Friday, September 08, 2006

Weekend Open Discussion

Observations about your local areas, comments on news stories or the New Jersey housing bubble, Open House reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let's have them. Also a good place to post suggestions, requests for information, criticism, and praise.

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For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be found at the bottom of the right hand menu and are categorized by week.

120 Comments:

Blogger grim said...

Looking for suggestions on what you folks would like to see more or less of.

jb

9/08/2006 11:04:00 AM  
Blogger grim said...

From Reuters:

Risk of U.S. recession growing: HSBC

Investment bank HSBC has revised downward its forecast for 2007 economic growth and cautioned that the risk of an outright recession is growing as a retreat in housing threatens household balance sheets.
...
The company argues that while corporate profits have remained sky-high, the incomes of most Americans have effectively fallen over the last 18 months.

That, say economists Stephen King and Ian Morris, could be a recipe for hard times in an economy that relies on consumers for over two-thirds of its strength.

9/08/2006 11:17:00 AM  
Anonymous Anonymous said...

I would just like to comment on the issue of interest rates. The mortgage interest rates are obviously artificially kept low because somebody is trying to get some leverage before the big crash.There is no way the interest rates are going to remain low as the economic indicators do not support low interest rates. Besides, even if they were kept low, it is not going to make much difference to the bubble which has burst already. In Japan, they lowered the interest down to 1% p.a. and that made no difference. It is now over 16 years since the market burst in Japan and there is still no activity in sight with the real estate market. We are in for a long haul here and I dont see any recovery for at least 8 years at the best.Naturally people will be influenced by realtors and the like and some will fall for the lies and misrepresentation and be sucked. This is not a time to buy anything.

9/08/2006 11:26:00 AM  
Anonymous Anonymous said...

DO NOT BUY A HOUSE OR CONDO.

IF YOU DO YOU LOSE. FALLING PRICES MAKE YOU A BAGHOLDER.

STARVING REALTORS ARE HURTING ENOUGH THAT SELLERS ARE ON THEIR HIT LIST.

WELL FINANCED BUYERS OWN THIS MARKET.YOU CONTROL THE PRICE. DO NOT LET ANYONE CONVINCE YOU OTHERWISE.

9/08/2006 11:38:00 AM  
Blogger grim said...

Less caps please.

grim

9/08/2006 11:41:00 AM  
Anonymous Anonymous said...

It's abuse a realtor weekend.

Talk about Lereah's statement inflation + 1 or 2 % price appreciation.

So 100% should be 30%.

Inventories piling up. No commish rub it in.

have fun abusing'em.

9/08/2006 11:44:00 AM  
Anonymous Anonymous said...

grim said...
"Looking for suggestions on what you folks would like to see more or less of."

First of all, my compliments to the great work that you do.

It may just be me, but I love the charts. This really paints a clear picture of the technical aspect of the market. We can all see that now the fundamentals and the technicals are moving in tandem. When this occurs, powerful moves are the end result. If anybody looks at the charts that you have provided, they have to seriously ask themselves why buy now. The charts look like a soybean chart in the midst of a drought when out of nowhere the skies open. Thanks again.

BC Bob

9/08/2006 11:52:00 AM  
Anonymous Anonymous said...

hi all. i enjoy the informed discussion
maintained on this blog.

since this is my first comment,
i'll be brief. we bought a condo
in Boston 1988, had to move 18
mos later. can you guess? the
only offer was for a 25% lowball
which we rejected.

net result: carried the property for about
10 years as an out-of-state landlord.
don't try that at home, guys.
you can't imagine the horror stories.
luckily we'd bought with a hefty down and the rent covered carrying cost.

finally sold in 2000 at about breakeven,
excluding finance costs.

true story.

9/08/2006 11:55:00 AM  
Anonymous Anonymous said...

Dont forget the inventories of houses we are told about does not include
(a) houses under construction
(b) houses constructed but still awaiting occupancy permits
(c) Land being paved and prepared for construction
(d)land already purchased and also land options taken by developers
Does anybody know how we can get some estimates of the above? When you throw all the above into the inventories you are going to have a real mammoth sized problem with inventories and how long it is going to take to unload all of the above including the inventories that are piling up. Think about it!It's real scary..

9/08/2006 11:55:00 AM  
Anonymous Anonymous said...

I have a question that I hope someone here can help answer. My boyfriend is going to be listing his condo soon before watching the values drop further. We have seen real drops in Bedminster YOY. He would like to avoid paying the 5% commission. Rather than use foxtons (which buyer's realtors do avoid) we are planning on using a flat rate MLS service and pay $500 to get on the MLS and a lockbox.

