State of Housing 2006
For your reading pleasure, from the Joint Center for Housing Studies of Harvard University:
The State of the Nation's Housing 2006
Keep in mind these are major assumptions on which to base predictions. To me, this looks like a typical CYA position. Should job and household growth slow, rental markets stay flat, and price appreciation falter, the slowdown will be anything but moderate..
Some other assumptions that the JCHS makes when giving these predictions are strong in-migration, no major loss of employment, and little overbuilding.
Lastly, consider the source. The study is sponsored by some major players in the real estate industry. Fannie Mae, Freddie Mac, the National Association of Realtors, the National Association of Homebuilders, etc.
Unfortunately, I'm on my way to the airport, I'll be out of the country for the next few days. I wish I could have posted something a bit more in-depth on this, but it's 5:20 and the car will be here shortly.
Caveat Emptor!
grim
The State of the Nation's Housing 2006
The housing boom came under increasing pressure in 2005. With interest rates rising,
builders in many states responded to slower sales and larger inventories by scaling back on production. Meanwhile, the surge in energy costs hit household budgets just as higher interest rates started to crimp the spending of homeowners with adjustable mortgages.
Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.
Keep in mind these are major assumptions on which to base predictions. To me, this looks like a typical CYA position. Should job and household growth slow, rental markets stay flat, and price appreciation falter, the slowdown will be anything but moderate..
Some other assumptions that the JCHS makes when giving these predictions are strong in-migration, no major loss of employment, and little overbuilding.
Lastly, consider the source. The study is sponsored by some major players in the real estate industry. Fannie Mae, Freddie Mac, the National Association of Realtors, the National Association of Homebuilders, etc.
Unfortunately, I'm on my way to the airport, I'll be out of the country for the next few days. I wish I could have posted something a bit more in-depth on this, but it's 5:20 and the car will be here shortly.
Caveat Emptor!
grim
81 Comments:
Please take the time to discuss this piece, I believe it would be a worthwhile exercise.
I'll be checking in from time to time next week, as access permits.
jb
I don't think its bad enough to leave the country! Things are looking better everyday. Maybe by the time you return we'll have hit the 40K listings and the declining market values will finally wise up some of the people selling.
Bill
haven't read it yet, but I disagree with some of its main points defending the "soft landing" scenario
1 basically they point to how most houses are financed which is [purposely?] specious - especially considering the data they use is national
2 they use the [tired] old growing population / immigration argument, which is also not relevant since there is a disconnect between housing stock and housing location and the socio-economic background of the theoretical buyers
surprising because Retsinas is on the ball - if you see the NAR referring to it, that's all you need to know
BTW - grim - nice catch on the sponsors - sick!
Bernanke Tells Bankers Risk Management, Capital Are `Critical'
June 13 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke told bankers that it's ``critical'' to manage risks well and maintain sufficient capital for the good of the financial system and their institutions.
``Both robust risk management and strong capital positions are critical to ensure that individual banking organizations operate in a safe and sound manner that enhances the stability of the financial system,'' Bernanke said yesterday in Washington to executives at a graduate school run by the American Bankers Association.
The comments are consistent with positions taken by his predecessor, Alan Greenspan, and Fed Governor Susan Bies, who is the board's chief member for regulatory issues. Bernanke also said use of financial instruments and activities such as loan trading and credit derivatives can help banks ``be more active in their management of credit risks and other portfolio risks.''
In terms of capital reserves, ``strong capital helps banks absorb unexpected shocks and reduces the moral hazard associated with the federal safety net,'' Bernanke said in the speech. The Fed and other U.S. bank regulators are trying to implement the international Basel II agreement to adjust capital standards.
Bernanke, 52, didn't comment on the outlook for the U.S. economy or interest rates in his speech or the question-and- answer session that followed.
China Currency
In response to a question, Bernanke said China ``would be well served by moving towards a more flexible, market-determined exchange-rate system.''
The yuan has appreciated by only about 1 percent since the country's central bank revalued the currency last July. At that time, China severed a decade-long peg to the dollar and began managing the yuan against a basket of currencies. The comments were similar to others Bernanke has made since becoming Fed chairman Feb. 1 and echo the positions of the White House and the Group of Seven industrialized countries.
