Existing Home Sales Fall, Inventory Hits New Highs
From the National Association of Realtors:
April Existing Home Sales
April Year-over-year Sales - Unadjusted
Nationwide -10.1%
Northeast -7.1%
Midwest -8.5%
South -7.7%
West -17.9%
Median Sales Price Changes
Nationwide 4.2%
Northeast 5.6%
Midwest -1.2%
South 3.4%
West 4.8%
Inventory is up a staggering 36.7% year-over-year. Current supply stands at 6 months, up 7.1% from last month.
April Year-over-year Sales (Condo/Coop Only) - Unadjusted
Nationwide -11.7%
Northeast -7.7%
Midwest -7.1%
South -16.7%
West -15.4%
Median Sales Price Changes (Condo/Coop Only)
Nationwide -0.2%
Northeast 3.7%
Midwest 5.2%
South -5.2%
West -6.8%
Condo/Coop inventory is up 62.2% year-over-year. Current supply stands at 7.1 months, up 2.9% from last month.
From Bloomberg:
U.S. April Home Resales Fall 2% to 6.76 Million Rate
Sales of previously-owned homes in the U.S. fell last month, reinforcing expectations that a slowdown in housing will help cool economic growth this year.
Home purchases fell 2 percent in April to an annual rate of 6.76 million from 6.9 million in March, the National Association of Realtors said today in Washington. Compared with a year earlier, sales fell 5.7 percent.
...
Economists expected existing home sales to fall to a 6.75 million rate from an initially reported March rate of 6.92 million, according to the median of 57 forecasts in a Bloomberg News survey. Estimates ranged from 6.4 million to 6.95 million.
April Existing Home Sales
April Year-over-year Sales - Unadjusted
Nationwide -10.1%
Northeast -7.1%
Midwest -8.5%
South -7.7%
West -17.9%
Median Sales Price Changes
Nationwide 4.2%
Northeast 5.6%
Midwest -1.2%
South 3.4%
West 4.8%
Inventory is up a staggering 36.7% year-over-year. Current supply stands at 6 months, up 7.1% from last month.
April Year-over-year Sales (Condo/Coop Only) - Unadjusted
Nationwide -11.7%
Northeast -7.7%
Midwest -7.1%
South -16.7%
West -15.4%
Median Sales Price Changes (Condo/Coop Only)
Nationwide -0.2%
Northeast 3.7%
Midwest 5.2%
South -5.2%
West -6.8%
Condo/Coop inventory is up 62.2% year-over-year. Current supply stands at 7.1 months, up 2.9% from last month.
From Bloomberg:
U.S. April Home Resales Fall 2% to 6.76 Million Rate
Sales of previously-owned homes in the U.S. fell last month, reinforcing expectations that a slowdown in housing will help cool economic growth this year.
Home purchases fell 2 percent in April to an annual rate of 6.76 million from 6.9 million in March, the National Association of Realtors said today in Washington. Compared with a year earlier, sales fell 5.7 percent.
...
Economists expected existing home sales to fall to a 6.75 million rate from an initially reported March rate of 6.92 million, according to the median of 57 forecasts in a Bloomberg News survey. Estimates ranged from 6.4 million to 6.95 million.
104 Comments:
Since Condos are the proverbial canaries, here is the Condo/Coop report:
April Condo/Coop Existing Sales
Sales (YOY)
Nationwide -6.3%
Northeast -2.0%
Midwest 3.7%
South -13.5%
West -14.0%
Median Price (YOY)
Nationwide -0.2%
Northeast 3.7%
Midwest 5.2%
South -5.2%
West -6.8%
I don't think there is very much positive news in this release at all.
I'm wondering if it's even possible to spin this.
April existing home sales fall 2 percent
The Realtors' chief economist David Lereah said higher mortgage rates were affecting buyers' ability to afford homes.
"Right now, the numbers we are seeing are soft-landing numbers," Lereah said. However, he said the housing industry was closely watching the growing inventory of homes for sale.
There were a record 3.38 million homes for sale in April, representing a six-month supply, the highest since a 6.4 months' supply in January 1998. The inventory in March stood at an upwardly revised 5.6 months' worth, the trade group said.
question on inventory -
are we seeing unprecedented numbers as far as inventory goes? obviously sales and price were unprecedented the recent years but as far as inventory goes I was wondering if anybody had any data showing how significant the numbers are. how do they compare with the last bubble burst? are we approaching those numbers? are we there already?
thanks!
Gluts & Gluts Of Inventory Piling up on GSML listings and FSBO
May 25 ----- 29,747
May 23 ----- 29,626
May18 ----- 29,260
May 4 ----- 28,209
April 12 ---- 26,582
March 6 ----- 24,111
The 30,000 mark celebration anyday now ANY DAY NOW!
