295,000 (10yr @ 9%/yr)

Home C - Wayne, Passaic County
Sold 1996 $375,000
More Than Fair Price $581,000 (9yr @ 5%/yr)
Asking 2005 $749,900 (9yr @ 8%/yr) - Orig $774,000

Home D - Montclair, Essex County
Sold 1993 $238,000
More Than Fair Price $428,000 (12yr @ 5%/yr)
Asking 2005 $599,000 (12yr @ 8%/yr) - Orig $699,000

Home E - Ridgewood, Bergen County
Sold 1991 $175,000
More Than Fair Price $350,000 (12yr @ 5%/yr)
Asking 2005 $649,000 (14yr @ 9%/yr)

Absolutely unreasonable percentage gains here, I think this helps illustrate why I think prices are going to fall approximately 30-40 percent (beginning in the very near future).

Caveat Emptor!
-grim