Saturday, September 16, 2006

"We took a lot less than we thought we were going to get"

From the Asbury Park Press:

Sellers may have to adjust expectations and prices

Sometime after Mel and Hildy Warren agreed to buy a new home in the Four Seasons retirement community in Manalapan about a year-and-a-half ago, they were surprised to find out that a couple also moving there had actually sold their old home right away and moved into an apartment while waiting for their new house to be built.

"Everybody laughed," Hildy Warren said. "We all wondered why they'd sell so soon. It turned out they were right."

The real estate market has changed a lot in the past year. The number of available homes is up and the days when sellers could stick a "for sale" sign on the lawn and name their price are gone, at least for now.

"Prices from last year are not what they are this year," said Iris Lurie, broker/owner of Century 21 Mack-Morris Iris Lurie in Marlboro.
...
"We listed it higher, thinking that was the correct price," Hildy Warren said. "The market was telling us differently."

Over the course of three months, they reduced their initial asking price, which they declined to reveal, in steps. "We weren't getting any offers and we got concerned," Hildy Warren said.

Finally, they cut it to about 10 percent below the initial price. That very day, they received and accepted an offer. They will close on the deal this month.

"We took a lot less than we thought we were going to get," Hildy Warren said. "Buyers are getting very good deals. If we had sold six months earlier, we would have gotten more."
...
The result is sellers are learning to recognize that conditions have changed. "They're slowly accepting it," Appleby said. "No one likes to think they missed the peak of the market."

The result is sellers must be a bit more humble in their asking prices, if they want their homes to sell, Appleby said. They must also put more effort into "curb appeal," sprucing up the home inside and out to make it stand out.

42 Comments:

Blogger grim said...

Hat tip to the Jersey Shore Bubble blog for this piece

The Jersey Shore Real Estate Bubble

9/16/2006 05:50:00 PM  
Blogger lisoosh said...

Great comment on a British newspaper:

"Unfortunately it has now got to the stage where an Englishman's home is not only his castle, but also his pension, savings and investments all in one, and I'm sure we can all recollect a proverb about eggs and baskets..."

Pretty much says it all, doesn't it?

9/16/2006 06:40:00 PM  
Anonymous KA said...

They went down in increments over three months...and then took an offer for 10% below their asking price? Jeez. What were those increments? A hundred bucks or so? Were they crazy?

9/16/2006 06:58:00 PM  
Anonymous Anonymous said...

‘It’s not a bad market, just overpriced homes,’ he said. ‘The bottom line is, selling houses is very competitive on price. People don’t care about cookies, donuts or flowers, they just want the best value and they are doing comparison shopping.’”

“He said many sellers are unrealistic about the true value of their home. ‘Buyers are now coming to us already educated about what is on the market, know what they want and know what they want to spend,’ Soler said.”

“‘It’s all a numbers game, the buyer wants to get the best bang for the buck,’ he said. ‘The toughest part of my job now is to tell people what their home is worth and dispel their false expectations. We can market till you are blue in the face, but if it is priced too high, nothing is going to work.’”

“Soler said motivated sellers are those who have relocated or have already bought a new home and are willing to drop the prices below the competition, or short sell, just to get out. In other words, he said, this is no time to sell a house with the intention of making money.”

9/16/2006 06:58:00 PM  
Anonymous Anonymous said...

In spite of the market downturn, Castaic home seller Schwanke remains optimistic. ‘After six months, we would like to sell it, just so we have peace of mind, but I am not giving away my beautiful home I raised my children in. Maybe we will rent it, but I am not going to throw it away.’”

This is called greed pure and simple. This emotion has ruined may over time.

9/16/2006 07:22:00 PM  
Anonymous Anonymous said...

Good for the mel & Hildy they found a bagholder.

9/16/2006 07:39:00 PM  
Anonymous Anonymous said...

@lisoosh
In my opinion…

Stock bubble (2000 - 2002) taught us not to put all our savings in stocks. Enron taught us not to put all your money in a single stock.
Margin calls pummeled the market.


Housing bubble (2006 - 2008) teaching us not to put all our savings on housing. ARM resets will pummel the market.

