Friday, July 28, 2006

Winter Comes Early In North Jersey

From the Herald News:

North Jersey feels housing market chill
By HEATHER HADDON

During the past several years of record-low mortgage interest rates, many homeowners secured disposable income to cover their bills or make purchases by refinancing or taking home-equity loans. That money translated into new cars, new decks and extra lines of credit.

But grim new housing statistics released this week have some North Jersey bankers worried that a housing recession could spread to consumer spending.

"The equity line was very helpful in driving a purchase market," said Tom Cosentino, who oversees mortgages for Greater Community Bank in Totowa. "Now people are coming back saying they spent all that money and didn't realize it would stop."
...
"It's worrisome," said James Hughes, a Rutgers professor and dean of the Edward J. Bloustein School of Planning and Public Policy who specializes in New Jersey's economy. "It could turn out to be very manageable and put a small dent into economic growth. Or it could be more serious."
...
Mercedes Pedrick, who oversees mortgages at Spencer Savings Bank in Elmwood Park, said that luxury homes are still getting snapped up, but sales of single-family homes generally have sagged in Passaic and Bergen counties. "They haven't been moving as much," she said.

Local bankers say that new mortgages -- and the refinancing of existing ones -- have dried up, especially over the past several weeks. "It has been quiet, unfortunately," said Steve Hoogerhyde, a lending officer for Clifton Savings Bank in Passaic.

July is usually a busy time for housing sales, as many families postpone transactions until their children are out of school, Hoogerhyde said. But that hasn't been true this year. "It has been slower than you would expect it to be. There's no question about that," he said.
...
Cosentino is particularly worried about young couples who borrowed heavily to make a down payment, along with those who refinanced to stave off financial hardship. "The property values were used to bail out people who were in credit-card trouble," he said.

Several experts said it was too early to say whether the slowdown in housing could result in job losses. But Hughes said if the slowdown continues, "We'll see construction employment decline."
...
Pedrick says that prospective homebuyers, especially those in the single-family home market, will continue to sit on the sidelines until the situation stabilizes. "Those people are riding the wave to see how low values will go," she said.

46 Comments:

Anonymous Anonymous said...

Grim
All the financial info is good but I don't see any listing price reductions yet. At the most prices for SFh have reduced by 5-10-15k.

central Jersey Observer

7/28/2006 10:07:00 AM  
Anonymous UnRealtor said...

All the stuff in this article has been talked about for many months on the blogs.

The media are so far behind.

Perhaps if the media stopped quoting Realtors® and Realtor® shills such as David Liareah, they would be better positioned to report accurately and inform the public.

7/28/2006 10:13:00 AM  
Anonymous Anonymous said...

If you were a seller, how would you market your house in today's environment?

The last thing for them is reducing price, the last last thing is for them to reduce price drastically.

The smarter ones are gone by now, the average people will chase the market down. Little by little, from losing their equity gains to maybe losing in the house purchase all together.

But this whole process won't take too long, because once people overcome the greed phase, they fear they will miss the boat of "being able to sell", pretty much just like when the priced shot up to the moon, they bid over each other for that crap house for tens of thousands of dollars..

These people might be very frugal in every other aspect of lives, they might be smart shoppers, good couple clippers, but they were willing to throw tens of thousands of dollars to overbid.. You have to be amazed by that...

Central Jersey house hunter

7/28/2006 10:20:00 AM  
Blogger RichInNorthNJ said...

But grim new housing statistics released this week have some North Jersey...

Makes me wonder?

Also, quote a SNAPPY title there Mr. Grim!
"Winter Comes Early In North Jersey"
Your good with the numbers AND the words!

7/28/2006 10:27:00 AM  
Blogger grim said...

The last thing for them is reducing price, the last last thing is for them to reduce price drastically.

This is only applicable to recent buyers. Those who purchased more than 6 years ago can easily undercut the current market by 10-20% and still come out with very handsome gains.

The problem is, these sellers set the prices. This is the worst possible scenario for sellers who purchased recently. They can't match the new market price without taking losses to do it.

grim

7/28/2006 10:29:00 AM  
Anonymous Anonymous said...

