Jersey Housing Market Getting Chilly
From the Star Ledger:
High prices, rising rates cool down home sales
Jersey drops 8.1% in 2006 first quarter
"Warm summer days may be just around the corner, but the housing market is sure getting chilly."
"In its quarterly survey, the National Association of Realtors said yesterday housing sales in many markets have slipped from the blistering pace sellers have come to enjoy these past few years. The numbers show that, nationally, 6.9 million existing single-family homes were sold in the first quarter of this year -- 2.1 percent less than the same period of 2005."
"In New Jersey, existing home sales, which include single-family homes and condos, showed a more dramatic 8.1 percent drop from January through March of this year compared with this same time period in 2005. Home sales in the Northeast declined 2.9 percent."
"Meanwhile, home price appreciation in New Jersey presented an equally mixed bag in the first quarter."
"For example, home prices in the Newark metropolitan region -- a six-county span that includes Essex, Union, Morris, Hunterdon and Sussex in New Jersey and Pike County, Pa. -- rose 6.5 percent in the first quarter of 2006 to $405,300. However that figure has also been on a downward trajectory since hitting a high of $446,800 in the third quarter of 2005."
"The same pattern holds in a four-county span that includes Middlesex, Monmouth, Ocean and Somerset counties. In the first quarter of 2006, the median home price rose 9 percent to $374,100. Back in April 2005, that number stood at $394,100 and has been falling ever since."
High prices, rising rates cool down home sales
Jersey drops 8.1% in 2006 first quarter
"Warm summer days may be just around the corner, but the housing market is sure getting chilly."
"In its quarterly survey, the National Association of Realtors said yesterday housing sales in many markets have slipped from the blistering pace sellers have come to enjoy these past few years. The numbers show that, nationally, 6.9 million existing single-family homes were sold in the first quarter of this year -- 2.1 percent less than the same period of 2005."
"In New Jersey, existing home sales, which include single-family homes and condos, showed a more dramatic 8.1 percent drop from January through March of this year compared with this same time period in 2005. Home sales in the Northeast declined 2.9 percent."
"Meanwhile, home price appreciation in New Jersey presented an equally mixed bag in the first quarter."
"For example, home prices in the Newark metropolitan region -- a six-county span that includes Essex, Union, Morris, Hunterdon and Sussex in New Jersey and Pike County, Pa. -- rose 6.5 percent in the first quarter of 2006 to $405,300. However that figure has also been on a downward trajectory since hitting a high of $446,800 in the third quarter of 2005."
"The same pattern holds in a four-county span that includes Middlesex, Monmouth, Ocean and Somerset counties. In the first quarter of 2006, the median home price rose 9 percent to $374,100. Back in April 2005, that number stood at $394,100 and has been falling ever since."
93 Comments:
Bombshell at Fannie?
Fannie Mae to Suspend Issuing Securities
Fannie Mae said Monday that it would temporarily suspend issuing certain medium-term debt securities until May 23, the day its chief regulator will release a massive special examination into the mortgage company's accounting and management problems.
Fannie Mae has acknowledged that it must correct $10.8 billion in accounting errors, and the Office of Federal Housing Enterprise Oversight's report is expected to be sharply critical of the company.
Fannie Mae said Friday that it would suspend issuing noncallable benchmark notes in May — the first time it's elected not to issue since December 2004 — but did not indicate why. Monday's announcement indicates that the company will suspend issuing even more types of debt, though the company will still issue short-term debt for liquidity purposes.
Housing Bust!
House prices going downzoooo!
Bababababababa BOYCOTT HOUSES!
BONZAI!!!!!!
Bob
notbuyingyet,
Great article.Suggest everyone read this article.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BF8B9E8DB%2D7503%2D4719%2D8378%2D0E6A5729C3C2%7D&siteid=mktw
Lean times are a coming bubbleheads.
Bababababababa BOYCOTT HOUSES!
Boooooooyaaaaaa
Bob
GSML LISTINGS UP UP UP!
3/6/2006 24,111
4/12/06 26,582
5/12/05 28,820
5/16/05 29,105
Everyday Inventory going up.