Bababababa
Boycott Bidding!
Bob
Heard of this saying: "Don`t catch a falling knife"
This sounds similar to "Don`t buy in a falling home prices ... you will end up paying a home with rapidly vanishing Equity on it !!!!!
Bet a surge in new listings after memorial weekend.
TOO LATE!
Party over.
Better swithc allegiance to Buyers Starving realtors. Things getting tough. Fight for substantially lower prices so you can buy pay your bills
STARVE!
Boycott BIDDING! NO BIDS!
Bob
US RESALE INVENTORIES
US resale inventory: in millions.
2.270..2003
2.224..2004
2.474..Apr. 2005
2.556..May 2005
2.678..June 2005
2.756..July 2005
2.841..Aug. 2005
2.772..Sept. 2005
2.868..Oct. 2005
2.924..Nov. 2005
2.846..Dec 2005
2.883..Jan. 2006
2.985..Feb. 2006
3.198..Mar. 2006
3.383..Apr. 2006
And the Cheeleader Learah says it's a soft landing.
Deserving of a lynching by those underwater homeowners who purchased in 2005.
BOYCOTT BIDDING!
Make'em starve.
Bob
Yeah but every head line in yesterday's papers were that NEW home sales had risen. There's nary a mention of Existing home sales. That's the spin. just don't print it.
Drain Drain Drain those rediculous prices. Let the forclosures begin!
I'm a huge Bob fan! Boycott houses!!!!!!!!!!!!!
BTW, new tax rates are coming in soon. I'll let those sellers starve a bit more before I even consider buying. I want realistic prices darn it!
-frustrated with Real Estate idiocy
to those who predict 40% declines...
how is this going to happen? i'm really having a hard time imagining it...
yes i'm sure all of us wish for it but what's "still ridiculous" for some may be "reasonable enough" for others.
so it would be nice if 600k houses become 360k but I would imagine some people will be satisfied when it reaches 480, 460, 420?
in my mind it would take a "pause" in buying in order to see 40%. don't know much about the last burst but it's just hard to imagine that everyone would be willing sit tight and wait.
how will it happen in your estimation?
It can happen, for sure, in particular in high density areas, like NNJ, that have a lot of rental alternatives, or geographic alternatives with transportion.
Consumers with money have already purchased.
Those middle-income consumers who purchased during 2003-2005 probably paid way more than a safe ratio of their income. They'll be in trouble at the least blip in their circumstances, increase in mtg., or increase in taxes.
So the house goes on the market.
Who is left to buy all these homes?
Maybe it is a good idea for real estate if the illegal aliens are made permanent/legal so there is a new pool of fools.
I don't know about 40% either, unless it's from total stagflation lasting a number of years. If a 600 house dropped to 500K or a little less, or a 750K house was 600K, I'd probably buy. See, I always expect to pay somewhat of a premium to live in the NYC area. I never think we'll see the 4 bed/2.5 bath houses they sell for 150K in North Carolina and elsewhere. That's fine with me. Value is always relative to where you live. I still think we'll see a correction, but not as much as we're hoping.
"to those who predict 40% declines... how is this going to happen? i'm really having a hard time imagining it..."
Why is it easy to imagine 100% price increases, but hard to imagine 40% price declines?
Speculators are already out (the smart ones anyway), prices are already declining, and the media is finally reporting that inventory is soaring and sales are down.
Watch the fun as July approaches and the time to register kids for school passes, and sellers get even more desperate.
anon12:02-
I would say a range of 10%-50% is very possible.
For example, let's say a homeowner had bought 20 years ago for $100,000. If the market value of there house currently is $600K, then prices dramatically slip and someone comes along and offers them $360K, they still make money.
So I say the high end of the discount range will come from foreclosures, condos, homes bought many years before the bubble, people inheriting a property and just trying to get rid of it, and homes in bad areas that saw ridiculous run-ups in the last four years.
The low end of discounts from current market values would be "great" houses (this is part objective/part subjective) in top end neighborhoods that don't see a lot of turnover no matter what the market is doing.
JM
"See, I always expect to pay somewhat of a premium to live in the NYC area."
Why has NY City moved closer to Northern NJ in the last 5 years to warrant a 100% price increase?
I was under the impression that the real downward movement in pricing was going to come from foreclosures forcing down comparable sales values.
I don't think that many of the current sellers can reduce the sales prices by that much due to the amount of debt that they are most likely carrying.
I could be completely off track though...
NjGal @ 12:12 PM
I don't know about 40% either, unless it's from total stagflation lasting a number of years. If a 600 house dropped to 500K or a little less, or a 750K house was 600K, I'd probably buy. See, I always expect to pay somewhat of a premium to live in the NYC area. I never think we'll see the 4 bed/2.5 bath houses they sell for 150K in North Carolina and elsewhere. That's fine with me. Value is always relative to where you live. I still think we'll see a correction, but not as much as we're hoping.
