Friday, February 03, 2006

Weekend Open Discussion

Open Discussion for this weekend.

Observations about your local areas, comments on news stories or the New Jersey housing bubble, Open House reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let's have them.

Let's hear some stories about Bergen county.

Have a nice weekend everyone!

Caveat Emptor!
Grim

51 Comments:

Blogger Grim Ghost said...

I've been tracking a few towns in Morris, Union and Somerset County for a few months. Most of last Fall was very tepid in terms of sales in these towns. In December, a flurry of sales were indeed consummated. However, I'm now getting back the actual sales prices for most of those sales and I'm quite pleased to see that most sales were prices below the asking prices, sometimes well below. In fact, comparing the prices with prices in spring and summer 2005, I think there was definitely a drop of 3-4% in the segment I was looking in.

Inventory is building up now. Yet, I've also seen (to my surprise) in the last 2 weeks, 2-3 houses that had been on the market for months (in one case, it was relisted) go into contract or attorney review. I thought those houses were definitely overpriced, and I don't know if the would-be buyers made lowball offers (I think not). Or maybe there are just new spring buyers convinced that prices always rise, using the slight drop in mortgage rates to make offers.

I also saw a few houses that were actually reasonably priced (or at lest not terribly priced) go into contract.

In fact, I bid on one such house in a Somerset county town. Another party also bid. I offered more money than the other party (above asking), but he was willing to waive inspection, which I was not. However, the house was extremely reasonably priced, only 10% above the price at which the owner bought it 5 years back (thats a total of 10%, not 10% annually), although it did need some work.

Inventory is definitely building up and could explode in the next few weeks. There are definitely buyers willing to bid like idiots, but there are also very cautious buyers.

2/03/2006 10:29:00 PM  
Anonymous Anonymous said...

I'm liking what I am seeing. I have been home hunting for 3 months now and I believe in about 4 weeks, prices will be nearing my target.

Just let that inventory sit there and you will eventually get that price you are looking for. People need to sell to pay off those home equity loans and Hummer H2's that they bought with that money!

2/03/2006 11:05:00 PM  
Anonymous Anonymous said...

Outrageous, are they kidding?

Check this rutherford condo price!!

http://www.realtor.com/FindHome/HomeListing.asp?snum=17&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=2&fid=so&stype=&mnsqft=&mls=xmls&areaid=84778&poe=realtor&ct=Rutherford&st=NJ&sbint=&vtsort=&sorttype=&typ=2&x=73&y=4&sid=061627C59071C&snumxlid=1054515989&lnksrc=00002

2/04/2006 12:21:00 AM  
Blogger chicagofinance said...

Grim:

I really get the sense that there are people with money, and they are diving into the market. It just strikes me as pure insanity, but I gues no one will stand between an American and their right to piss away their livelihood. My evidence is purely anecdotal, but I think some of these Wall Streeters are looking to burn some of their bonus.

As this juncture, I look at this period as an anomoly that will peter out by the middle of April. What have you been hearing?

2/04/2006 01:23:00 AM  
Anonymous Anonymous said...

grim ghost
sounds like you're an investor.

2/04/2006 02:07:00 AM  
Blogger Hedge Blog said...

The NY Times has an article that i cant post in its entirety but it says that the savings rate of Americans has dropped below zero, here is an except...

"The personal savings rate of Americans fell below zero for the first time since the Great Depression. The Commerce Department report that Americans spent more than they saved in 2005, with the result that the national savings rate stood at minus 0.5 percent, did not make front-page news. But as an image of a country living beyond its means, it is powerful. The accumulated deficits of hundreds of billions of dollars in the U.S. budget and its current account tend to boggle the mind, but we can all understand consumers maxing out on their credit cards, taking home equity loans to go surfing in Hawaii, and embracing the view that only fools still think that rainy days come around. The only other years in which the savings rate was negative were 1932 and 1933, a time when people had no choice but to spend whatever money they had because they were out of a job and businesses were collapsing around them."

There is more in today's NY Times

2/04/2006 05:45:00 AM  
Blogger grim said...

The negative U.S. personal savings rate is certainly on the mind of every economist around the world, and nobody can agree on how the scenario will play out.

For the short term, the boost in consumer spending is certainly a good thing for the economy. The more we spend, the faster the economy grows.

So how does the scenario play out? One of two ways.

1) We, as financially savvy Americans, come up with even more elaborate debt instruments to feed our ravenous consumption. 40 year mortgages, 50 year mortgages, 100 year mortgages. Higher credit limits, loans for amounts much greater than values. I can't even conceive of what elaborate debtting tools are being thought up.

