North Jersey Market Slows
From the Star Ledger:
Home sales slowing in North Jersey
BY SAM ALI
The "For Sale" sign has been up for three months. You've had a handful of showings and open houses. But your four-bedroom colonial in your quaint middle-class suburban neighborhood is just not selling.
In America's cooling housing market, it's a story many home sellers in New Jersey can relate to these days.
Housing activity is slowing across the state, and the inventory of unsold homes is expanding.
"You have this standoff between buyers and sellers who tend to be as much as three-quarters of a year behind the market," said Jonathan Miller of Miller Samuel, a real estate appraisal firm in New York. "Sellers have been trained over the past five years to stick with their prices and be firm, and yet now you have buyers on the other side saying they want a deal."
As of June, the supply of homes on the 12-county northern New Jersey market is 69 percent higher than it was in June 2005, climbing from 23,584 homes to 39,829, according to Jeffrey Otteau of East Brunswick-based Otteau Appraisal Group, who also authors a series of widely followed quarterly market reports on the New Jersey real es tate market.
Middlesex County saw the largest year-over-year surge in inven tory, with the supply of homes on the market climbing 99 percent, to 4,739 homes, from June 2005 to June 2006.
The number of months it would take to sell the existing inventory of active listings at the present sales pace stands at seven months, up from three months a year ago, Ot teau said.
Historically, a 5 1/2-month supply of unsold inventory has been considered a "stable" market.
In the late 1980s, when the residential real estate market last hit the skids, that number ranged from nine months to 24 months.
...
Otteau also believes "the chorus of voices predicting this collapse and the attention they have received from the media" are playing a big role in bringing the housing market to its current state.
"As always, perception becomes reality," he said.
The market currently has a six- month supply of homes priced below $600,000. For homes priced between $600,000 and $1 million, there is a 10-month supply, and for homes priced above $1 million, there is a nearly 13-month supply.
Home-sales volume also is slowing in the state, declining 18 percent through May from one year ago.
51 Comments:
Housing market slowing but strong
"Despite cooling economy, this year should still be the third-strongest year on record, according to Freddie Mac...
"Though the direction of housing activity is unambiguously heading cooler, we remain confident that the climate is still temperate and that 2006 will finish as the third strongest year ever for the national housing market," Freddie Mac said in its monthly economic outlook.
In the second half of the year, the markets, businesses, and consumers will need to adjust to an economy in transition from above trend growth driven in large part by a housing boom to below trend growth exacerbated by higher energy prices and a cooling housing market," it added."
http://money.cnn.com/2006/07/10/news/economy/housing.market.reut/index.htm
Pat
It's simple, he can't bite the hand that feeds him.
He attempts to be as objective as possible without alienating the industry that keeps him in business.
The Otteau organization is walking a very thin line right now. If you read the statements in the past 6 months, it's clear that Otteau taking the safest position he can, the middle ground.
grim
I wonder if the lucent diaster
will have any effect.
Depends on the extent of the NJ layoffs. The worst case scenario is that Lucatel/Alcacent decides to shutter it's NJ ops (Murray Hill), resulting in thousands of job losses.
I'm actually a bit more concerned about the minimum wake hike hitting NJ harder than expected. The minimum wage was raised to $6.15 last year, and will go to $7.15 on October 1st, 2006. I don't believe the state economy has felt the impact of the first hike yet, let alone a second coming up shortly.
grim
Here is a true story out of Piscataway, NJ:
This FSBO house (MLS # 2271964) was listed around early May at 350k. I know some folks who bid around 315k around mid May. Seller's response was to the effect of "I'm willing to negotiate a few thousand not tens of thousands." Mind you the sellers already bought (and I believe are living in) a new house. Some time passed, bidders came back and asked what the status was...said 320k was as high as they could go...wife seller said maybe, husband seller said he won't go under 330k. Shortly after, the house was lowered to 335k. Anyhow, to make a long story short, looks like they're going to get it for 320k (2 months later).
Still too much for a 2 bedroom house if you ask me...and with interest rates on the rise I think the bidders should have reduced their previous offer...but I do like the fact that the seller got his wake up call. Not willing to negotiate tens of thousands, huh...
Also, according to the above bidders, you can pay $500 to have your FSBO house listed on the MLS and they'll put up a picture of "the agent"...which is really just a random picture. Seems kind of shady. Is this true?
