Saturday, March 04, 2006

Weekend Open Chat - Why are you here?

Now that my weekly sit-in for Grim is just about done; I'm opening up this thread for open discussion, but mainly to find what; who are you and what brings you here?

We definitely have a very broad range of individuals who visit, read, and post here. I was just curious to see the different varieties of people we have here, and why everyone is so interested in real estate.

I'm Richie, 31, married, and a first time home owner since 2004. My day job is in computer consulting. I'm interested in Real Estate mainly because of my father. He's a contractor/builder who's been in the business since the late 70's so over time I've learned a lot from him when it comes to the industry. I hope to expand my ownership to more then just the home that my wife and I live in. Since my dad has been through this market once before; he knows exactly how bad it can get. He said it was ugly when real estate was sour in the late 80's/early 90's and he thinks that it's going to be just as bad this time around.

I did not start paying attention to real estate until 1998-1999 when I started saving up enough $$ to purchase something. Through my father's advice, I picked up an empty parcel of land at the end of 1999. The land stayed vacant until 2003 when my wife and I started construction on our new home which is where we live today.

With some more money saved up now; I hope to increase my stake in real estate once prices become reasonable by purchasing more land or buy getting some rental property.

So everybody, introduce yourself!

93 Comments:

Anonymous Anonymous said...

I sold my house in October at double my 1997 purchase price, and I'm currently renting until the market drops. The information and commentary from blogs like this one are invaluable in helping me to determine the current state and trends of the RE market, and it's a great forum for exchange of ideas and observations.

It also helps me stick to my plan of waiting for the right time to buy, which is sometimes difficult. While I'm in a very nice rental, one's desire to own a nice home can be a powerful emotion, and sometimes can overwhelm rational judgement. Reading the blog helps me maintain perspective.

3/04/2006 01:16:00 PM  
Anonymous Stan said...

I'm renting in Hoboken. I started looking at condos here around 2001. At the time my wife was in school and working part time, and I was working for a startup and not making much money. We could have afforded a 1 bedroom or maybe a two bedroom far from transporation. I didn't buy because I thought prices were high and we wouldn't be staying long if we had children.

Well, now it is 2006 and we still think we will have children "soon". My wife has a good job and I'm making a lot more than I was in 2001. We could afford a two bedroom here, but I'm not excited about going into so much debt for a place which probably won't appreciate and which won't be a good place to raise a family.

So we are still renting and putting money into savings every month. I will buy when I feel like settling in one place for 10 years or more and can afford a three bedroom in that area.

The biggest problem with renting is putting up with the crappy quality of the maintenance that the landlord pays for, and not being able to do renovations to make the apartment better (add washing machine for instance).

3/04/2006 02:02:00 PM  
Anonymous Anonymous said...

Our house on east coast FL, sat on the market for over a year. We sold it for over $100 thousand less than we paid for it a year ago. The market is saturated with houses for sale, and there is indeed a bubble.
We had a job transfer to NJ and had to bail, we took the loss moved on. Obviously, we are not flippers - we just got caught in the beginning of the huge housing bubble starting to burst.

In the mean time we are watching the NJ market and see that the same thing is happening here. The houses way over priced and are sitting on the market, not selling. Some are reducing prices, and still no buyers. The NJ housing bubble, seems to have slowed just as fast as Fl.

We have been going to open houses in NJ for the past year -zip codes 08730, 08736, 08735, 08742 and no one is looking, interested, or buying these over priced homes. I do think NJ is due for drastic price corrections.

I am inclined to rent another year before tossing money into a house that is definitley going to be worth less a year from now. We already made that mistake.

3/04/2006 02:08:00 PM  
Anonymous Anonymous said...

I'm another Hoboken renter. Back before this boom, I didn't feel I had enough career traction to make a RE committment. I also nver expected to still be here after all these years.

As I watched my income swell, I've seen the desirable condos remain just beyond my finger tips. It's like a cruel cosmic trick.

Yeah, I could push it and make it work but I remember the early 1990s when there were hundreds of condos on the market that no one wanted to buy.

Luckily I'm in a rent controlled flat and my rent hasn't budged in years. Buying something similar would easily triple my monthly outlay and dent my savings.

So I wait. And watch.

3/04/2006 03:38:00 PM  
Anonymous Anonymous said...

I'm a JC renter who would love to settle into a 2-3 bedroom condo, but as a teacher, I can't afford much more than a $2K monthly hit with my wife's similar income--so that leaves me on the sidelines (I'm rational enough not to take on a some crazy financing)... So, I'm sitting tigh for two more years to see what happens, and either make a transition to a higher-paying occupation or move somewhere else.

3/04/2006 04:04:00 PM  
Anonymous Anonymous said...

We're a married couple who almost closed on a home in Newtown PA. The house was very nice but priced at 100k over what it was worth. Luckily they found black mold in the basement and we were able to bail. Total loss $1200 (fees etc).

Now that I look back on our summer purchase (or almost) I realize what a mistake it would have been. My wife and I tried to move into a 2br/2Ba rental apartment in Yardley PA but the landlord wouldnt bunch on the yearly contract (i.e. no shorter term once the year is up).

My wife's a lil frustrated that we cant seem to find the right fit either in terms of a rental or a home..I keep asking her to hold on and not get carried away with the notion that we'll never purchase a home at this rate. The timing will mean everything once the new rate hikes happen and people start to realize that this is not the summer of 2005 anymore.

Malicious I guess, but true.

3/04/2006 04:11:00 PM  
Anonymous Sugee said...

I am 44, my husband is 49, residents and apartment-renting in NJ since 1997, just got our GreenCard hence the looking-to-buy-house as a logical next step, a son just in college, second to go in 2 years, lost lots of money in the stock market, retirement planning not so far away, so quadruply wary about buying house just now in this market. May buy a townhouse after 2 years, but ideally would love a smaaaall plot of land to put up a nice smaaaall cottage with a exxxtra-huge porch/verandah :-)

3/04/2006 04:23:00 PM  
Anonymous Anonymous said...

Grim: I've got a similar story as you. My job is technology related . My father was also involved in house building and real estate investing in the early 70's to early 90's. He's still involved in building product manufacturing and is convinced the market will come down.

I'm 36, married with two kids 5 and 1. Since about October of last year have been looking, I have been kind of surprised by the realtors with "take it or leave it" attitudes. Fortunately, I have a nice apt. that will hold us for the near future.

3/04/2006 05:57:00 PM  
Anonymous Anonymous said...

Looking to buy in Ocean County NJ. Been watching market - prices are being reduced, (except if seller doesn't have to move and is just waiting for someone to pay the high asking price).

With out a doubt, prices are no longer climbing and market has started to fall. I am watching and waiting- the buyer's market is rapidly headed this way.

3/04/2006 05:58:00 PM  
Blogger Richie said...

I should have also asked where everyone works. I'm just trying to gauge if everyone who lives in Northern NJ works in NY.

I work in Parsippany; I know Grim works on the border of Clifton/Bloomfield. How about everyone else?

Most people I know work in NJ; with a few exceptions of people working in the City...

-Richie

3/04/2006 06:31:00 PM  
Anonymous Anonymous said...

