Northeast Market Cooling
From Bloomberg this morning:
`For Sale' Signs Rise, Home Sellers Cut Prices as Fed Tightens
Maryam Safai's 5,000-square-foot, five-bedroom colonial in Mahwah, New Jersey, has been on the market for a year, even after three reductions in asking price.
``I'm not going to give in to the market,'' says Safai, 44, a dentist. ``I'm not selling below our current asking price'' of $1.69 million.
Like Safai's northern New Jersey neighborhood, housing markets around the nation are cooling, mostly as the result of the Federal Reserve's drive to push up interest rates. That has slowed price increases in most of the country and reduced demand for risky types of financing that caused former Fed Chairman Alan Greenspan to worry about ``froth'' in the housing market.
...
The trend is most pronounced in affluent neighborhoods in the Northeast, where prices soared the most during the real- estate boom. Median prices for existing homes in the Northeast were up 5.2 percent in February from a year earlier, compared with almost 18 percent in the previous 12-month period, according to the Realtors group.
...
While damping price growth the most at the high end of the market and in the Northeast, rising rates have also reduced demand for riskier forms of financing and begun a shift of power from sellers back to buyers, economists and brokers say.
In a sign that buyers are starting to gain the upper hand, pre-sale home inspections are back in vogue in Montgomery County, Maryland, says Meg Finn, a Long & Foster agent based in Bethesda. Just a year ago, buyers who insisted on inspections jeopardized their chances of getting a house in a bidding war, she says.
...
On a Boston street, lined with a dozen ``For Sale'' signs, McCormack is trying to sell a three-bedroom house listed at $535,000. She's holding ``commuter hours'' open houses on Monday nights to lure would-be buyers on their way home from work.
``When the market was hot, we never would have had to do this,'' she says.
Caveat Emptor!
Grim
(Credit goes out to Ben at The Housing Bubble for finding this one)
`For Sale' Signs Rise, Home Sellers Cut Prices as Fed Tightens
Maryam Safai's 5,000-square-foot, five-bedroom colonial in Mahwah, New Jersey, has been on the market for a year, even after three reductions in asking price.
``I'm not going to give in to the market,'' says Safai, 44, a dentist. ``I'm not selling below our current asking price'' of $1.69 million.
Like Safai's northern New Jersey neighborhood, housing markets around the nation are cooling, mostly as the result of the Federal Reserve's drive to push up interest rates. That has slowed price increases in most of the country and reduced demand for risky types of financing that caused former Fed Chairman Alan Greenspan to worry about ``froth'' in the housing market.
...
The trend is most pronounced in affluent neighborhoods in the Northeast, where prices soared the most during the real- estate boom. Median prices for existing homes in the Northeast were up 5.2 percent in February from a year earlier, compared with almost 18 percent in the previous 12-month period, according to the Realtors group.
...
While damping price growth the most at the high end of the market and in the Northeast, rising rates have also reduced demand for riskier forms of financing and begun a shift of power from sellers back to buyers, economists and brokers say.
In a sign that buyers are starting to gain the upper hand, pre-sale home inspections are back in vogue in Montgomery County, Maryland, says Meg Finn, a Long & Foster agent based in Bethesda. Just a year ago, buyers who insisted on inspections jeopardized their chances of getting a house in a bidding war, she says.
...
On a Boston street, lined with a dozen ``For Sale'' signs, McCormack is trying to sell a three-bedroom house listed at $535,000. She's holding ``commuter hours'' open houses on Monday nights to lure would-be buyers on their way home from work.
``When the market was hot, we never would have had to do this,'' she says.
Caveat Emptor!
Grim
(Credit goes out to Ben at The Housing Bubble for finding this one)
33 Comments:
richard "High prices or Not"
YOU HAVE TO BE ABLE TO AFFORD IT FIRST.
MOST FIRST TIME BUYERS ARE PRICED OUT!
You can't figure this out.
``Entry-level buyers are still strong, while buyers looking to step up to bigger houses are becoming more cautious.''
This doesnt seem right - I thought that entry level buyers were out thereby raising the median house price? Is this double speak on the part of the writer of this article?
KL
Can someone with NJMLS access look up this address?
The address isn't listed on GSMLS, and I can't seem to find a property listed at that price on NJMLS.
Wondering if he dropped the price again or pulled the listing.
grim
richard,
"this will put increased demand at the starter level. while inventory has grown at this level i'm starting to see some of the more quality properties move."
Inventory is starting to grow at EVERY level. OK I know I sound like a broken record, but I have already seen things come down, and you are already getting more for your money than last year. Things are moving, but far slower than last spring.