- Cultural Infidel
So of course, what will happen is that the supplies of 600k+ and 1 million+ homes will stabilize or drop, due to owners reducing prices; the under 600k range will bulge, the result of more homes dropping into that category.
Grim,
Thats an excellent point about the minumin wage. I had totally forgot about that one. Then again, with that hike, it only encourages people to hire the mexicans. It will be very interesting indeed.
SAS
Bucks County, PA has very little moving at all over $400k. We don't get as much press as NNJ, so I'll enter the data here for consideration.
Top of the market is completely dead, and has been dropping since August. The data printed in one local paper from the peak (July/August) show that there were 1250 sales published Nov/Dec/Jan, of which only ~180 sold at more than $500k, and only ~10 sold at more than $1M.
This makes me nervous for the economy. The Bucks market has a big percentage of transfer purchases. A downturn for top taxpayers is going to hit the entire economy, based on the percentage of taxes paid by the top vs. everyone else.
After the market finally finishes its correction/collapse, my prediction is that a million dollar house will, once again, be a place that makes you say, "wow, that must be a million dollar house." :)
Prices dropping in Long Island:
Home price declines have come to Long Island. Recent data on home sales in Nassau, Suffolk and Queens show that houses in certain communities are fetching less than they did a year ago. A Newsday analysis found median sales prices in three of the service's zones, Huntington Town; North Hempstead and northern Oyster Bay; and northeastern Hempstead, Bethpage and Farmingdale, declined from May 2005 to May 2006.
http://newsday.com/wireless/ny-bzhome114813340jul11,0,744888.story
I know this is NJ blog, but I was in Queens this morning checking up on my Brownstone in Ridgewood. (Fully paid for and I love that place, not going to sell it, so save your advice for me on that one. I let a church use it to house guests).
I did a drive from Flushing, near Shea to Ridgewood. Alot of For Sale signs, more than I have ever recalled. Also, they are still building 2-3 story condos in some areas. Its really starting to get interesting. I think panic mode is starting to creep into the psychology of the seller and builders still have a false confidence in the housing market.
SAS
SAS:
Grew up on the corner of Parsons and 41st Avenue in Flushing.
I used to play golf at the pitch and putt behind the Tennis Center - the smell of Flushing Bay on a summer day - ahhhhhhhhhh. It puts the Fresh Kills land fill to shame.
chicago
Chi,
Had some killer Schezuan in Flushing last week. There is some great food there.
The slowing market is even clear to me, a first time buyer (now shopping) and new to the area. But what where does this put the area historically speaking? Are the current deals looking like 2004 deals? Or maybe its just flat compared to last year when everyone wants to see growth?
And, oh by the way, what about when an area has reassessments? what is that doing to bring sellers out into the market?
Morris Cty shopper
Word from East Brunswick, Middlesex county.
I have been following some properties one came down from 530K to 480K in last 3 months. Others are dropping 50-75K but taking long time to reduce. Town houses are in ample supply and not reducing asking price by much. Couple of sellers actually increased asking by 10-15K as margin to negotiate.
shytown finance,
yee, I was just in your old hood: Parsons and 41st Avenue.
You been there lately? That area doesn't know what it wants to do with itself. In the sense, alot of lower class moved in, but they have built some pretty nice condos in that area. well, pretty nice for Queens, you know what I mean.
My Brownstone is off of Forest Ave.
Alot of polish around there these days.
SAS
Check out this inventory graph for Virginia, which goes back to 2003:
http://tinyurl.com/o4hhr
One word for sellers: nightmare.
unrealtor...didn't you see the realtor's comments on market conditions for down there?
http://tinyurl.com/kgofe
"no traffic and no offers within 2 weeks translates to "your home is overpriced". Be willing to reduce the price..."
Talk about ruining a seller's day.
Pat
entry level houses in westfield are flying off the shelves still. wall street money, must be nice.
My Brownstone is off of Forest Ave.
Alot of polish around there these days.
SAS
7/11/2006 12:37:51 PM
Greenpoint East? :)
I have a bunch of family buried off of Myrtle Avenue.
Old memory. I had a girlfriend that lived right off Union Tpke and Woodhaven in Glendale. I used to walk her home from the Continental Avenue subway stop, then turn around and walk back, take the IND to Jackson Heights, switch for the 7 train and walk home from Main Street.