Crazy at is seems, I just put an offer on house in a very desirable town today and I over bid--yes, over bid. Why did I do that? Because it is a house that fits my lifestyle today and 10 years down the road. However, I may not be the only fool for this property, for there were 23 people looking at it today. How many other crazy people could have shown up at this property. I'll find out once the lucky winner is pulled from the hat.

3/04/2006 06:36:00 PM  
Anonymous Anonymous said...

We originally planned to buy in 2005-2006, we just had this emotional need to have our own home. I started reading Ben Jones' blog last year, and really got into learning about finance.

I realized how stupid I was for thinking about buying into that market. So I just said - this is nuts. We are just going to rent and save our money. I can't think of anyone who ended up 'screwed' because they had money in the bank. My wife bought into this too, so here we are, happily renting in Montclair, saving tons of money, and realizing that life is long - its better to be slow and safe, than just focussed on fulfilling our immediate selfish needs.

This blog and others help, so thanks Grim and crew. I have also been pooring money into our retirement accounts. The more you read about finance, the more you read about people's mistakes. And one thing that I only see mentioned rarely on these blogs is the secondary affect of bubbles like these - namely that most divorces are due to financial strain. If the market tanks, many of these people will end up over their head, and that is bound to have a deteriorating effect on the rest of their lives.

I would rather be happy, cash postive, and renting - than worrying about decorating a house that I overpaid for.

3/04/2006 06:40:00 PM  
Anonymous Anonymous said...

"Crazy at is seems, I just put an offer on house in a very desirable town today and I over bid--yes, over bid."............


Who wants to bet this comment... was posted by an untrustworthy realtor - I do appologize if it is really a carefree person with a lot of money to toss around.

Honestly though - who brags about overbidding!? And why are you writing about it on this site? I'm not buying it(your story)...or another house yet!

3/04/2006 08:12:00 PM  
Blogger chicagofinance said...

published in August 2005, researched in May 2005

this is main article
http://www.bankrate.com/brm/news/mortgages/BubbleMain.asp

this is me
http://www.bankrate.com/brm/news/mortgages/celkupafamily.asp

I work south, my wife workls in NYC

3/04/2006 08:41:00 PM  
Blogger chicagofinance said...

trying again

http://www.bankrate.com/brm/news/mortgages/BubbleMain.asp

3/04/2006 08:43:00 PM  
Blogger JMW977 said...

I'm a renter who started looking in 2001 after I had saved what I thought was a decent downpayment i.e. 20%. At the time, the prices were always just out of my reach.

I gave up in disgust one day when I arrived at an open house on a busy street in Bloomfield to see 20 - 30 people waiting in line in an absolute downpour to look at an overpriced, unimproved cape right next to the high tension wires.

Since I'm a value shopper (aka cheap) who never pays full price for anything, the whole bidding war thing just doesn't do it for me. Besides, I can't afford it!

I'm single and earn about the median for the area. I live in Clifton and work for a small company in Belleville.

The building I'm living in was sold last year, and the new owner has submitted plans to demolish my building and put up a two family and a one family.

I've consulted an attorney who tells me I'm covered under the NJ non-eviction law, so I plan to dig my heels in a bit. I'd like to stay where I am for another year or so while the prices come down. I'm sure the builder would like to get started soon before the prices drop, so maybe he'll make it worth my while.

That's my story, sad but true... 8-)

3/04/2006 09:35:00 PM  
Anonymous Looking said...

I’m in my late 30’s, married, 1 child, 1 on the way. My wife and I live in NYC, we rent, it’s rent stabilized so a good deal all around, not enough room though. We both work in the city and are self employed.

We’ve casually looked for the last 3 years with no intentions of buying. With another baby on the way now, that emotional pull to have a backyard and more space kicked in and that’s when we just picked the closest train lines in Jersey and started looking at what these towns were all about.

We were shocked at what we could – or couldn’t afford. We bid on one house. We had heard stories from friends who bought in the last few years who said they felt everyday they waited to buy a house, the less house they could afford. Our bid wasn’t accepted and it had only been the 2nd offer, it sat on the market for a month or two more and was reduced further, we're REALLY thankful we didn't get it. We’re waiting to see how things pan out, maybe giving it a year or two - or more.

Unlike my friends who had to decide to buy a home sometimes upon first walk through, I feel that everyday that goes by I can afford more house.

3/04/2006 09:37:00 PM  
Blogger JMW977 said...

"Unlike my friends who had to decide to buy a home sometimes upon first walk through, I feel that everyday that goes by I can afford more house."

Looking,

This statement really encourages me. You're absolutely right!

Hang in there!

3/04/2006 09:53:00 PM  
Anonymous Anonymous said...

We've managed to save over $100K while watching in disbelief as the market skyrocketed out of proportion with salaries.

We're renting, still saving, and waiting for the market to return to normal before buying.

We have also considered moving out of state, taking several flights to other cities to look at real estate there.

What $400K buys in North Carolina or Dallas is staggering -- 4,000+ square feet home, built-in pool, perfectly landscaped yard, great family-oriented communities, great schools, lower cost of living, 20-40 minute commute, etc.

We may still move out of state, the next few months will be the deciding factor. If the market doesn't normalize this spring/summer, we're gone...

3/04/2006 10:30:00 PM  
Blogger Effex said...

I'm 27 and my fiance is the same age. I am a computer programmer and work in Cranford and she is in marketing working out of Fairfield. We have been renting in Madison for the last 3 years and will continue to do so for the next year or two. We are in no rush to purchase our first house as we understand that this is a cycle and prices will drop. They will not drop as much as I think some people expect but prices will come down and at that time we will make our move.

3/04/2006 10:33:00 PM  
Anonymous Elric said...

34, renting in Westwood with fiancee. Working in Mahwah (programmer/analyst). Tried to get into a starter home a few times over the past two years but the monthly hit always comes in too big.

The lease on our rental is up. We'll likely renew, keep saving like mad, and watch the real estate drama unfold over the next year.

I'm hoping for a substantial RE correction, but I fear the lower end of the Northern NJ market will always be too competative/expensive for us.

We would have moved to a more affordable part of the country by now, but we're reluctant to leave the family/relatives we have here in NNJ. With that in mind, we're keeping a close eye on the southeastern part of NJ as well.

3/04/2006 10:36:00 PM  
Anonymous Anonymous said...

"Who wants to bet this comment... was posted by an untrustworthy realtor"

I think you are exactly right, anyone who is up on what's happening in the market right now would be a complete idiot, or so wealthy it doesn't matter, to over-bid on a house at the top of the market.

Who wants to start out upside down?

I make well over 6 figures, and sellers can shove these current asking prices straight up their do-da.

3/04/2006 10:42:00 PM  
Blogger trroll said...

I'm 36, married, got my first baby last year. I'm a Network Engineer working in NJ (working from home). We bought a home last year - it was HUD foreclosure so we got a very good price for it - plus my father in-law is a general contractor so he helped us to fix it. It's not in the greatest area of NJ but it's a decent one. We got adjustable mortgage (3.7%) for 3 years and are planning on selling and buying something nicer/bigger before it’s up. But if the prices won't go down by than we might just sell and move to another state - probably Texas (my wife works for Continental Airlines) and with my job I can virtually work from any where in the world as long I got fast internet connection.

3/05/2006 12:06:00 AM  
Blogger RentinginNJ said...