9/16/2006 07:52:00 PM  
Anonymous Anonymous said...

I am so exicited watching the market crash. We are first time buyers with only a small amount of money, and now all of a sudden we can actually afford to buy in NJ.

Now, how long should we wait before prices hit rock bottom? :)

9/16/2006 08:39:00 PM  
Anonymous Anonymous said...

Now, how long should we wait before prices hit rock bottom? :)


Ten or fifteen years, according to many on this board.

9/16/2006 09:05:00 PM  
Anonymous Anonymous said...

10-15 years commenter (on multiple threads) can you help us understand, using some facts or even explained theory, when YOU think the bottom will be, when and under what circumstances YOU think, honestly, a potential homebuyer would be making a good, sound decision to buy (using normal/current reality of 5-7 years in a home, and median income)?

And please no responses like, "why should I bother." It seems you feel strongly, so why?

Pat

9/16/2006 09:21:00 PM  
Anonymous Anonymous said...

Ten or fifteen years, according to many on this board.

I told you not to take those shots!! ARM reset hurting you bud? Why don't ya charge it ...

9/16/2006 09:23:00 PM  
Anonymous gary said...

Big f***ing deal. They sold their sh*tbox for 10% less which is still about 20% too high. Yes, another bagholder is born.

Once again, my wife and I would love to trade up from the cape we now live in and thought that was going to happen 2 years ago. That was until all the idiots decided to sell their souls buying somebody elses POS.

We will not sell until the market comes back to normal. I don't care if it's 5 f***ing years from now. Our friends and family just don't get it. They think we're going to "lose" all this equity. We've tried to explain that it's all about the principal...they just don't get it.

9/16/2006 09:28:00 PM  
Blogger Richard said...

buyers are getting very good deals? 100% run up in 5 years and they get a 'deal' at a 90% run-up? this is wishful thinking, or just plain ignorant.

9/16/2006 09:31:00 PM  
Anonymous Anonymous said...

"Now, how long should we wait before prices hit rock bottom?"

I think you are going to be waiting at LEAST 5 years. If you can't wait that long, I would move away from this area.

10% deduction in this market is nothing. So many fools.

SAS

9/16/2006 09:32:00 PM  
Anonymous Anonymous said...

I was taking a spin today in the Roadster. I saw alot of houses "for sale", but it didn't seem as bad as it was last month. But, there is still so many, its down right scarey.

I was also surprized by that HUGE condo complex right off of route 4 near Ft. Lee. Its near the Starbucks and the Hoop Zone on route 4 as you are heading to the bridge. That complex is massive. Are those condos? man, there is no way they will ever sell those things.

I think the condo & townhouse market is going to hit such rock bottom. wow....

SAS

9/16/2006 09:36:00 PM  
Anonymous Anonymous said...

"Now, how long should we wait before prices hit rock bottom? :)"

IMO - the ARM resets and slowing economy will overwhelm many, including some of the posters here. Who knows when "rock bottom" will be, but you'll see prices taken down from theor 2005 highs by double-digit percentages (15-30%) by 2008. Save your pennies...cash will be king in 2008.

9/16/2006 09:43:00 PM  
Anonymous Anonymous said...

"cash will be king in 2008"

You got that right.

SAS

9/16/2006 09:48:00 PM  
Blogger grim said...

I am so exicited watching the market crash. We are first time buyers with only a small amount of money, and now all of a sudden we can actually afford to buy in NJ.

You might want to tone down the excitement, and not just because of karma.

grim

9/16/2006 09:56:00 PM  
Blogger RentinginNJ said...

In other words, he said, this is no time to sell a house with the intention of making money.”

This is absolutely insane. People don’t understand the concept of paper gains and losses. When the value of their house goes up, they spend the equity like its cash in their hand. When the value drops, they think they lost money. Anyone who bought more than 2 years ago can still make a boatload of money, just not as much as a year ago.

Let’s say a person buts a house for $250k in 1999. The value (on paper) probably peaked around $500k a year ago. Let’s say they sell it now and can only get $450k. Many of these people will hang their and sulk claiming they lost $50k on their house, meanwhile they made an 80% return over 7 years (over a 10%/year annualized return).

