Star-Ledger New Jersey Forecast 2006

The Star Ledger is running a forecast series for '06, some of it interesting some not. Today's edition featured a number of articles on real estate. I picked out a handful of the most interesting pieces, worth a few minutes of your time to skim through. Like always, take everything with a grain of salt and be critical about what you read..

You may pay a price for that non-standard mortgage

The scary news, however, is that some buyers have used these loans to buy more house than they can really afford. They're living with no margin for error. When interest rates rise, the economy slumps or the homeowners finally have to start repaying principal, they may find themselves stretched to the breaking point, unable to pay for the roof over their heads.

In short, said Keith Gumbinger of HSH Associates, a Pompton Plains company that follows the mortgage market, a lot of buyers "jumped into the pool and don't know how to swim."

Smaller homes begin to make a comeback

The large homes are not without their critics.

"To me it has to do with conspicuous consumption," said Anthony Schuman, graduate program director at the New Jersey School of Architecture at the New Jersey Institute of Technology in Newark.

"It has a negative impact on the environment and the quality of the towns the homes are built in. People are building large houses on small lots. And the proportion of the building to the size of the lot has an impact on the neighborhood scale."

"We're finding the beginning of a trend for smaller, more intimate spaces," Skea said. "I think practicality will start to rule."

Mixed-use projects won't combine business, pleasure

North Jerseyans can expect in coming years to see thousands of new homes, plenty of fresh spots to eat and shop, new hotels, an enormous new multiplex and even an indoor ski slope.

But what most of the area's biggest new mixed-use projects won't feature -- at least not anytime soon -- is office space.

House prices returning to earth

Lower sales will mean less pressure on prices. Already in late 2005, there were some hints of slower growth as builders began "rolling out sales incentives" to lure buyers who are resisting high prices for new homes, Seiders said.

A slowdown in price hikes will be good news for young would-be buyers, who have watched in frustration as the prices on even starter houses raced ahead of their incomes.

Even in red-hot market, this coast is still golden

Even in North Jersey's scorching real estate market, the condos along the Hudson River Gold Coast have stood out for their relentless pace of appreciation.

But as the 2006 spring buying season approaches, sellers from Fort Lee to Jersey City appear to be a bit more willing to negotiate. Realtors say condos are taking longer to sell as buyers have become a bit more cautious with mortgage rates trending upward and talk of a housing bubble growing louder.

Caveat Emptor!
Grim