31 married (just under 1 year) renting in Clifton & working in Newark.

We are taking a wait and see approach with the housing market. We are willing to rent for another 1 - 2 years, but ultimately want own a house. If the market doesn't cool considerably over the next year or two, we will probably leave the area.

3/05/2006 12:25:00 AM  
Anonymous Anonymous said...

I'm a buyer renting in Edison NJ. I withdrew an offer I had made on a 2 bedroom townhouse in Edison, the day I first read grim's blog. Waiting it out till this insanity ends.

3/05/2006 12:26:00 AM  
Anonymous Anonymous said...

Single Hobokener here.
Not a renter, currently selling my condo.
Have an urgent high $$$ offer from someone to buy my place right away.
Currently in bad argument with my former boyfriend about selling my place.
May have to lose him as a friend because he says Im crazy not to hold on to my place for a long time.
No matter how patiently I explain to him that its best for me to sell now , rent a while and then buy when Bubble has contiuned to burst, he won't listen.
He tells me its Hoboken and next to NYC so itll never go down only up, up , up.
Ive been reading everything I can get my hands on about real estate tanking for the last 10 months.
Even though Hoboken might not come down for a while longer Id be crazy NOT to sell now and make a tidy profit.

3/05/2006 12:42:00 AM  
Blogger Richard said...

for those of you waiting until prices come down, i seriously don't think they'll adjust anywhere near what bubble watchers think. at best my feeling is prices in the next 3-5 years will go flat to down 10%. if you think any more and you really want to own a house you might want to look in lower cost states. has anyone here seen what you can get for even half the money in some other states compared to here? i'm personally offended that people would ask $550-$600k for basic 3 bedroom colonials in terrible shape in second tier towns.

the question you really need to ask yourself is, are you willing to pay at or near today's prices for a home to stay in this area? this is an individual choice. if you plan on doing it, the key is to buy as large a plot of land as possible with low taxes. forget about the house that sits on it, that isn't where the value of the property comes from, it's the proximity to NYC, a good downtown, good school district, etc.

3/05/2006 08:36:00 AM  
Anonymous Anonymous said...

Who wants to bet this comment... was posted by an untrustworthy realtor"
NOTE....To whomever overbid - please give us the MLS, town and price...you are so willing to brag about your conquest, I have to see it to believe it. I am certain you are a realtor trying to drum up the stale market....Give us the facts. We gladly give you our data and can back it.

We have been looking and watching the prices drop and you can see houses sitting, expiring, no shows at open houses.

From the information I can gather from the Monmouth and Ocean County Realtors, the market has all time high inventory and price reductions.

I am ready to buy, cash in hand, but there is no way I am buying something over asking price. Until then, we pay $1300/ month for a 3/2 home in Ocean County. To buy this same house, (with a hefty down payment, plus taxes) would cost over 3000k/month.

3/05/2006 08:55:00 AM  
Anonymous Anonymous said...

Ilove this story from the Jersey Shore Bubble blog...

...."trying to sell my home (Jersey Shore)...wanted to reduce price to have it sell quickly...
response from realtors. "Keep your price and RAISE the commission (plus, add a selling incentive/bonus $1000k)that way our agents will show it more!"

HOW SHAMEFUL!

3/05/2006 09:25:00 AM  
Anonymous reader said...

I'm new to NJ, married with a baby, renting now in No. Bergen county, for the moment. Looking to buy but want to be informed.

Happened upon this blog via a random google search and have been a regular reader ever since. Like others, taking a cautious approach, but we've been saving for a few years and ready to jump even in this market if the right place at the right price happens along.

3/05/2006 10:12:00 AM  
Anonymous Tamar said...

Sold our house in Los Angeles last June at what I now think was the height of the bubble there. Moved east and are now renting a cute carriage house in Montclair. I love the schools here. (We have a son in first grade.) My husband works in NYC, I work at home. We're both freelancers. We can't buy now because we're not yet established here, ie: we don't know what we'll be able to afford as a monthly outlay. We're also waiting till the market settles out. We won't buy till late '07 at the earliest.

I haven't yet seen real evidence of the market cooling in Montclair/Bloomfield, though I keep waiting for it. A couple I know just bought in Bloomfield. They faced multiple-offer bidding-over-asking-price situations on more than one house they wanted. It's discouraging to hear, so I come here for reassurance that I'm not crazy and the market really is on its way down. I suspect/hope it's just that things cool down at the high end first.

I found Grim's blog through Ben Jones' Housing Bubble blog.

3/05/2006 10:31:00 AM  
Blogger Richie said...

What's amazing to me is that most of the readers here are in similar situations and actually taking time to study the market (ie: reading news, checking external resources). I try to tell everyone I know to read about the whole "craze" before they get house-crazy. Patience will be key.

Real estate is a MARKET just like stocks, commodities, etc. Markets have UPS and DOWNS, BOOMS and BUSTS. It's happened before for both of them. It's documented. Throughout the past 100 documented years of finance & real estate; no one has been able to "predict" what will happen tomorrow, but we can definitely read about them in yesterday's news.

-Richie

3/05/2006 10:41:00 AM  
Anonymous Anonymous said...

There was an article on the front page of the NY Times yesterday morning which basically said a stalemate exists as sellers do not want to take lessers bids and buyers are not offering asking price.

Has anyone seen this happening in our general area?

3/05/2006 10:45:00 AM  
Anonymous Anonymous said...

Sold at the peak in NYC back in Sept and already seeing prices come down and inventory rise in areas we are interested in. But we're fine waiting longer in our cushy rental apt.

I think the Times is behind the market, as usual. Price lowering already has begun. And I don't think the NJ or NYC market is so attractive that it can't suffer a major correction (it's NOT different here - in fact economists cite this area as one of the most vulnerable for a large correction).

Richard, 10 percent drops are happening already, inventory is up more than expected, and new- and existing-home sales figs point to a market headed for further falls.

It was a crazy ride up, and it's going to be a crazy ride down. Be patient.

3/05/2006 11:08:00 AM  
Anonymous Anonymous said...

I've seen several $50K drops in the last few weeks.

I think the few remaining bidding wars, are from 1) people who aren't fully aware that the market has changed (the release of last Tuesday's boatload of market-related info, for example), 2) are simply wealthy and don't care, or 3) are idiots.

The fundamentals are all changing (ARMs resetting, foreclosures up by 40%, the absurd amount of zero-down purchases in the last year, median incomes flat as home prices soar, etc, etc).

This bubble is simply unsustainable, and the market changes have been evident since August 2005.

3/05/2006 12:02:00 PM  
Blogger RentinginNJ said...

This comment has been removed by a blog administrator.

3/05/2006 12:13:00 PM  
Blogger RentinginNJ said...

"at best my feeling is prices in the next 3-5 years will go flat to down 10%. if you think any more and you really want to own a house you might want to look in lower cost states"

When the last bubble burst, nominal prices fell by about 10% and then remained stagnant for a few years. The combined impact of inflation and nominal price drops reduced real prices by about 30% in this area. Interest rates were high, so the Fed was able to lower rates and mitigate the damage.