Its time for you to buy now ... this is a premium good enough for you I guess.
"Why has NY City moved closer to Northern NJ in the last 5 years to warrant a 100% price increase?"
It hasn't. I didn't say that. I think 100% increases are insane. And I'm not a housing bull by any means, but to pretend that the NYC area is going to go to NC or Texas prices is crazy because it was still more expensive to live here than in those areas even during the 1990s crash. So I will continue to expect to pay somewhat of a premium over the national median to live in the area. That doesn't mean I don't think prices won't drop.
JM,
There are very few people who have purchased a home 20 years ago and never refinanced.
Also, buying foreclosures is RISKY - regardless of what price it is.
CNS
"I think 100% increases are insane. And I'm not a housing bull by any means, but to pretend that the NYC area is going to go to NC or Texas prices is crazy..."
Well, I don't think a single person here or elsewhere ever made such a statement that NJ/NY Metro prices would ever equal NC/Texas prices.
richie -
thanks for the response to my question. however, i find it hard to compare the "forthcoming collapse" in housing to what happened with tech stocks.
for one thing, a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. meanwhile, i don't think amazon.com or pets.com stocks are on a lot of people's priority list.
"a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. meanwhile, i don't think amazon.com or pets.com stocks are on a lot of people's priority list."
For those retiring in 2000/2001, those stocks were on their priority list, and they have no room to wait for a "rebound."
I know I am diverting from subject but
Objectively, the time to buy is not when prices drop 10-15% from insane levels, but when NO ONE else wants to buy, and owners are screaming to get out.
Let's see how 2007 looks.
100% declines?? wouldn't that be 000,000.00 USD, yen, euro, etc.
nah, don't think we're going to see that either ;)
If a house goes up 100% in 5 years it takes only a 50% drop at the higher price to get back to initial starting price.
So $250k to $500k 100% gain but 50% takes back down to $250K.
Many of us are saying 35% falls.
so 500K to $325k correction.
Seems reasonable giving the l-t homeowner a reasonable profit WITHOUT RIPPING OFF NEW HOMEOWNERS
babababababa
BOYCOTT BIDDING!
NO BIDS NO MAAS STARVE!
Bob
CNS-
I actually looked at a house (on a beautiful block by the way). It was inherited from parents about 20+ years ago. Very well built, but absolutely nothing updated. I checked records (I have access to that stuff at work.) and no outstanding financing.
Guess what he wanted...$600K and comparables were in the 400s and it needed at least $150K in work...
He was looking to cash out for his retirement.
I think there are plenty of people who bought and did not go crazy with 2nd mortgages or HELOs/HELOCs. Those are the ones that can take a big drop and still make plenty of money.
As for foreclosures, yes, it can be riskier, but it's no riskier than buying any house with out a good inspection. Plenty of those buyers were out there the last few years. Some realtors will work with you on finding these properties and I've helped renovate a number of foreclosures and you usually don't end up with that much more work than you normally would on an older home.
JM
Richard, I have a lot of friends on the sidelines like me, all professional couples. We have all decided to at least wait it out until the fall, to see where things go. That doesn't necessarily mean any of us will buy then. If we start seeing prices come down enough over the summer, there's a good chance we'll all wait it out a bit more. So the time spent on the sidelines can't necessarily be measured by % drops - I'm going more on psychology and if I feel like by the fall there's a panicky environment, higher (and growing) inventory, I will remain on the sidelines for a bit longer.
A 15% drop, however, would be decent for me - my husband and I hate to move, so we're looking to be in our place for at least 10 years, if indeed we don't find our "forever" house right away (we're still hopeful!). Of course, i understand sometimes life changes things, but that's the plan we have now.
Shailesh -
Can you help us find something similar for property taxes?
Richard, no way will the fencesitters be able to grab all the extra inventory - that's why inventory, more so than interest rates, is my main concern. Besides, I may not even buy in NJ, and some of my fencesitting friends are looking in NY, so I think the fencesitters are spread out over the tri-state area, which may make us a non-entity after all.
grim:
I know the First Amendment and all, but if you continue to allow off-color comments relating race, ethnicity etc. I ain't going to be hanging here.
Booooyaaaaaaa as they say.
chicago
I'm not trying to be a smart-ass but if we don't see 40% declines, rather 10-20% would that still be considered a collapse?
where do you draw the line between slowdown/correction and collapse/bubble burst?
"where do you draw the line between slowdown / correction and collapse / bubble burst?"
Probably where houses start selling below their inherent value (not what some Greater Fool would pay, but following a long term value trend).
Shailesh, you have an unusual way of looking at the world.