2) We become savers. If you think this is a good thing (tm), you might be right, but there is a good chance the scenario will play out horribly wrong. As savings grow, spending declines, if not offset by business investment our GDP will begin to dwindle away, likely putting us into a recession, or worse.

Am I just such a pessimist that I can't see the light? If there is an easy way out, please let me know.

grim

2/04/2006 07:49:00 AM  
Blogger grim said...

As to pricing, there are still plenty of homes coming on the market priced in the stratosphere. Remember, this up cycle began in 1997/1998, it took us a long time to get to this level. It's going to take some time for psychology to change. It's happening, just ask anyone who is selling a piece of property right now.

Do things move? Sure, buyers are guilty of the same. I'm seeing homes more reasonably priced popping up and disappearing rapidly. But believe me, the volume just isn't there.

So this is it, Superbowl Sunday weekend. This weekend starts the real estate rollercoaster. Keep a good eye on inventory from this point forward..

Caveat Emptor!
Grim

2/04/2006 07:53:00 AM  
Anonymous Anonymous said...

Last week I posted that Hoboken's MLS number was 440.

When I checked this AM, that figure was 455.

2/04/2006 09:08:00 AM  
Anonymous Anth said...

Question - Is there a public NJ School Ranking system, or a magazine that covers this, or anything that can tell me without a doubt which are the best school districts in NJ?

Whenever I look, I seem to find only "pay-me for data" information. Data is only as good as your interpretation, I need something general that ranks or tells me "Stay the hell away from Mine Hill / Dover" or "Nutley has excellent schools" etc.

PS - not looking for debate, just data - Whenever I ask anyone, the school systems in their town are the best (shrug) - They can't all be the best.

Anyone?

2/04/2006 10:29:00 AM  
Blogger lisoosh said...

When are you planning on updating your sales graphs?

2/04/2006 11:00:00 AM  
Blogger Grim Ghost said...

Last Thursday's Star Ledger has a very detailed list of information about all schools in NJ.

And to anonmyous@2:07 Am, I'm not an investor. I need to move because I'm getting a new landlord who wants to increase the rent 35% (which is illegal because the township only allows 4% increase maximum). I don't want to deal with jerks like this anymore.

2/04/2006 12:03:00 PM  
Anonymous Anonymous said...

Bergen county:
Homes seem to be severely overpriced in Mahwah still, where taxes are pretty low. The inventory is alot better though this year versus last and homes are on the market longer. However, the town next door, Ramsey, the homes are sitting on the market for a long time and seem to be more reasonably priced and may possibly be lower than last year. Taxes in this town are a lot higher.

2/04/2006 12:07:00 PM  
Blogger chicagofinance said...

Grim:

re: negative U.S. personal savings rate

The other simple answer is that people simply won't retire. In the future you will have to live to 70 to receive Social Security and Medicare. Further you won't have any pensions etc. So the only way to have reasonable health benefits and pay your bills is to work until the day you drop dead. It is a fair trade-off; one that Americans have justly earned.

chicago

2/04/2006 01:21:00 PM  
Blogger Richie said...

Get a lawyer or file a complaint with your town. It's illegal for a landlord to raise rent higher then the allowed yearly increases (depending on your town).

-Richie

2/04/2006 02:37:00 PM  
Anonymous Anonymous said...

Timing of the bubble burst?

It seems that the resets on ARMS are at the greatest level in 2007. That being said, lets say it is mid year 2007. What is the collective wisdom of this blog in regards to the timing that speculators may want to place properties on the market if they see the interest rates go up.

I would think that they would want to both have enough time to sell and close, lets say 3 months at least, and to also make sure they bet the other, making it at anytime?

My gut would be this spring. Why? First, they most likely follow the market, as we do, and believe that inventories may go up so they will get in first. Second, since the time on market is increasing they will want some buffer.

As a side note I spoke with a friend that works at a mortgage company and they are drawing up plans for more foreclosures then they can handle. There is a limit they can own at any one time and this means that once they are over that limit they will need to unload, vs shopping the deal.

Enjoy,

CDF

2/04/2006 02:59:00 PM  
Blogger chicagofinance said...

The ARM reset issue means that you should be in no rush to enter the market. Target very specifically what you want, and bid aggressively using Grim's lowball tactics. You may get your property today, next month, next year or in 2008, but you certainly do not have to worry about the market moving away from you any more.

Your personal situation dictates the right time to approach the market. There is no hard and fast rule or loud pop that will be heard.

We haven't seen horrible sob stories, scenes of domestic violence, or a new reality show about a HOME REPO MAN.