This bubble is much bigger than the last. However, I think we will see a quick, but modest drop (as "investors" jump ship) followed by several years of less impressive drops. This will be a slow and painful process. Cumulatively, the drop will be impressive, but it’s not going to be like watching the stock market crash.

Also, I agree with your advice about leaving the state. Do yourself a favor and check out other areas. For example, check out Cary, North Carolina. Nice new homes, nice town, good jobs at a fraction of the cost, a better quality of life overall. I would leave today, but I am finishing an MBA and my wife really wants to stay (family). We agreed to give it 2 years, so we will rent and save. If things don’t change, we will leave.

3/05/2006 12:13:00 PM  
Anonymous Anonymous said...

I have seen price reductions in NJ. Most asking prices are still 20% over priced, if you check with zillow.com.
There are 2 attractive choices if you choose to live in NJ. North Jersey if you work in the city, or live in a smaller shore town.

NNJ homes have more property, bigger and nicer homes, and big school districts - thus higher taxes.
Shore towns have small lots, you get bungalo (fixer-upper) for the same $$. You have to look around too, the shore house next to you could be a rental that has 50+ illegals there in the winter, and weekly, drunk group rentals during the summer. Either way - I would not pay top dollar for that!

3/05/2006 12:25:00 PM  
Anonymous Anonymous said...

I'm married with a kid on the way and renting a 2/2 in NYC now. We don't want to leave the city, but want to own someday soon. There is no way, however, that I'm spending a 1/2 million for a fixer-upper on the fringes of the ghettos of NJ. I'm here to see if there is any logic behind the notion that prices will not just stabilize, but will in fact decline.

My observations are that to explain the slowdown in the last quarter of 2005 the media said nobody buys in the winter. Then the media said expect a pick-up in sales in the first quarter of 2006 because it has been unseasonably warm and bankers were getting record bonuses. Now that January and February are gone, and sales still slump, the media is saying wait until it warms up again for sales to take off. I can't wait until the next excuse.

3/05/2006 12:37:00 PM  
Anonymous Anonymous said...

I spoke to a realtor Saturday. Just as I thought he would, he had to admit prices have leveled off in NJ but told me not to expect a decline. His explanation... "The market reached 2009 home prices by 2005, so we will just grow at a slower pace, but still grow."

I do not believe a word of it.
With that logic, housing prices would have to decrease to make the market work.
I guess they will try any line to convince you your money is safe buying a house in this market.

I am also looking to buy, but these realtors make my skin crawl! This "profession" has turned into a slime pit and I am hoping to find a home for sale by owner and cut out the RE agent! I do not believe they are entitled to my hard earned money.

3/05/2006 12:57:00 PM  
Anonymous Anonymous said...

I have seen a few hosues go into foreclosure priced at between $1 mil - $2 mil.
Things are getting tough on the so called rich buyers.

3/05/2006 01:26:00 PM  
Anonymous Anonymous said...

Turn the clock back to 1993.
Houses were sitting dormant on the market, Realtors were harassing you when you looked at an open house and bids were much lower than asking prices and usually getting it.
This is going to happen again but worse this time around.

3/05/2006 01:47:00 PM  
Anonymous Anonymous said...

Hey realtors reading this board things are getting slower and tougher. Just wanted to let you know it is going to get alot slower and alot tougher.
Good luck
I hope you stacked away alot of the extra bubble cash you made last several years.

3/05/2006 01:49:00 PM  
Anonymous Anonymous said...

Here's some more information for the rational buyers out there if you haven't seen it yet.

http://www.youdovoodoo.com/80sbubble.htm

3/05/2006 01:53:00 PM  
Anonymous Randy in JC Heights said...

Multi-family home owner in Jersey City Heights here. Bought in 2001 and bought a second one down the block early last year. Just checking in here to see how things are going. I really don't want the bubble to burst, but I do have to admit that people went a little bonkers with over-extending themselves financially to buy expensive real esate. Luckily, I have great tenants that cover all my expenses plus a little extra for emergencies every month, that way I can ride out the storm that may or may not be coming.

I think things will just flatten out here in Jersey City/Hoboken area. I don't think that things are going to decrease much. I guess well just have to wait and see.

3/05/2006 03:41:00 PM  
Anonymous Anonymous said...

I'm 27 single male currently bumming off my parent's home. They bought the place in mid 2003 when we thought the housing prices had gone out of control. Little did they know, there was more bubble to come and their $447k purchase was going to be worth over $700k in two years.

Frankly, we think $447k is still too much for this house, and fortunately we got in just early enough that we probably won't be hurt much even in a catastrophic market correction.

Right now, I'm also looking to buy a home. w/o touching retirement account, I have about $100k in bank. Hopefully after 3 years after the correction, I'll be one of those prudent newbie home buyer who puts up 20% downpayment and still have plenty of extra leftover.

3/05/2006 05:04:00 PM  
Blogger lisoosh said...

37, married with 2 kids. Came to the states in 1998 and missed the boat due to non existant credit rating. Currently renting 2 bed townhouse for $1200. It's a bit cramped but want to keep rental expenses low.
Currently seeing 1960's houses listed around $350 that are being pulled and relisted around $20K cheaper, sometimes by different agents. Of course this is a lot more that the $280K they were going for last year or the $180K they were going for in 1999 when things started to take off.
Hoping the big drop off will happen over next year and a half. I hope to buy a house to live in for the next 15 years so can weather smaller incremental losses. I wish I could wait till this bottoms out but don't think I have another 5/6 years.

3/05/2006 05:45:00 PM  
Anonymous Anonymous said...

With this market going the way it is, hopefully many of the real estate "professionals" with their 75 hours of "training" will hop off the gravy train as easy as they hopped on. Moreover, good riddens!

3/05/2006 05:59:00 PM  
Blogger Richard said...

was out with a realtor today looking around summit. looked at 2 serious fixer uppers for $675k and $620k. both easily needed $100k in work just to make them livable. i practically laughed under my breath knowing they won't get any takers for these places. both are at least $75k over a realistic asking price even in this market.

i don't know what the future holds and maybe i'll be sitting in my rental 2-3 years from now saying how come nothing came down but i sure won't pay the prices being asked today. i'd rather rent and have cash flow the rest of my life then to be both house poor (due to big prices) and cash poor.

3/05/2006 07:42:00 PM  
Anonymous Anonymous said...

We agree with Richard. We are looking (and laughing) at houses, but not scared into paying outrageous prices. If sellers want to sell, they will reduce. If we find something we like and it isn't in our price range, we will make a low offer - they can take it or leave it, but we are not breaking the bank for the seller's, realtor's, or mortgage broker's sake.

3/05/2006 08:14:00 PM  
Anonymous Report from Central Jersey said...

For work reasons, I moved to the Princeton area in the late summer. Was looking for a house in the 500-600 range. At the time could find only one house that I could even remotely imagine living in. We tried to lowball but the seller wouldn't budge. We ended up offering a contract at near full price. But after the inspection showed major problems, we pulled out as the seller would not reduce the price enough to pay for repairs (my insurance company said the repairs would have to be made within two months of moving).

In the end the amount were dickering over was a tiny percentage of the total purchase price. At the time we made our offer, I was willing to overpay (I felt that even for the market at the time, the price was 50K inflated) in order to ensure stability for my family (schools for kids, etc.). But I wasn't willing to fork over an inflated price just to enter Mr. Blandings Builds His Dream House land and to have to act as a general contractor as soon as we moved in order for long-neglected repairs to get done.