Papapapapapapa PANIC!
Bonzai
Bob
2264067 dropped to 699K,
what is a fair price for it? Is 550K is feasible lowball?
notbuying yet,
i couldn't open that link... what does it say?
So when does the forclosure market open up? And how can I get a forclosed house? Surely there will be a market for forclosed homes within the year. Has someone setup a website with forclosed listings?
;-)
-frustrated!
Great information everyone. I am wondering if the market in Jersey City (near Journal Square) is going down. There is a house for 440k. (w/ an annual Income of $37200) I put in a lowball offer 370k and the other agent did not budge and came back with 425k. I put another offer at 385k and he still did not budge. Do you guys think the market would still be hot there? Why would they not budge?
Sorry for the confusion.
Richard, that's the annual income of the house from rent.
anon at 9:55,
Let me know what county in NJ you are interested in and I can give you more specific information. The foreclosures in NJ are handled by the county sheriff. There are ads listing all foreclosure properties on certain days of the week in local newspapers (e.g Morris listings on Friday in Daily Record, Bergen listings on Wed in Bergen Record etc).
minutesfromnyc is right. It may be better to target REO properties from banks (a little less risky). INVESTING IN FORECLOSURES IS VERY RISKY. YOU CAN LOSE A LOT OF MONEY IF YOU DON'T KNOW WHAT YOU ARE DOING.
CNS
"There is a house for 440k. (w/ an annual Income of $37200) I put in a lowball offer 370k and the other agent did not budge and came back with 425k. I put another offer at 385k and he still did not budge."
Unless you have 50% to put down you have no business bidding on a overpriced house like this one.
This is the major problem today. people who cannot afford a bloated overpriced house are buying them with suicide loans. Why Not? Just gamble and live way beyonds your means for a few years until the blowup.A tsunami of mtg defaults are coming.
Stop living in your "bursting bubble" fantasy. It's people like you who missed out in the last five years while everyone around you made a killing.
A 450K HOUSE IS NOT DROPPING TO 250K JUST FOR YOU!!
Bob
It's banzai not bonzai.
SU SU SU SU STUPID ID ID ID ID IDIOT!!!
Jersey City definitely is soft. I'd just keep looking and making bids that work for you and make sure you can be patient.
Even if your low-ball is rejected...check back in if you see it still listed somewhere or if you really like the place...
Don't get discouraged by delusional sellers...
JM
Bubbleheads getting frustrated with falling prices.
Lean times are a coming.
Bababababa Boycott Houses!
No buyers + No sales = starving realtors + panicky sellers
Booooooyaaaaaaa
Bob
Keep the Chatter up Bubbleheads
Prices are lower now then at the 2005 summer peak.
Accept it bubbleheads and start dropping prices before you ride it all the way down.
Same for you starving realtors start pushing these delusional sellers to drop prices substantially. Or miss out on selling your house at these nosebleed levels.
Boooooooyaaaaaaaa
Bob
If you have access to WSJ.com or have a copy of today's paper, there is a great chart on page D2.
It gives you a clean look at YOY, QOQ data. You can draw your own conclusions.
As an example QOQ in Atlantic City is down 7%. However, most of the data shows that nationally, the downdraft has not yet start in earnest.
chicago
No buyers + No sales = starving realtors + panicky sellers
So this is the formula that led you to the conclusion that the market will come back for you??
LOL!!!
Note: QOQ Newark-Union NJ PA
413.9 to 405.3 ===> -2%
I will say that it is small enough not to be statistically significant.
It could just be mix.
If you want access, let me know.
Bob
This is really getting pathetic...stop embarassing yourself.
Say less..it'd be better for you
I missed out on the boom. I decided to wait..My realtor told me prices will only go higher, "might as well buy now." I didn't believe her. Thought she was just greedy. People at work all bought houses, I kept telling them they're crazy. They're buying at market peak. Prices will come crashing down and they'll be forced into foreclosure. They just laughed at me - "Boooyaaaa!! I'm making money while you're moping and whining! Booooyaaaa!!!"