There is a long road ahead of us, and it is going to be a sad one for me to witness :(

2/04/2006 03:24:00 PM  
Anonymous Anonymous said...

re: negative U.S. personal savings rate

Dig deeper.
What's usally not explained in all the hype about the "negative" U.S. savings rate is that senior citizens who are spending their retirement money are included in this calculation. Obviously seniors have negative savings -- they're living off of their savings. If they were taken out of the equation, the U.S savings rate would be positive, probably well over 5%. With the baby boomers starting to retire at a greater rate, I would expect the savings rate to decline further in the future. Per se, that is not a bad thing.

2/04/2006 04:12:00 PM  
Anonymous Anonymous said...

Been reading the site for the last few weeks and thought my personal situation might be interesting.

My wife and I are expecting our first child this summer and we have been thinking of buying a house in Milburn/Short Hills. We would like to move to a house for the normal reasons, more space, schools, etc. We currently live in Hoboken in a 2bd/2br condo my wife bought in 2000 before we were married. The price of the condo has more than doubled since then, assuming we can sell in Hoboken at current prices (there seems to be a ton of inventory) we will have considerable equity from the sale.

In addition I work on Wall Street and we have pretty considerable assets, and I can confirm that bonuses were very good last year.

Based on data (ratios of median income to median home price are especially compelling) I definitely belive that home prices are overvalued. Maybe by as much as 40%.

Even knowing that, we have been looking in Milburn/Short Hills and have been pretty shocked by asking prices. We have seen a number of houses asking $1.2 million or more that "need some work" or are "perfect for expansion".

Nevertheless, we are likely to buy within the next two months. We are likely to buy because of our personal needs, even recognizing the overpriced nature of the asset.

Our plan at this point is to put ourselves into position to weather a bursting or slow leak of the bubble. We would accomplish this by:

1) Purchasing with 30-40% down payment

2) Planning on paying down mortgage with future bonuses

3) Buying less of a house than we had wanted, meaning we may need to move in 3 or 4 years if we have more kids

4) Being patient, looking for bargains and bidding wll below asking price

On a purely financial basis I consider this a poor investment, but frankly we can afford the downside. Renting and waiting it out does not seem like a practical solution for us. Any feedback from bloggers would be appreciated.

Thanks.

2/04/2006 04:18:00 PM  
Blogger njresident286 said...

to Anon buying in short hills.

If you did buy a 1.2 million dollar home, and it declines 30% (you said you think 40 but we will play is a little more conservative), the value of your home will be 840,000 ( a loss of 360,000 dollars)

Even if you paid 4000 a month in rent for 3 years, or 144,000 total, in that scenario, you save over 200k by renting.

I know there is a tax write off to owning, but upkeep on an older house in more of an unknown, plus you will be paying at least 8k a year in taxes.

Also think of this. Right now you have 30% down on 1.2 million, which again is 360,000. So take your downpayment now, invest it. Then add to it the 360,000 you will save by not buying, as well as the money you can save over the next 3 years. If houses price do fall, and you continue to do well in your career, you may be able to buy the house in 3 years for cash.

If you expect a downturn, and plan on moving again soon, I think you are setting up for a big loss.

Now if you said I am buying, I know it is over priced, but I know i am staying for 25+ years, then its not that big of a deal. But the part that struck me is that you mentioned when you have more kids you will need to move. To me, knowing that in 3 or 4 years everyone here expects RE to be significantly lower, I just do not think it is a good move for your family.

2/04/2006 04:38:00 PM  
Blogger REwatch said...

To Anon buying in Short Hills

I have to agree with njresident286.
We live in Summit and have already seen many homes in the $2MM range come down in $200-350K chunks and still take a while to sell. (We were looking to "move up" but have changed our minds.)

There are currently 90 properties on the market in Short Hills according to Realtor.com in a town where multiple bids of $100K over asking were not uncommon one year ago.

The market is not slowing, it has struck a brick wall. You may be able to make a low ball offer in about six months and get a great deal. You are more likley to sell your condo now at more profit than in the spring, but remember, everything goes up and down in percentages so you are going to take more off the purchase price in the new house than you lose in equity on your place in Hoboken.

If you "fall in love" with a house, ask your RE agent for the last purchase date and price. Then make an offer in accordance with appreciation stats -which is theoretically where the house should be priced. Reduce that price by 30% and make an offer.

Also, ask your RE Agent to run a comp list and show houses sold in Short Hills for $1.2 as little as three years ago. You will be shocked at the comparison to the little houses, needing work that you admittedly said you would need to move out of with more kids.