The sellers -- who had already bought another house and had taken out a bridge loan to cover both mortgages -- likely kicked themselves for not having agreed to our terms. The house proceeded to sit on the market for another six months; it only recently sold. Don't know the final price but I would be shocked if it didn't go for significantly less than the original asking price. Indeed, the seller phoned me sometime in late October to sheepishly ask if we were still interested in buying it if they agreed to pay for all the repairs. (Hello? We had signed a lease two months earlier and already moved into a rental.)

Since then I have been closely monitoring the Princeton area prices. Prices have softened somewhat in Princeton proper and houses are definitely sitting. But in Princeton boro/township, good houses that are well priced seem to sell easily (as opposed to PoS's that are grossly inflated, which not surprisingly sit and sit).

In the towns outside of Princeton, however, my impression is that a) there are a lot more houses for sale and b) they are becoming significantly cheaper than they were in August, which was when I was looking to buy a house. There are probably eight to ten decent, in-my-price-range houses for sale in the towns of Pennington, Cranbury, and Hopewell -- all of which have great schools and are an easy commute of my job. This was NOT the case last August, when the pickins were slim to none.

P.S. to CHICAGO: Your url link doesn't seem work in the format of this blog. Please tell us more about yourself, since I (and no doubt others) very much appreciate your posts on this site.

3/05/2006 08:48:00 PM  
Anonymous Anonymous said...

"Turn the clock back to 1993.
Houses were sitting dormant on the market, Realtors were harassing you when you looked at an open house and bids were much lower than asking prices and usually getting it."

Looked at a couple houses this weekend and my realator calls to see if I want to bid on either one. Also said that they weren't sure that a lot more would come up that fit our requirements. I find it hard to imagine no more houses will come on that meet my requirements. This is my first 'spring market' which I was told that It would probably move beyond my affordability as more buyers move in, has it started yet? To me it seems things have slowed down or got quiet.

3/05/2006 09:14:00 PM  
Anonymous Anonymous said...

Went to some open houses today... noticed several 'decent' homes are within our price range that were not last year.

Prices are dropping.

Although another over-priced house went into 'attorney review' within 3 days, before the first open house. So some buyers are still caught up in the 2005 market. They'll be upside down on the house at closing...

Some other homes in great shape, on great lots, are just sitting. Stuff that would be snatched up in only days last year.

We'll keep waiting.

3/05/2006 11:23:00 PM  
Anonymous Anonymous said...

I'm 28, single, and moved to Wayne in late 1993. My parents and I were previously in the more moderately priced region of Berks County, PA.

Originally we looked to buy a house in 1993 - which would have been a home run today if we did - but we opted out. We rented for over 10 years with a very reasonable landlord and finally purchased the property in 2002. Since then it has nearly gone up 70% in value.

My mom now, with the real estate frenzy, wants to trade up - but we have been fighting tooth and nail to delay until the market bottoms out.

As an example, we saw a house in Riverdale that was priced at $528k in early 2003. Today its worth $790. Even then we (my dad and I) thought it was overpriced, and even more ridiculously today. Mom, however, says "I told you so - real estate never goes down".

I see the for sale signs everywhere now, esp around Wayne. Hopefully that mess around 46 will have people move out of the area. It's gotten too crowded!

I have been working in NYC since 2000 and commute from Wayne.

3/06/2006 08:39:00 AM  
Anonymous Anonymous said...

"Since then it has nearly gone up 70% in value. My mom now, with the real estate frenzy, wants to trade up..."

While your house may have gone up 70%, so has the more expensive 'trade up house.' The net effect is that it's more expensive to trade up today, rather than when prices are lower.

3/06/2006 08:46:00 AM  
Blogger Richie said...

That Route 46/80/23 intersection is horrible now. I can't beleive they reduced all the double-lanes to single lanes WITHOUT putting up any warning signs. The DOT should be ashamed.

3/06/2006 08:50:00 AM  
Anonymous Anonymous said...

I'm single, live and work in NNJ, in my early 40's, and a lifelong renter.

When I moved out here, in the late 80's, both owning and renting was already expensive.

Then the economy and housing market cooled in the early 1990's. In retrospect, I could have afforded something even then if I was willing to buy a condo (and maybe take in a roommate). But my job was shaky with all of the defense cuts.

So I ignored real estate for 10 years, built my career, traveled and tried to find me a wife. Well, that last part didn't work out - it's tough being single 40 miles from the city.

I started looking to buy a house in 2003, in spite of things shaky again at my company, because I had recoverd some of my stock market losses. I quickly realized that the market was in a frenzy and backed off for 2 more years.

I finally hired an agent in 2005, looking in Essex County (halfway between work and NYC). I have plenty of money but don't want to spend it on a dump.

I almost made an offer on a 4/2/1 cape in West Caldwell last June. But the numbers didn't work out for me (it eventually sold at asking price - 499K). So my agent dumped me after 3 months of looking.

Since then, I've been even more cautious. But at least I'm now saving faster than the rate of housing inflation.

3/06/2006 08:59:00 AM  
Anonymous Anonymous said...

For what its worth, looking at open houses yesterday in Bergen/Passaic, I actually had a real estate agent tell me it was a "buyer's market" now. First time since I've been looking over the past two months. Most of them will tell you the market is "evening out" or that "its not crazy like last year"

3/06/2006 09:07:00 AM  
Anonymous Anonymous said...

I am 26, single, and live at home with my parents. Wow, I feel like I just admitted I was an alcoholic or something...

I live in west NJ and commute 100 miles round trip to Edison, NJ where I work as a web developer. I also have a part time job - also as a web developer. Due to the fact that 2006 has been a craptastic year and driving in this state gets worse each day, I'm in danger of losing my full time job. My part time job was supposed to end in December 2005, so the end may be near for that as well. Even if I burned the candle from both ends and devoted my entire life to working those 2 jobs, I still don't think I could afford to buy a house. I seriously don't understand how people are doing it - is everyone making 6 figures? If so, tell me where to apply... Sure some sketchy techniques may get you a loan, but these people seem to be finding a way to pay.

I've been reading this blog and lurking in the comments forum since around September of 2005. I was brought here by hopes that house prices would go down to affordable levels. While I'm sometimes encouraged by what I read here, I'm beginning to think it's hopeless. I don't remember the bubble of the 80s (although I read the articles that were posted here) - my barbie was able to afford a mansion and that was what was important to me at the time. I'm starting to believe the "prices will only flatten" propoganda. People here are making 6 figures and have a butt load of savings. While I do ok, my boyfriend and I combined just barely make 6 figures. And if I lose my job, I think I'll be looking at a $20k pay cut...and probably a long lull before finding another job...so I can say goodbye to what I do have in savings. Anyhow, while logic says that prices are insane and need an adjustment, there is another part of me that thinks that as soon as prices take a dip all of the wealthier folks will snatch up homes or even 2nd or 3rd properties hoping to be in a good position for the next real estate market rise.