I've been hearing it from them for 5 years. I can't stand it - "Boooyaaaa!! I told you you should have bought that house 5 years ago! I told you!! Booooyaaaa!!"
I'm still waiting. I'm trying to tell everybody the sky is falling - maybe people will spread the word, maybe people will panic. Maybe prices will come down again.
Maybe one day I can buy house.
Bob
Hoboken story from kannekt:
"As someone trying to sell a condo in Hoboken, I can tell you that the market has changed. I've had to lower my price three times which amounts to about a 10% reduction.
Last August the identical unit below mine sold for $609K. Mine is now listed for about $550K. I have one offer of $530K, and he won't budge.
By the way it was built in the past 3 years, and is not one of those crappy walk up units.
I think there is currently somewhat of a standoff between most buyers and sellers regarding price that is not yet reflected in statistics.
My prediction is that come September/October, after the summer buying season is over, seller's will have no choice but to lower their prices. Seller's outnumber buyers now and the ratio will just get worse. I've always been a bull on Hoboken real estate, but this has me concerned.
The only hope at this point is if mortgage rates go back down. That would again stimulate the market.
Why would a mortgage rate go down? That's one thing that ain't going to happen
http://realestate.msn.com/buying/Articlebankrate.aspx?cp-documentid=421723
Hey Bubbleheads tell us what we are missing again.
"Nearly one in 10 households with a mortgage had zero or negative equity in their homes as of September 2005, according to First American Real Estate Solutions, an arm of title-insurance company First American Corp. The study of 26 million homes in 36 states and the District of Columbia found that one in 20 home borrowers was upside-down by 10% or more.
The situation is even grimmer for recent borrowers. Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more.
Interest rates on about a quarter of all mortgage loans outstanding, or $2 trillion, are scheduled to reset this year and next, according to Economy.com. Homeowners who opted for extremely low teaser rates in recent years could see their payments eventually double, said Christopher Cagan, First American's director of research and analytics.
Defaults and foreclosures are already on the rise, thanks in part to higher interest rates, cooling real-estate markets and overextended borrowers. Nationally, 117,259 properties entered some stage of foreclosure in February, according to foreclosure-monitoring firm RealtyTrac, a figure that's up 68% from February 2005."
Bababababa BOYCOTT HOUSES!
Housing Bust!
Boooooooyaaaaaa
Bob
Try spinning this bubbleheads.
"Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more."
Go ahead and buy fool.
Boooooooyaaaaaaa
Bob
Let me repeat this again greedy manipulators.
"Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more."
So it's a great time to buy?
NOT
BOYCOTT HOUSES
Booooooyaaaaaaa
Bob
Rates from 1991-1995 went down from about 9% to 6% and House prices fell substantially along with condos which crashed in price.
Wow prices fell in the face of dropping interest rates. Another crushed RE Myth!
Lean times are a coming bubbleheads.
BOOOOOOOYAAAAAAAA
Bob
hey check out mls 2234382. 3 yrs young low tax
Let me repeat this again greedy manipulators.
"Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more."
what this means is 71% have positive equity. 84.8% ARE NOT underwater and WILL NOT panic and sell their houses for a price you can afford. maybe you can call the 15.2% one by one and sell if they're willing to sell you their house for a bargain.
good luck bob.
wow... realtors are posting on this blog... LOL!
anon 1:16PM
Please. Did you ever drink 1% fat Milk or 2%? It sounds pretty impressive until you realize that Whole Milk is 4%.
I think the same logic works here. You would hope the number is very low, but once it moves into double digits, you really have to be shocked.
Don't knock Madison-- it is a very desirable place to live. I don't see it as a wanna-be Summit at all. In fact, I live in Summit, and I prefer Madison's downtown area which has better stores, bars, restaurants and a great jazz club.
That said, 2264067 is an obscenely overpriced POS, even for Madison.
What would happen when you have negative equity? Would you have to pay the bank more money to get to a positive equity?
Nothing would happen if you can pay your monthly mortgage and do not need to sell.
But, if you need to sell when you are "under water", you'd better be prepared to come to the closing table with a check to pay the difference between what you sell for and what you owe. NOT a good position to be in....