We plan on giving 2.5% to the buyer's agent, still saving 2.5% for the listing agent. He is a real estate attorney so the paperwork is no big deal for him. And being a real estate attorney has left him with no respect for realtors or the lack of work they do for the pay. ;o)

Do buyer's agents tend to avoid the flat rate listings? Are there other alternatives we should consider?

RK

9/08/2006 11:55:00 AM  
Anonymous Anonymous said...

I'd be interested in hearing some stuff on Hoboken/Jersey City. A friend bought recently, $500K (in Hoboken) for a 2 bedroom far from PATH/water.

I'm sure she's screwed, esp. with all that capacity coming on line. Any news on this local market?

9/08/2006 11:57:00 AM  
Blogger grim said...

I have yet to find an agent that will work with me on the Hudson market. I really need data from the MLS system that covers Hudson.

grim

9/08/2006 12:01:00 PM  
Anonymous Anonymous said...

Excelent site....i have been reading it for about 1 month.

9/08/2006 12:02:00 PM  
Blogger RentinginNJ said...

Grim,

I would be really interested in seeing any historic monthly data you have for inventory for previous years. I would like to see what the normal pattern is over the course of a year. For example, does inventory typically rise in the fall season as sales slow? Or, does inventory fall as sellers let listings expire and hope to relist in the spring?

9/08/2006 12:13:00 PM  
Anonymous Anonymous said...

Yesterdays Phila.Inquirer had a large article on the front page of the Business Section.It said the growth in home prices in the USA in the second qurter was the smallest since 1975.Higher interest rates and rising inventories were blamed.It went on to say that the housing market is cooling very rapidly.

9/08/2006 12:15:00 PM  
Anonymous Anonymous said...

http://nnjbubble.blogspot.
com/2006/08/new-jersey
-condos-look-at-last-
crash.html

RK read this well written post and really let this article sink in. This is what you will be facing.
Price aggressively.

9/08/2006 12:18:00 PM  
Anonymous jay said...

It would be great to see a chart that superimposes inventories and price movements of today's RE bubble with the one from the 1980's. As the decline moves forward, the chart could track housing market performance relative to the last bubble.

Keep up the great work grim. your blog is invaluable.

9/08/2006 12:26:00 PM  
Anonymous Anonymous said...

grim -
Personally, I'd like to see more balanced information. Although the concensus has been there is a bubble and it has started to burst, I feel it would still be helpful to show data supporting the other side of the coin. As opposed to posting quotes from Lereah and the like which will then be followed by 65 or so posts which basically say the same thing about Lereah or the NAR being a bunch of a-holes.
Also, I think everyone would agree that the blog could use more hard evidence and less of the "somebody's uncle's neigbor who bought a condo in 1999..."

9/08/2006 12:35:00 PM  
Anonymous Anonymous said...

jay said...

Keep this is mind Jay. A few of us were in the middle of that 1988-1989:1994 Housing Bubble.

The Housing market today is insane vs the last bubble.
This housing market is absolute lunacy when it comes to lending practices exotic loans and stupid people!

It is Called the "Show & Tell" Society. Alot of show without the substance.

9/08/2006 12:38:00 PM  
Anonymous Anonymous said...

"As opposed to posting quotes from Lereah and the like which will then be followed by 65 or so posts which basically say the same thing about Lereah or the NAR being a bunch of a-holes."

Sorry grimster but the truth is the truth. Even the starving realtors believe that prices need to come down.
Why?
No commish checks.

9/08/2006 12:40:00 PM  
Anonymous Anonymous said...

Hi Grim,

Been reading your blog for a while and greatly appreciate all that you do. Thank you.

I would like to see whats happening on the rental market. I would expect prices of rentals to climb higher as people are not buying. I am renting so i would be interested in that data (middlesex county).
SS

9/08/2006 12:41:00 PM  
Anonymous Anonymous said...

markets should reward those that are patient wise and prudent with their assets.
Not reward some Knumbnuts who is fearless and puts the pedal to the metal buying houses they can't afford.

9/08/2006 12:43:00 PM  
Anonymous gary said...

Grim:

I would love to see a list of the top 10 things Realtors say to get you to buy and the rebuttals that would make them stutter.

Thanks, and I love this blog.

9/08/2006 12:47:00 PM  
Anonymous jay said...

Keep this is mind Jay. A few of us were in the middle of that 1988-1989:1994 Housing Bubble.

I remember it well, I bought my first place in '87. the current market may be different in scope, but the psychology is very similar.

Comparing the 80's with now would certainly provide additional insight.

9/08/2006 12:49:00 PM  
Blogger rymingrealtor said...

I could use a wee little less of :

It's abuse a realtor weekend

And :
65 or so posts which basically say the same thing about Lereah or the NAR being a bunch of a-holes."