I know a guy who bought a house in Lavallette for $80k around 1998. Now similar houses are going for $350-400k. I cannot imagine that those houses will ever correct down to $120k. Even houses in north and central jersey...if people are buying homes at these insane prices - what are people going to do when prices go down? And I'm afraid if interest rates go up and house prices only come down slightly, they'll be even more unaffordable. It just seems hopeless.

I'd hate to leave NJ (for family reasons mostly), but I'm thinking that's what it's going to come to. I've been thinking that perhaps I should just have a few kids and collect welfare. I've put too much work into being middle class to have nothing to show for it.

3/06/2006 10:25:00 AM  
Anonymous Anonymous said...

"I've put too much work into being middle class to have nothing to show for it."

Interesting post, thanks for sharing.

But at 26 years old, you've only been in the workforce 4 years, right?

I think it's a bit early to throw in the towel...

3/06/2006 10:54:00 AM  
Blogger NJGal said...

Renting in Hoboken with my husband, working in NYC, both with fairly stable jobs (I hope), saving much of my salary and living on his (but not a good enough job - I still think we can do better),loaded with student loans (at least very low interest rates, which even though rising, still knocking off more principal than interest) and looking to buy a house, although we cannot decide where. We could theoretically pay 700K but why would I want to? My whole salary would go to the mortgage and property taxes and we'd save very little (and I plan to continue saving so my house had better accomodate that!) If I can get a mortgage under 600K, it would be manageable. But still, I'd rather it be under 500K:)

Also, probably not going to buy in NJ because of one issue - property taxes. Westchester is bad, but NJ is awful. I just can't imagine paying over 1000 a month in property taxes.

3/06/2006 11:37:00 AM  
Anonymous Anonymous said...

I am 34, married with one child. I have a pretty good job in NYC making six figures. My wife works part time from home. We have been renting the same place for the last five years hoping that the real estate market would cool off in Bergen county (unfortunately, it has done completely the opposite). On the plus side, we have been able to save up a sizeable down payment.

At this point, we will continue to wait, but at somepoint in the next 12-15 months we will need to make a move (space reasons/expanding family). Even if prices go down 20%, I can't help feeling that we would be better off relocating to another area of the country where prices are more reasonable. The wife's family is all from NJ so this probably won't happen.

3/06/2006 11:39:00 AM  
Anonymous Anonymous said...

34, Married, 2 kids ages 5 and 3, both live and work in Bergen County.

Our families and extended family are all in NJ so we are staying. Family is too important to us to leave. We don't have boat loads of cash saved and are trying to find better a better school system for our kids, which really means we'll be trading up for higher taxes and a higher mortgage, but probably getting a smaller house than we own now.

3/06/2006 12:22:00 PM  
Blogger Shailesh Gala said...

Reading all the previous thread, it seems most of us are in 30's and looking for first house. It appears though everyone's income has increased in last 5 years, but it has been difficult to catch up House prices.

Even though House prices seems to be coming down, but as many have concluded, they will be down at most by 15% to 20%, not more. In my opinion, the prices need to come down much further for most of us to be able to afford decent house in NJ.

I think all of us should try something to raise awareness that it is difficult in NJ for young families to afford decent house.

3/06/2006 01:25:00 PM  
Anonymous Anonymous said...

Shailesh - I completely agree that affordability is a HUGE issue (especially for younger families just starting out). Not sure that there is a whole lot that can be done...it ultimately comes down to supply and demand. If people stop overpaying for POS houses or move out of the state prices will go down.

3/06/2006 01:46:00 PM  
Anonymous Anonymous said...

Let's go to open houses in collusion (strength in numbers) and tell the realtors the price is too high. Each week we could focus on one town where one of us wants to live. We could even have each other put in bids lower than ours to make ours look good!

As a matter of fact, I've experienced this first hand in Suffern, NY where the Hisidic community got together and lowballed on my in-laws house and then they accepted the only better offer

3/06/2006 01:51:00 PM  
Anonymous Anonymous said...

People blame the speculators for driving up the markets... and I agree. But I know a handful of people my age (late 20s) who overstretched themselves to buy a house recently.

One guy bought a house a few months ago and was excited about landing a job that paid him $115k/year. But he said with all the recurring expense, he only has 7% of after-tax income leftover. And it's not even a great house.

That's the kind of tragic situation we're dealing with. Here's a guy who makes more money than most people (regardless of age) and he's struggling.

The sad reality is, if you want a nice home in NNJ, you need a dualincome household pulling in combined 200k/year.

3/06/2006 01:54:00 PM  
Blogger Shailesh Gala said...

The trouble is First Time home buyers are not active enough that their voices will be heard by local politicians. The long time residents have much larger influence and hence are able to put restrictions such as Zoning laws etc... which restricts supply. This really needs Grass Root lobbying, that will bring this issue to front. If folks who are in same boat as us, raise this question, the politicians & public will have to take notice of it. Afterall, event long time resident's kids are finding it difficult to live in NJ.

Here is link to NJ legislature site. In my opinion, at least all of us should write of this issue to them.

http://www.njleg.state.nj.us/SelectMun.asp

In my opinion, If we all combine our energies as a group, one can create significant awareness. BTW: I have done similar efforts at Federal level and have seen positive results.

3/06/2006 02:03:00 PM  
Blogger chicagofinance said...

Report from Central Jersey:

add " .asp " to the end of the web address. It should work.

3/06/2006 02:27:00 PM  
Anonymous Anonymous said...

"This really needs Grass Root lobbying, that will bring this issue to front. If folks who are in same boat as us, raise this question, the politicians & public will have to take notice of it."

I think you're about 4 years too late...

The market is correcting itself now -- laws of supply and demand.

Also, no need to type everything in bold.

3/06/2006 02:31:00 PM  
Anonymous Anonymous said...

patience. the craziness is ending and the kast fools will pay up. Then it will just dryup. the greedy sellers who couldn;t afofrd the house they sit in will be scratchuing their head wishing they had taken that offer 10% below their asking as iot is now 20% below.

3/06/2006 07:17:00 PM  
Blogger skep-tic said...

I'm 28, married, no kids, renting in westchester, work in NYC.

Wife and I have good income (north of $200k), but significant student loans. We're renting a place that is bigger than we need right now with the expectation that we'll grow into it over the next few years.

In the meantime, we'll be paying off debt and saving. No real interest in buying for at least three years. No real interest in overpaying either, so if house prices continue to rise faster than our income, we'll consider moving. Neither of us is from the tri-state area originally anyway.

I've been reading this blog since late summer 05 and I've sensed a real shift in the RE market since then. At this point I'm pretty hopeful that things will be in our favor long term. Obviously, I'm biased, but I think a 10% drop is already in the bag this year. I think a 50% drop over the next 5-10 yrs is realistic given the aging demographics of the area.

3/06/2006 07:40:00 PM  
Blogger Grim Ghost said...

Late 30s, married, no kids. Joint income in the mid 6 figures last 2 years (although probably less this year), personal savings in the 7 figure range. Did not buy for personal reasons in 2000 and 2002 (because I wasn't sure how long I'd stay in the area).

However, my rental place was sold a few months back. New landlord is a real asshole, wants to increase rent 25% (illegal in my township), and says that I should be responsible for all maintenance. I don't want to give him a penny, so I'm moving. I really would rather not rent again, because moving is such a pain (I own nearly 5000 books). I know that the market is going to stagnate at best,but Iwould still rather buy (very conservatively --I'm planning to buy around 40% of what I woudl qualify for. If the market falls, I'll probably trade up.