"Stop living in your "bursting bubble" fantasy. It's people like you who missed out in the last five years while everyone around you made a killing."
Go PriceLine stock! Don't miss out!
http://finance.yahoo.com/q/bc?s=PCLN&t=my
Stop the bursting bubble fantasies, this stock is really worth $1,000, even though it's at $26!
Fundamentals don't matter, you'll make a killing!
"There is a house for 440k. (w/ an annual Income of $37200) I put in a lowball offer 370k and the other agent did not budge and came back with 425k. I put another offer at 385k and he still did not budge."
Barring some emergency, it makes no sense to make offers in 2006.
Wait until 2007.
Just take yourself out of the market, don't go to open houses, don't talk to realtors. Keep saving, and see how things look in 2007.
There's no downside to waiting, prices are going down, down, down.
"that's the annual income of the house from rent."
- Less mortgage
- Less taxes
- Less HOA fees
- Less maintenance costs
- Less months vacant
- Less renovation costs when tenant leaves
Hope you've calculated these costs as well.
"Nearly one in 10 households with a mortgage had zero or negative equity in their homes as of September 2005, according to First American Real Estate Solutions, an arm of title-insurance company First American Corp. The study of 26 million homes in 36 states and the District of Columbia found that one in 20 home borrowers was upside-down by 10% or more.
The situation is even grimmer for recent borrowers. Of those who bought or refinanced homes in 2005, 29% had zero or negative equity, and 15.2% were underwater by 10% or more."
Sounds like a good time to buy! Come on in, the underwater is fine!
"hey check out mls 2234382. 3 yrs young low tax"
Withdrawn after 118 days on the market, and a price drop.
No Greater Fools signing up.
unrealtor,
Only possible downside to waiting is the rising interest rate. If rate goes up by 1% and house prices come down by 10%, won't the monthly payment still be the same?
smk
...prices come down by 10%, won't the monthly payment still be the same?
40,000 less downpayment on a 400k house? I think I prefer that over a 1% interest rate increase.
"What would happen when you have negative equity?"
It means your house is worth less than what you paid.
Say you buy at $500K, and then a year later you lose your job, can't make the mortgage payments, and have to sell.
But the market has cooled, your house is now worth $400K. You now have to eat a $100K loss.
"Would you have to pay the bank more money to get to a positive equity?"
The only way to get back to "positive equity" is for a Greater Fool to come along and pay you more than $500K.
(Also factor in transaction/closing costs, which are about $10K to $15K, so you would need to sell at $515K to BREAK EVEN, when the market is saying your house is worth only $400K.)
Essentially, you're screwed.
Here's a real example of negative equity:
MLS 2261656
http://www.realtor.com/Prop/1057139140
The owner paid $1.3M last June, and put it back on the market a few months later.
After having the sit house on the market for months, they're now hoping for a $300K loss, selling at $1M.
They're screwed, too.
Real estate doesn't always go up, and I can't even imagine the hurt from taking a $300K loss. That would wipe out most for a decade at least.
Stop the bursting bubble fantasies, this stock is really worth $1,000, even though it's at $26!
Fundamentals don't matter, you'll make a killing!
do you really think people who made a killing with the tech boom all got burned in the end? maybe you did..but not everyone.
"Only possible downside to waiting is the rising interest rate. If rate goes up by 1% and house prices come down by 10%, won't the monthly payment still be the same?"
Say you wait a year, you'll have:
* Larger downpayment (which earned interest for a year)
* Lower purchase price
* Smaller loan size
After the deal closes, you can't renegotiate a lower purchase price, but you can refinance your loan to a lower interest rate.
Better to pay less for the house, or if prices stay so far out of line with fundamentals, not to buy at all and keep earning interest on your money.
Higher interest rates also mean nice interest deposits into your accounts each month.
Anonymous said...
unrealtor,
Only possible downside to waiting is the rising interest rate. If rate goes up by 1% and house prices come down by 10%, won't the monthly payment still be the same?
smk
2:39 PM
This comment is fair, but I am uncomfortable with the way it is framed. Depending on the context, it could also be a specious argument.