And:
never trust a person with a picture on his business card!!

And:
I guess it goes to show the kind of people proliferating in the RE profession.


And:
Speaking of "realtor" or should we call them "get real tors"



But still love this blog !

KL

9/08/2006 12:53:00 PM  
Blogger lindsey said...

Here's a question for the audience:

Everyone is talking about price drops, how much do you believe prices are going to drop by the end of the year?

More specifically, (since I can track it) how much do you think ASKING prices will drop?

I've taken to monitoring median price on the Monmouth and Ocean publicly available Realtor.com site so I have information on a weekly basis back to mid July.

To allow people to make more educated guesses, what I have seen so far (in 8 weeks) is a drop in asking price of between 1/2 of 1 percent and 3.75 percent on SFHs and a drop of about a 1/2 of 1 percent to an INCREASE of 3.7 percent on condos/townhomes.

I will put my own guess in on Sunday.

9/08/2006 12:54:00 PM  
Blogger rymingrealtor said...

I would love to see a list of the top 10 things Realtors say to get you to buy and the rebuttals that would make them stutter.

Oooh that one got in as I was posting.

KL

9/08/2006 12:56:00 PM  
Anonymous dreamtheaterr said...

Grim,

Great site, great content. How about a SavedO'Meter that tracks how much folks on this site have 'saved' by not buying?

My guess is that there are people who were close to buying and once they came to this site, they realized their predicament if they bought this bubble and instead chose to wait it out.

Perhaps have a section on the website where people can input what they felt was a fair offer and were ready to bite, but held off and see that same listing now lower (hopefully!).

Start the SavedO'Meter at $50K coz that's how much a townhome I have tracked and wanted to bite has been reduced in the past 6 months.

Anyway, just my 2 cent suggestion.......not adjusted for inflation.

9/08/2006 01:02:00 PM  
Anonymous Anonymous said...

KL

You really must laugh all day.

Pat

9/08/2006 01:03:00 PM  
Blogger lindsey said...

to Anon. 1:35

"show data supporting the other side of the coin."

If you know of any data, I'd love to see it, because I'm always looking, but not finding.

What would count, wage increases? stock market rally? a builder announcing some new projects? lower interest rates (probably the closest thing to it, but really just a means to perpetuate the bubble)?

I know I sound flip here, but I'm really not trying to be, I just can't think of anything that points to something other than a collapsing market.

9/08/2006 01:04:00 PM  
Blogger Math, like gravity, is law. said...

As of 10/1/06, The Law Establishes The New Category Of "Digital Property"

The law defines “Digital Property” as electronically delivered music, ringtones, movies, books, audio and video works and similar products, where the customer is granted a right or license to use, retain or make a copy of such item. Digital property does not include video programming services, including video on demand television services, and broadcasting services, including content to provide such services. N.J.S.A. 54:32B-2(vv).
Source: www.state.nj.us/treasury/taxation/


Now a comment from someone who's business' WOULD have been directly affected by this stupidity...I moved 1 of 2 business' (other one is on it's way) and myself personally to Florida this past May. Why should anyone care? I earn on average anywhere between $230k to $550k in annual personal income...I am done donating to the NJ Socialist's. As an aside and how this relates to housing; In Northern NJ I would have been a buyer in the $1.5m range (today they ask $3m). And would have paid the property taxes, income taxes and sales taxes purchasing other goods and services in NJ...sooooo now as booya Bob say's they get NADAAAAA. Promised my Wife who is originally from Manhattan, that by coming to S.Florida, I'll buy her an Apt. in Manhattan, sometime over the next 3-4 years. Remember: In every State that they do not allow concealed carry and demonize guns, is where they tax you dry...moral of the story... Guns, in the hands of law abiding citizens are good! If we didn't have them in 1776 what would this country look like?

9/08/2006 01:08:00 PM  
Blogger lindsey said...

and rymingrealtor,

When people here speak ill of realtors, they don't mean you, because, you know, your our friend and we know you're not like those other realtors. We only want to say bad things about the bad realtors.

(I hope the sarcasm came through)

9/08/2006 01:08:00 PM  
Anonymous Anonymous said...

Check out these guys:

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?cnn=yes

Trying to sell there townhouse. Having trouble. Nobody even interested. Poor boys.

9/08/2006 01:09:00 PM  
Anonymous patricia said...

yes this is a good blog site for those who are in real estate biz..ü

9/08/2006 01:12:00 PM  
Blogger chicagofinance said...

This comment has been removed by a blog administrator.

9/08/2006 01:15:00 PM  
Blogger chicagofinance said...

grim:

I'd like to have you start wearing a Blackberry connected to the NNJ RE Bubble Blog. I think it is unacceptable that you indulge yourself by taking "evenings off" from the blog because of extraneous social obligations [e.g., birthday].

