Spring isn't thawing the chilly Northeast Market
From Inman News (and a hat tip to Ben Jones at The Housing Bubble Blog):
A housing chill in the Northeast
Only a few months ago, at midnight on Dec. 31, Joseph and Kianna Jackson gently clicked their champagne glasses together in their New Jersey apartment and made a resolution for the coming year: They vowed to make an offer on their first home by March 15 -- their daughter's second birthday.
But like so many other New Year's resolutions, their promise has so far been unkept. As mortgage rates crept higher in the first two months of 2006 and sales in their local market slowed, the Jacksons decided to postpone their home-buying plans because they think prices could be a lot lower in the summer or fall than they are today.
"A year ago, the market was super-hot and it was hard to find a Realtor or builder who would even return our calls," says Joseph Jackson, a self-employed computer-programmer.
"But now, I'm getting a couple of calls a week from people who want to sell me a home," Jackson says. "I just tell them to call back in a few months, and I'll let them know whether I'm interested in buying again."
While real estate agents from Brooklyn to Boston say that the Northeast's housing market will remain strong, it's the decisions made by families like the Jacksons that will ultimately determine whether the region's sales and prices gains simply moderate or come to a screeching halt.
...
With inventories nearing 10-year highs in some Northeastern markets, "buyers are reclaiming some of the bargaining power that they had lost as prices soared over the past several years," says Lawrence Yun, an NAR economist and managing director.
...
"The most softness in values will be felt in the priciest markets, like Boston and New York City," the economist adds. "Those are the areas most at risk from rising interest rates -- their prices are already so high that a lot of buyers who could qualify for a mortgage at 6 percent won't be able to qualify as rates move toward 7 percent later in the year."
As price gains cool, a handful of Northeastern markets have found themselves at the top of some dubious lists.
...
Like many real estate analysts, Dreier said it was "too early to tell" whether the recent slowdown in sales represented a mere pause in housing's long run-up or the start of a long-term decline.
"The year," said Dreier, "is going to depend on what we sell from March to July."
This goes out to Joseph and Kianna. Congratulations on your decision to wait, Lord knows it was a tough one to make. Don't give in to market pressures, you've made the right move. Stay strong, hold tight, and don't lose those champagne glasses. You'll need them to celebrate a purchase made under your own terms.
Caveat Emptor!
Grim
A housing chill in the Northeast
Only a few months ago, at midnight on Dec. 31, Joseph and Kianna Jackson gently clicked their champagne glasses together in their New Jersey apartment and made a resolution for the coming year: They vowed to make an offer on their first home by March 15 -- their daughter's second birthday.
But like so many other New Year's resolutions, their promise has so far been unkept. As mortgage rates crept higher in the first two months of 2006 and sales in their local market slowed, the Jacksons decided to postpone their home-buying plans because they think prices could be a lot lower in the summer or fall than they are today.
"A year ago, the market was super-hot and it was hard to find a Realtor or builder who would even return our calls," says Joseph Jackson, a self-employed computer-programmer.
"But now, I'm getting a couple of calls a week from people who want to sell me a home," Jackson says. "I just tell them to call back in a few months, and I'll let them know whether I'm interested in buying again."
While real estate agents from Brooklyn to Boston say that the Northeast's housing market will remain strong, it's the decisions made by families like the Jacksons that will ultimately determine whether the region's sales and prices gains simply moderate or come to a screeching halt.
...
With inventories nearing 10-year highs in some Northeastern markets, "buyers are reclaiming some of the bargaining power that they had lost as prices soared over the past several years," says Lawrence Yun, an NAR economist and managing director.
...
"The most softness in values will be felt in the priciest markets, like Boston and New York City," the economist adds. "Those are the areas most at risk from rising interest rates -- their prices are already so high that a lot of buyers who could qualify for a mortgage at 6 percent won't be able to qualify as rates move toward 7 percent later in the year."
As price gains cool, a handful of Northeastern markets have found themselves at the top of some dubious lists.
...
Like many real estate analysts, Dreier said it was "too early to tell" whether the recent slowdown in sales represented a mere pause in housing's long run-up or the start of a long-term decline.
"The year," said Dreier, "is going to depend on what we sell from March to July."
This goes out to Joseph and Kianna. Congratulations on your decision to wait, Lord knows it was a tough one to make. Don't give in to market pressures, you've made the right move. Stay strong, hold tight, and don't lose those champagne glasses. You'll need them to celebrate a purchase made under your own terms.
Caveat Emptor!
Grim
12 Comments:
Do folks think builders who tear down a home and build a new house on the same lot will be affected by the downturn?
It seems that even if the market drops 20%, it would still be profitable to buy a ranch on 1/3 acre, knock it down, build a colonial in its place, and sell it for twice as much.
Does anyone think this will stop during a market slowdown?
Builders? Builders have been doing teardowns and major remodels long before the bubble. They'll likely be doing it long after.
There is profit to be made by the builders, but only because they've got the equipment and manpower on hand already.
grim
So it seems I'm screwed with trying to find a 'fixer-upper' in a nicer town.
:-(
Hopefully with some luck, and with enough builders busy working on other houses, I can squeeze a deal in there.
It's getting mighty frigid these days. ice cold.
Do not bid or look at a house until you see "Real" price drops of 25%.
When you feel you are getting harassed by realtors and builders then wait another few months to let them stew in stagnation.
Richie, having costs of $700K and selling for $800K is not an attractive proposition.
But in 'high end' towns, that 1/3 acre lot can pay off big for a builder.
A builder recently bought a small house on 1/3 acre in Short Hills for $900K. Tore it down, built a new 5BR house (that fits fine on the 1/3 acre lot), and has it listed for $2.6M.
http://www.realtor.com/Prop/1056803317
That's quite a profit.
If I'm going to compete with that, I'll need LOTS of luck, and patience.
I'm not looking to spend $900K, but that's just an example of what I'm dealing with.
Some areas of that town are "historic" which means you can't knock down the house, so there may be some opportunities there, for those willing to engage in a 'money pit.'
Correction, that house os on .7 acres, not .33 acres, but the same point applies.
Bairen, good post. I'm doing many of the same things as well. Already looked in another state, and will go to another this summer.
And aside from the job market aspect, there's the factor of who wants to work in NY City when someone is likely to scream "allah is greatest!" while blowing themselves and the whole train up.
Areas that are 'less appealing targets' are also a factor, for me.
Those fixer uppers are going to builders... like this total dump in allendale which was listed for $619 and sold for $720 recently
Unrealtor: I have always agreed with you, however on this thread you talked about a listing price that a builder has as "quite a profit"...yeah if someone pays him the ask...which I doubt. I think everyone who is seeing a lot of builder activity in towns their interested in, will be pleasantly suprised by what a builder will be willing to take for a house next year and beyond. (they will be "giving back" some of the profits that they made in this bubble RE market. I will bet the house on that one!!!
ps: Housing values are subjective values and in a bubble will (as they have) overshoot, the inverse is equally true...like I said I will bet the house on it.
"Unrealtor: I have always agreed with you, however on this thread you talked about a listing price that a builder has as "quite a profit"...yeah if someone pays him the ask...which I doubt."
That house will sell for over $2M, I can virtually guarantee it (and I'll post the closing price here when it sells).
They're knocking down a gorgeous $2M house on Old Short Hills Road, to build a $6M house. It may sell for less than six, but they will still make a lot of money.
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