You cannot look at a monthly payments in a vacuum. You have to have a holistic view.
Realtors and car salesman use these tactics to generate immediate sales.
Anonymous said...
do you really think people who made a killing with the tech boom all got burned in the end? maybe you did..but not everyone.
2:58 PM
Anon:
On overwhelming group of people were significantly burned. Not just investors, but employees who had holes blown through their W-2's and ISOs.
"do you really think people who made a killing with the tech boom all got burned in the end?"
The lemmings listening to those instructing them to buy at market peak surely all got burned.
That's why realtor scum telling people to buy now are so repugnant.
Go PriceLine stock! Don't miss out!
Stop the bursting bubble fantasies, this stock is really worth $1,000, even though it's at $26!
ok your point is? the bubble will burst and half a mil houses will be what...100,000?
go ahead and wait...LOL!! let me know when it happens...I'll even buy for you.
chicagofinance,
The way I'm looking at monthly payments is what I can afford and still live comfortably. In other words, how much of my budget goes towards housing.
Wasn't trying to make a specious argument... just genuinely concerned about what to do and at what point it will be best to buy a house in NJ.
smk
Unrealtor. I would love to believe that MLS 2261656 was bought for 1.3M and is listed < 1M but according to http://tax1.co.monmouth.nj.us
&
zillow.com last sale was
10/23/1996: $342,000
Where did you see different?
"what this means is 71% have positive equity. 84.8% ARE NOT underwater and WILL NOT panic and sell their houses for a price you can afford. maybe you can call the 15.2% one by one and sell if they're willing to sell you their house for a bargain.
good luck bob."
What this means is you are an @$$%^$# who does not give a damn about anyone but your own greedy little situation. Telling people to buy and stretch their financials using risky loans is just unethical.Many are going to being crushed in next year as these loans and taxes readjust upwards.
Babababababa BOYCOTT HOUSES!
Boooooooooyaaaaaaaa
Bob
Wiseup...think for yourself and do not trust anyone but your own COMMON SENSE!
If wages are basically flat to barely up last 5 years for the avg NJ'ersean then houses prices going up 100% roughly DOES NOT COMPUTE.
Right.
Think!
a train wreck is ready to happen with risky loans and soaring interest rates.
If it sounds to good to be true it is!
BOYCOTT HOUSES!
BOOOOOOOOOYAAAAAAAA
Bob
Bob
What I don't give a damn about is people like you who are trying to cause a panic for your own little situation.
Nobody here's telling you to buy. It's not suprising you're starting to hear voices...
I saw this really crapply movie called "Two for the money" with Al Pacino and Mathew McCaughwhatever(sp?) they were urging gamblers to bet more money, so they can make killing on commission...
Eventhough Mathew eventually had his conscious kick in, but nobody put a gun to the gambler's head to bet everything he had.... just like people that are buying houses with very risky loans....
Again, I don't blame the realtors, I just blame the lowered interest rate that fed this storm...
Market will adjust eventually, I don't expect to fall 25%... I am hoping maybe -15% in my area...
Interesting blog article about price corrections in CA and how far current prices are off from the historical mean...most startling point is potential 56% correction to return to mean!
Seems possible here with houses that were going for 225K 5 years ago now going for 475K.
Here's the link...
http://tinyurl.com/lgce7
I own a house already and do not rely on using my house as an ATM machine. Been lucky to buy when they were rationally priced over 13 years ago.
The sleeze hanging out in the Real Estate industry will be all gone after this next housing BUST!
BUSTS cleanse the system.
BOYCOTT HOUSES!
Booooooyaaaaa
Bob
I wrote this on kannekt. I liked it enough to dump it on you guys as well. It's Hoboken focused.
==========
I disagree. I think a lot of the buyers were actually investors or else people who thought they needed to buy immediately or be locked out of owning forever. They were probably at the stage in their lives where they should have continued to rent.
The investors have evaporated, and are sending their money to the stock market now. A lot of others who are owner-occupied are simply transient and are just looking to sell.
The buyers aren't there, because they don't exist. At least not in numbers enough to offset the amount of sellers that are trying to entice them to step-up and take a plunge.