I'd like to see more postings at regular intervals. Every time I come to the site, I want to see something new. Use ESPN.COM during a NFL Sunday as your benchmark.

I think you should consider the world your audience, so dynamic updating of the site should be your priority at all hours of the day and week.

Do not let the quality slip either!

9/08/2006 01:20:00 PM  
Anonymous jay said...

rymingrealtor said...

I could use a wee little less of :

It's abuse a realtor weekend
and...


This is the NJ Bubble Blog after all, and if people can't express their dissatisfaction with the housing market game and its players here, than where?

I admit it does get old and is sometimes innaccurate and unfair, but just skip over those objectionable posts and you'll continue to find excellent info and viewpoints.

9/08/2006 01:20:00 PM  
Anonymous Anonymous said...

Lindsey,

You stole my thunder. There is only one way to look at this; fundamentals and technicals. Grim does not make up these #'s/charts, he reports them. We have had one side of this coin from 2001/present. You better get used to the other side of the coin. It is just starting to unravel. I constantly ask realtors/individuals in the business why I should buy, haven't received one feasible response. Still waiting.

BC Bob

9/08/2006 01:20:00 PM  
Anonymous Anonymous said...

I'm thinking maybe anon 1:35 is trying to see a thread for "listings closed above asking prices, where asking price was above 2005 peak and no incentives were offered."

Maybe a list of unsold homes going for rental that are not negative on the monthly stream. That would be a positive statistic, even if most of those homes were pre-'99 purchases.

Or positive articles like the following:
http://tinyurl.com/m858g
which are a little upbeat about the situation.

That one basically says, "Look folks, a travel agent and a contractor are willing to buy-up! If only stupid buyers would buy their old place (they even lowered the price a whopping 2%..$7k).

Lindsey, after thinking about the possible positive stats that could be out there, I'm also with you.

I don't think there ARE many positive numbers. Not even with the mortgage guys. Maybe if we could find out if recent purchasers with risky mortgages are doing the right thing and converting to fixed?

Pat

9/08/2006 01:23:00 PM  
Anonymous Anonymous said...

Grim,
First, thanks. You do a fantastic job on this site, and your legwork with inventory data, charts, etc. is what makes this blog an amazing resource. I probably would have become a "bagholder" if it weren't for this blog.

What I would like to see is some historical median price NNJ price data. I've searched but cannot find it. I'm trying to project future median prices in NNJ over the next 8 years. Seeing the historical median data will help to find where prices became disconnected with inflation and I can start my analysis from there. Thanks again!

9/08/2006 01:23:00 PM  
Blogger grim said...

Places other than home and work that I've blogged from in the past year..

I've blogged from a number of local cafes and bookstores, including a Starbucks in NYC.

I've been caught blogging at a christening party for a nephew, at a superbowl party, at my parents and inlaws.

Blogged internationally from Krakow, PL and Playa Del Carmen, MX, and almost always blog during weekends on LBI.

I tried to blog from my cellphone, it was a horrible mess.

grim

9/08/2006 01:30:00 PM  
Anonymous UnRealtor said...

"A lot of show without the substance."


That's "All hat, no cattle."

9/08/2006 01:31:00 PM  
Blogger Richie said...

I AM NUZD.

That's my word verification.

9/08/2006 01:49:00 PM  
Blogger RichInNorthNJ said...

Looking for suggestions on what you folks would like to see more or less of.

More sex!

Oh, sorry. Wrong blog.

I'm with those other guys that said less bashing and less "my uncle's neighbor" stories and MORE DATA.
Me loves data!

9/08/2006 01:53:00 PM  
Anonymous Anonymous said...

Does anybody know where we can get on line prices of houses sold at sheriff sales in the different counties on a regular basis? This would also give us a good indication of the prices of the properties being sold through the foreclosure sheriff sales. I would appreciate any input on this.

9/08/2006 01:53:00 PM  
Blogger Rich52 said...

Does anybody know where we can get on line prices of houses sold at sheriff sales in the different counties on a regular basis? This would also give us a good indication of the prices of the properties being sold through the foreclosure sheriff sales. I would appreciate any input on this.

Would that info be under tax info, given that enough time has passed since the sale? If so, one would need to keep a list of addresses of houses going up for auction.

9/08/2006 02:05:00 PM  
Blogger skep-tic said...

"I would be really interested in seeing any historic monthly data you have for inventory for previous years. I would like to see what the normal pattern is over the course of a year."