``It's in China's interest along with everyone else's, to create greater balance in the world international economy,'' Bernanke said, citing the U.S. current-account deficit and other ``external imbalances'' around the world.
In response to other questions submitted by audience members, Bernanke repeated the Fed's concerns about so-called industrial loan corporations, or banks that are owned by commercial concerns. Wal-Mart Stores Inc., the world's largest retailer, is trying to obtain a state banking charter in Utah as an ILC and recently filed an application for deposit insurance with the Federal Deposit Insurance Corporation.
``There are some issues related to the way the ILC structure is set up,'' Bernanke said.
Mortgages
Bernanke also said that the Fed may issue, ``not too far in the distant future,'' a final version of bank guidance over use of some types of variable-rate home mortgages. In December, the Fed and other government agencies said interest-only and other nontraditional mortgages pose a threat to the financial system and urged the nation's banks to tighten lending standards.
In a separate speech last month, Bernanke said the Basel II rules for the U.S. banking system are still a ``work in progress'' that require input from financial institutions and regulators to make it efficient and practical. He repeated that comment yesterday.
Are the sellers who make reductions the only ones getting their homes sold? How long will it take for this to affect appraisals? When will mortgage companies have to use all the reduced-priced comparables? In the last market downturn, did buyers start to have trouble getting a mortgage because their new homes would not appraise at the purchase price?
Another quote, with a different slant, from the new Harvard study that Grim cited:
"New household projections incorporating higher but more realistic immigrant assumptions suggest household growth will accelerate to 14.6 million over the next ten years from 12.6 million over the last ten. “Strong household growth, combined with record incomes and wealth, will lift housing investments to new highs next decade,” remarks Eric Belsky, executive director of the Joint Center."
Seems to me that this flies in the face of the Grim's contention that we're in for a serious crash.
Yes, I see that the Harvard Center for Housing Studies gets funding from some of the big players in real estate, but I've never seen anyone impugn their integrity and claim that their studies are biased before...so why now?
Google Robert Kiyosaki and Amway:
http://google.com/search?q=Robert+Kiyosaki+Amway
Enjoy the trip Grim!
"Strong household growth, combined with record incomes and wealth, will lift housing investments to new highs next decade"
Northern NJ inventory at 16 months:
Currently, there are 30,764 properties advertised for sale in NJ on our site. For Residential Properties that are Multiple Listed with Garden State, 99% are available to be searched on this site.
http://www.gsmls.com
The NAR wouldn't lie, jump in now "investors"! Real estate is heading for "new highs" even though houses are already at 10X median income.
A tiny cape on 1/8th of an acre costs $700K? No problem, "new highs" are on the way!
I simply think it's important, at least occasionally, to step away from the world of bubble blogs, where you all agree with each other and "booyaa" yourselves into a stupor, and be open to considering other ideas. Don't become so very entrenched and invested in your worldview that you're unable to react and respond to changes in the landscape.
If you're utterly inflexible in your thinking, you could end up as bad off as those folks who believe in the gospel of ever-increasing house prices.
RE: "flexible thinking"
The irrational exuberance was based on a detachment from both reality and facts.
The numbers don't lie -- these crazy home prices are simply unsustainable, as they're too far out of line with incomes. No amount of "flexible thinking" can change that reality.
The academicians can study this to death, but in the real world, the sellers that are in trouble (loss of job, interest rate resets/exotics/ARMs, divorce, relo, etc.) will drive this market. They will drive the price down along with the comps.
Those markets that have a higher proportion of these type of sellers will see larger price drops.
I prefer to stand on the sidelines, watching carefully.... and not become so completely wedded to my position that prices will come down 30, 40, or 50% that I ignore what is actually happening.
I just think you should step away for a moment, and see how utterly rigid your thinking is....you're as bad as the folks who think the sky's the limit on housing prices.
I'm a contrarian at heart, and have never followed the herd. The fact that so many people are now issuing urgent bubble warnings makes me just a little uneasy.