"you need to get in somewhere and i ponder how long will renters and condo owners be able to hold out before taking the plunge, high prices or not."
You need to get in somewhere is very common realtorspeak...getting in at the top and losing all your equity is a lot worse than getting in in another year at a huge or even small discount.
When you can rent a comparable property for less than what you can buy, you are not losing by renting.
You can rent a mansion in Summit for 8500-10,000 a month, homes that are worth 2-3 million. Given the interest rates hikes to buy these same homes at the current market price with 25% down would be around 12-18K a month.
The "pride" of owning a home is simply not worth the current cost.
You are wise to keep looking in this market however because I have seen some things priced incredibly low, you know current values and you may come across a desperate buyer and get a good deal via a lowball. Sellers are now accepting bids that are good for only 24-48 hours as the inventory = competition is increasing.
If you find the perfect home in the perfect neighborhood at the right price and plan to stay for a very long time I guess it doesn't matter, but buy and then don't even look at what happens to the market in the next year or it may damage the psyche.
"I'm not going to give in to the market"
LOL!
Unrealtor.
Don't you just love that!!!
I can smell the toast.
Richard,
You are probably so sick of hearing my advice, but I know very well the towns you said you are looking at and it disgusts me to see what they are charging for "starter" homes. I only have money to lose on my own house by taking this position.
I hate to imagine all the young families strapped in to an upside down mortgage. I don't take pleasure in imagining the losses of what other people term F*K'"D borrowers. I feel very sorry for them.
I feel like the realestate and banking industry will be the next tabacco industry. The public is just now getting the "true picture" of the market like smokers that were addicted before they started releasing the true reports on the deadly consequences of smoking.....
Will Russel Crowe play David Lareah in the next "Insider"?
Richard -
Why would I move out of the townhouse I currently rent for $1300 to pay $2500 to live in a 2 bed condo with less square footage and someone walking over my head? And if I won't buy the overpriced condo, how can that person buy a house?
And how will that homeowner move up (or out to a retirement community)?
And on the other end - lowered prices on mansions put downward pressure on lesser properties.
This is the HOUSING market we are talking about - not stocks or dog food or widgets. It will take a lot longer than a couple of months for a total psychological shift in the market on the part of buyers and sellers.
The other thing which surprises me it the belief that "nice" areas can't drop in price.
A starter home in Summit for $800,000 might seem OK when a similar house is $730k in nearby, almost as good areas but what about when the "almost as good" area starter homes are $400k? Lower price, lower taxes and the savings would more than cover private school.
I agree that the really nice neighbourhoods will hold their value RELATIVE TO NEIGHBOURING AREAS but that is not the same thing as holding peak prices. Just as no man is an island, neither is a neighbourhood.
And don't forget - Trenton is full of well built, once beautiful mansions that were once the apple of their well heeled owners eye. And look at it now.
Can someone with NJMLS access look up this address?
Got it. They pulled the listing on March 15.
Here's a quick run down:
Sold 1/27/03 $1,100,000
(Last Asking $1,189,000)
Listed 4/2/2003 $1,349,000
Expire 10/18/2003
Listed 4/6/2005 $1,879,000
PCH 4/9/2005 $1,910,000
PCH 5/24/2005 $1,875,000
Expire 8/30/2005
Listed 9/1/2005 $1,749,900
PCH 11/9/2005 $1,699,000
Basic McMansion w/taxes of $14,596
A recent post on Moneysmartz mentions your site. Moneysmartz recently launched with a mission of identifying the best personal finance websites and blogs. Here’s a link to the post:
http://www.moneysmartz.com/weblog/archives/2006/03/real_estate_bub.html
Moneysmartz
Wondering if he dropped the price again or pulled the listing.
69 georgian court - expired 3/15
Just my opinion... but homes with value in towns even like Ridgewood are cutting their price. Not by very much but it is indeed happening... and they are just sitting. Pricing pressure from the top causes the market to adjust, correct, to a new reality. This is how capitalism works.
OT; What most illinformed or too lazy, fail to "get", is that when you take out a million dollar mortgage (go into debt) or "extract equity" (go into debt)...every dollar of debt becomes an asset on the lending institutions book. Simply, your liability is their asset...which side of this trade is the wealth building one?