For this reason, I expect a real estate to die a very slow and painful death. Many sellers will hang on for a “turnaround”, refusing to sell at a loss (even a paper loss). Even the NASDAQ took 2 ½ hears to hit bottom. The late 80’s NNJ housing bubble took about 10 years (in real terms) from top to bottom.

I expect to see 3-4 years of falling nominal prices (as speculators and toxic loan holders are forced out) followed by another 5-7 years of flat prices or slight appreciation that does not keep up with inflation. I think we will see the bottom, in inflation adjusted terms, in about 10 years.

9/16/2006 10:25:00 PM  
Blogger annamelbourne said...

"I was also surprized by that HUGE condo complex right off of route 4 near Ft. Lee. That complex is massive. Are those condos?"

You mean the place called Windsor Park? That's in Englewood. They were marketed as townhouses for a year. Now I see that they are trying to rent some of them. That is a hideous location. You overlook a golf course, but you also overlook a string of gas stations. They call it "prestigious Englewood" but in order for anyone in that complex to get to downtown Englewood (or anywhere else in town for that matter) they have to get out on a very crowded Route 4 for half a mile. Only in a housing boom would that marginal property behind the gas stations have been built out as residential.

9/17/2006 06:10:00 AM  
Anonymous Anonymous said...

Take 30%+ off then offer.

9/17/2006 07:19:00 AM  
Anonymous Anonymous said...

I expect to see 3-4 years of falling nominal prices (as speculators and toxic loan holders are forced out) followed by another 5-7 years of flat prices or slight appreciation that does not keep up with inflation. I think we will see the bottom, in inflation adjusted terms, in about 10 years.
If it is anything like Japan the bulk of the loss occurs in about 3 years but does grind down over another 5 years. So imo the bulk of the losss should occur by 2009.

9/17/2006 07:21:00 AM  
Anonymous Anonymous said...

10-15 years commenter (on multiple threads) can you help us understand, using some facts or even explained theory, when YOU think the bottom will be

I'm the "10-15 years" commenter.

I don't disagree that housing prices will see a substantial decline.

I do disagree, however, with the contentions of many on this board that we are in for a catacylsmic collapse--of real estate prices and the economy as a whole.

I hold the more mainstream view that the American economy is more resilient and diverse than you are making it out to be, and that massive numbers of folks aren't going to end up on breadlines, or foreclosed, just because ARMs reset in 2007 and 2008.

The actual proportion, nationally, of homeowners with ARMS that reset in the next couple of years is small. Out of those, only a proportion will be severely strained by the payments.

I guess what I am trying to say is simply that bloggers here are showing "irrational exuberance" in anticipating a massive, prolonged decline.

I am also trying to point out that renting for 10-15 years, to "catch the bottom," as you predict it, is unpalatable to most people.

Is renting for 10-15 years something you plan to do?

9/17/2006 07:25:00 AM  
Anonymous Anonymous said...

Only a few ARM borrowers in trouble in a town can crush prices just tlike the one bonehead who overpaid.

It's going down. Buyers will noty pay for past stupidity.

9/17/2006 07:27:00 AM  
Anonymous Anonymous said...

10-15 year dude:
I don't plan on renting for 10-15 years. But our situation is that we are the rare type [I'm saying that based on the comments I read from mtg. brokers on blogs] of people with cash, no debt and great FICOs. It's possible that our personalities are the deciding factor here..we really like renting. Maybe it's like our last stand for freedom, or maybe a defense.

To balance our lack of home ownership in the mix, we live below our means, sock a chunk pretax, and try to make up in other ways. We don't take expensive vacations, or drive expensive cars.

But I'm sure that when we can buy a house for a little less than our rent, we'll do it. I'm hoping in a year or so. I do think prices in many surprising places will go down 50% from peak last year, but I don't think I'll wait that long, because I'm not investing or speculating, just trying to minimize our housing expense.

Thanks for answering.

Pat

9/17/2006 09:10:00 AM  
Anonymous Anonymous said...