Just about everyone in Shorthills, Milburn, Summit have Wall Street related careers. Most veterans also know that these bonuses will not last. Think about how much work you put in to make $300K after tax? Now imagine no bonus for a couple of years.

How would feel to have just thrown away that much money? Even veteran guys who have millions in the bank would not be so cavalier about "wasting" 300K.

Don't get into the "We are so young and succesful" psyche with your young friends and buy "becasue I can" ultimately lose part of your hard earned nest egg.

I have to say that in my opinion you have chosen an excellent community. We wouldn't think of leaving this area- even though you can get much more land and house out west. Ultimately you know your own situation- you're in a tought spot. You sound like a smart enough person to make the right decision.

GODD LUCK!

2/04/2006 05:19:00 PM  
Blogger Richard said...

check out this condo that just sold in my complex in south orange. note the original price, reduced price and selling price. $9k drop from $418,900 to $409,900. selling price was $395,000 which was 15k below reduced price and $24k below original.

get this. the exact same unit in another part of the complex sold 2 months ago for $450k. that buyer is now negative $60k equity. that's why they tell you don't try and catch a falling knife.

http://listings.gsmls.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFul.asp?prp=Mls&MlsNumList=2211228

2/04/2006 10:50:00 PM  
Anonymous Anonymous said...

If you own a condo in Hoboken now and plan to move to the 'burbs in the next few years, I think the best move would be to try to sell ASAP and rent.

As we have all seen, inventories are growing fast in Hoboken. However, it is my belief that inventories will really spike in the Summer as the first phase of the Maxwell complex will be finished.

Although mostly anecdotal, it is my understanding that many of the buyers for the Maxwell first phase are people that already own in Hoboken. In other words, the people who are going to be buying their Maxwell condos are not new Hoboken residents. Instead, they are current residents who already own and will be looking to sell the Hoboken condo they currently reside in. The Constitution supposedly has a number of people who will be selling and moving down the street to Maxwell in the next few months.

As far as renting is concerned, it seems that doing so might a pretty good deal. The Sovereign is about to open and already buyers in the Tea building are looking for renters. I think that lots of "investors" who can't sell their condo will try to rent those condos out and play landlord for awhile.

2/04/2006 11:13:00 PM  
Anonymous Anon Buying in Short Hills said...

Thanks for the feedback, some good food for thought. It was not my intention to come off sounding cavalier about the potential loss. Believe me, I know how cyclical Wall Street is and how much hard work went into saving what we have.

NJResident286, good thought concerning being careful about plans to move in 4 or 5 years. Makes me think some more that the best we can do in the current market is find a house that we like enough to stay in for the long haul without overreaching.

Rewatch, also very good advice on getting pricing point data. I agree completely that sales have slowed. The realtor we are working with has been very forthcoming on that front. Of course the realtor thinks things will pick up in spring. We continue to get new Millburn/Short Hills listings almost every day and my expectation is that sellers and realtors are in for a rude awakening in coming months.

We are going to look at more houses tomorrow and I'll post again if we get any noteworthy price info.

Thanks again for the advice.

2/05/2006 01:02:00 AM  
Anonymous Anonymous said...

Outrageous, are they kidding?

Check this rutherford condo price!!

http://www.realtor.com/FindHome/HomeListing.asp?snum=17&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=2&fid=so&stype=&mnsqft=&mls=xmls&areaid=84778&poe=realtor&ct=Rutherford&st=NJ&sbint=&vtsort=&sorttype=&typ=2&x=73&y=4&sid=061627C59071C&snumxlid=1054515989&lnksrc=00002

12:21 AM

================================
I live about a mile from the Rutherford train station(close to the complex). I pass this complex 2-3 times a week. I think it is almost empty since I see maybe 2-3c ars in the parking deck. I believe the price was reduced to $400.000 and recently saw an add on a local paper for $360.000. I do not remember if this add was for the 2bdr or for the 1 bdr units. Right across the street in East Rutherford they are building another condo building for almost 2 years not.....and it seems they was progressing VERY slowly or the construction was stopped.

2/05/2006 01:05:00 AM  
Blogger RentinginNJ said...

Does anyone know what is going on with the new "Four Seasons" development (K. HOVNANIAN'S) in Clifton/West Paterson? Their website said "opening fall 2005", but all I see is alot of dirt, but no homes.

2/05/2006 01:23:00 AM  
Blogger Metroplexual said...

I found an article on appraisal reform. I have been following the woe that Monroe County PA has had in the last few years. They apparently pitch home sales to the people in NYC and NE Jersey and inflate home prices. My understanding is foreclosures in that county are stratospheric. Something like 9,000 over the last 10 years (relatively small population)
appraisal reform

2/05/2006 07:56:00 AM  
Blogger Metroplexual said...