What could easily be described as one of the nicest houses in Short Hills just went on the market:
MLS 2288625
32 Windermere Terrace, 07078
$1,895,000
5 BR, 4 BA
Tudor built in 1929
1.3 acres
1/4 acre pond on property
http://www.realtor.com/Prop/1061516657
Was surprised to see the price, which is about half what I expected, and considering morons are buying 3BR 1960s ranches on 1/3 acre for $1.3M.
Should be interesting to see how the market reacts to this one.
an Ad ARTICLE AT
Asbury Park Press
Sunday May 28, 2006
p.G3 !!!
"Kara Homes advises active adults to purchase homes now" !!!
Why buy homes when you knew that New Jersey home prices is way overpriced according to the latest report and Housing prices is now cooling if not CRASHING !!!!
"I'm a contrarian at heart, and have never followed the herd. The fact that so many people are now issuing urgent bubble warnings makes me just a little uneasy."
Sounds like you've been reading this blog for quite a while, so you know that many people have been issuing bubble warnings for years. Many respected financial journals. Just click on some links to find them, or let me know if you need the links for any of them back to 2002.
It's not a new warning. Why would it make you uneasy NOW?
Maybe you know that flippers lost heart right about March. The flipper herd turned.
What changed? A lot of them took a good look at their heating bills last winter, vs. the rents they were getting. A lot of them saw other flippers' houses sitting on the market for 6 months to a year.
So they started dumping. DUMPING.
Black Thursday. But it just happened a little slower. And a lot of potential bagholders were a little more educated than in 2003-2004, so there weren't so many dummies around to clean up the flipping mess.
Pat
So they started dumping. DUMPING.
Thats awesome, about darn time we saw a friggin correction. I need a home too you know....
-- BM (Not Bob)
Anon 6/13/2006 10:55:02 AM:
While ultimately what you are saying makes complete sense, it needs to be place into context.
The problem with residential real estate is that no matter how massive in scale the overall market is, the underpinnings of the market will always be a cottage industry. Transaction data will always be the compilation of volumes of small individuals making the largest, most intimidating, risky and complex purchase in their lives.
The sales themselves are completely idiosyncratic. The data asymmetry is massive, and further exacerbated by the real estate community which benefits tremendously by obfuscation and obstruction of current "live" information.
With this backdrop, the herd has always driven the market strongly in its strong plodding way. If we were trading stocks, I would appreciate you point more, but being a Real Estate Bear is a process of attrition, and ultimately we will all want to wade in. Our lives are going to dictate more about our eventual decision that a myopic compulsion expressed on an Internet Board.
chicago
Just performed a healthy skim of the document. On the face it is intended to be balanced, but it has certain dubious spins on information that make me question its objectivity:
1 homes consume less energy PER SQUARE FOOT in 1995 versus 2005[intended to build some case that energy prices are less of an issue that they would otherwise be]
2 new records for income and wealth in inflation adjusted terms [however they are comparing 1995 to 2005, when we were still stuggling to move out of the early 1990's recession and 2005 included all the value of appreciated real estate]
3 analysis of rental market - conclusions? echo boomers are going to be entering their 20's and early 30's, so rents will be going up [don't rent, BUY!], [buy property for investing]
4 home equity gain are the best protection against foreclosure because homeowners can sell at a profit [what???!!!] - How about NOT borrowing beyond your means is the best protection against foreclosure!
THE CLINCHER!
5 affordability problems are most acute in housing markets with strict land use regulations
doh!
From Ben Jones Blog.....
Here’s the list of who funded this “report”
Andersen Windows
Armstrong Holdings, Inc.
Beazer Homes USA
Black & Decker
Boral Industries
The Bozzuto Group
Bradco Supply Corporation
Builders FirstSource
Building Materials Holding Corporation
Canfor Corporation
Cendant Corporation
Centex Corporation
CertainTeed Corporation
Champion Enterprises
Countrywide Financial Corporation
Crosswinds Communities
Fannie Mae
Fannie Mae Foundation
Federal Home Loan Bank of Boston
Fortune Brands - Home and Hardware
Freddie Mac
GAF Materials Corporation
Georgia-Pacific Corporation
Hanley Wood, LLC
Hearthstone
Home Depot
HomeStore, Inc
Hovnanian Enterprises
Huttig Building Products
James Hardie Industries NV
Jeld-Wen
Johns Manville Corporation
KB Home
Kimball Hill Homes
Kohler Company
Lafarge North America
Lanoga Corporation
Lennar Corporation
Louisiana-Pacific Corporation
Marvin Windows and Doors
Masco Corporation
Masonite International Corporation
McGraw-Hill Construction
MI Windows and Doors, Inc.