Miller/Samuel had a great chart up on his blog a couple of months back on seasonal fluctations of the NYC RE market. It isn't Jersey, though I suspect the overall fluctuations are similar

9/08/2006 02:14:00 PM  
Anonymous Anonymous said...

hey GRIM.
this site is espectacular!
What about prices in sheriff sales?
do u think that sheriff sales can be a real termometer for actual real home prices?
Do u think that could be a good idea to try this now, or it is better to wait?
THANKS a lot

9/08/2006 02:22:00 PM  
Anonymous Anonymous said...

Pat -
what I'm saying is...

while the "lowballs" that grim posts periodically is a great help and the kind of data we all want to see, I think it would be helpful to see "highballs" as well for instance.

this might even provide a unique perspective of reality setting in. for instance there might have been 25% lowballs and 25% above asking for a given period. perhaps next month the data might show 50% below asking by 10% or more, 35% at asking and the rest above asking. who knows by next spring it might be 100% below asking.

formerly anon 1:35

9/08/2006 02:26:00 PM  
Anonymous Anonymous said...

Anonymous said...
Pat -
what I'm saying is...

while the "lowballs" that grim posts periodically is a great help and the kind of data we all want to see, I think it would be helpful to see "highballs" as well for instance.

this might even provide a unique perspective of reality setting in. for instance there might have been 25% lowballs and 25% above asking for a given period. perhaps next month the data might show 50% below asking by 10% or more, 35% at asking and the rest above asking. who knows by next spring it might be 100% below asking.



Being a realtor and having access to the MLS, I can tell you that it doesn't happen too often anymore. Infact, so seldom that it would not be beneficial to show it

9/08/2006 02:29:00 PM  
Anonymous Anonymous said...


Being a realtor and having access to the MLS, I can tell you that it doesn't happen too often anymore. Infact, so seldom that it would not be beneficial to show it


that's too bad...it would have been nice to see downward trend.

9/08/2006 02:43:00 PM  
Anonymous Anonymous said...

Anonymous said...
grim -
"Personally, I'd like to see more balanced information"

This is pretty balanced;

"My names Bob, I have a nice house, 3 kids, good schools, nice yard,etc... How do I do it??? I’m up in debt to my eyeballs. Somebody help me."

BC Bob

9/08/2006 02:46:00 PM  
Anonymous Anonymous said...

Any blogs on commercial real estate for morris county or NJ in general

9/08/2006 02:49:00 PM  
Blogger skep-tic said...

as for things that contradict this blog's conventional wisdom...

1. high income people have an increasingly large share of the nation's wealth. these people are concentrated around premier cities such as NYC, Boston, LA, San Fran. As the wealth of the upper class continues to grow disproportionately, it stands to reason that RE would appreciate more rapidly where the wealthy live than in other places.

2. paying for a home has a more favorably tax consequence than it used to have. The fact that you can make up to $500,000 tax free from the sale of your home should increase the price people are willing to pay for this asset relative to before the tax break was in effect.

3. people have an amazing number of ways to finance a home relative to the past. given that the average homeowner doesn't stay put for 30 yrs, Greenspan was probably right that people on average were overpaying for financing. For many people a 5 or 10 yr fixed rate ARM is worth it. The improved financing options have legitimately improved many buyers' purchasing power, and prices should be expected to have gone up as a result.

4. RE is a traditional play against inflation. It makes sense to own RE when inflation is high. I think there is a legitimate argument that the explosion in RE prices was a manifestation of high inflation. If high inflation continues (and it doesn't appear to be slowing down), owning real estate will be smart.

5. while population growth is flat, fewer people live in a household than 20 yrs ago and people generally buy bigger houses. Also, with more wealth going to the upper class, these people increasingly own multiple homes. The point is that demand has grown beyond population growth, especially in wealthy enclaves like the Northeast.

6. houses are more expensive to build than ever. building materials are in high demand globally. labor is in short supply. if not for illegal immigration, it would be even more expensive. plus, regulations against development are absurdly restrictive in many areas. It just doesn't make sense to build middle class homes anywhere close to premier cities, unless it is in the ghetto (and only then with tax subsidies, zone waivers, etc). Thus, the supply of middle class homes is artificially low, and prices cannot come down too far.

these are just a few I can think of off the top of my head. I'm not saying that I don't still believe we're in a bubble, but I do think there are some compelling reasons to believe that not all of the appreciation of the past few years was irrational.

9/08/2006 02:55:00 PM  
Anonymous UnRealtor said...

"I would love to see a list of the top 10 things Realtors say to get you to buy and the rebuttals that would make them stutter."


The classic: "There's another offer coming in tonight." (Added twist: the house has been on the market 100+ days, but the "other offer" magically appears the same day you're making an offer.)

The response: "That's fine, this is my offer, best and final."