I have been reading this blog for a couple months. I have my house on the market for 60 days and i am now in a negotiation process, I think we are going to settle at 305,000, was listed at 339,000. So the market is cooling , and by the way, i thought 339k was ridiculous to begin with, since its a 2 bedroom house.

7/28/2006 10:33:00 AM  
Anonymous Anonymous said...

"Those people are riding the wave to see how low values will go,"

Yes, we are! But we should also give seller the offer we think it is reasonable.

7/28/2006 10:49:00 AM  
Anonymous Anonymous said...

Really??

This isn't what I am seeing. Most people in the NYC / NJ area look and act like they are living in a hedonistic state of extreme happiness and have a ton of cash to burn.

Make no mistake about it, condo sales are still very strong in Manhattan, Jersey City & Hoboken. Recent grads are renting and buying these luxury condos which have payments of at least $3,000 a month for one bedroom to over $5,000 a month for a luxury 2 bedroom when you included maintenance and taxes.

The back to school & holiday shopping season should be another barn burner with people spending thousands on new clothes and maybe a new car or SUV as well.

7/28/2006 10:53:00 AM  
Anonymous Anonymous said...

Interest rates are dropping while Rents, Property Taxes, & Sale Prices are all surging in tandem with each other.

But people in the NYC metro area love paying the most for everything.
From rent - dinner to $300 jeans every few days.

7/28/2006 11:00:00 AM  
Blogger BergenBuyer said...

Folks,

I put together some data based on the following towns:
Allendale
Franklin Lakes
Saddle River
Upper Saddle River
Wyckoff

I took the sales data from April 1st thru today. It's only homes that have actually closed in the price range of $600 to $1.1M. If a house went under contract in January, but closed May 30, it's in this list. If it went under contract May 15, but has yet to close, it's not on this list.

Please note, some of the avg's aren't totally representative because the sample is low (ie only 3 houses sold in FL and SR).

Allendale
13 homes sold
Avg
DOM- 68
Orig List- $861
Sale Price- $816
% Change- (5.2%)

FL
3 homes sold
Avg
DOM- 30
Orig List- $1.092
Sale Price- $985
% Change- (9.8%)

SR
3 homes sold
Avg
DOM- 204
Orig List- $1.2
Sale Price- $985
% Change- (18.8%)

USR
14 homes sold
Avg
DOM- 77
Orig List- $943
Sale Price- $894
% Change- (5.2%)

Wyck
35 homes sold
Avg
DOM- 54
Orig List- $850
Sale Price- $816
% Change- (4.0%)

I've seen about half of these houses and am amazed by what some went for. I saw some back in Feb/Mar before I really thought the market was going to tank and thought they were overpriced then. Now, I see some listings that took 3-4 months to close and those new homeowners must be kicking themselves. Funny thing is, there's enough evidence to show that you could probably turn around and still sell tomorrow and only lose a few thousand off what you paid and then wait a year or two and buy a similar house for 30% less, or from the same schmuck you dumped the house on.

Craziness, there's still a bunch of people out there buying overpriced houses. I have a feeling once the "school rush" is over, it's gonna be dead for a long time.

7/28/2006 11:11:00 AM  
Blogger RichInNorthNJ said...

Wouldn't be Friday with out "$300 Jean".

By the way, I'll be at Cafe Panache in by $560 jeans.

7/28/2006 11:12:00 AM  
Anonymous Pat said...

Rich..too freaking funny.

7/28/2006 11:17:00 AM  
Anonymous Anonymous said...

But any decline in housing prices will be short lived with interest rates declining. Since economic growth is "weaker" than expected the markets expect a pause and then a cut in rates and maybe the fed will go back down to 1% by end of 2007.

Even though inflation is at a 16 year high in the NYC region, everyone is still shopping and spending outrageous sums of rent along with paying $500,000 for a one bedroom condo outside of Manhattan.

I guess everyone is either working on Wall Street, a trustafarian or an E Millionaire rich from Google stock or the Dot com boom back in 2000.

7/28/2006 11:19:00 AM  
Anonymous Anonymous said...

BergenBuyer,

The price drop % would be much bigger in June and July, will be bigger later on....Also, if possible, check information from Realtor's web for the houses' information since they were oringinal listed. One house I saw in Mahwah was list at 1.699m in early 2005, it was expired early 2006 and re-liated at 1.499m....and reduced and reduced....finally sold at 1.16m last month..

