Tuesday, June 06, 2006

Jersey Unsold Homes Up 71%

Nothing that you didn't already know from reading the blog yesterday. From the Herald/Record:

Supply of unsold homes up 71 percent in a year across N.J.

"Buying a house in New Jersey this spring? You've got a lot more choices than buyers have had in recent years, according to a new report from an appraiser who tracks the housing market."

"The inventory of unsold homes was up 71 percent in April compared with April 2005, according to Jeffrey G. Otteau, an East Brunswick appraiser."

"While buyers used to bid against each other for houses, now sellers are 'in a scramble to gain the interest of buyers,' Otteau wrote in his latest report, which was released Monday. The report echoed his findings for the first quarter."

"Sales contracts in April ran 20 percent below the April 2005 level, and there is now a seven-month supply of houses for sale in the state, up from a three-month supply in the spring of '05."

"The most expensive houses sit on the market the longest. A house costing more than $1 million is likely to be on the market for an average of 12 months in Bergen County, 24 months in Passaic County, 11 months in Morris County and 40 months -- more than three years -- in Hudson, Otteau estimated. Those estimates are based on the supply of houses for sale in that price range."

"There is about a six-month supply of houses under $600,000 for sale in North Jersey, Otteau said."

55 Comments:

Blogger grim said...

Glimpse into our future?

High-end condos' low opening bids signal glut

Here's a sure sign that too many high-end condominiums are going up in metropolitan Phoenix: Units at two pricey new developments are being auctioned off, and the minimum bids are half of what the homes originally cost.

Four condos in the Optima Biltmore Tower on Phoenix's posh corner of 24th Street and Camelback Road are going on the block this month. The high-rise homes cost $949,000 last year. The opening bid for one of the condos now is $475,000.

In Tempe, three condos at the Vale development at 1111 W. University Blvd. will go to the highest bidder this month as well. The units originally cost $429,000 to $699,000. The "suggested opening bid" starts at $240,000.

6/06/2006 07:38:00 AM  
Blogger grim said...

Stagflation....

Fed's Poole: slowing economy won't reduce inflation

If inflation expectations are rising, a slowing economy may not reduce inflation pressures, said St. Louis Federal Reserve President William Poole, quoted in the Wall Street Journal.

"If inflation turns out to exceed our expectations, our target range, I do not believe we can count on a slowing economy to bring inflation down, by itself, quickly," Poole, said in an interview with the Wall Street Journal published on Tuesday.

6/06/2006 07:47:00 AM  
Anonymous Anonymous said...

OK everyone,
I think we've all finally won our argument that the housing market is heading for a major slide.
Things are sliding so fast though that we should be starting to have some concerns over what it will do to our economy. Over 20% of the U.S. GDP is tied to housing. If housing goes, so does the economy.
Houses will be cheaper, but at what price?

6/06/2006 07:48:00 AM  
Anonymous Anonymous said...

Cheaper houses are great if you still have a job

6/06/2006 07:58:00 AM  
Anonymous Anonymous said...

I agree that we should be quite worried about the economy, especially with a lot of recent economic growth coming from the housing sector. Plus, you think consumer spending will continue, with pullbacks in housing, housing-related credit, credit in general?

Andy

6/06/2006 08:12:00 AM  
Blogger grim said...

KL,

Frankly, Ms. Lynn's swiss-cheese analysis isn't thought out enough to get front-page billing. It's a canned response not backed by data, and completely void of any real analysis or insight.

grim

6/06/2006 08:16:00 AM  
Anonymous Anonymous said...

I think housing and interest rates are just the tipping point for a big recession. I have been thinking for quite awhile that there will be a slowdown somewhere in 2006 or 2007 and now finally it seems that more people are talking along the same lines.

Andy

6/06/2006 08:16:00 AM  
Blogger grim said...

I'd consider a recession a "soft-landing" if the alternative was a multi-year depression.

grim

6/06/2006 08:20:00 AM  
Anonymous Anonymous said...

People were going out and getting overly optimistic appraisals and taking out equity loans to pay for all kinds of stuff. Using your house as an ATM was a common term.
That's what's been driving consumer spending over the last few years. Comsumer spending will slow down as values go down. That, my friend, leads to a recession

6/06/2006 08:32:00 AM  
Anonymous Anonymous said...

Grim,

Well you know that old joke about the difference which goes something like, a recesion is when your neighbor loses his job, a depression is when you lose yours.