National Gypsum Company
Oldcastle Building Products, Inc.
Owens Corning
Pacific Coast Building Products
Pella Corporation
Pulte Homes
Reed Business Information
Rinker Materials
The Ryland Group
S&B Industrial Materials S.A.
The Sherwin-Williams Company
Stock Building Supply
The Strober Organization
Temple-Inland
UBS Investment Bank
WeyerhaeuserWhirlpool Corporation
Bah hah ha ha ha ha!
Now I get it. Sometimes I'm a little slow on the uptake on these kinds of jokes.
Thanks for the splainin.
Pat
With a list like that, it's fairly clear to see how this report is based on "flexible thinking" alright.
"New highs" in real estate are on the way!
This whole thing doesn't reflect well on Harvard...
CF
A who's who in real estate.
Who do you think they had to pay off to get Harvard to rubber stamp that analysis and assumptions?
Maybe build them a new set of Freshman dorms?
New hardwood floors for all the Deans?
Pat
to RYMINGREALTOR:
Your name came up on the NJShoreBubble Blog, as a realtor with a solid reputation:
http://www.blogger.com/comment.g?blogID=11981241&postID=114807609545597530
you may try posting over at http://nnjbubble.blogspot.com/
There is a realtor, rymingrealtor, who posts there regularly who seems legit and not out to take every penny you have.
Even if you are interested in a territory she doesn't cover, she may be able to refer someone...)
I'm starting to look for places in Monmouth and Ocean, and would like to get your contact info. You can reach me at:
ninefoothoagies(at)hotmail(dotcom)
Thanks in advance,
James
x-underwriter wrote:
"We won't see the actual statistics support what we're writing about here for another few months."
I don't know about that, check out Grim's post from yesterday:
http://nnjbubble.blogspot.com/2006/06/northern-new-jersey-may-residential.html
(triple-click to select long links)
January - Down 15.3% YOY
February - Down 11.6% YOY
March - Down 9.9% YOY
April - Down 23.8% YOY (the "spring bounce"!)
May - Down 15.7% YOY
"“The opinions expressed in The State of the Nation’s Housing: 2006 do not necessarily represent the views of Harvard University, the Policy Advisory Board of the Joint Center for Housing Studies, the Ford Foundation, or the other sponsoring agencies."
That's a joke.
If the opinions expressed in the report don't reflect the opinions of the report authors, or the university from which they operate, whose opinions DO they represent?
Ah..the good old days when I got my MBA and we had to support our documents with facts...
Ah..sitting with Mikey the Mainframe and running multiple regressions all night long until I was sure my analysis was not bogus.
Nobody cares about such things anymore, and it makes me sad.
Sniff, Sniff.
Pat
Interesting article out of FT.com
from some dude in Harvard.
http://news.ft.com/cms/s/15c1eb92-fa79-11da-b7ff-0000779e2340.html
Think that link should work. It was also on page 4 of todays FT newspaper (financial times).
I think this guy who wrote this article is in neverland.
Ironically, this article was on p4, but next to it on p5 was a full one page ad from FreddieMac claiming that a home is the best nest egg and trying to seduce people to buy homes. The ad contains like a cartoon of an egg with a roof over it. FreddieMac should replace that with a guy taking a shotgun to his head because he is now upside down in a home that he will in no way shape or form ever pay off and the house is worth less than he bought it for.
Thats an interesting point now isn't it........
Will the suicide rate go up as the rate of home prices go down?
I apologize if you guys already talked about this article. I got consfued with all the different threads....