Not rain, sleet, or even snow prevented me from completing my appointed rounds. Even at 3AM.
My mom was always furious at me.
Ahhh - what a teenager with a crush is willing to endure
Chi,
Had some killer Schezuan in Flushing last week. There is some great food there.
7/11/2006 12:11:11 P
I say the Joe's Shanghai in Flushing is better than the one off Mott Street.
Probably, but with the family coming into town this weekend, we're gonna take the crew to Chinatown for a meal. It's more of a night out for my niece and nephew, plus we can take them to Serendipity for dessert.
BTW, as you know, the food in Queens can hold its own with any where. Have you been to Manducatis, in LIC? My favorite old-school, red-sauce Italian restaurant.
Jackson Diner in Jackson Heights might be the best Indian food in the City, taboot.
This comment has been removed by a blog administrator.
unrealtor...didn't you see the realtor's comments on market conditions for down there?
http://tinyurl.com/kgofe
Very intereesting realtor comments indeed!
Buyers market; dramatically slowing down (with price reductions and leveling off in rate of increase, and stretching out of days on market). Inventory is WAY UP! .Compared to this time last year: The Average Sold Price for all homes is $542,050 (up 5.20% over last year this time--BUT it's still up!) and homes are on the market much longer (an average of 70 days---which seems an eternity to sellers). Builder incentives to purchasers are increasing dramatically. THIS is a good indicator of movement to buyers market in new homes.(Though prices are still through the roof).Most re-sale homes are also offering buyer/agent incentives.There are currently 4,718 homes, actively for sale in Loudoun right now and only 469 of those are under contract!!! That's over a 7 MONTH SUPPLY! MAKE AN OFFER! Sellers should price realistically and "listen to the market".No traffic and no offers within 2 weeks translates to "your home is overpriced". Be willing to reduce the price and negotiate if you want a quick sale.
Grim,
Thats an excellent point about the minumin wage. I had totally forgot about that one. Then again, with that hike, it only encourages people to hire the mexicans. It will be very interesting indeed.
Help me out here! Who in this state pays someone $6.15-$7.15/hr? If I can't pay between $10-$12/hr, my house does not get cleaned. Who are we kidding folks--no one cares about the extra $1.00.
There are 1.4 TRILLION of ARMs resetting in the next 18 months. This is selling off and this hasnt even happened yet. Bar the doors - this is just the tip of the iceberg.
Anyone familiar with steam heat / cast iron radiators? Many old houses have this type of heating arrangement, is it as much of a headache as it seems? Lots of maintenence? High heating bills?
http://doityourself.com/stry/maintainradiators
"Sellers have been trained over the past five years to stick with their prices and be firm, and yet now you have buyers on the other side saying they want a deal."
Trained? Like dogs to fetch a stick? I guess the realtors and NAR are the trainers. Maybe it's time to learn some new tricks.
All kidding aside, realtors advice and media reports of outlandish appreciation rates have guided seller's expectations for the last 5 years. The new reality is slowly sinking in.
JAY
Thanks Rich, I suppose theoretically the steam radiators could be removed and hot water baseboards used, or better yet, install radiant heat to the basement 'ceiling' (which would at least heat the first floor).
I'd imagine central air ductwork could be also be used for forced hot air. If this is possible, it would likely be the least expensive solution, but central AC ducts/vents installed after-the-act in older homes are probably not ideally located for forced hot air delivery.
Radiant heat for the first floor sounds like the most effective approach (in theory anyway). But that still leaves the second floor up for grabs.
just my opinion... don't forget about the piggback loans... the 80/20s... the 20s (piggyback loans) are ARMs/variables. i heard those are really the wild-card in all of this.
One other important item... don't forget about S&P and how they just raised the fees on these loans... the 0% downs are just about gone as of this past July 1st. This is going to have a pretty big impact on the RE market... less qualified buyers.