I definately think a recession is very likely, but a multi-year depression, I'm not sure, but I'm worried...I think it is possible, based upon everything I have read and the confluence of many different economic datapoints, but where I'm not sure is the actual due diligence of some of these datapoints on the internet and the risk assessment. I think the risk is there, but I can't comment on the level.

Andy

6/06/2006 08:38:00 AM  
Anonymous Anonymous said...

we could see a failing of banks in many states as well. Alot of banks made very risky mortgages in this market. I am an attorney with several clients who are already stating that if there houses crash and are suddenly worth half, they will just "give the house back to the bank." These people have no savings, can't and won't cover a mortgage on a house worth significantly less than they paid for it. They will go bankrupt if need be.

Where do you think that will leave banks who have to now sell these houses and lose big $?

6/06/2006 08:54:00 AM  
Blogger grim said...

Resolution Trust Corp., Act II.

grim

6/06/2006 08:59:00 AM  
Blogger Smart Grid blogger said...

Read: CNNMONEY.COM:

Affluent Americans sour on real estate
In survey, one-third of wealthy respondents expect real estate decline during the next year.
By Christian Zappone, CNNMoney.com staff writer
June 6, 2006: 8:11 AM EDT

6/06/2006 09:17:00 AM  
Blogger grim said...

David,

Glad to hear you did well. I remember our conversations about it mid-year last year. While all of the precious metals did well since that point, I think palladium was exceptional.

grim

6/06/2006 09:20:00 AM  
Blogger Smart Grid blogger said...

Read: USATODAY.COM:

'Housing boom is over,' analyst says as Pulte is latest home builder to cut outlook
Posted 6/2/2006 5:26 PM ET


DETROIT (AP) — Pulte (PHM) on Friday became the latest major home builder to lower its full-year earnings outlook as the housing market continues to cool. Its shares tumbled more than 5% to a 52-week low.
Pulte cut its full-year outlook after both Hovnanian Enterprises (HOV) and Toll Brothers (TOL) lowered their forecasts within the past month.

All three companies cited large dips in new orders and jumps in cancellation rates in the second quarter on top of rising interest rates and larger inventories.

Pulte, which operates in 27 states, reported preliminary new orders dropped about 29% in April and May from last year to 6,447 units from 9,128 units.

Toll Brothers, a luxury home builder operating in 21 states, had a 29% second-quarter drop in signed contracts and Hovnanian, which builds mostly in the Northeast, California and the Washington D.C. area, had about a 19% drop in net contracts.

"Buyer demand through April and May has been below expectations," Richard Dugas Jr., Pulte's president and chief executive, said in a statement.

Home prices should start to dip as companies offer incentives and discounts and investors who bought up many homes during the boom sell their assets, said Rick Murray, an analyst from Raymond James & Associates.

"I think it's safe to say the housing boom is over," Murray said.

Pulte, the largest builder of active-adult communities for people 55 and older, projects earnings of 85 cents to 95 cents a share for the current second quarter, and $4.70 to $5 a share for the full year. In April, the company had forecast 2006 earnings between $6 and $6.25 a share.

Cancellation rates for the two months stood at 27.4%, up from 14.8% in the year-ago period.

Based on the slower sales pace, Pulte forecast unit settlements for the year will range from 44,000 to 46,000 homes. New orders fell in every part of the country except the central region, which had 1,169 units, up from 1,492 last year.

The National Association of Home Builders expects home sales this year to fall to 2004 levels, which were surpassed only by those in 2005.

This year "might still end up being the second best year ever," said Michael Carliner, an economist with the association. Much of the effect from fewer orders shouldn't show up in this year's earnings, he said.

On the New York Stock Exchange, Pulte shares fell $1.70, or 5.2%, to close at $31.33, Hovnanian Enterprises shares fell 91 cents, or 2.7%, to close at $32.36, and Toll Brothers shares rose 4 cents to close at $28.83.

6/06/2006 09:20:00 AM  
Anonymous Anonymous said...

NO ONE WANTS TO PAY an upside-down mortgage or negative home equity !!!!

6/06/2006 09:22:00 AM  
Blogger grim said...

That is the trillion dollar question.

Dow broke through 11k..

grim

6/06/2006 10:10:00 AM  
Blogger grim said...

While we're on the topic of empires, here is an interesting read:

"Empire of Debt : The Rise of an Epic Financial Crisis "
Bonner & Wiggin

grim

6/06/2006 10:16:00 AM  
Anonymous Anonymous said...

Some say the next bubble is already here in the commoditites market, esp gold......

Andy

6/06/2006 10:24:00 AM  
Anonymous Anonymous said...