Average listing price is down 10% YOY in that Corzen report,
but I didn't buy the entire report, so I only see Somerset.
http://www.corzen.com/press/20060612b.pdf
Pat
>>Who do you think they had to pay off to get Harvard to rubber stamp that analysis and assumptions?>>
I gotta love you guys. Something comes out that you disagree with, and suddenly everyone at Harvard's Joint Center for Housing Studies is on the take. Conspiracy theories next?
Why not analyze the report, lose the know-it-all attitude, and see the report for what it is--another policy wonk's point of view.
No--instead you worship without question those who agree with you...which is dangerous in the extreme.
You're turning your bubble bandwagon, which made valid points to begin with, into an unthinking runaway train.
This blog is now The Gospel According to Grim and His Disciples-- and no thinking man need apply.
excerpt from roberto kiyosaki
Link On Yahoo
How to Profit From a Cooling Real Estate Market
All over the U.S. there are stories of a rise in real estate foreclosures. Many people who took those exotic mortgages -- borrowing 125% of home value or choosing adjustable-rate mortgages -- are struggling to make their payments, and some aren't making it.
Also, a glut of new property supply, especially condominiums, is coming on line. A friend of mine, a very seasoned real estate investor, says in San Diego County, once one of the hottest real estate markets in the country, thousands of new condominiums are getting ready to come to market -- just as the market softens. He estimates that over 12,000 new units are coming on line, and the market, at the best of times, can only absorb about 1,000 condominiums a year. If he's correct, that means 12 years of supply will be ready for market in the next year.
As interest rates rise and the number of eager new buyers begins to diminish, adding supply to an already bad real estate market for sellers may mean a very good market for buyers and for property investors.
Read more on Yahoo link above
-- BM (not bob)
The first page addresses the IO and ARM loans and describes how they were used to stretch to get into their homes. they go on to say how price reduction risk is minimal because of no layoffs and the economy being sound and a lack of overbuilding.
I would agree with the last statement under past circumstances but they talk about how IOs are years away from resetting. My understanding is that these loans typically reset in 2-3 years. BTW they mention that IO's represent 20% of the dollar value of all loans outstanding. If that is not pure pollyanna crap.
Kiyosaki is a quack.
"This blog is now The Gospel According to Grim and His Disciples-- and no thinking man need apply."
As if anyone cares what the NAR, et al, promote (except for the sake of amusement).
First rule of analysis: consider the source. Everything else comes afterwards, and if the source stinks, proceeding past Step 1 is a fool's errand.
"Watch out for the right of way Easement though"
Yes, didn't see that bit. Though at 5 bedrooms, not much need to expand!
The property is really breathtaking to see. It's listed by Burgdorff, so perhaps they're going for the "let's create a bidding war" strategy on pricing.
Can't wait to see how this one unfolds.
Actually Harvard JCHS has been challenged before by Dean Baker in the past:
http://www.cepr.net/publications/Harvard_Housing_Bubble.htm
Harvard has been pretty consistently rosy, despite the market being out of whack:
http://www.jchs.harvard.edu/publications/markets/son2005/index.html
I find their outlook to be a bit too sunny for comfort. It's naive to think their heavy support from the RE industry has no effect.
Only kind of research I trust is independent, and this isn't quite cutting it for me.
>>First rule of analysis: consider the source. >>
Exactly. And what axe do you Bubble Bloggers have to grind?
Why do you want so much to save the rest of us from ourselves?
"This blog is now The Gospel According to Grim and His Disciples-- and no thinking man need apply."
Bob is a thinking man
Anonymous said...
"This blog is now The Gospel According to Grim and His Disciples-- and no thinking man need apply."
Bob is a thinking man
A thinking man with blog tourettes.
BTW I have been reading the paper. It is full of information but it is obviously skewed to show everything in a positive light even the negatives. Like the IOs, Page 17 talks about them as "innovations" Here is the story since 2003 according to the second to last paragraph, 20% IOs, 37% ARM and payment option (neg Am) 10%. My math shows that fully over 2/3 of loans issued were exotics. How is that sustainable, especially with rate increases.
Harvard should change their motto from "Veritas" (truth) to "very sad"
This blog is now The Gospel According to Grim and His Disciples-- and no thinking man need apply.