There is no class warfare, and people from lower income areas are not held down by anyone but themselves.
I put myself through college, thanks to federal loans, grants, and scholarships, and the key: hard work.
People unwilling to work hard, are not entitled to anything in my view.
America is the land of opportunity, for those willing to work hard to achieve success. It's not the land of entitlement and handout, though some would like to make it that way.
JM,
Sorry for the delayed response.
I believe you about the house that you saw. One soft issue that you have to think about is leverage in negotiations. The homeowner asking for $600K probably did not have any pressures to sell. He must have thought he could name his price. Bad assumption and poor tactics. Even in a seller's market, the seller must respect the buyer (and vice versa of course).
When I referred to buying foreclosures, I meant people who are so bent on "getting a deal", that they take cash/cashier's check to a Sheriff's auction and bid on the houses there. A novice will never know the risks involved in this. Buying pre-foreclosures from realtors is okay but the "deal" isn't as great, buying pre-foreclosures from banks takes a little more knowledge and a little more risk.
CNS
"buying pre-foreclosures from banks takes a little more knowledge and a little more risk."
Ever see that show "Flip This House"?
Great show, they buy houses on the courthouse steps, and have 50 people fix them up in 10 days, and do it over again every 10 days.
Great show.
Here's the website/TV schedule:
http://www.aetv.com/flip_this_house/
Sometimes the lose money, but they target houses, and have access to all sorts of data, and even have an in-house realtor to perform research and before, and sales after.
The owner is LOADED.
Good night.
To all those starving realtors and desperate sellers you'll need a good sleep. Maybe a few cocktails will help the misery.
Boycott BIDDING!
NO Bids NO MAAS
Cheers
Bob
Median sales price still increased over 5% in the Northeast - that's not so bad, so why is everyone on here so happy?
Anon 1:34:
"a young couple wanting to have kids, or a growing family wanting to upgrade will buy eventually. "
I hear a lot of this kind of statement - as if there are lots of buyers just refusing to hand over their cash. The OK Corral of housing - the great stand off. Truth is - most people are just priced out. The average hardworking professional makes between 40 - 70k a year. For a young couple, especially one with young kids, a house is just out of the question.
There is no game here. They won't buy "eventually". They will buy when they can afford it - when the prices drop.
I'm with Chicagofinance.
Enough with the racism.
Unrealtor - your comments are also offensive. There are lots of people working full time for peanuts, $250 a week for a full 40 hours, maybe they can bring in $24 thousand a year working two jobs.
Poor does not necessarily equate with lazy.
"Unrealtor - your comments are also offensive."
LOL, Shailesh claims people in lower income towns are 'held down by the man' and I responded with facts (my own experience in this case) that prove he is wrong.
And I never said or implied "poor equals lazy" but to anyone who has ever been in Newark it will be obvious that there are reams of lazy people who do not pick up garbage on their own lawns, clean up the street, remove painted graffiti from the walls, etc, etc.
There's "stereotyping" and then there's generality based on fact -- I'm not stereotyping.
I don't know what you call people who leave garbage on their lawn, but I call them lazy.
Wow!
Now buying in Summit will not only give you an exclusive zip code, it will also automatically provide you with complete immunity to all communicable disease!
Now THAT is worth a $200k premium!
regarding the depth of housing price declines, we'll see a Fibonacci retracement on prices before it's over.
Here is my two cents.
To all bloggers who think there will be a correction (read reduction) of prices in the range of 40% or more to bring the housing market to normal sustainable level, don't bet on it. In reality only 20-23% correction spread over two year period is all required. Here is my theory
Assuming a nice 2000 sf colonial in a decent town was worth $360,000 in North Jersey in the not so distant year of 1998. This same house is / was worth $700,000 at the peak of the market (i.e. summer of 2005). Not far fetched scenario.
Assuming we had a normal housing market where real estate appreciates just ahead of inflation and in pace with median wage increases or about 5% a year. In year 2005 same house would be worth $506,556 (using 5% appreciation rate). Add another two years of appreciation; the same house would be worth $558,472 in Year 2007.
Now watch this.
A price reduction of modest 8% from the peak market of 2005 (from the bubble price of $700,000) would make the same house worth $ 636,364 in summer of 2006.
Another more robust reduction of 15 % from the 2006 price (after reality sinks in for in- denial sellers) would make the same house worth $ 563,607 in summer of 2006.
Now compare this $563,607 price to the would have been normal price of $558,472, it is a virtual match.
My opinion the market will stabilize at the end of 2007 based my humble analysis. I am not a financial analyst and not a realtor for that matter, but have an advanced degree in engineering, so (I may say ) know how to add or subtract (no big deal).
Note I posted this message a while ago, I thought it still has some relevance to the discussion on this thread.