7/28/2006 11:21:00 AM  
Blogger BergenBuyer said...

You really think there's a chance the fed will go down to 1% in 2007? If they do, they're stupid'er than I look.

7/28/2006 11:23:00 AM  
Anonymous Anonymous said...

{{You really think there's a chance the fed will go down to 1% in 2007? If they do, they're stupid'er than I look.}}

The fed wants to start cutting rates quickly to undo all the tightening over the last 2 years but needs some iota of data to support doing this.

It can use the manufactured slowdown as its justification. I don't see any slowdown especially in this area and especially in retail sales / consumer spending & housing sales

7/28/2006 11:26:00 AM  
Blogger BergenBuyer said...

Anon 12:21,

I took relistings into account when I made the list. But it was only on houses I knew. So yes, there could be a few re-listed where the true price decline isn't reflected properly.

7/28/2006 11:28:00 AM  
Blogger grim said...

It's no wonder I don't get any respect in my $19 Levis. I got them at sale at the Levis outlet at Woodbury Commons by the way.

Hmm, now that I think about it, I got this shirt up at Woodbury too. I think it was like 12 or 13 dollars.

Too bad it's not in fashion to wear T-Bills around your neck..

grim

7/28/2006 11:29:00 AM  
Blogger BergenBuyer said...

They may pause and stop raising rates if they think they've reeled in inflation, but I would think they would stay at that rate for a while to find a comfort zone. Maybe a few tweaks up and down, but no drastic cuts back down to 1%.

7/28/2006 11:31:00 AM  
Anonymous Anonymous said...

yes, BergenBuyer, we will see more and more expired, expired..re-list, re-list...reduce, reduce....we should ask the realtor agents to show the whole listing infomation to us.... I happened got a chance...you will be surpried....

7/28/2006 11:38:00 AM  
Blogger RichInNorthNJ said...

It's no wonder I don't get any respect in my $19 Levis.

Peasant.






;-)

7/28/2006 11:44:00 AM  
Blogger Richard said...

"The problem is, these sellers set the prices. This is the worst possible scenario for sellers who purchased recently. They can't match the new market price without taking losses to do it.

while true grim all sellers have one thing in common, get as much money as you can for your asset. some would call it greed. i've seen people with fully paid off mortgages not budging on prices higher than those bought 1-2 years ago due to being either uninformed, smug, or needing that amount for retirement or another house they built.

in the end most sellers end up spending their unrealized gains and therefore all of them will act very similarly as the prices drift downward.

7/28/2006 11:44:00 AM  
Anonymous Anonymous said...

grim, you got ripped off a penny at the Commons. Gotta watch that place.

Kohl's down the street towards Nepera has them for $17.99 with $10 off a $50.

http://www.kohls.com/main/home.jsp

;)
Pat

7/28/2006 11:52:00 AM  
Blogger Flop that house said...

I got my Levis at NYC's Levis store in SOHO. $17, and no TAX
(try to beat that)

7/28/2006 11:52:00 AM  
Blogger Jiggles the Clown said...

Bear in mind that the alleged "new graduates" who are buying and renting Hoboken condos are either resorting to crazy mortgage schemes or relying on Mommmy and Daddy. It they're in the first category, they're relying on consumer credit to pay for $300 jeans and restaurants. I'm surrounded by yuppies where I live and I laugh to myself when I think about how large their credit card bills must be.

7/28/2006 11:52:00 AM  
Blogger RichInNorthNJ said...

Good point Pat!

And Ph.d beat on the part about no tax.

7/28/2006 11:56:00 AM  
Blogger RentinginNJ said...

But any decline in housing prices will be short lived with interest rates declining. Since economic growth is "weaker" than expected the markets expect a pause and then a cut in rates and maybe the fed will go back down to 1% by end of 2007

Housing prices are irrational even with low interest rates. There is no guarantee that lowering rates back to 1% would reinflate the housing bubble. At best, it might help cushion the fall. When the Fed cut rates to 1%, it was hoping the liquidity injection would reinflate the stock market and find its way into business spending. Instead, it got a housing bubble. There really is no telling where the next liquidity injection will show up in the economy. Stocks? Gold? Commodities? Commercial RE? Consumer prices? Baseball cards?