6/13/2006 01:43:47 PM
dude - give us a slight bit of credit
I know you are just trolling us anyway.
Sincerely,
Graduate of
Hunter College High School 1986
Cornell University 1990
University of Chicago 1997
Formerly employed by:
PriceWaterhouseCoopers
AT&T Treasury
Assisted in originating, pricing and syndicating a $9B Corporate Bond Deal.
Managed the largest non-financial Commerical Paper program across Y2K, which at its peak had $10B in market value of securities outstanding.
Currently assist people in making personal decisions appropriate for their situation regarding, among other things, real estate.
Please go sell something.
Hey, I'm not selling anything, honest. I'm just the idiot who bought his house for $190K in 1975. Last year, it was worth $2 million...this year, less, without a doubt.
Some of you folks urged me to sell it now, before I lose even more money.
Not so sure that's good advice, but I'm at least listening, without the know-it-all attitude you folks seem to have.
I just wonder why you're all so obviously anxious to see real estate prices collapse so completely, that's all.
As I said, I'm a contrarian, and a crankly old one at that.
"Exactly. And what axe do you Bubble Bloggers have to grind?"
Uh, that median home prices are about 10X median income.
"Why do you want so much to save the rest of us from ourselves?"
Hey, if you want to buy now, go right ahead. Why are you reading this blog, it certainly won't help you sleep at night.
If someone over-extends themselves to get into a massively-overpriced house, the Anti-Fools will be around soon enough to drop 40% down.
Anonymous said...
"Hey, I'm not selling anything, honest. I'm just the idiot who bought his house for $190K in 1975. Last year, it was worth $2 million...this year, less, without a doubt. Some of you folks urged me to sell it now, before I lose even more money."
You havent lost money it is jkust worth less.
"Not so sure that's good advice, but I'm at least listening, without the know-it-all attitude you folks seem to have.
I just wonder why you're all so obviously anxious to see real estate prices collapse so completely, that's all."
Dude it just that they have appreciated beyond reason. They only have one direction to go at this point.
"As I said, I'm a contrarian, and a crankly old one at that. "
If you are a contrarian you would be in our camp. WE ARE CONTRARIANS IN CASE YOU HAVE NOT NOTICED.
1975 Buyer,
You're sitting on a $1.8M house near the peak of a massive real estate bubble.
If you're nearing retirement, and could use an extra million in liquid, it might be a good time to sell.
Or, maybe you can trade for 32 Windermere Terrace (above).
:)
It is very contrarian to have a pond, by the way.
House is in NY metro area (Greenwich CT) but not Northern NJ, sorry. Still, one of the commuter suburbs so similar in that way.
You'll cry when I tell you the taxes--$9,000/year. Greenwich govt has always been fiscally responsible, pay-as-you-go, hence the low taxes. Probably going to go up some soon, though, as the newcomers in town are demanding bigger and better everything.
Sorry to hear about the state of things in NNJ. Listings here are up 15% over last year according to the MLS figures. But alot of us crusty old timers have deep pockets, drive our old cars into the ground, and don't believe in making rash decisions.
No need to tell me to go sell perfume at Macy's..hard to believe that just disagreeing could draw so much ire from you young folks.
"You'll cry when I tell you the taxes--$9,000/year."
Yes, the pond probably isn't worth the extra $20,000 each year.
CNN uncritically swallows this Harvard report whole, and further, cites a 'National Association of Realtors' lackey:
http://money.cnn.com/2006/06/13/real_estate/Harvard_study_housing_slow_growth/
(triple-click to select long links)
anon 6/13/2006 03:25:13 PM:
Just so you understand, due to the views that I have, I have been called: jealous; an idiot; a coward; a jackass; spineless; a loser.
Although I can't confirm it, the bulk of the people volleying the insults appear to be: real estate agents; salespeople for publicly traded homebuilders; individuals who purchased real estate as an investment; people who may be in the market soon to sell.
Being a veteran of internet stock boards during 1998-2000 on RagingBull.com, I hope you will understand the hyper-sensitivity that I have regarding people positing views or allegations that are unsupported.
"Anonymous said...