RentinginNJ said...


Does anyone know what is going on with the new "Four Seasons" development (K. HOVNANIAN'S) in Clifton/West Paterson? Their website said "opening fall 2005", but all I see is alot of dirt, but no homes.


My understanding is that anything that says "Four Seasons" that K. Hovnaninan builds is age restricted housing. I've been told the market is drying up for those. In fact the sam's club in East Brunswick is on leased land that the township owns and the township had planned to put a smartgrowth age restricted comunity in there built by Troll Bro.s. Troll came back and said no can do.

I don't understand the appeal of those communities anyway. You have limited the resale opportunity of your home to a limited market. It is only a win to the municipal coffers. An article I read said that these tend to cannibalize their own population thus freeing up housing in that same municipality for families with kids.

2/05/2006 08:07:00 AM  
Blogger grim said...

Went to see a place in Mendham yesterday afternoon (MLS #2107994).

Historic homes are my 'thing', I'm a card carrying member of the National Trust for Historic Preservation..

But that place.. Wow.. Talk about a project. The asking price is entirely out of range, even with the premium of being in Mendham.

I'd consider that place in the high 3's, but not high 4's. The house had significant structural issues, crumbling foundation, serious warping/cracking of beams, etc. Granted, the place was built in the mid 1700's, but I would have expected at least minor structural work over the years..

It would be easier to just knock the place down and build a facsimile using some reclaimed materials.

Grim

2/05/2006 08:32:00 AM  
Anonymous Michelle said...

To anon buying in Short Hills:

My husband and I were in a similar situation. We sold our house in California and made a killing, and moved east because we have family here and NYC is one of the few places that has a robust market for my husband's line of work (mine too for that matter).

Or original plan was to buy a "for now" home in Millburn, Summit, Maplewood, Madison or Chatham. We looked and looked for about 3 months, and were just appalled at what we could get in our price range, which at the time was "only" up to $800K. Although we could afford about $1.1M, I wsa hesitant to spend that money on a temporary home. So I started looked a bit further west and found a home in Morris Township (5 minutes from the Morristown trainstation which is also Midtown Direct) listed for just under $1.1M, which had just been lowered from $1.2M. We lowballed on our offer and settled on $960K, which is 20% below original asking. PLUS, we can see ourselves living in this home for a looooooooooong time: 6 bedroooms, 4 bathrooms, 3 acres, gorgeous pool, etc etc.

Personnally I am with you in understanding that buying is better than renting for some people's situation (we have 4 dogs so renting is virtually impossible and fraught with problems). The only thing that I would suggest to you is bypassing the "for now" home and considering what your "for a long time" home would be. See if you can make that work and then you're in a much better place to ride out a, say, 7 year slump followed by a 7 year gain, at which point you could sell and make a nice profit.

Also, the bank for the buck in the Morristown area is KILLER, in my opinion. Maybe it's a coupla train stops more, but according to my husband who takes the train every day, by the time he gets to Chatham there are few places left to sit and by the time they reach Summit he's seen it where sometimes people have to stand all the way into NYC.

We are totally digging Morristown - much bigger with MANY more restaurants (a big deal for us) than Madison, Chatham, OR Summit. Forget about Short Hills - there's very few places to eat out.

Anyway, that's my two cents. We're thrilled with our decision and can envision staying put for a long long time - which means that we can sleep much better at night as we don't have to worry about the vagaries of the RE market.

Good luck with your househunting!

Michelle

2/05/2006 01:02:00 PM  
Anonymous Michelle said...

Grim -


Check out MLS 2233729.

I'm not sure how old this house is or if it's historic per se, but it's in a very historic area and frankly I think it's a pretty good deal given the fact that it's on 5 acres!

2/05/2006 01:14:00 PM  
Anonymous Anonymous said...

================================
I live about a mile from the Rutherford train station(close to the complex). I pass this complex 2-3 times a week. I think it is almost empty since I see maybe 2-3c ars in the parking deck. I believe the price was reduced to $400.000 and recently saw an add on a local paper for $360.000. I do not remember if this add was for the 2bdr or for the 1 bdr units. Right across the street in East Rutherford they are building another condo building for almost 2 years not.....and it seems they was progressing VERY slowly or the construction was stopped.
==============================

Yep, even though the link didnt go through, you knew what I was referring to. I drive there about once a week and used to live in Rutherford.... I gotta get my fill of Village Gourmet at least once a week!

I contacted one of the realtors about that condo, it was a 2 bedroom going for 460,000. The person selling it paid 440,000 and never moved in, I guess you guys call that a "flipper".