Prices definitely are coming down here in Bergen County. Here in the Goldcoast (right along the Hudson, across NYC), we have many new condo projects - One Hudson Park, WaterMark, Grandview I/II, Vista Pointe, Hudson Pointe etc etc...almost too many to list. Last year this time was the peak of the real estate market along the goldcoast. Last yr this time, in a complex (Ind Harbor), you could hardly find any decent two-story duplexes for sale (1760 sf). Now there are SEVEN with prices ranging from 675,000 to 759,000 (724 Mean). These units are practically the same, similar age, similar views, identical inside layouts (1769 sf). The most recent transaction prices for these units were 720K, 724K, 748K (all except the 748K unit were from contracts signed in 2005, the 748 unit was sold in June, implying the contract was signed in Feb/March 06). The average listing time for the current units are already 3 months with the most recently listed unit priced at 675,000. Since these units are practically the same, it is doubtful the higher priced units will catch much of a bid (and they have been on list for months now). Take this as a hint, prices are coming down, even with hot selling units in 2005. The average price for these units were 520, 600, 670K for 2003, 2004, 2005 respectively. Once prices begin to fall, I wounder how many current owners (not flippers type) would cash out their units and create more inventories. The complex has 44 of such duplexes, an avg yr, you will find 5 to 7 transactions. Now we have SEVEN listed over NJMLS. Nevermid all thsoe new condos started in 2005 will finish in 2007. One Hudson Park has 167 units, only 60 something is under contract.

9/17/2006 10:00:00 AM  
Anonymous Anonymous said...

"cash will be king in 2008"

Cash is king today.

BC Bob

9/17/2006 10:18:00 AM  
Anonymous Anonymous said...

RentinginNJ.

That's too logical for the massses of the asses.

BC Bob

9/17/2006 10:20:00 AM  
Anonymous Anonymous said...

Is renting for 10-15 years something you plan to do?

9/17/2006 08:25:15 AM

I'll chart the spread. When the spread comes back in from it's unrealistic/exhorbitant amount, then I'll buy. It's not about time to me, it's the spread.

BC Bob

9/17/2006 10:25:00 AM  
Anonymous Anonymous said...

we really like renting. Maybe it's like our last stand for freedom, or maybe a defense.

If you like renting, more power to you. Most people don't like the idea of long-term renting, but if you do, there's no reason not to do it.

But I'm sure that when we can buy a house for a little less than our rent, we'll do it....I'm not investing or speculating

Again, we are in agreement. BOTH the doomsayers on this board and the flippers out there see housing as an investment to be timed carefully, striving to buy low and sell high.

On the other hand, I see renting vs. buying as a lifestyle choice, and apparently so do you.

9/17/2006 10:35:00 AM  
Anonymous Anonymous said...

When the spread comes back in from it's unrealistic/exhorbitant amount, then I'll buy. It's not about time to me, it's the spread.


Fine. So if it takes 10-15 years, are you willing to rent for that long?

You must be, if you consider housing to be little more than an investment to be purchased at the correct price.

Seems to me that many on this board are as greedy as the "grubbing sellers" you make so much fun of.

9/17/2006 10:59:00 AM  
Anonymous UnRealtor said...

"Anyone who bought more than 2 years ago can still make a boatload of money, just not as much as a year ago. "


I don't know about that. This seller bought over two years ago, and is currently asking $10K below what they paid in June 2004:

http://www.realtor.com/Prop/1067710048


Jun 15, 2004 - Closed $755,000 (MLS 1671861)

Mar 05, 2006 - $879,000 (MLS 2253723)

May 01, 2006 - $829,000

Jun 05, 2006 - $795,000

Jul 13, 2006 - WITHDRAWN

Jul 14, 2006 - $795,000 (MLS 2299446)

Sep 07, 2006 - WITHDRAWN

Sep 09, 2006 - $745,000 (MLS 2317848)


The market is BAD. This bust seems like it's moving faster than prior busts, probably due to the Internet and the volume of toxic loans used.

9/17/2006 11:31:00 AM  
Anonymous UnRealtor said...

"Fine. So if it takes 10-15 years, are you willing to rent for that long?"


Now or in the near future is clearly not the time to buy:

http://tinyurl.com/e4so5

People can rationalize that fact away all they want, but they are selling their soul if they buy now.