Yeah, but according to real estate agents (and Michael Bloomberg) this isn't so.

It is still such a rosy economy where everyone has 20% down and able to purchase a $800,000 condo or $650,000 starter home.

If you say you are looking for under $400,000, they think you are either an undesirable person (read: lower class or Minority), or not worthy of their time.

Check out craigslist. Everything (rent or sale) is still high & rising higher.

Even in the dumpy parts of Jersey City, one bed condos are going for over $350,000.

You don't want to live in a house for $500,000. Probably a tear down.

6/06/2006 10:25:00 AM  
Anonymous Anonymous said...

Yeah, but the condo boards only want single yuppies from the suburbs (not from the NYC boros) who make over $200,000 a year and have 20% or 30% to put down.

Their 'ideal' buyer according to the NY Times.

6/06/2006 10:27:00 AM  
Blogger grim said...

Let's keep the discussion clean and on-topic.

grim

6/06/2006 10:29:00 AM  
Blogger grim said...

Actually, I don't care about being off-topic, just keep the comments clean.

grim

6/06/2006 10:32:00 AM  
Anonymous Anonymous said...

ok grim off-topic then -

Addison Wiggin was on bloomberg radio promoting that book last week. I was already at home but couldn't leave my car.
felt like an idiot afterwards hanging on his every word as if he was some kind of prophet.
very interesting interview though. been thinking about getting the book.

6/06/2006 10:37:00 AM  
Blogger grim said...

No, not at all, just a general comment out to everyone.

Whenever race, creed, or color becomes part of a topic here, the discussion tends to deteriorate very quickly.

I somehow feel like I'm burning the Bill of Rights when I delete posts, so I want to avoid doing it if at all possible.

grim

6/06/2006 10:38:00 AM  
Anonymous Anonymous said...

boy this thread has the makings of a new record huh grim?
please refrain from posting useless comments especially the wannabe-commedians so we don't have to skip thru too much.
Bob hasn't even posted yet...

6/06/2006 10:42:00 AM  
Anonymous Anonymous said...

useless comments
perfect example above

6/06/2006 10:45:00 AM  
Anonymous Anonymous said...

minutesfromnyc
here's a comment from you
Yes, because everyone works in NYC and it is such a great place lol


for the 100th time, we get it ok

6/06/2006 10:49:00 AM  
Blogger grim said...

No one has made any kind of improper comments.

Discussing the ethnic composition of an area and how it relates to the local market is perfectly fine. In fact, in many markets I believe the ethnic composition of the area to be a very important factor of those market. To deny that would just be silly.

grim

6/06/2006 10:52:00 AM  
Anonymous Anonymous said...

absolutely agree.
after all, birds of the same feather...

anywhere in the world - asians generally want to live among asians. same with hispanics, russians, you name it.
where's the racism?

6/06/2006 10:57:00 AM  
Anonymous Anonymous said...

From a macro perspective, recessions are good to expel the excesses from the system. I can't think of a better thing than to have the housing industry suffer a recession. I know it's a big part of the overall economy, but I can't see it bringing on a depression. Even if 50% of the construction industry loses their jobs, they'll find work in other places (if they choose). Otherwise, illegal immigrants will just keep pouring over the borders to fill those jobs.

6/06/2006 11:06:00 AM  
Blogger grim said...

I think one of the best examples of tight-knit communities keeping an area in tip-top shape is Passaic Park. The transition is incredible once you make your way into the orthodox community. You wouldn't know you were even in Passaic County, let alone Passaic. The area directly surrounding Third Ward Park is a great example of this..

I've often wondered why this area hasn't seen strong gentrification and renewal, especially when you consider the train located so closely.

grim

6/06/2006 11:06:00 AM  
Anonymous Anonymous said...

pesche, its not that people can't take the truth its that it is not a NEW observation, korean today, irish, italian, german 60 years ago.

Actually the newer immigrant groups bring with them a quicker time to capitalizaiton than ever before.

Its the immigrants that have maintained "good public school districts"

at the end of the day it is a class issue, like someone posted - if you can't afford 500K you are sub-class, but the problem is that a 5K mortgage payment is a 240K salary and more like 300K for cost of living (taxes, etc)

I don't make that - i don't think many that do can afford to spend time drooling on this msg bd.

so stop baiting and everyone else should grow up and realize that its not marxist to understand that you are as worth as the $ you have otherwise its to the lions.

please back to houses and neighborhoods

6/06/2006 11:11:00 AM  
Blogger chicagofinance said...