Cliffy
Hi Cliffy
A friend of mine owns a 200 year old house for which they initially paid $30. Do you want to now buy that house for .5 mil?
My point is that the 5% year over year increase does not apply to all houses.
Shailesh-
I really believe that the quickest, smartest, fairest way to get affordable housing back is to get rid of the funny money loans.
Can you imagine how cheap homes would be if we had to pay for them with cash?
Now check out the other end of the spectrum: how expensive can they get if all kinds of bizarre loans are available to any Tom, Dick or Harry who wants one?
Somewhere in between there is the happy medium where a person works hard, gets a reasonable loan that they can EXPECT to pay off in 20 years or so.
I am hoping that problems with Fanny Mae lead to a meltdown in the home loan industry.
I'm quite sure that the ONLY reason homes are so expensive is because of the loan standards right now.
Better standards would bring homes into line with incomes quickly, IMO.
Anon @ 9:53,
While you make a lot of good points, I want to clarify a couple of things. Fannie Mae is not responsible for the "funny loans" now in prevalence. By no means am I defending Fannie or its problems with accounting, but without Fannie Mae as an agency, your regular loans (the "unfunny" ones) are going to be LOT LOT LOT more expensive and hard to obtain. Be careful of what you wish for.
CNS
CNS:
There are other financial institutions that have already stepped up to fill the Fannie Mae void. Fannie Mae's importance is overstated, and the public perception has been warped by an effective marketing campaign waged by the company for the last 10 years. It's a hollow claim.
chicago
Chicago,
Yes and no. I agree with you that other financial institutions seem to be able to step up and take the load.
But a lot goes on behind the scenes. For instance - the massive purchases of Fannie securities by FCB's (Foreign Central Banks) over the last year or so that helped Fannie reduce the size of her retained loan portfolio significantly. This "bailout operation" was obviously planned (at least a little) by the Fed. The Fed could not have done this if Fannie wasn't a quasi-government agency.
CNS
Cliffy,
Your calculation brought a good point to consider. However, I do think that 5% is a bit on the high side. I would do with 3%, the average inflation during these years. With 3%, I got $442K, now the story could be different. (I have a MSEE :)
The price of townhouse in my area jumps from $240k (2002) to $400k (2005). If you tell me at 2002, that the price will jump that high, I still will not buy, since I think you are out of your mind. Now I am out of my mind, I still can't believe this house worth that much. (2 beds, 2.5 bath, 1 garage).
For Westchester County, NY observations, see http://westchesterny.blogspot.com
anon @ 10:31 & Cliffy,
Inflation over the past few years has been MUCH more than 3 or 5%. The inflation stats release by the goverment are heavily doctored with substitutions, hedonistic assumptions etc
CNS
unrealtor,
What is your thought on this one?
mls# 2272625
Hi CNS,
Yes, I have the same "feeling" as yours. One gallon of milk went from $1.99 to $3.50. Gas went from $1.20 to $2.95, not to mention $4.00 last year. However, the government CPI does NOT count the jump in house price. They count on "owner's equivalent rent". I just have myself educated via this link: http://www.bls.gov/news.release/cpi.nr0.htm
I would say, historically, house price rises in pace with inflation, or slightly higher. Even if I take 10% inflation YOY between 2002 and 2005, that house would go from $240K to $320K. But not $400K!
Anon @ 11:15,
I agree. It is not just a feeling. The government has changed the way it calculates CPI over the years. to deliberately understate it. If you use the same formula as was used in the 70's or 80's, the true CPI would be calculated to be between 12% to 15%. Look up www.shadowstats.com for a good read on this.
CNS
Cliffy and all,
Being a former engineer, I appreciate your numerical analysis, but I think we are missing a big point. Economic forecasting at some point requires a guess and trying to distill down future home price increase/decrease seems to be a big guess. In business school, I learned that all those fancy economic or financial models required a guess at some point. I thought it was funny that on the one hand, the experts would say, "Past performance does not indicate future performance," but past performance is used as a starting point for a guess for the future in financial models. If the price of a home is the price someone is willing to pay, in some respects it will be dependent on human behavior in addition to supply/demand. Since most of us here feel that housing prices moved way out of line with fundamentals, what would be a reasonable guess for the future? Reversion to the mean? Thus, my bet is "big" change to get that. (In addition, to all the other contributing economic factors, higher interest rates, low real wage growth, falling dollar, higher energy prices, higher inflation...I believe the gov has been understating it) Whether this big change happans over the long or short term, I have no idea and I feel everyone else is "betting" too. I think I convinced my fiancee to wait on buying a house. (As others have said here before, there are a lot of expectations to buy a house as soon as you even announce your engagement!!)