7/28/2006 11:57:00 AM  
Blogger grim said...

Japan lowering rates to zero didn't reignite their burst property bubble.

Falling mortgage rates in the Northeast during the 90's didn't reverse the decline in property values or reignite the bubble.

grim

7/28/2006 12:07:00 PM  
Anonymous Anonymous said...

And all those yuppies in Hoboken, Jersey City, Astoria, & Jackson Heights Queens are paying 15% brokers fee on a $2,000 'spacious' 650 square foot one bedroom apartment that rented for closer to $1,200 two years ago.

Its laughable that most make in the six figures but lease luxury cars, pay over $2,000 for rent outside Manhattan in the 'other 4 boros', and another few grand for credit card bills.

No one invests or saves for retirement anymore.

7/28/2006 12:10:00 PM  
Anonymous Anonymous said...

I live in South Jersey, came here 2 years ago from down south. Looking to buy since then. Glad I did not make what would a been the biggest mistake of my financial life last year. In Moorestown ("best small city to live" 2005) and Mount Laurel Areas. Now sellers are cutting prices up to 10%-12% from the highest listing points last year. There are quite a number of desperate adverts on the realtor sites. For example check out Fox Run, a street in Mt. Laurel. 2 houses here, they have been chasing each other down from around $480K now one is listed for $430K, and the other cut just yesterday from $427K to $419K, both with "Make an Offer, Motivated Seller", type adverts. It will get worse after August/Sept when it becomes clear the back to school buyers are no longer here, IMHO.

7/28/2006 12:10:00 PM  
Blogger BergenBuyer said...

Anon 12:38,

My realtor is actually a friend, so he usually sends me the whole nine yards. However, he told me the local mls system just changed and he can no longer email the full listings that show agent %'s and other items that is more realtor specific. He called and confirmed they only allow him to see it and not send it. It still shows Orig List, DOM, etc, but not everything.

The Realtor Assoc is tightening the reigns and letting less info out.

7/28/2006 12:14:00 PM  
Blogger X-Underwriter said...

Anonymous said...
Its laughable that most make in the six figures but lease luxury cars, pay over $2,000 for rent outside Manhattan in the 'other 4 boros', and another few grand for credit card bills.

Due to Wall St, many of these people even have degrees in accounting and finance!!!!!
This is like a two pack a day smoking cardiologist

7/28/2006 12:18:00 PM  
Anonymous Anonymous said...

{{Due to Wall St, many of these people even have degrees in accounting and finance!!!!!
This is like a two pack a day smoking cardiologist }}

A trained monkey can do their jobs. Nothing but "populating" excel spreadsheets and keeping up appearances.

7/28/2006 12:24:00 PM  
Anonymous Anonymous said...

a house for sale on our street in morristown started with a list price of close to a million 3 months again, the price has been reduced to 875k last month. Seems like it still isn't getting offers. Another one million home has a asking price under assessment value. Haven't seen that in the last 2 year either.

7/28/2006 12:34:00 PM  
Anonymous Anonymous said...

BergenBuyer,

you don't need email listings, just info the realtors can see but public can't - such as when was the house oringinal listed, when expired, when withdraw, when under- contract but come back to market....I supose agents should let us know these info, but you have to remer to ask!

7/28/2006 12:36:00 PM  
Blogger X-Underwriter said...

A trained monkey can do their jobs. Nothing but "populating" excel spreadsheets and keeping up appearances.

I agree. Wall St is 99% sales people, kind of like the NAR. All they know how to do is apply lipstick to pigs

7/28/2006 12:38:00 PM  
Anonymous Anonymous said...

....Another one million home has a asking price under assessment value....

If the asking price is arround assessment value, that would be the the reasonable price for the house. But currently most hoses marked double and above price of the assessment value in morris....

7/28/2006 01:16:00 PM  
Anonymous JAY said...

"If the asking price is arround assessment value, that would be the the reasonable price for the house. "

Not necessarily, it depends on when the assessment was done. In some places recent assessments were done that use inflated bubble values.

JAY

7/28/2006 02:49:00 PM  
Blogger chicagofinance said...