MARKET TIMERS - grrrrrrrrrrrrr...

pesche22 said...
as of today a good place to be
is in cash.
11:09 AM

grim said...
That is the trillion dollar question.
Dow broke through 11k..
grim
11:10 AM

6/06/2006 11:25:00 AM  
Anonymous Anonymous said...

investerdavid,

I used to live in Demarest and Closter area. It is a beautiful area. I consider it better than Tenafly. The school is also ranked top 10 in jersey like Tenafly.

However property tax is high like the rest of Bergen County.

The only problem is that there is no convenient way to commute to NYC (I work in NYC).

There are also a lot of affluent Asian immigrants moved from Fort Lee and Pal Park area to Demarest and Closter area. I bring it up because it seems to be a concern with some folks regarding having Asian or immigrant neighbors.

I hope this helps.

6/06/2006 11:34:00 AM  
Blogger grim said...

CF,

Spot on, you've always been a voice of reason around here.

grim

6/06/2006 11:42:00 AM  
Blogger grim said...

How about this plan for Hoboken schools?

Hoboken schools chart new paths

Superintendent of Schools Patrick Gagliardi, who is retiring next year, has spearheaded a plan to create a two-tiered educational system, with one geared to students seeking vocational careers and the other catering to students going on to four-year colleges.
...
"We have to raise our expectations here to meet the new emerging community," Gagliardi said. "We cannot subject all the kids to SAT prep, a lot aren't college-bound. They are going to vocational school where they don't need to take the SAT."

Under the terms of the new system, Demarest Middle School will become a junior/senior high school, replacing the current alternative school at the Boys and Girls Club and with the ability to serve 125 students in grades seven through 12.
...
But Beth Rubin, an assistant professor of education at Rutgers Graduate School of Education in New Brunswick, said the system Hoboken wants to create can hurt students on the lower rungs of the educational spectrum.
...
The shuffling of schools is part of a larger effort by the district to attract students from the more affluent community.
...
Hoboken also falls behind the state average on SAT scores and percentages.
...
But under the new arrangement, SAT scores would soar because many of the poor-performing students won't take it.

6/06/2006 11:54:00 AM  
Anonymous Anonymous said...

investerdavid

I have family live in Englewood Cliff. It is a nice area and closer to the city.

The reason tax is relative lower is because Englewood Cliff does not have a High School.

However I think the town has been overrun with McMansions in the last few years.

I think Fort Lee, Englewood Cliff is starting to look like Northern Queens.


minutesfromNYC said...
The school is also ranked top 10 in jersey like Tenafly
It is amazing...the kids are not getting any smarter either!


I agree however school ranking is one of the reasons to value a house. It always has been and it always will.


anon @ 12:34

6/06/2006 11:57:00 AM  
Blogger chicagofinance said...

grim said...
How about this plan for Hoboken schools?

Hoboken schools chart new paths


Grim: There were bigger write-ups in the past week's Hoboken Reporter and other sources. Ultimately, it is half a solution. It serves the current student body well, but it shows no credibility on the "emerging population" front.

You have highly paid school bureaucrats that are under pressure to fix something, but they do not have:

1. any meaningful idea how to fix it

2. the guts to say that the real solution is to hire from outside someone with "credentials"

Anything short of a MEd or PhD from one of the major private LOCAL world class institution [e.g., Columbia], will be looked upon with laughable disgust.

It sounds like snobbery, but in reality, if you are paying Aged- Porterhouse prices, why should you settle for steak and tails at Red Lobster.

6/06/2006 12:27:00 PM  
Anonymous Anonymous said...

For those waiting for the fed to reduce interest rates to save this thing - dont keep holding your breath. Understand that our government is spending like drunken sailors, and it is only going to get worse. A recession from the falling housing market will obviate the ability to raise taxes too much, so the only alternative is to issue debt. Problem is our issuing debt is now very dependent upon foreign investment. There is only so long China is going to buy our debt at current rates, or be able to buy it at all. We will have to search for new buyers, and this will likely entail higher interest rates.

6/06/2006 02:18:00 PM  
Anonymous Anonymous said...

For any of you who think we're being racist:

When my grandparents came from Germany and Poland in the 1920's they decided to live in towns where there were predominately other Germans and Polish. BUT,
they abandoned their native language and learned ENGLISH. They raised their children in ENGLISH and didn't expect every sign and recorded phone message to be in their native languages. The assimilated into their respective towns.