9/08/2006 03:00:00 PM  
Anonymous Anonymous said...

must read......

http://www.xanga.com/
home.aspx?user=russwinter
&next
date=9%2f8%2f2006
+23%3a59%3a59.999

9/08/2006 03:03:00 PM  
Anonymous Anonymous said...

I would like to see fewer long articles posted in full text in the comments section--it's a drag to read them in that format, and half the time they are repeats. I agree that sometimes the reporting seems unbalanced--for example, it would be nice to know how many houses closed w/in 5% of OLP (AND perhaps which agencies and agents are pricing realistically!) I don't think lowball--amusing as it is--tells the whole story. Better spelling. Fewer caps. A little more humor and a little less vitriol.
--CJ Sell-out

9/08/2006 03:13:00 PM  
Anonymous Anonymous said...

anon 4:03...

Just read it.
The numbers have not made sense for months.

I slammed the brake and shifted from brain to gut in early July. Hated to do it, but the numbers I was eating were giving me hangovers.

Pat

9/08/2006 03:14:00 PM  
Anonymous Anonymous said...

sounds like a few humbled beaten DOWN realtors have joined the blog.

NOOOOTTTT"ING against you but the display of ethics the last few years has been outrageous!

I am sickened what i have seen the last 3 years!

We need a really good correction to get home prices down to reality and the 1-2% + Inflation trendline which sits about 30% lower.

DO YOUR JOB AND START TALKING SENSE INTO SOME OF THESE GRUBBING "TOO LATE IT'S NOT 2005" SELLERS

BOOOOOOOOOOOOOYAAAAAAAAAAAA

Bob!

9/08/2006 03:17:00 PM  
Blogger grim said...

If anyone has access to the Credit Suisse report that Russ Winter mentions, please let me know, I'd love to read it.

jb

9/08/2006 03:21:00 PM  
Anonymous Anonymous said...

price declines are here and they are big.
Finally, given the bogus reporting, CS wisely recommends channel checks and here's a few samples:

- One builder estimates that prices in Prince Williams County, Virginia are down 10%, while MLS data indicates 2%.

- Feedback from Phoenix indicate incentives are averaging 10% of the base price in the market.

- A Las Vegas builder believes true net prices are down between 8-15%

- A builder in Tampa reports that base prices are up 5%, but that incentives are 20%. This builder plans on dropping base prices by 15%.

- A contact in Sacramento believes prices are down 12-15% from the peak.

- A respondent in San Diego estimates net prices are down 12-15%. Many sellers are now asking less than their mortgage appraisals.

- A realtor in San Diego notes that in July, homes with an average price over $2.5 million made up 5.7% of MLS sales, versus 4.5% in July, 2005, giving a false product mix distortion of price data.

-A contact in Chicago believes base prices are up 3%, but that incentives of 8% has eliminated that gain.

This item is important, perhaps reflecting self imposed credit tightening from one of the big enablers, New Century:

The company said interest-only loans fell to 17% of nonprime production in August from 35% a year ago. California-based loans slipped to 32% of nonprime production from 37% a year ago.

9/08/2006 03:22:00 PM  
Blogger Richard said...

there are those that are going to buy in this market for reasons only they can justify. knowing that it would be useful if us 'experts' can provide more information on how to provide maximum protection in such an uncertain point in the RE cycle. it certainly would be more educational and valuable than saying let the greedy grubbing sellers rot.

9/08/2006 03:33:00 PM  
Anonymous Anonymous said...

I would like to see more stories from the overseas media reporting on the US housing bust. They seem to have a better idea of the crash than do the american media. Especially Japan, because they have already been there and done that.

SAS

9/08/2006 03:35:00 PM  
Anonymous UnRealtor said...

"it would be nice to know how many houses closed w/in 5% of OLP"


Tough to know, as realtors intentionally manipulate that information by re-listing the same property for each price drop, or when the 'days on market' gets too high.

That stat has become meaningless, thanks to the "realtor code of ethics."

9/08/2006 03:35:00 PM  
Anonymous Anonymous said...

KL

Re: the comment "Speaking of "realtor" or should we call them "get real tors"


Given you are a realtor, what do you think of my hypothetical story posted under the NAR story from yesterday? Do you think a complaint is in order either from me or from the owners of "Unit A" that is still not rented out. I really mean it, would love to get your feedback. Thanks,

AFE

9/08/2006 03:45:00 PM  
Anonymous Anonymous said...

I liked the Saved-O-Meter idea. I personally bid 385K on a 2 bedroom townhouse (Edison) back in Feb' 06. The night I signed the contract, I came across this site... after reading through the posts I called up my agent and cancelled the offer. The same home is still on the market at 345....
Thanks Grim.

SUM.