We'll see how things look in 1-2 years, as the market is sinking fast.

I dislike renting, but dislike debt slavery even more.

9/17/2006 11:41:00 AM  
Anonymous Anonymous said...

I dislike renting, but dislike debt slavery even more.

OK..agreed. But my question still remains:

If this thing takes 10-15 years to play out, how many of you are willing to consider renting for that long?

Just how committed are you to your position?

9/17/2006 12:31:00 PM  
Anonymous Anonymous said...

"Fine. So if it takes 10-15 years, are you willing to rent for that long?"

I don't give a damn if it's 20 years. It's the SPREAD and money flow into this market, nothing else to me. If the spread stays the same forever, I'll just rent.I have owned for 20 years, renting and saving 2k a month is not a bad alternative to me.
If the spread stays the same, I will have a ton of cash,(difference in the spread), when I retire. I won't have to bitch that the govt reneged on their promise for ss. My judgement does not get clouded by time frames. It's all fundamentals and technicals. The market will tell me when the right time to buy is.

BC Bob

9/17/2006 12:47:00 PM  
Anonymous Anonymous said...

I don't give a damn if it's 20 years. It's the SPREAD and money flow into this market, nothing else to me.

OK, so it's obvious that you think of a house as an investment, nothing more. Buy low, sell high.

Move every other year or so, looking for the best rental deal?

Glad it works for you. Wouldn't work for a lot of folks, though, long-term.

9/17/2006 01:18:00 PM  
Anonymous Anonymous said...

BC, I just reposted your comment at the top of the blog. I didn't want it to get lost.

I am honestly interested in finding out just how many here feel the same way.

Perhaps 20- and 30-somethings have a different take on housing than old timers like me. It could be a major paradigm shift, and I'd like to know if attitudes towards homeownership have indeed changed so radically in one generation.

Please re-join the discussion at the top of the blog if you like. I'd like to hear more about your views.

9/17/2006 01:30:00 PM  
Anonymous Anonymous said...

"Jun 15, 2004 - Closed $755,000 (MLS 1671861)

Mar 05, 2006 - $879,000 (MLS 2253723)

May 01, 2006 - $829,000

Jun 05, 2006 - $795,000

Jul 13, 2006 - WITHDRAWN

Jul 14, 2006 - $795,000 (MLS 2299446)

Sep 07, 2006 - WITHDRAWN

Sep 09, 2006 - $745,000 (MLS 2317848)"

I'm a newbie to this board. Is the listing information above available to the general public or only to realtors?

9/17/2006 04:24:00 PM  
Anonymous UnRealtor said...

"Is the listing information above available to the general public or only to realtors?"


Unfortunately, only to realtors.

9/17/2006 05:24:00 PM  
Anonymous UnRealtor said...

"Just how committed are you to your position?"


I think your question is flawed because it won't take 15 years to "play out."

In 2-3 years, properties will be reasonably priced, or I will move to another part of the country.

Instead of spending $800K in NJ, I can spend $300K elsewhere and get a larger house, shorter commute, and save the $500K.

Either buying a house in NJ makes sense, or it doesn't. Some people are buying even when it doesn't make sense, just because "It's time to buy a house" and they will pay financially for that decision for the rest of their lives.

9/17/2006 05:29:00 PM  
Anonymous Anonymous said...

"You must be, if you consider housing to be little more than an investment to be purchased at the correct price."

Wrong, probably biggest financial investment/committment anybody will ever make.

BC Bob

9/17/2006 05:58:00 PM  
Anonymous Anonymous said...

"Move every other year or so, looking for the best rental deal?"

WRONG,WRONG!!!!!! I negotiated up front. I pay cash, the first of the month. If I don't pay by the 1st, I pay a 4% late fee. On my end, I will not receive a rent hike for the first 2 years. The 3rd-5th, if I'm still renting is capped at 2% annually. Now if I don't live up to my agreement, paying cash by the 1st, the deal is null and void. What kind of deal did you negotiate with your municipality regarding your taxes?? What kind of deal did the I/O's, piggybacks negiotate with their lender??? By the way, I'd rather live like a chicken than be a dead duck.

BC Bob

9/17/2006 06:09:00 PM  

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