But nowadays, you have the Koren PTO in Paramus (and I'm sure there'e something similar in Pal Park) who precludes you from joining unless your Korean. How is that any sense of community? How is that helping the kids learn that everyone is equal? Why does the Principal or Superintendant allow this? Its the parents as a whole that should be supporting all the kids in the school.

Here's somethng I just found "The CKPO is the Tenakill and Hillside Schools' main interface with the Korean community. As an extension of the PTO, the CKPO helps facilitate the orientation of newly settled Korean parents into the Closter school system and encourages them to participate in school events and causes. The CKPO also helps reduce language barriers that can interfere with effective communications between administrators, teachers and parents.

Nice right!

And here's another thing to think about... my nephew who went to Northern Valley Old Tappan was a pretty good student, but all the Koreans blew him away. If he had gone to Hackensack HS he probably could have been in the top 10 and went to Harvard but being among the superstudents (Asians also attend school on Saturday and I'm sure they go to Kumon) in Old Tappan, he was ranked in only the top 25% of his class.

Like someone else said on this board, your child has a better chance getting into Harvard if you move to Montana.

Karen

6/06/2006 03:26:00 PM  
Anonymous Anonymous said...

Oh, and I recently met a Teaneck mother who was moving her daughter into a Catholic school. She was sick of them not being able to sing Christmas songs anymore.

Karen

6/06/2006 03:29:00 PM  
Blogger chicagofinance said...

Ahh, but being #40 at a magnet school will get you into Cornell ;)

6/06/2006 03:52:00 PM  
Anonymous Anonymous said...

David,
My point is. . . they are being racists for not joining the society that already exists. Why can't they try to assimilate themselves into the society they CHOSE to live in and move into, rather than segregate themselves even more.

And its not singing that's outlawed, she had a problem with not being able to sing Christmas songs at CHRISTMAS time.

Karen

6/06/2006 03:56:00 PM  
Blogger chicagofinance said...

I work with other alumns to contact prospective applicants to Cornell. While I have no insider knowledge [and certainly NO influence] the whole discussion about schools is almost irrelevant. Show me an involved, patient and supportive parent [no helicopter parents], and I will show you a successful student.

Bottom line - who cares - let's all hope our kids grow up to achieve what makes them happy.

6/06/2006 04:00:00 PM  
Blogger chicagofinance said...

InvestorDavid said...
chicagofiance,
But being #40 at a magnet school won't get a child into Princeton or Yale. :)
4:53 PM

Not true. There were people lower ranked than me.

6/06/2006 04:01:00 PM  
Blogger chicagofinance said...

No the kids were more well rounded than me.

Out of a class of 187, 40% of the kids went to Ivies or Stanford.

If you add MIT, Berkeley, UCLA, Rice, Chicago, Michigan, Williams, Swarthmore, you end up at almost 60%.

6/06/2006 04:16:00 PM  
Anonymous Anonymous said...

I guess they don't teach grammar there.

6/06/2006 06:38:00 PM  
Anonymous Anonymous said...

Ha,Ha,

He went their and lives in New Jersey. Never

6/06/2006 07:07:00 PM  
Anonymous Anonymous said...

I want to move to Passaic.
Anyone Have any ideas?

6/06/2006 07:08:00 PM  
Blogger chicagofinance said...

chicagofinance,

Where was this school at?



http://www.hchs.hunter.cuny.edu/

6/06/2006 07:38:00 PM  
Anonymous Anonymous said...

Why would there be a recession if house prices fall? Falling house prices equates to less mortgage which in turn equates to more investments and spending.

We could avert a recession if the sellers agree to reduce their prices quickly.

6/06/2006 08:19:00 PM  
Anonymous Anonymous said...

Don't we sometimes have to talk about race? Seriously, afterall, a mixed neighborhood, is worth less than an all white neighborhood. Its not really a race issue, but just demographics and how housing prices relate to it.

Lets quit being so soft aye??

6/06/2006 09:54:00 PM  
Anonymous Anonymous said...

so which is it? Do immigrants bring prices down in your community or pose as competition for your kids in the schools? Just trying to figure out why race is important to you. getting mixed messages from this board.

6/07/2006 12:09:00 AM  
Anonymous Anonymous said...

Remodeling and Home Improvements. YEAH.. If you are like me it seems like there is never enough time in the day.. You get home late and leave early.. then the weekends thats another story by itself. My wife has found it easier to hire somebody if you we need help with how to build. She fond a great site for how to build at http://build444.com and wanted to share it with you.. Im glad to find help when I need it.. I hope you have great luck remodeling your home...

6/19/2006 03:47:00 AM  

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