Andy
BTW Grim, as a former road racer, I hope your race went well. You ever go out to T-Town? I went out there this April to sell all my old stuff for cash for savings @ the flea market
BTW Grim,
Thanks again for all your effort with this site. I am addicted to it. (Before I found it and others like it, I could not understand how so many people could "afford" homes!)
And thanks Everyone who comments on the site. I look forward each day to reading everyone's comments, even famous Bob!
Andy
What do you think of MLS# 2614666?
And what is the deal with West NEw York in terms livability(crime, schools etc)
Andy -
Me too.
This is a great forum for all points of view.
If I read a far left opinion here, then a far right opinion, I go out and find "expert" articles, then come up with my own plan.
It has helped me to believe, at least, that herd emotional mentality is the most important factor in predicting where things are going. No matter the analysis and facts, I gotta stay out of the way of the thundering herd.
It reminds me of what an old neighbor told me [he played the horses AND the stock market when I was a little girl]. "Go the other way."
"My approach is not to ask for Govt to give money, but to ensure that correct policies are set."
This comment is subjective by definition, and further, many "policies" result in the government giving money away.
Don't use New Jersey as a yardstick to measure policy throughout the United States.
New Jersey is a closed system that is run with an outdated structure, has moved beyond its origins, and has become this bastardized and bloated albatross. Hopefully, Corzine can find a way to blow it up and start over. If he has nay political courage and cares about his legacy, he will push for demolition and rebirth.
"I thought it was funny that on the one hand, the experts would say, "Past performance does not indicate future performance," but past performance is used as a starting point for a guess for the future in financial models."
Andy: Don't compare apples and oranges. The quote is from marketing departments that have to be vetted by compliance and the prevention of litigation. Also, many investors' idea of past performance is looking at year-2005 returns to make 1Q06 decisions. Obviously, as you learned, past performance IS an indicator, it is just necessary to look at long-term trends, data, and other relevant empirical evidence and analysis, and not some mutual fund company's IRA advertisement.
chicago
shailesh
Appreciate your posts. America is corrupt not at the level of most countries, but nevertheless sold to the highest bidder with the most influence.
Politicians are bought by industry lobbyist. The RE lobby group is NO good.
Young people and homebuyers are being RIPPEDOFF today by a manipulative self-serving group of bandits!
BOYCOTT HOUSES & BIDDING!
Think for yourself.
Protect yourself and your financial well being.
Booooyaaaaaaa
Bob
Chicago,
Point taken. I was generalizing and trying to be "funny." As you said when developing a pro forma model you look at past performance, adjust for long-term trends, etc. At some point you are still guessing; it is an educated and well-reasoned estimate.
Shailesh,
Your points are interesting, but I would be very hestiant to look to the government for help. Government isn't the solution, but part of the problem
Chicago,
Point taken. I was generalizing and trying to be "funny." As you said when developing a pro forma model you look at past performance, adjust for long-term trends, etc. At some point you are still guessing; it is an educated and well-reasoned estimate.
Shailesh,
Your points are interesting, but I would be very hestiant to look to the government for help. Government isn't the solution, but part of the problem
Forgot to add,
Andy
BTW I bet a conference call with some of the regulars on this blog would be quite interesting....
Andy
still no sign of grim...must be caught up with that mess with the race.
for me... the bottom-line is... my wife and i are going to most likely leave NJ because of it's out of control spending... taxes are high now... and they will continue to increase for years to come at a very rapid pace.
how different is it in PA? is the difference in cost of living almost negligible or significant?
Andy and Chicago -
If we're going for the looonnnggg-term analysis, in theory, keep money in cash! Build a house around our families with the piles of cash, I guess.
I have graphs from an actuarial course I took years ago to "prove" it.
The problem with some analysis is that it keeps us from living our very "short-term" lives.
Shailesh Gala said...
Is there a model for RE to forecast? Can one potentially see impact of past Interest Rates increase/decrease and then apply it in future?
11:18 AM
Shailesh:
Did you review the Monclair Biking thread? Metro and Andy posted a great link to a talk by a Anderson economist. If you have an hour this weekend, make a bowl of popcorn, skip the movies, and enjoy a real show on your computer.
Check the next thread!
my response to Metro
=====================
Metro:
As you stated, this video is well worth the time to view. Clear language, and an energetic and engaging speaker.
I used my lunch time to watch it. For anyone else, you can skip the first 12 minutes until you really get into the meat and potatoes. Although, if you have the time, watch the whole thing. Given the drivers of the CA economy, I wonder how similar NJ is, likely A LOT! Just replace Wall Street with Entertainment and Tech.
Briefly:
Minute 21 - when do prices go down?
Minute 23 - US Real Housing Prices
Minute 24 - asset returns
26 - why are homes more valuable?
30 - what is a bubble?
33 - what is a real estate bubble?