Anonymous said...
{{Due to Wall St, many of these people even have degrees in accounting and finance!!!!!
This is like a two pack a day smoking cardiologist }}

A trained monkey can do their jobs. Nothing but "populating" excel spreadsheets and keeping up appearances.

7/28/2006 01:24:59 PM


please

maybe they are sales people, but they are intelligent, motivated, and polished WORLD CLASS sales people

do you remember the Frank Sinatra song?

I'm not trying to be an a55, but please be fair. I know it is irritating seeing some babyface with a fat W-2.

7/28/2006 04:34:00 PM  
Anonymous Anonymous said...

RentinginNJ said;

"There really is no telling where the next liquidity injection will show up in the economy. Stocks? Gold? Commodities? Commercial RE? Consumer prices? Baseball cards?

7/28/2006 12:57:58 PM

Yeah, you are right. There will be a new mania. I say Gold!!! The Fed is in a quandry. They are trapped in a tight corner like a severly wounded, dangerous animal. Do they increase rates to stem inflation and really turn the housing market upside down or do they inject reserves into the system to cushion the R.E. crash??? They are screwed either way. We all know the answer if they continue to tighten. If they try to cushion the fall, the implications may be more severe. The Fed only controls the fed funds rate. The market controls long term rates. If the fed loosens and allows inflation to fester, with a slowing economy, our dollar will get crushed , the foreigners who buy our debt will either pull their $ out or demand a higher rate of return. Grim is right, lower rates does not guarantee that the RE market will be saved. Look at Japan, 0% interest and RE market in the tank for 15 years!! If the fed trys to protect RE and ignores inflation the next bubble will be GOLD!!!!!! I'll be looking to buy my next house when all the present day flippers are buying gold at $1,500-$3,000 oz. At this time, I'll be happy to sell them my gold and buy real estate that nobody wants.

PATIENCE,PATIENCE,PATIENCE

BC Bob

7/28/2006 10:06:00 PM  
Anonymous Anonymous said...

Home buyers being lured by pools, vacations
Builders pony up expensive perks to counter housing market slowdown
Reuters


Updated: 6:33 p.m. ET July 28, 2006
NEW YORK - On the fence about whether this is the house for you? Maybe a free swimming pool will convince you. Or perhaps a free vacation.

Such is the state of U.S. housing, as home builders pull out all the stops to keep business booming — a sure sign the once red-hot market has turned in favor of the buyer.

Nearly all measures of housing activity have pointed not just to a slowdown but to a sector that is struggling. Sales are sliding, supply is swelling and price appreciation is abating. Now, home builders are going beyond offering free washers and dryers, refrigerators and microwaves, ponying up more expensive perks and luxury items to lure buyers.

Las Vegas-based Wagner Homes is giving away swimming pools said to be worth $30,000 on some of its projects.

"We had three homes sitting on the block for six months without a buyer," said LaRae Obenauf, office manager at Wagner. "Within the past two months we threw in the pool, and we saw a big increase in interest."

The result: All three homes are now sold.

Some incentives — occasionally in the form of cash via bonuses, refunds or fee waivers — are worth as much as $100,000, said Larry Murphy, president of SalesTraq, which monitors real-estate trends in the Las Vegas area.

"Swimming pools, gold club memberships, home landscaping ... all of them are being offered," Murphy said. "Home builders lower prices only as a last resort, so prior to that they prefer to give incentives, which are masked within the sales price. They don't want to reduce prices, not only for the peace of mind of having to deal with the homeowners who have already bought but because it would cause problems with appraisals."

Extravagant incentives are most prevalent in states such as Florida, California and Nevada, where home prices had risen the most but are now seeing the sharpest softening, analysts say.

Prices in Las Vegas surged by nearly 16 percent last year but added only slightly more than 3 percent in the first quarter of 2006, according to data from the Office of Federal Housing Enterprise Oversight.

Nice to meet you, Mr. Clooney
And if that new plasma-screen television is not enticing enough, how about the opportunity to rub elbows with a Hollywood celebrity?

A bevy of builders in New York City are paying top dollar to entertainers just to show up for viewings, according to Diane Saatchi, senior vice president with the Corcoran Group, a residential real estate firm in New York.

"Celebrity open houses are definitely popping up," she said. "Particularly in the new developments, which is proof they are doing all types of things to attract buyers."