The place looks empty and it looks like no one lives there, I guess someone is eating those costs! I like the location, I like Rutherford and I like the layout of the place but I am not paying that price, I doubt others will.

2/05/2006 02:54:00 PM  
Blogger chaoticchild said...

Michelle,
One of the reasons Morris Twp's RE prices are lower than Short Hills/Summit/Chatham/Madison is its school system.
It is true that Morris Twp has a nice and ranked elementary school system. However Morris Twp's high school is shared with Morristown. It is a bigger school with a mixed crowd. Its performance and SAT scores aren't ranked top-tier.
Short Hills/Summit/Chatham have been consistently ranked by NJ Magazine to be top 10 in the last few years. And Madison has been consistently been ranked top 20 in the last few years.
We live in Summit. The express train can get us to Penn in 35 minutes and we usually can find seats on the train. It takes closer to an hour from Convent Station in Morris Twp to get to Penn.
I agree that there are larger and nicer properties in Morris Twp/Morristown with the same amount of money comparing to Short Hills/Summit/Chatham/Madison.
But with the commute and school system. I think you get what you pay for.
ChaoticChild

2/05/2006 03:09:00 PM  
Blogger grim said...

Michelle,

Your story would make a great front page article.. As far as I know, you are the first Lowball! success story.

jb

2/05/2006 04:01:00 PM  
Anonymous Anonymous said...

any thoughts on Fair Lawn? I looked at a house in the Radburn that was too small and needed work. Looked (outside only) at another house that was nice and good size...neighborhood was nice. Would love any feedback on town, schools, commute, etc.

2/05/2006 10:50:00 PM  
Anonymous Anonymous said...

To Anon re: Short Hills -

I was on the opposite end of your trade. In late 2004 we had grown tired of the hours on Wall Street, so we sold our place and moved back to my hometown in upstate NY. The profit paid for our house plus a nice nest egg.

Short Hills is a great town, but you know that feeling you get when you stop into a Chanel boutique to buy a purse for your wife - you think that maybe the clerk thinks you don't really have the $$ to be there - that was the way I often felt when living in Short Hills.

Also, re: schools - their high school is excellent, but the grade schools vary - Hartshorn supposedly better than Deerfield, etc.

Although I despise single variable models, the single greatest predictor of educational success is parental involvement. If you can afford Short Hills and still attend every 2nd period music performance - go for it. If not, the best schools in the world may not make a difference.

Just my 2 cents
"mortgage free since 05"

2/05/2006 11:33:00 PM  
Anonymous Anonymous said...

Price drops in my neighborhood are beginning!

MLS ID#: 506809
This 2 family has been sitting on the market for at least 4 months at $435K (Perhaps 6 months or more. I'll find more deets tommorrow.)

It has been just price reduced to $415K. Nice neighborhood on a dead end street and walking distance to the Journal Square path station in Jersey City.

Even if I were to lowball it by 40% to get it to $250K, that would still be more than double its value of about 5 years ago.

Will we ever see a day this decade where prices will have dropped 1/2 the current asking prices today?

Thanks,
ChrisXS

2/06/2006 02:28:00 AM  
Anonymous Michelle said...

To various...

Grim: You're certainly welcome to use my story on your front page if you'd like. I'd be happy to answer any questions you may have.


Chaotic Child:

Yes, you're right, Morristown High School isn't considered to be all that great. However, consider this: We have a 6 bedroom house on 3 wooded acres. This includes a separate 2 story guest house. Total square footage is over 6000 (yup, SIX thousand). What would that cost in Summit? *runs to gsmls*...looks like $1.8 to $3.3M, and 1.18 is the largest lot..

If I had kids I'd take take the HUGE amount of savings of buying in Morristown vs. Summit and send them to private school. Delbarton and Villa Walsh are spitting distance from our place.

Don't get me wrong - I LOVE Summit and would have loved to have lived there. But for us the dramatically louder bang for the buck justifies the 18 additional minutes on the train.

2/06/2006 10:21:00 AM  
Blogger REwatch said...

Michelle

This isn't a competition between two towns, I also LOVE Morristown(MOGUL- the indian restaurant is our family's favorite place to celebrate birthdays!) but different people simply want different things. I respect that. One is not inherently better than the other. I would never want or need a house with six bedrooms or want to be secluded on 3 acres. I Love my charming 1920's neighborhood full of children. Summit has countless kids activities and recreational opportunities within a 1 mile radius. So I can walk and not spend my life in the car. We stroll into town, grab a sandwich, visit the post office and go to tae kwon do or ballet classes- it's a great life.