3/06/2006 08:43:00 PM  
Anonymous Anonymous said...

Great thread. I found this blog in Dec. 05.
29, renting in NYC with the GF. Close to getting engaged. She's 26.
Combined, we make about 170k, but we're very good savers.

I thought I struck gold when i bought low in Fla in 2004, but now I'm worried the price will drop so much that all my 'paper' equity will be gone. Relative is living in the house now, paying the mortgage, so I can't boot them.
They'll be gone by year's end, so the plan is to put the house on the market in Sept., which I realize is an awful time, but I have no choice.

Right now, I've got about $150k in equity, but I imagine half of that - or more? - will be gone. Oh well. Such is life. I should have sold. I'll never be greedy again. Thanks for not rubbing it in.

Our rental is up in Aug, and she's not too thrilled about where we are (she's a country girl from central NJ, and wants a house/yard, etc). I don't want to buy in Aug cause I feel the market will continue to slip a bit (falling knife, etc).

We're considering extending the lease a few months, and seeing what happens with my Fla house (will i rent it to someone else? not if I have to pat $300 out of pocket a month .. will I sell?) just because i don't want to buy a place here and then have to pay the mortgage (30 yr fixed, so no arm worries) in Fla while it sits on the market. 2 mortgages = not smart/good.

We're looking in north jersey ... targeting houses that are about 500k because we feel later this year we can offer 375k-400 and get what we want. She's got her half of the 20%, and i have mine in equity. We probably will be able to save the other half if I choose not to tap into equity.

Fun!

3/06/2006 09:58:00 PM  
Anonymous Anonymous said...

38, renting in JC, wife and I are both professors, with a 3 yr. old daughter we love and another one due in April that we'll love too.

We arrived from the midwest two summers ago--bad timing all the way around, though our good fortune to land in NYC as we did. Our jobs are good and stable, but we don't pull in much more than 100k at this point, and we didn't quite break even on the house we lived in for four years and then sold back in the heartland. Not a lot of cash on hand.

We're excited about the city, despite the real estate/school/community dilemmas. But we live now in an affordable, dumpy, 3-bedroom rental (with mice) in a tough JC neighborhood that is near but not in JC gentrification, near but not in the city, etc.

Trying to decide where to move this summer--a better apartment in JC, out to Montclair, up to Riverdale? Is Montclair worth the train-fare and commute? My wife, a feminist urban literary gal who wants it all, fears being made into a suburban care-giver. The fear runs deep!

Here is another complicating factor, and our great good fortune. We bought 5 acres on an island in the St. Lawrence River in 2003--cheap, beautiful, virtually unimaginable. 300 feet of waterfront--sandy and calm. Near my mom. We may try to build a summer house, since living a dream 6 six weeks each summer and renting here seems better than buying a POS--no dreams and only a huge mortgage in that.

To all those 30-somethings with kids, and all others too, rent better and better, and carpe diem! Thanks Richie and Grim.

3/06/2006 10:26:00 PM  
Blogger chicagofinance said...

Anon 9:58PM:

Just my opinion - don't buy anything until you have resolved your Florida situation. The only exception is if you have a relative [i.e. mom/dad] who would front you liquidity in case there is some kind of blow up. You may think that you have reserves, but it is surprising [telling] how quickly banks / credit cards etc. dry up right when you have an emergency and need to rely on them.

If you feel as if your financial situation is getting too complicated and there are too many loose ends flying around - TRUST YOUR INSTINCTS!

chicago

3/07/2006 10:31:00 AM  
Anonymous Michelle said...

A comment for Shailesh Gala:

The governement should NOT be involved in regulating home prices, nor was it the government that made prices rise to begin with. If you believe in central planning then why do you even want to own private property? It's supply and demand, plain and simple, and government should not interfere with the economy.

*gets off soapbox*

I would have posted sooner but I've been too busy unpacking as we moved into our new house in Morris Township last week! (And NO, I'm not a realtor).

I'm a 30-something gal, married, who just moved back to NJ from CA. We bought a house in the SF Bay Area in 2001 for $525K and sold in in August for just over $1M. We moved back to be closer to family (I grew up here) and to be by NYC where there are lots of job opptys in our fields.

We bought because renting is not an attractive option for us with 4 loud dogs. We looked but there were slim pickins, and if you get evicted as a 4-dog-owning-renter good luck finding something else quickly! We bought a home that I can see living in for the rest of our lives. It's spacious, on a 3 acre lot, and perfect for us. We paid about 20% less than OLP of $1.2M and put over 30% down in cash.

I'm here because I was originally trying to get info on when to buy in NNJ. Because as mentioned earlier renting was not an option for us (and staying with family was wearing thin) we went against the conventional wisdom of this blog and bought. As it's a long term investment I'm not as worried as I would have been if we were buying a "for now" house, and I'm enjoying our new home immensely. It's worth a lot of money to me to not have to worry every time one of the dogs barks or a paw leaves a small scuff mark on the floor.

Life's not just about money. We have a pool, jacuzzi tub, steam bath, wet bar with icemaker, and lots of creature comforts, plus the comfort of knowing that we're safe to stay in our own home as long as we want. That's worth its weight in gold to me.

3/07/2006 12:45:00 PM  
Anonymous Anonymous said...

Before buying in Montclair, check out the taxes. Some of the highest I've seen in the state.

A tiny 2BR house, no land, no garage (no room for one), has taxes of just under $12,000.

Insanity.

Taxes on a 'real' house would be beyond burdensome.

3/07/2006 12:49:00 PM  
Anonymous Anonymous said...

"We bought a house in the SF Bay Area in 2001 for $525K and sold in in August for just over $1M."

I was about to congratulate you on a once-in-a-lifetime windfall of half million dollars, and then you wrote this:


"we moved into our new house in Morris Township last week! ... We paid about 20% less than OLP of $1.2M..."

Huh? You got way ahead of the game with $500K in liquid, and then jumped right into a massive debt with a $700K mortgage + about $20K in taxes for a monthly nut of about $6,000?

Seems completely insane...

3/07/2006 12:58:00 PM  
Anonymous Anonymous said...

"We have a pool, jacuzzi tub, steam bath, wet bar with icemaker, and lots of creature comforts..."

I'd venture a guess that you could have obtained those things for less than $1 million, and with a better school system to boot...

3/07/2006 01:02:00 PM  
Anonymous Michelle said...

Yeah, good luck with that.

It WAS under a million, on 3 wooded acres, over 6000 square feet, in pristine condition.

I think we got a steal.

And I don't give a hoot about the schools - I don't have kids nor will I be having any, and I don't plan on reselling into the foreseeable future.

3/07/2006 01:23:00 PM  
Anonymous Anonymous said...

Chicago - Thanks for the tip.

I'm in a bit of a push-pull with the girlfriend over when to buy. I would like to wait until I sell the house in Fla ... she feels it won't be a problem (and in truth, the house is brand new, looks great, corner lot, gated community, etc, etc) ...

That being said, I'm a cautious, sometimes negative guy.

But I can understand her desire to move - while we live in a nice apartment, it is a bit noisy outside, somewhat of a busy street, and we could use the extra space (we live in a 2 bedroom now, but we both have home offices crammed into one).