Don't misunderstand, I know there are a few people on the sidelines waiting for price drops, but you overestimate how many are out there.
It will be similar to the Wall Street bonus money. After a drop in prices, there will be a quick surge in interest that will give the appearance of some strength, but finite in size and quick to dissipate. It will burn off like a morning fog, just like the Wall Street money did.
If you can get out in the black, DO IT!
Interest rates are going to be higher in the coming months regardless of what the Fed does. The economic environment is still strong enough that people who want to buy and borrow significant sums can do so.
Later this year or next, you will find people that will be locked out of the market not because they refuse to pay the prices asked, but because banks won't lend them the money. If that happens you will be dead in the water!
Thanks anon 3:46 for the great article the bubbleheads will deny exists.
http://tinyurl.com/lgce7
BOOOOOOOOOYAAAAAAAAA
Bob
hey guys look...Bob's starting to open up. LOL!
Regarding the guy taking a $300K bath...
I don't have the original MLS from the June sale @ $1.3M. Your link points to Monmouth county, and the house is in Essex county.
Domania.com (which is not running half the time) has the June sale listed -- $1,300,000.
Also, you can look up MLS 2204767 from October, when he first put it on the market a few months after buying, and was asking $1.3M, the same he paid in June.
Even if it's in attorney review now, I'm pretty sure they didn't get multiple offers, since it sat for over a month at $1M.
An interested buyer would probably offer $950K.
That tech bubble argument doesn't hold up...
Even if I had to dump a $700,000 for 400, it would take much longer compared to stocks. Besides, why would I sell it if I had to write out a check for 2-300,000? I'd rather have it foreclosed.
Houses in the bay area will not come tumbling down to 300k+.
Anonymous said...
That tech bubble argument doesn't hold up...
Even if I had to dump a $700,000 for 400, it would take much longer compared to stocks. Besides, why would I sell it if I had to write out a check for 2-300,000? I'd rather have it foreclosed.
Houses in the bay area will not come tumbling down to 300k+.
4:11 PM
Um - wha? "I'd rather have it foreclosed." For those at home keeping score, this would be a prelude to bankruptcy. In previous years, something that you would want to avoid, but could manage your way through - albeit with exteme discomfort.
Now, thanks to the new bankruptcy laws, when you are upside down, you have a good shot at being forever underwater - [e.g., garnishee your paycheck].
No way out! Easy street is closed. Thank you Congress.
ChicagoFinance
Amen brother! AMEN!!
Ahh, was wondering when an owner/realtor/flipper would try the "I don't have to take that price argument"...Well like any market, it only matters what transactions are taking place.
And, you are right, if you can make your payments, you don't have to settle for any price. You can stay in your house. So, you wouldn't be counted in the marketplace.
Just remember, many people bought their homes prior to the last six and would be up from their initial investment even if the market does drop dramatically. Also, there will be a number (who knows how many) of "investor" looking to get out. Also, what about all the condo's, spec McMansions currently being finished, and foreclosures on people who really didn't understand ARM's/IO's.
These will be the homes included in the marketplace, not yours. It also means your appraised value will drop and you'll have no equity for a HELO or HELOC.
Oh, and don't you think the bank will try to come after you for some of the money you on the foreclosure?
I'd love to send your banker/mortgage broker this post...can you give me their email?
Unrealtor thanks. I see many listings in Chatham, Summit dropping but do always check the sales price. It is definitely sad to see someone take such a bath but it has to happen and I like seeing evidence of real drops in value not just listing price.
I used the monmouth site is that it lets you search other counties tax records. This is a method documented on this blog in the tools section. I have not tried domania.
BTW MLS 2263245 - 162 Hillside Avenue Chatham just dropped 30K to 830K though it's still rediculous. It was bought last december for 595 K 12/1/05. The guy painted (poorly) inside and did a bad rennovation on the kitchen. I expect he will not get his rediculous asking price
“Home prices in the Newark metropolitan region, a six-county span that includes Essex, Union, Morris, Hunterdon and Sussex in New Jersey and Pike County, Pa., rose 6.5 percent in the first quarter of 2006 to $405,300. However that figure has also been on a downward trajectory since hitting a high of $446,800 in the third quarter of 2005.”