As for a private school option. Delbarton accepts 1 of four applicatns and it is EXTREMELY hard to get in to. Tuition is about $22,000 a year. $22*4 years=$88K. This does not include meals, transportation, books and "fundraisers" you will likely attend. Now mulitply that by 2 or three kids. Delbarton and Villa Walsh are both catholic single sex schools- not a fit for everyone.

You're right, you will not find a house in Summit on three acres- if you have access to the town lot map it doesn't exist, at any price. People choose to live here for other reasons. Most of my friends are former professionals with advanced degrees now choosing to stay home and raise children.

We are not less intellegent for living here. For us, it's a wonderful community, we understand that there are many people who would prefer a more rural lifestyle.

Belive it or not Summit also has much more socioeconomic and racial diversity than many of our surrounding towns. This is another reason we wanted to buy here. Tolerance comes from knowing personally people of different backgrounds. It is exciting to see local kindergarten ESL students in the advanced Math Achievment Programs along side their affluent friends by the time they hit 4th grade!

I think what we can all agree on is regardless of where you look right now, real estate prices are out of line with reality no matter how much we love our towns!

2/06/2006 01:54:00 PM  
Anonymous Michelle said...

Rewatch -

Sorry, don't misunderstand me! It's totally not a competition. I adore Summit, and yes, you are totally right, the prices in all of these towns are crazy! I wouldn't be able to afford ANYTHING if my house in Cali hadn't doubled (and my condo in San Francisco hadn't tripled to give me the money to buy the house!)

I just wanted to point out that there are ways to get around the school issue. And as another anon poster here wrote, the ranking of the school may be less critical that the time the parent is able to spend with their kids anyway, which might be limited by having to cover an even crazier mortgage.

There are lots of great towns in the area, and I think I'm just expounding upon Morristown because I'm just discovering it (even though I was born in Morristown Memorial!) Normally I would meet people for dinner in Summit or Madison, and I had no idea that Morristown had so much to offer.

There are lots of subjective reasons to select a town or a house, and we all hopefully make the best choices for ourselves. Because land and privacy were strong preferences for us, we were disappointed in not being able to find anything in the original towns we looked into (we were only initially looking for over HALF an acre). Morristown was originally a distant last choice for us; I'm glad it worked out the way it did because I'm enjoying the dining and shopping options.

My point to the original poster: If you're going to buy now, buy something that you can see youself living in for an extended amount of time so that you are somewhat protected by market swings. Anyone could live in the nicest town around, but if the house is too small or uncomfortable for whatever reason, you won't enjoy living there. By the same token, buy in a place you could see yourselv living in terms of cultural offerings and otherwise.

The one thing that compelled me to post in the first place was the fact that the Short Hills looker was thinking about buying a "for now" home, and I think that's really really risky right now.

2/06/2006 05:50:00 PM  
Blogger Grim Ghost said...

Michelle --- sorry I don't follow. Why is buying a "for now" home risky ? Are you comparing it to the alternative of renting or to the alternative of buying a "terminal" home ?

We looked in the Township or Morris as well when doing some house hunting. YOu can definitely get more house than in Chatham or Summit. We saw a really lovely (if idiosyncratic) house that was really a log cabin with 1.5 acres bordering a lake. We finally decided though that it wasn't worth having to go through some really messy (and occasionally run down) Morristown streets every day to get to the station (and problems with non-resident parking). We also considered Mendham, but decided that the commute to NYC was to hard.
But good luck to you -- it seems like you got a great house, and reasonably priced too.

2/06/2006 06:31:00 PM  
Blogger Grim Ghost said...

richie -- thanks for the suggestion about getting a lawyer, but I really don't want the hassle, I don't want to give the landlord 1 penny of my money in any case (and the rent, even if not increased, is certainly not a bargain).

And in any case, I was planning to move out, since I need room to keep my 5000 plus books.

2/06/2006 09:15:00 PM  
Blogger REwatch said...

Michelle,
Sounds like we agree on all these points! Don't get me wrong- I wasn't in any way offended by your responses, just thought I would clear up some of the issues involving private schools and reasons we settled here.

Many young homebuyers may be under the assumption that they can simply trade off the cost of private school for a nicer house in a less desirable school district. It isn't that simple. Acceptance to these schools is not guaranteed and in fact is extremely competitive.

Future or young parents not aware of the true cost or admissions reality could make a HUGE mistake. Especially if they find themselves upside down in a house and unable to move in a few years.

I also agree that parental involvemnt is the number one indicator of a childs success, but hedging on a great school system makes fairly good sense.