No need to tell me to go sell perfume at Macy's..hard to believe that just disagreeing could draw so much ire from you young folks.
6/13/2006 03:25:13 PM"
G'wich,
We are trolled by RE agents who are contrarian to us. All views are welcome as grim says, but please do not accuse us (at least me) of wanting to see anything like economic collapse.
BTW it would help if you signed your entries so some of us could see the chain of thought instead of thinking that it is a hoard of Anonymous. Just a courtesy is all. I say welcome to you "G'wich Gus".
exunerwriter said
"The next generation of homebuyers doesn't exist. People coming out of college now simply can't afford even the crappiest house in the crappiest neighborhood."
They are already in the hole from college loans (see yesterday's Usatoday)
Hey, thanks for the tip about choosing a name to post with. Your suggestion of G'wich Gus sounds good to me.
No, I'm not in OG, which I understand to be the hot area these days for the kids who want to be on 1/4 acre. I have 2 1/2 acres in the one acre-zone in G'wich. Subdividable, but not by me. Like my privacy, thank you.
House is not much to look at, I'm told, because the ceilings are only 8 feet high. That's high enough for this old man (6'4") but not for the Masters of the Universe Hedge Fund Young Turks buying property in this town now.
My house will be torn down no doubt. Always thought I'd be carried out of this place feet first before that happens but who knows.
So the market in G'wich is still strong, you say? Why are things so different here?
G'wich Gus,
Let's keep these conversations to discussing the housing bubble at large, not you own personal interests
So the market in G'wich is still strong, you say? Why are things so different here?
6/13/2006 04:04:20 PM
You know the answer to that question. As we know, the richest 0.5% of the population [i.e. Greenwich] are benefitting tremendously in this environment.
What you should be tracking is the performance of hedge funds, and hedge fund compensation. If there is a blow-up or mass exodus, your real estate market will be on the cusp of the change.
Hey, Chicago:
PWC Phila Consulting '87-'95
Hi.
Pat
Sorry if my personal postings are not of interest. I'll try to do better.
But the Greenwich "exception" to the bubble, if there is one, is interesting generally, no?
Is it possible that there will be a "flight to quality" in real estate if things get really bad?
I mean, will choice property like waterfront move contrary to the rest of the real estate market?
Isn't the "Greenwich is different" argument the same as the "Summit is different" argument?
If real estate can appreciate in Greenwich, it can certainly decline in Greenwich, otherwise that $20M house on the water would have also cost $20M fifty years ago.
Greenwich does have a very tony image, to be sure.
But there are three public housing projects in town that outsiders don't seem to know exist.
unreal:
You are -of course- correct. I guess the point here is that Greenwich is one of the premier towns in the entire country. A good number of the buyers do not even need to finance their homes, and developers have no power.
I won't speak for people who would know better.
I guess certain parts of Short Hills may equate, but really nowhere in NJ is there a place with equivalent cachet.
Summit is a middle class backwater by comparison.
Just my opinion.
to be clear
residents of Greenwich are not spending in excess of 30% of their annual income on housing
I have an MBA from NYU and two undergraduate degrees. Harvard recruited me for their summer high school program when I qualified for the Indiana state chemistry finals (sent me a polite thanks, but no thanks when they saw my grades).
My father-in-law has been beating me over the head about my opinions on the real estate market for the last two years. Basically, "...real estate never goes down!"
Fortunately, my father has 30+ years in real estate, construction and a PHD in finance. He's not as negative as me, but he does believe there will be a one to two year dip and then a slow rebound. He also thinks a lot of people are in for real pain when the ARMs and IO's readjust and can't believe the lending standards.
JM
Yes, discussing Greenwich is really like talking about the Upper East Side. Yes, you can find an affordable apartment on the Upper East Side if your wallet is big and you look hard enough, but when the pitch comes, Greenwich and the Upper East Side will feel it last. Summit will be affordable long before Greenwich opens its doors to most of us.
And, by the way, the crash will come in NNJ; it's just a question of when and how much.
WM
gwich gus, anon 1:43 etc.
If you feel the "board" did not give you the answer you were looking for (i.e., "don't sell your place") you should try the real estate blogs that NAR supports...they may give you the advice you are looking for.