36 - how does a real estate bubble happen?
37 - how does it end?
39 - common housing myths
43 - don't think trends, think fundamentals
45 - when is it going to end?
50 - housing markets are not the same as stock markets
52 - advice
1:01 PM
Anon 11:25
I'm in PA. What do you want to know about Pennsyltucky?
Bucks County is a great alternative for Hunterdon, Middlesex, Mercer.
Northampton Cty. - same for NNJ counties.
Depending on where you work, you've got apply a factor for giving up an extra 10 to 37 hours per week on the commute.
What you pay in taxes in some places in NJ can pay for 30% of your mtg. in PA or half rent.
Also check this....
chicagofinance said...
Yesterday's Bloomberg on the Economy - first half
http://tinyurl.com/lmm2j
4:02 PM
if you live in pa do you still have to commute to nj? are the good jobs mostly in the philly area? how's the cost of living in that area?
Anon 11:44
SE PA is kind of a NY suburb like Morris Cty - but it's a lot farther, so homes are cheaper. Instead of paying 650k for a nice place in a great neighborhood, you pay $375k and taxes are maybe $5500 versus $8000.
Check the local real estate sites like kellerwilliams.com or c21davis.com. Then knock off $30K from the prices listed-that's about the current discount for median homes. Keller lists street addresses- so you can cut&paste address in zillow.com for comparable sales through January.
If you have kids, avoid Bristol Twp. school district. Since real estate costs are the biggest difference in cost of living, that will help you understand.
You asked about SE PA and commuting. You're going to commute, usually, no matter what. It's just a matter of how (train/car), and how far. You could live in Philly, and walk to work, I suppose, if you can get a job there.
There ARE good jobs in Bucks and throughout Philadelphia County, but generally, they don't pay as well as NJ /Route 1 corridor (with some exceptions). The competition for the best jobs is fierce. For professionals with average job history, it might take a year of looking, plus a recruiter, but eventually the job is there.
chicago
RE:"50 - housing markets are not the same as stock markets"
Shiller's futures mkt will change that. Might take a couple of years, but it will change.
Shailesh,
Two points. One - a family making $150K should be able to afford a house well north of $450K. Two - the price of a house (or a stock or anything else for that matter) is always determined by what a buyer is willing to pay for it. If you extrapolate this logic (i.e if government helps people buy houses e.g. subsidizing loans, regulations etc) - it only serves to increase the prices of houses even more because the pool of buyers is higher now.
BTW, I think both the Fed & the state government should stay out of trying to influence house prices. Market dynamics will take care of that.
CNS
thanks anon 12:29!
"unrealtor, What is your thought on this one? mls# 2272625"
I'm not thrilled with the whole Wyoming area of Millburn (everything East of South Mountain Reservation), and that house in particular is only a few feet from Maplewood.
It looks like a decent house, but I think $550K will probably go further in Parsippany, for example.
Regardless, your $550K will almost certainly go farther everywhere in 2007.
Personally, I'm not making any offers, or attending a single open house, until at least 2007. No sense in looking at over-priced houses.
FYI, here's the sales trend for zip 07041 (Millburn)
https://melissadata.com/lists/ezlists/ezHomeowners.aspx?zip=07041
(triple-click to select long links)
Just change the zip to see another town.
More the supply, better the chance of prices becoming more realistic.
check out inventory numbers. the market will take care of itself. all you need to do is refuse to pay current prices.
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?
I'm a capicorn
Anon 2:33 :
Bob! we missed you!
off the topic. Does commercial realestate follow the same trend as the housing market? How volatile is it? Does it follow the interest rates or inflation?
GOOD WEEKEND TO ALL. THAT INCLUDES STARVING DEPRESSED REALTORS AND DESPERATE GREEDY SELLERS TOO!
BOYCOTT BIDDING!
BOOOOOYAAAAAAAA
Bob
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?
Bob's looking for a roomie...until prices come down.
Booooyaaaaaa
On this blog, under the "Home Prices Do Fall" article, the chart says median home values in NJ dropped from ~350k in 1990 to ~250k in 1995.
These numbers seem quite fishy. Where is this info coming from?
NJAR stats don't seem to go back this far and NAHB stats show the median for the Northeast to be steady around 144-147k during this time. It amazes me that NJ would register a 33% drop and not have it show up anywhere else in the Northeast.
Does anyone remember the average NJ home being 350k in 1990?
There's no way the median NJ home in circa 1989-1990 was 350k.
I’m new in the area.
I love this site. I want to
rent in a gay community .
Any ideas?
How about Woodbridge?
I hear a former Governor is looking for a new friend.
"off the topic. Does commercial realestate follow the same trend as the housing market? How volatile is it? Does it follow the interest rates or inflation?"