Prices going down bubbleheads.
BoYCOTT HOUSES
Booooooyaaaaaa
Bob
Summer 2005 peak.
In japan Housing Bust the First 9 months after the peak trended down very slowly than BANG the floor fell out the next 18 months.
The floor is creaking and ready to coooooollapse.
Lean times are a coming bubleheads
BOOOOOOOOOYAAAAAAA
Bob
I need some support here, kinda like an intervention. I am in the market to buy a house, and I desperately want to go look at some, but I know they are overpriced. I keep holding off to see if prices will come down a bit over the next 6 months. Bob - I am boycotting along with you, but the temptation to go is killing me!
My wife and I took a look at a house in Whippany. Great bargain - 4 br 2.5 ba .6 acre. Found out later, .6 was irregular and .2 was only usable for a dog run.
I could go on and on about the beautiful brick wall in the kitchen (with missing bricks) or the lovely baths caked with soap scum and mildew, or the shag rugs that smelled like urine, but I won't.
So what was the price?? 699K.
I asked the realtor how he arrived at this number and he stated by last year's comps.
I said that was interesting but inventory is up and sales are down.
He responded with, "True, but this is not reflected in the prices."
I said, "Maybe not yet (in Whippany at least) but they will!"
I wanted to lowball but my wife wouldn't allow me to bid 150K.
In my opinion, by the end of Aug-Sep we can get to hear horror stories of home owners who got tricked.
We might even have a "congressional hearing" by then.
I agree that home prices will drop. But what about those of us that are in a situation, such as another child on the way, and need a bigger house?
I am living in a 2 br house. A 2nd child is on the way.
If I were to purchase a 5 br 2 ba and stay in the house for 7-10 yrs, would you agree that now is the time? Or, buy a 3 br 2 ba home that will get me by the next 3 yrs then sell?
I understand that I will lose money through realty transfer taxes and market downturn,etc etc but my expectation is that this will be less because I'm not buying my final house.
Thoughts anyone?
Off-topic:
Yeah this housing thing is bad, but my sister-in-law just phoned my wife to tell her that I look like Taylor from American Idol. I am in a world of hurt now.
:(
chicago - Don't feel bad, Taylor is a hottie :)
"I've found Domania to be pretty inaccurate at times."
I have yet to come across a single error there, and have looked up hundreds of houses.
Sometimes there's a discrepancy between Domania and the MLS "sale price" but that just means the realtor typed in the wrong "sale price."
BTW, I'm not guessing at the $1.3 million sale price, but people wanted an online source for the June sales price, so I've tried to oblige
I know for a fact it closed last June for $1.3M, as well as the whole story behind the current screwed owner.
He's an out of state buyer, got suckered by local realtors into buying for $1.3M, and is now relying on them once again to stop the bleeding at $300,000.
Poor bastard.
But that's all irrelevant, the market has spoken. And the market has decided that house is worth less than $1M.
"MLS 2263245 - 162 Hillside Avenue Chatham just dropped 30K to 830K though it's still rediculous."
That's crazy for a tiny corner lot, with no garage!
Built in 1908, can you say "money pit"?
"I need some support here, kinda like an intervention. I am in the market to buy a house, and I desperately want to go look at some, but I know they are overpriced."
Take yourself out of the market.
Once you cross that threshold, and make the decision that "We'll buy next year" a weight will be lifted from your shoulders.
Stop talking to realtors. Tell them you'll be buying next year. Don't go to open houses, let the realtors sit bored, and the sellers wonder why their $800K bungalow hasn't sold in months.
LOL, Taylor Hicks:
http://idolonfox.com/contestants/taylor_hicks
Anon 8:09 PM -
I'm in a similar boat. One kid, hoping to have another soon. Our approach is to "passively shop" - we go look at houses a little beyond our current price range and plan to strike on one of a few we like when the owners start to lower prices. The key is to not let yourself "fall in love" with one property - if you stay flexible, you can get something good (if not perfect).