BTW just saw a property re-listed, Started at $1.85 and was on for a a few weeks this fall, went under contract, must have fallen through and is back on at $1.795. Not a big drop, but the house is on one of the nicest streets in Summit. I am sure it would have sold in a weekend given last springs market.

Sentiment is changing.....

2/06/2006 09:31:00 PM  
Anonymous Anonymous said...

Don't feel bad. Alot of the people who cannot afford Summit or the other towns end up in Morristown. If that was the case for me, I would sing its praises as well. And do not worry, no savy bankers are buying right now (and if they had to purchase, they would be keeping quiet about it). Good luck to all. Cheers....

2/07/2006 12:00:00 AM  
Anonymous Sunnyside said...

Sayonara N.J. ! To all who have some choices about where to live and why, I'd like to offer my experience at the risk of sounding
too much of a gloat-not intended. I lived in NJ for 21 years( Morris and Somerset counties) raised two kids who went to both pulic and private schools. This past fall we sold our family home in the nicest
town in Somerset county for about
$2.5 million and moved to a warm island outside the U.S. Our money bought us an oceanfront 15,000 square foot home with views that would rival anything you've ever seen in a postcard, only it's for real. There was enough money left over to buy a 36' sailboat and the walk to the marina (house came with an owned mooring) is less than 5 minutes. We have a cook and a maid to prepare our meals three days a week and clean our home. We also have a gardener who comes 3 days a week and also works as a handyman doing home maintenance work. We have no fuel oil costs as the year-round temperature here varies from average winter highs in low 80's to summer's mid 80's. Electricity runs about $400 per month (we don't use air conditioning as the prevailing trade wind breezes keep the house cool). Phone with high-speed DSL runs about $100 per month. Property taxes are about $700 per year and everything else mentioned above adds a total of about $15,000
per year tops. The NJ home I left behind had property taxes of $30,000 per year and we received almost nothing directly in return for that as our children never attended the local schools. We had no trash pick-up (contracted privately) or water or sewage (well
and septic).Other direct operating costs pushed our annual home ownership costs to approx $60,000 per year in NJ (we had no mortgage). I am fortunate to be able to pursue what I do for a living with simply use of a phone and computer as my occupation (money management) is information driven and not dependent on a physical place or location. I suspect I'm not the only one who enjoys this flexibility. My point is that the world has changed. Local towns and even states have never viewed themselves as part of a competitive landscape. Indeed its inhabitants are usually viewed as "captive" sheep to be regularly
shorn. That is changing. People can and do move to other places and take their jobs with them as I did. Some of the other places can be quite "unbelievable" both in terms of quality of life and cost of living as what I currently enjoy. (Almost forgot, I don't pay any state income taxes any longer since I don't live in a US state - federal taxes are ongoing.) I can safely state that my cost of living now is being directly paid for exclusively from the savings of not living stateside and in NJ.There's even ample funds left over to travel back often to visit friends although truthfully most of our friends prefer to visit us here. Message to NJ bureacrats and
legislators: wake up a smell the coffee before it's too late!! You're killing your residents and your state!

2/07/2006 06:06:00 AM  
Anonymous Anonymous said...

Sunnyside: Think you are confusing us with people who care. This is a blog about the northern NJ real estate market. Bub-bye (and watch out for hurricanes).

2/07/2006 08:51:00 AM  
Anonymous Michelle said...

I disagree, anon. I think it's great for folks to hear about viable alternatives to dealing with this NNJ wackiness! Good on you, Sunnyside. I think it's fabulous that you're living such a dreamy lifestyle. Enjoy it and have an umbrella drink for me.

grim ghost: The risk I was reffering to concerning buying a "for now" home was exclusively the assumption that in 3-4 years such a home could be sold for the same or higher price than it could be purchashed for today.

Renting may bear the least risk right now, but the orignal poster mentioned that it was not an option for him, nor was it for me. I think that buying a "terminal" house is the way to go if renting is out of the question (and with 4 dogs, it is for us).

BTW, I think we looked at that same house! Was is right off of 202 on Speedwell Lake. listed I think for $525K? That house had some structural wierdness to it... Not crazy about that area either. We're in Washington Valley to the west of Mo'town. Lovely spot.

2/07/2006 04:47:00 PM  
Blogger Grim Ghost said...

Michelle -- yes that may have been the same house, it was on Speedwell lake, was a log cabin. When I saw it, it was $560 K, but it might have fallen by the time you saw it. It finally went into contract when listed at $510 K, no word yet on how much it sold for.

My wife really liked the place -- it had a real charm for people who like their privacy, and you could probably build steps leading down to the lake. But we decided it was impractical as a day to day residence, and the streets outside weren't all that great.

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