The celebrities showing up for open houses are not exactly what many would deem "A-listers," but they are drawing crowds.

"Put it this way: If George Clooney was served up instead of a free lunch, attendance would skyrocket," said Saatchi.


Take a vacation
All that house hunting got you feeling tired? Take a free vacation courtesy of your mortgage lender.

"One of the gimmicks right now for closing a mortgage loan is a free vacation to Hawaii," said Anthony Hsieh, president of LendingTree.com, on online facilitator that matches consumers to lenders competing for their business.

But buyer beware: The vacation voucher usually carries a number of stipulations, and consumers often pay for freebies with higher interest rates and closing costs, he said.

The Mortgage Bankers Association's latest seasonally adjusted purchase index showed loan volume down 20 percent year-over-year during the week ended July 21. The downturn was even more pronounced in the loan refinancing index, which showed a more than 40 percent drop.

To attract business, some lenders are offering two free airline tickets to borrowers who refinance their home loans.

"Any time there is increased competition in a shrinking market there are free toasters everywhere," said Hsieh, who is based in Irvine, California.

Agents also see incentives
After historically low mortgage rates fueled a five-year housing boom, the sector is feeling the heat as rates hover near four-year highs. Some home builders, looking to unload a property, have been cozying up to real-estate agents, offering sales commissions of up to 10 percent.

"In this environment you are always looking to think outside of the box," said Ellen Bitton, president and chief executive officer of Park Avenue Mortgage Group, Inc. based in New York, who added that her firm sometimes offers lunch to potential customers. "Obviously, we'll have a better lunch layout for a $3 million dollar house than a $300,000 studio."

Signs of a cooling market have been more evident in the past few weeks as a deluge of data showed an excessive supply of homes, declining sales and falling prices.

Scott J. Cooper, president of Old Merchants Mortgage Bankers in Lake Success, New York, said his firm is offering refunds on home appraisals, which can range from $300 to $800.

"The market certainly got tougher and it's more competitive, so one thing we are doing is we're closing loans a lot faster," he said. "Lowering rates, lowering points. We are doing just about anything we can to make the consumer happy."

Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.
URL: http://www.msnbc.msn.com/id/14079764/

7/28/2006 11:43:00 PM  
Anonymous Anonymous said...

Yee, you boys gotta remember we are about 5 years behind Japan.

Look to see what the market was doing there 5 years ago, what was working, what was not.

About the Street, there are some really smart whips out there who make a ton of cash (young and old), but there are also 10x cold callers down there. Joes they hire off the street.

Either way, the feds are still going to raise rates in Aug. This GDP number is no surprize, this was set in motion a long time ago.

SAS

7/28/2006 11:51:00 PM  
Anonymous Anonymous said...

grim said...
The last thing for them is reducing price, the last last thing is for them to reduce price drastically.

This is only applicable to recent buyers. Those who purchased more than 6 years ago can easily undercut the current market by 10-20% and still come out with very handsome gains.

The problem is, these sellers set the prices. This is the worst possible scenario for sellers who purchased recently. They can't match the new market price without taking losses to do it.

grim

7/28/2006 11:29:38 AM


Repetition is the mother of learning.
This will be the majority of sell side, over the next 5 years.
While the 01 -05 purchasers grind it out, or get thrown out.

7/29/2006 02:31:00 PM  
Anonymous Anonymous said...

Anonymous said...
"Those people are riding the wave to see how low values will go,"

Yes, we are! But we should also give seller the offer we think it is reasonable.

7/28/2006 11:49:49 AM


Confuscious says: DONT CATCH A FALLING KNIFE.
Whats yur rush?

7/29/2006 02:34:00 PM  
Anonymous Anonymous said...

Grim said: "Too bad it's not in fashion to wear T-Bills around your neck.."

grim

7/28/2006 12:29:36 PM

T-Bills hmmm, I think ANY woman, anywhere, would find us men on the board very handsome, smart, nicer, funny, taller etc. flossin dem T-Bills!

7/29/2006 02:45:00 PM  
Anonymous Anonymous said...

Anon said "A trained monkey can do their jobs. Nothing but "populating" excel spreadsheets and keeping up appearances."

7/28/2006 01:24:59 PM

SO TRUE!

7/29/2006 02:50:00 PM  

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