9/08/2006 03:53:00 PM  
Anonymous Anonymous said...

Anybody dissatisfied with their career? Not getting raises?

How about mortgage collections? 2% Salary increase in a month! Must be A LOT of work out there.

Where's the Queens guy? He should look into this.

"Collection salaries continued their steady climb last month with salaries for 20 collection jobs increasing from 0.21% to 0.26% from the start of August to the start of September, according to a CCR analysis of data from Web site Salary.com...

Increases range from a high of 6.73% for intermediate level mortgage collectors to a low of 2.34% for mortgage collector level III."

http://tinyurl.com/o4az3

Pat

9/08/2006 04:03:00 PM  
Anonymous Anonymous said...

..make that .26, but better than none in a month.

Pat

9/08/2006 04:10:00 PM  
Blogger chicagofinance said...

Latest client mystery story [not mine, so I don't mind disclosing detail]:

Married couple in NJ, three young kids, combined salary $235,000. mortgage payment roughly $3,000. Drive modest cars.

Don't have enough money to fund retirement plans at all.

Does this sound fishy?

9/08/2006 05:04:00 PM  
Anonymous Anonymous said...

O.K.

Huge student loan problem?

Prior marriage/ child support secret?

High salary only recently obtained?

Long (5 months+) unemployment period within last 2 years?

Gambling problem?

Attend a church/religion that forces 20% tithes but not permitted to speak about it?

Some weird stuff it might be. Or, it could be simply that the three kids are in private schools at an average of $3000 a month or more for all three.

Pat

9/08/2006 05:25:00 PM  
Anonymous Anonymous said...

CF--
Assuming they have done little tax planning, they might net $150K after taxes. Out of that comes child care, nursery school, afterschool programs and summer care--$15-60K depending on their arrangements. One or both may have graduate and/or undergraduate student loans, which could easily run 10-25K. They are buying a lot of services if they both work and have young children--lawn service, cleaning service, etc, add minimum 5K per year. Many meals out or bought in, another 5K. With those salaries, they are probably spending on clothing and personal care to keep up with expectations, another 5-10K easy. A family vacation once a year, another 5-10K. Lessons, clothing and out of pocket medical for the kids--another 5K. Mortgage, taxes, utilities and home maintenance another 60K. Stuff--add another 10K. Car payments, maintenance, gas and insurance--3K each vehicle, another 6K even for modest cars (assuming they were bought new and financed.) This assumes they have no financial obligations for parent or disabled siblings, no credit card debts to pay off, etc. It's quite believable they don't feel they can fund a retirement plan, or college fund for the kiddos, for that matter. And yet I live quite cofortably on 1/4 of that. It's a mystery.

9/08/2006 05:50:00 PM  
Anonymous Anonymous said...

shytown,

easy....

He is getting call girls at 300-$400/hr.

She knows this, and lives out her denials by shopping at the malls.

SAS

9/08/2006 05:51:00 PM  
Anonymous Anonymous said...

high income people have an increasingly large share of the nation's wealth. these people are concentrated around premier cities such as NYC, Boston, LA, San Fran. As the wealth of the upper class continues to grow disproportionately, it stands to reason that RE would appreciate more rapidly where the wealthy live than in other places

Does this mean, in your opinion, that high end real estate (Park Ave apts, waterfront, top locations in top towns) will feel the effects little, if at all?

The "flight-to-quality" effect?

After all, if Wall St continues to do well, those folks have to live somewhere, and I don't see them denying themselves waterfront in the Hamptons, Round Hill Road in Greenwich, or a family apartment in 10021.....

Do you?

9/08/2006 06:04:00 PM  
Blogger grim said...

From Marketwatch:

Standard Pacific cuts third-quarter outlook

Standard Pacific Corp. late Friday said it expects third-quarter earnings to come in below its previous forecast of 80 cents to 85 cents a share. The Irvine, Calif.-based homebuilder also said it expects to lower its full-year earnings and delivery outlook. Standard Pacific said net new home orders for the first two months of the third quarter were down 58% from the same period last year, driven mainly by an increase in the company's cancellation rate and further weakening of demand in many of its larger markets. The company's gross orders for July and August were off 30% from last year. The backlog at Aug. 31 stood at 4,837 pre-sold homes valued at $1.8 billion.

9/08/2006 06:09:00 PM  
Blogger RichInNorthNJ said...

I would like to see fewer long articles posted in full text in the comments section...Fewer caps. A little more humor and a little less vitriol.

Amen, amen and amen.

(The bad spelling is kinda fun.
Yea, I wrote kinda not "kind of".)