We won't even mind overpaying a little, since we plan to stay long-term which will hopefully insulate us from a near-decade down cycle.
One nice predictable thing about the US market - stocks, RE, whatever - is that people move in herds, so when the masses realize no one is buying, *no one* will be buying, which means more selection and better negotiating power for those with the balls to be contrarian.
Again, sorry for my lack of input today.
Away at a client site in Delaware..
jb
Nothing would happen if you can pay your monthly mortgage and do not need to sell.
http://money.cnn.com/2006/05/16/new
s/economy/housing_impact/index.htm
>>That means that if the National Association of Homes Builders is correct and there are 150,000 fewer new home sales this year compared to the 2006 record, that's 375,000 fewer construction jobs, or the equivalent of about three companies the size of General Motors.
Thanks for the encouragement Unrealtor - I'm waiting on the sidelines for awhile to buy and boycotting the open houses, but it isn't easy. I have the $ to buy in my 550k range now, but would like to leave some in the bank.
Plus, I do not want to help the "seller's side" of the market by jumping in now, while prices are being forced down.
anon 7:52 PM
Some people were asking whether they should wait now that interest rates are rising, here are some quick calculations:
$625,000 house
20% down payment: $125,000
total mortgage: $500,000
30 year mortage rate 6.5%
Total payments: $1,137,722
Total interest: $637,722
$625k-10% price reduction= $562.5k
total mortgage-20% dn.pymt:$450k
30 year mortgage rate 7.5%
Total payments: $1,132,722
Total interest: $682,722
$625k-20% price reduction= $500k
total mortgage -20% dn.pymt: $400k
30 yr mortgage rate 7.5%
Total payments: $1,006,867
Total interest: $606,067
I think this shows it does pay to buy now even if the interest rate is better now if you see strong indicators prices are dropping...
Last poster: you are thinking this DOES pay to buy now? Maybe you mean no.
If we assume scenario 1 is now, and scenario 3 is one or even two years from now (I agree with your interest assumption) then we are happier waiting, no?
Our thrifty buyer can invest the $100K not downpaid now, plus the taxes not paid for the 1-2 year(s), compounded over the life of the loan, at minimum in tax free bonds. Or simply use the extra money down in 1-2 years as conditions may change.
Buy now vs buy later scenario:
Buy Now
$625,000 House
$125,000 Down Payment (20%)
---------------------------
$500,000 Loan (30 Year @ 6.5%)
Interest Paid: $637,722
Total Paid: $1,137,722
Monthly Mtg Payment: $3,160
Extra Cash on Hand: $0
Buy Next Year
$500,000 House ($625K Less 20% Reduction)
$100,000 Down Payment (20%)
----------------------------
$400,000 Loan (30 Year @ 7.5%)
Interest Paid: $606,868
Total Paid: $1,006,868
Monthly Mtg Payment: $2,796
Extra Cash on Hand: $25,000
Buying later means...
* Monthly payment is $364 lower.
* Buyer pays $130,000 less.
* More cash available after purchase.
Don't be a Greater Fool, buy in 2007 or later.
Anon 10:09 has an interesting arguement. He (or she) advocates the loss of $85K-125K in equity as a good decision.
"Honey..where did our equity go?"
"Did you check behind the couch cushions?"
anon7:22
actually looking more at cost of ownership...yes, you could buy today, but it's pretty clear prices are going down...so, would you rather pay the same amount for a house that will be worth less or wait a few more months or a year and owe less to the bank?
I'm assuming you are a realtor or RE investor to come back with that argument? Because everyone knows Real Estate is a great investment and prices always go up (sarcasm on).
sorry all, my post at 10:09 meant to say "...not buy now"
apologies for the confusion...i'm definitely advocating wait and see how prices are headed and or negotiate low balls as best you can if you must buy now (even though you can probably rent the equivalent).
Wow, in my post above, the loss of $125,000 in equity was omitted!
Buying later also means...
* No $125,000 loss in equity/risk of foreclosure.
Blogging is not always a rewarding journey, but I ran across yours on this trip and it was a good break from my own real estate work. Thanks. Keep up the interesting work and visit my site if you have a chance.
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