I should be able to talk her into holding off on buying ... but it should be noted that she has already offered to help/carry the Fla house should I be unable to move it/rent it. (Yes, she does make a little more than I do).

3/07/2006 01:41:00 PM  
Anonymous Anonymous said...


The governement should NOT be involved in regulating home prices, nor was it the government that made prices rise to begin with. If you believe in central planning then why do you even want to own private property? It's supply and demand, plain and simple, and government should not interfere with the economy.


You are missing Shailesh's point totally. His point was that government has indeed been a factor in rising prices through zoning and development restrictions. If you beleive that government should not interfere with the economy at all, then you should advocate the immediate repeal of all zoning restrictions.

3/07/2006 02:15:00 PM  
Anonymous Michelle said...

My bad re: Shailesh Gala's posts. I guess I'm just so conditioned from 10 years in the SF Bay Area that I assumed when folks say "Contact the Goverment about this" it's because they expect the govt to fix the problem. For some reason I didn't see his bold portion of his second post.

To Anon 12:58, while your numbers are a bit off (mortage is $600K, taxes are $14K) the reason we bought our house was NOT for a quick flip. We'll be there for a long time (neither one of us is subject to job transfers). And unless you have 4 dogs, you have NO idea how hard it is to find a rental. Lots of listings SAY dog friendly, but when you say "four dogs" suddenly the house/apt/condo is off limits.

BTW, we cleared $500K+ on that sale only 3 years after I cleared $225K on the sale of my condo in SF.

THe house we're in now also appraised at $50K over our bid, and our insurance agents wouldn't let us insure it for less than $1.2M because that's what they estimate it would cost them to REBUILD it, MINUS the land. And Zillow, for what it's worth, valued this house at $1.3M prior to the sale.

Many posters to this blog seem to completely ignore the fact that houses - homes - are not only about investment. It's where you LIVE. Not only do I live here in fact, I work from home so I'm here almost all the time. I'd rather spend more money to spend my life in a drop dead gorgeous environment then save dollars and live in a small rental. Our investments are in the stock market; if our house makes us moeny again, great. I bought into this one being $750K ahead of the game in net profit from starting with $10K down on my condo.

3/07/2006 02:38:00 PM  
Anonymous Anonymous said...

Well, congrats to you that instead of buying a gorgeous house for $800K, leaving $200K in the bank, you instead bought a house for $1 million at market peak, and liquidated all your equity gains...

To each their own.

3/07/2006 04:37:00 PM  
Blogger chicagofinance said...

Shailesh Gala:

I have to respectfully disagree.

The problem that we have experienced over the last 5 years relating to affordability is not a supply issue, it is a demand issue. NJ is already the most densely populated state in the region despite an anemic economic environment in telecom and pharmaceuticals.

Once all the marginal demand is eliminated, you will certainly be able to afford the home you wish. At a minimum, wages should track inflation. I guarantee that home prices will not.

Just give it time. You'll see. Be forewarned, the opportunity may not materialize until 2007-2009.

chicago

3/07/2006 09:06:00 PM  
Anonymous Michelle said...

Would that this place were $800K. I wish it were too. But unlike some of you spreadsheet jockeys I wanted a place I could love and live in forever - not a boring place on a small lot. Good luck finding 3+ acres in NNJ for $800K with a gorgeous house on it. I found it and it was $1.2M, and I got it for $960K. I'm happy. I don't make money to look at it in the bank.

3/08/2006 06:42:00 AM  
Anonymous Anonymous said...

Congratulations on your new home purchase, michelle. Who can absolutely, without a doubt, guarantee that house would eventually be worth $800k? If michelle feels she paid what it was worth to her, that's all that matters. Besides, she clearly loves the house and plans to stay there indefinitely - not turn it around for a quick profit. If I could find a house that I loved and I could afford it, I would buy too.

3/08/2006 07:48:00 AM  
Anonymous Michelle said...

Wow, and ally! :-)

Thanks, and I hope you find a home at the right time and for the right price that makes you as thrilled as we are with ours.

3/08/2006 10:02:00 AM  
Anonymous Anonymous said...

36 yrs-old, married with 2 kids. we bought a house in 97 and sold it in 2003 for more than double. we have been renting for 2 years now. i started to loose my belief that the housing was in bubble because it just kept going up. now, i see all this talk about bubble bursting, but i do not see significant changes in outrageous asking price. could we ever afford a house again for the money is worth?

3/08/2006 02:08:00 PM  
Blogger Grim Ghost said...


Good luck finding 3+ acres in NNJ for $800K with a gorgeous house on it.


For 3+ acres, you have to go a little distant to the fringes of Northern NJ, but you can do it in towns like Ringwood, Long Valley, Hopewell, Lawrence Township, Franklin etc. You can probably get 10 acres in some of those towns. However, there are a number of towns where you can get 1.5-2 acres with a nice house for around that much. Example, see this one

http://tinyurl.com/pkenm

2.05 acres for 649K. Very nice house. The lot is not level, but you do have a view. Township has 3 train stations, and the high school at least is excellent.

I also saw one house in Warren (great town, excellent schools) earlier this year with a huge 1975 5 bedroom house, with a large great room, that went for 750K or so.

So you can get that house, but its all a matter of tradeoffs. Commute to NYC, schools, resale value, neighborhood all play a role. The somewhat more rural towns (Warren, Long Hill, Watchung) in Somerset and morris Counties often have large rural and sometimes even farm lots.

3/08/2006 02:21:00 PM  
Anonymous Michelle said...

Grim Ghost,

The train service on the Peapack Gladstone line doesn't have as many midtown direct trains as the Morris and Essex (we're in Morris Twp just a few minutes from the Morristown train station.) Still, we looked in Long Hill and it's lovely; this house looks like a very good deal but it's not our style at all. I'm a modernist through and through.

Also, Gillette and Long Hill in general really have no town centers, which is something I love. I'm stoked to have found my 3 acres so close to Morristown and its amenities and nearby conveniences.

It's nice to see a reasonably priced house out there. I bet this will make someone very happy (although it wouldn't have been us!)

3/08/2006 03:32:00 PM  
Anonymous Anonymous said...

We moved to Sparta in 1993 from a little town ner Boston, because Sparta reminded us of Massachusetts. Bought a N. E. Colonial farmhouse, 4 br 4000 sq fton 3 acres in a very small subdivision (12 homes). Very friendly, small-town feel, very low crime rate. Great view, quiet, woods all around, can sit on my porch and watch the deer, fox, turkeys, and yes, even the bears (which have never been a problem!) Will be selling very soon-kids grown, husband passed away. Buying a townhouse in same town-which is very supportive of its senior citizens. You can get a great house in Sparta for way less than 600 K.
I agree that in Northern NJ the land is what is golden, especially with the Highlands legislation, taking thousands of acres off the market permanently, and more McMansions growing up like weeds each year.
You can keep your Montclair, Clifton, Hoboken,JC. Give me clean air, no crime, Beaver-Cleaver neighborhoods and values every time.
I predict that the bubble will not be so severe out here, as families try to escape cancer alley (Bergen, Passaic, Hudson counties).

3/14/2006 02:36:00 PM  

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