PS: I realize that the vast majority when purchasing a home have and will do so with a mortgage...but doesn't it make sense to try and keep that liability as low as possible. The last house I bought (since sold) I did pay cash, and I have to tell you that when the funds are going directly from your account to the sellers it sharpens the mind. Interestingly, the RE broker kept telling me that I'm not really buying a house rather I'm buying money...what a line of sh.., she didn't have much to add after I told her I'm writing a check and my experience has taught me that houses that you occupy, eat cash.
What most illinformed or too lazy, fail to "get", is that when you take out a million dollar mortgage (go into debt) or "extract equity" (go into debt)...every dollar of debt becomes an asset on the lending institutions book. Simply, your liability is their asset...which side of this trade is the wealth building one?
You'll like this letter to the Boston Globe:
Q: "I purchased my home for $480,000 and it is now worth $600,000. Is there any way of cashing out this additional $120,000 of equity and applying it to the loan balance?"
A: You can borrow the $120,000, which will increase your loan balance by that amount, and then use it to pay down the balance by the same amount. Of course, that will leave the balance right where it was, and you will be poorer by the amount of the closing costs on your new loan.
http://housingbubblecasualty.com/forum/index.php?topic=489.0
Unrealtor.
Hilarious!
This guy richard won't be so smart talking when this housing market goes into full fledge Bear.
Back in 1992-1994, that kind of BS never was spoken.
I 1993, all i know was that realtors were harassing home buyers. we went to an open house and would be harassed for weeks about making a bid or needing help with another listing. Had to tell off the desperate realtor to keep them from calling again.
Did buy a house all on our terms. The seller and realtor kissed our @$$ to get a deal done.That meant maor concessions on the sellers part, not the BS buyers are dealing with at the recent peak last summer.It was a good felling.
It's coming. That cocky arrogant attitude will be long gone from the realtors and the sellers.
BTW, guys, where to get open house information? weichert.com has some. What about realtor.com or other places?
Try this if your in North Jersey
http://njmls.com/
Actually, anywhere in Jersey!
Oops.
BTW, guys, where to get open house information?
Star Ledger -- print version.
The info online SUCKS, but there is always tons of stuff in the print version of the Sunday paper.
But I'm boycotting ALL open houses for the foreseeable future. Why look at overpriced houses? Even if you see a "bargain" for $400K, how much will it be worth 18 months from now?
Let the Realtor™ sign-in books sit empty!
Boycott open houses!
rich in NNJ, thank you.
Senior housing most certainly adds education burden. The link isn't exactly straightforward, so many miss it.
Older people do not move to Jersey to retire, the property taxes are terrible, there is very little incentive to do so.
Instead, locals tend to sell their homes and downsize into these communities. It reduces their monthly bills, reduces their tax burden, and reduces the household maintenance. It also lets them stay near families, friends, and the communities they lived in.
But just who buys the now vacant homes that these downsizers sell?
Exactly.
Even though I do agree that House prices are up for correction, I don't think they will go down sharpely & significantly. Based on location & demand they may go down from 10% to 30%."
Hmmm, let's plug in your assumptions on a $500,000 home (which barely exists anywhere desirable).
$500,000 home price
10% off = $50,000
20% off = $100,000
30% off = $150,000
Are you so wealthy that you can afford to throw away up to $150K in 18 months?
anon 2:00
don't be so hard on Richard. I understand his point of view- it's tough to be young, have done all the right things, work hard and still face this ridiculous market.
Since the interest expense on a mortgage is what you can actually write off...doesn't it make sense to buy in a higher interest rate environment, and take advantage of depressed real estate prices, keeping your actual mortgage (money your on the hook for) to something manageable? I truly believe that net-net the 01'-06' period will prove to have been the worst time in history to buy a house.
2006 might prove to have been the worst time in history to have bought a house,but how in the world could 2001 or 2002 be, given how much prices have increased since then?
"UnRealtor said...
You'll like this letter to the Boston Globe:
Q: "I purchased my home for $480,000 and it is now worth $600,000. Is there any way of cashing out this additional $120,000 of equity and applying it to the loan balance?"
A: You can borrow the $120,000, which will increase your loan balance by that amount, and then use it to pay down the balance by the same amount. Of course, that will leave the balance right where it was, and you will be poorer by the amount of the closing costs on your new loan."
VERY NICE!
UnReal - as it were
Anon 7:24 Prices paid in 2001 and 2002 are bubble prices in the NY/NNJ area, The NAR has been talking about "record sales" since 1998...yes it has been that long.
anon 7:24 ps: yes, if you bought in 01' and flipped to the next sucker in 05'...show me 1 truly wealthy person who has really made it that way...it is a suckers bet, the same people that fill the seats in AC or Vegas.
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