It is indeed interesting that you came to NNJ housing bubble blog and wish to tell us about your gwich propertiy that you think is not inflated.
Sounds like you already know that you are not going to sell...Good idea if you ask me...why not? After all one thing you should know is that everyone is free to make their own decisions..buy now, buy later, sell now, sell later..sit on the fence, hold the bag...etc...you get the idea.
Good luck whatever you choose to do..hopefully greenwich will not go down...but nobody here really knows for sure...you are your best ally!!
cheers
DK
DK, you said much of what I wanted to tell G'wich.
There is a time and a place to challenge acceptable socio-economic ideas, assumptions and norms.
Should be.
Unfortunately, during the last three years, none of the appropriate venues, including those public institutions that we have vested with the responsibility of regulating, monitoring and correcting the RE and mtg. industries, has taken the bull by the balls.
I'm no crusader, and have no right to preach to anyone.
But if discussing the topic helps one other person avoid signing a suicide mortgage just to get a $500K roof over their heads, then maybe I used my brain for something besides ear glue.
Pat
investordavid:
boring, boring, boring . . . .
I wasn't in the NYC area during the last dowturn, but I was in California in the early 90s.
And the elite towns in Si Valley -- Atherton, Los Altos Hills -- they took their lumps in the last downturn like everyone else.
"I wasn't in the NYC area during the last dowturn, but I was in California in the early 90s.
"And the elite towns in Si Valley -- Atherton, Los Altos Hills -- they took their lumps in the last downturn like everyone else."
I was in Atherton Two years ago at my sister-in-laws in-laws house. Anyway Just two years ago the house sold for almost 5 Milion Just a 2100 sq/ft ranch with a pool on .5 acres. Nice place but really pricey stuff.
Maybe I did not see the SI valley influence but the houses all around the place are packed in and ugly especially north of Atherton.
Seems REinvestor is late to the game, again.
"Summit doesn't come even close to Old Greenwich."
I wasn't comparing the two towns, per se, but the notion that a given town is "immune."
We had a thread awhile back where people thought Summit property values would never go down, because of top-rated schools, and the Midtown direct train line, etc. Problem is, all that was true 4 years ago, when properties cost 100% less.
Greenwich may "be different" but I wouldn't gamble my life, or savings on it.
gsmls - 30,848
I guess more opportunities for our investor friends.
"Problem is, all that was true 4 years ago, when properties cost 100% less."
Wow -- they were free 4 years back :-) ?
unrealtor @ 6/13/2006 08:25:48 PM
you mean the realtor who thinks he is a investor?
"Wow -- they were free 4 years back :-) ?"
Yes, yes, thank you. :)
unreal:
I agree that you are correct about Greenwich.
I guess the point is that if your Greenwich home drops in value from $70M to $55M, the likely reaction is "wow - kinda sucks", as opposed to "my entire life is ruined forever".
But again, you are right.
Interesting back and forth here. Although some of the tools that post anonymously make me glad that the new forum does not allow anonymous posting.
Chicagofinance, I look forward to your views, in particular.
Interesting for this middle class old timer, as you put it, to see Greenwich so discussed.
You're right that nobody wants our "rather ordinary" $1MM houses. What they seem to want is the land underneath them.
The town tax assessor gave a talk on this a couple of months ago when the new assessments came out. Gist was that if your house was built before 1985 it's a teardown.
I would hope that rule doesn't apply to the big old stone places in town though, built before the war. They have a class that just can't be duplicated.
Those posh towns in Westchester, by the way, have a tax rate that is four times higher than G'wich.
No so sure about the huge inventory you speak of. This RE company (no connection to me or mine) has statistics posted going back 5 or so years. Shows a 15% rise in inventory compared with the same month last year:
http://www.liveingreenwich.com/marketdata.htm
I'd like to see the data to back that up. Am I being misled by the broker's site I've been looking at?
Inventory of single-family houses is up less than 15% over last year at this time according to that broker's figures. Fudged, do you think?
Inventory of condos is way up, though, I suspect due to a new condo conversion that is going on in town.
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