Completely different market. It's more geared toward business fundamentals and strategy.
"Anonymous said...
Im new in the area.
I love this site.I want to
rent in a gay community .
Any ideas?"
Where do you work?
What kind and length of commute is acceptable?
What kind of amenities are important to you?
FYI - I don't think there are gay communities per se in NJ. I would think "gay-friendly" would be a better objective.
finance
could you post a pic.
chicago,
I have been reading this blog and I value your comments. Does it mean that it is save to invest in
401K real estate accounts? I think it is safer than the stock market for people going to retire within the next five years. If the stock market goes down it seems to me that these real estate accounts are managed by a group of people that knows what they are doing and will be quite safe. What is your take on this?
"Anonymous said...
finance
could you post a pic.
5:18 PM"
I said last week that my sister-in-law said to my wife that I look like Taylor Hicks. :(
While this thread seems to have descended into an abyss, in an earlier thread there were some concrete examples of buy vs rent, which use the same house:
http://nnjbubble.blogspot.com/2006/05/toxic-or-more-toxic.html
(triple-click to select long link)
The reealtor has a few houses listed on both the "for rent" page and the "for sale" page, so it makes for some interesting comparisons.
Have a good long weekend all, and stay away from Open Houses! :-)
Anonymous said...
chicago,
Does it mean that it is save to invest in 401K real estate accounts? I think it is safer than the stock market for people going to retire within the next five years. If the stock market goes down it seems to me that these real estate accounts are managed by a group of people that knows what they are doing and will be quite safe. What is your take on this?
5:21 PM
I am generally uncomfortable offering advice without knowing the context. That said, a five year time horizon is not very long at all, and I would be concerned with focusing on real estate only.
Make sure the portfolio is well diversified. Also, if you already own a home, that is PLENTY of real estate to own. Again, given your short-timeframe to retirement, I would certainly not own any more residential real estate beyond your home, and devote no more than 5% of other investable assets to this class.
Spring of 2006 is not a good time to get paid for taking risks.
As a rule of thumb, assume EVERYTHING is risky in some form or another, and even smart and seasoned investment managers can make a decision that loses money in a five-year time period.
What did Andy say? Past performance is no indicator of future results? ;)
Chicago, that's the catch , we do not own a home. We moved here from the south eight years ago and was sticker shock. It is too late to buy a home now at this market. The money set aside to buy a house was put in a bank will only give less than five percent at the current market. Thus we feel it is save to move the retirement fund from a safe part of the portfolio that is making around 5 % per year to commercial real estate account that seems to be doing better and seems not too risky considering that it is quite diversified, they bought all over the country and outside of the country. 2002 the worst year 3.4%, 2003 7.5% ,2004 12.5% ,2005 14.02%.
Average annual total return 5 year 8.68 10 year 8.86.
Thanks for your advice.
Anon @6:05,
I'm a little confused by your message. Are you asking about investing the saved money for a downpayment or are you reallocating your 401k? If it is the money you have saved for a house, then I totally agree with Chicago and that money should be in something with either very little risk of principal loss such as a money market or even better something riskless like short term CDs or gov bonds like t-bills.
If you are talking about reallocating your 401k, again I agree with Chicago that commercial restate funds (I assume you mean REITS and similiar stuff) should be a very small % of your portfolio, esp if you are close to retirement. If you are within 5 years of retirement, you should be thinking of preserving $$ with less risky stuff. REITs and commercial real estate can be all over the place with returns. As Chicago said don't expect past returns in the future.
And please, do not assume that the people managing the funds are "smart" and know what they are doing and hope for the best. That's your money that they are investing and they can just as well as anyone can make or lose money. The WSJ used to have a competition matching a portfolio picked entirely by random (I think throwing darts at the paper on a wall) against the professional money managers and the random portfolio often beat the others.
Andy
What are these guys smoking?
Bought townhouse in 03/2006 for 283K now selling it for 429k!!!
buying price
selling price
Please tell me something is wrong.
I forgot to add, be careful looking at past years performance. You said the worst year was 2002, but was that only of the last 5 years? what about before that? How did the market do over the last five years? Maybe all REITs did well over the same time period (a rising tide lifts all boats....)
Andy
unrealtor,
Thanks a lot for your comment about Millburn area.
Downtown Jersey city is very gay especially in the historic areas, Van Vorst Park area is called the west, west village. While the neighborhood is very mixed, people of all walks of life, "gay americans" (McGreevey term) are a large part of the neighborhood.
Anon @ 4:16,
The numbers are "real", adjusted for inflation. You can't compare the price of two assets over time without taking into account the change in value of the exchange medium that asset is priced in.
A dollar from 1989 is nothing like a dollar in 2006.
grim
fiance
post a pic.
come on you can do it
Post a Comment
<< Home