Hey Guys,
I read this blog and I find it dead on accurate. Recently I have been tracking three McMansions that went up for sale over here and believe it or not two have already gone under contract. Once when I was taking my daily walk a house hunter actually stopped his car and started gushing about these stupid houses and what a great blah blah blah it all is here in executive neighborhood land. The one or two homes that are not moving are atypical contemporary McMansions. These are already twenty year old homes. They probably cost 400-500k in 1993. When I moved to this area in 1993 there was eighty acres of land across the street from my front yard. Now it is all McMansions on postage stamp lots. I welcome a slow down and crash...it can't happen soon enough. I still have to hear the constuction trucks on their way to the new cul de sac development in progress. Meanwhile my listing is dormant you might say. I only have land and a basic ranch. I probably couldn't sell if my life depended on it. But believe me people are still buying the house that they want. You could say they even think they are getting a bargain. Please don't throw tomatoes at me for blogging this info. There is no slowdown in tech jobs or real estate constuction in my area yet. Commercial and residential are still going gang busters over here. All I can ask is why???? My one thought is they are trying to get it all done and on the market by the end of this year.
Chow Dog Owner
P. S. Maybe BOB could be unleashed over here and scare off all this development.
SAS,
"My Brownstone is off of Forest Ave. Alot of polish around there these days."
Your comment could be considered racist. I hope it was not.
I'm Polish-American and am proud of it.
I like your inputs and comments but this one kind of saddens me.
trroll...I thought he meant slang..polish as in polish/grease the palm...Wall St. money.
Didn't this one go around in April?
Hmm.
I have one maternal Polish grandparent. I took no offense.
Neighborhoods change. I thought it was descriptive.
chicago,
It's possible I was mistaken about that comment and it's intentions. If so, SAS, please accept my apologies.
Polish as well. Took no offense.
grim
trroll: i didnt take offense but i didnt think it was the most circumspect thing to say either
Everybody wants to be PC.
Anonymous said...
Everybody wants to be PC.
7/11/2006 08:21:33 PM
Actually no.
It's called tact.
trroll,
Come on boys, where is the hard shell?
By know means was I being racist. I was being descriptive. This part of Queens is now Polish, used as an adjective. Use to be German, then alot of Pakistanis came in, but now seems like the Polish are taking over.
I have love for everyone, as long as you are hard working, honest, and don't suck the tit of the government, your a okay with me. Don't matter what you are...and when I was in the buisness world, if you were making me money, you could be whatever you wanna be....and you were alright with me (he....he....)
Come now boys, lets smoke the piece pipe.
SAS
Yeah shytown...
I don't have any tact or wasn't schooled in PC. When your in jungles of Vietnam or the jungle of Wall St., all that stuff gets thrown out the door. So, I apologize up front.
SAS
SAS:
You're O.K. by me. Money talks.
Guinea chick
OT: For whatever it's worth. I have a friend of mine he is in the towing business, no AAA, mostly private property impounds ie;someone parks in a strip mall lot leaves the property, he tows em. He has noticed a drastic slowdown in this portion of his business, his words in the last 3 months, progressively worse, now down 80% from a year ago.
a) out of towners visiting NYC, taking the bus from a place like Secaucus is non-existent. Interestingly, his phone has started "ringing off the hook" for repo work. It is what it is, gonna be ugly.
ps: of 7 cars he towed in the last 4 days, 5 can't get them out of his yard, they say they don't have the money, get paid friday etc. He showed me the cars 1 of the 5 was a pos, no suprise there, the rest were 2 years old max; 25k to 40k cars.
Not to beat it do death we're talking $150 to get their car back. He said in 2001 and very early 2002 was when it was almost as bad as now, I guess the funny money credit stuff, has been keeping people afloat between early 02 and 06
SAS,
I apologize if I over reacted. I might be little bit touchy these days - must be the lay off going on in my company. Though not effected it still makes me little bit edgy.
SAS:
I'm more the "worried about the slippery-slope" type. You let some simple stuff slide, then the real offenders start to get comfortable.
Also, it helps to avoid intellectual laziness and bad habits.
I had my eye on a house in Monroe first the price was listed as 275k then the owner upped it to 339 now its down to 299k dont know if its worth it though. Built in 1930 but realtor ad says 1950. Extra small three bedrooms. Its been on the market for over a year.
I was interested in a home that was originally going to sell for 270k then the seller upped the price to 339 now it is down to 299. IT has been on the market for a year. I also found out the owner only paid 150k for it now less than two years ago.
Anon 2:53,
What if you offered 170K? That is a little over 5% appreciation per year for the two years the seller has owned the home. IMHO, that is all any seller is entitled to.
Having said that, I think the seller is likely to reject such a lowball. But it would sure grab his/her attention!
I guess you might need to be willing to pay more if you really want the place now. Given that it has already been on the market for a year, the seller might be very willing to negotiate.
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