5 Mojitos Rich

9/08/2006 06:45:00 PM  
Anonymous Anonymous said...

anon - 9/08/2006 03:26:43 PM


who knows by next spring it might be 100% below asking.


i'm waiting for prices to go down but not by 100% :)

9/08/2006 07:16:00 PM  
Anonymous Anonymous said...

to Skep-tic

First, I like that you live up to your name. I'm going to take your statements one at a time and see what it takes for them to function as "positive" signs for this RE market.

"1. high income people have an increasingly large share of the nation's wealth..."

How many people are we really talking about here?
Using Wikipedia I get about 7 million households nationwide with earned incomes of $150K+ (in 2005).

Now let's make some assumptions:

I think it's reasonable to place the floor for high income in Greater NYC at $150K and that should hold true for LA, SF, Boston, Miami, Chicago and a few other cities.

Lets put 1M of those households in Greater NYC at any given time (Westchester, southern Connecticut and NJ down to Monmouth County).
If NJ gets 1/3, that's 333K or roughly 1 in 10 households in the state.

Lets take 1 in 20 (I'm trying to leave significant room for error) of those households as those currently looking to purchase a home. Now we have about 17K potential buyers of homes for sale at more than $500K (some might have to stretch a little) In NJ South from NYC to Monmouth County.

Looking at Realtor.com's Monmouth County listings (does not include new construction) there are about 3,400 homes for sale at $500K or more.

So, if all of those things are true, and 1 in 5 of those high income buyers in New Jersey are seeking to buy in Monmouth County, and don't want new construction, than the market here is OK, but if an assumption is wrong...

Lindsey

9/08/2006 07:33:00 PM  
Anonymous Anonymous said...

skep-tic said...
9/08/2006 03:55:06 PM

Regarding the 500k tax break. Why does this increase the price someone is willing to pay for an asset?? The 500k tax break has nothing to do with the price of the house, only the profit. Look at the Otteau report, what price homes have the highest absorption rate???

"The improved financing options have legitimately improved many buyers' purchasing power, and prices should be expected to have gone up as a result."

Isn't this part of the reason we are in a pile of shit now???? The end result will not be higher prices but lower prices when this financing crashes and burns.

"regulations against development are absurdly restrictive in many areas. It just doesn't make sense to build middle class homes anywhere close to premier cities, unless it is in the ghetto (and only then with tax subsidies, zone waivers, etc)."

If zoning restrictions in America are your argument why have prices increased globally??? If towns are so restrictive why haven't rents increased in tandem with house prices???

Your argument on zoning restrictions is flawed. The increased supply of homes on the market through new construction is a small # of the total % sold. The avialable # of homes on the market can increase substantially without any change in the supply of new homes. Irrational prices being paid may be the # 1 culprit.

BC Bob

9/08/2006 07:38:00 PM  
Anonymous Anonymous said...

Are there other alternatives we should consider?

RK

Yeah, drop the MLS listing. Advertise in the local paper and the Star Ledger, and post on fsbo.com, forsalebyowner.com and Craigslist. Also post in the common area of the condo community..you never know who may have a friend interested in buying or if a current owner is looking for additional properties as an investment.

No offense, but if your boyfriend is a real estate attorney, he should know this drill.

9/08/2006 07:59:00 PM  
Blogger Richard said...

it's quite simple to me why prices have gone up considerably. the plethora of mortgage products with a sliding risk scale not available before, rock bottom negative real interest rates, the fascination with real estate as an investment after a stock market crash and some 9/11 effects. the first reason is totally unique and to me the strongest driver behind this surge by lowering the 'affordability' bar allowing more participants than historically. while we can all speculate on what the outcome of this is no one knows as we have no historical precedent. sure you can draw analogies to similar things but they only rhyme. we're going to have to watch and wait a couple of years to see whether the RE market crashes and burns, or grinda and/or stabilizes at some point.

9/08/2006 08:12:00 PM  
Blogger Richie said...

The next great investment is going to be jeans. Start buying now!! We can corner this market if we buy up all the supply!! The price of denim and cotton will skyrocket!!

-Richie

9/08/2006 08:33:00 PM  
Blogger Richie said...

Latest client mystery story [not mine, so I don't mind disclosing detail]:

Married couple in NJ, three young kids, combined salary $235,000. mortgage payment roughly $3,000. Drive modest cars.

Don't have enough money to fund retirement plans at all.

Does this sound fishy?


It smells fishy. Does the $3k mortgage payment include taxes?

-Richie

9/08/2006 08:35:00 PM  
Anonymous Anonymous said...

Richard,

" while we can all speculate on what the outcome of this is no one knows as we have no historical precedent."

You are so right about that. That is what makes this so scary. The only thing that I can compare this to is the 1920's. Market crashes always occur in the same manner. Regardless of the market, the same simple psychological underpinnings are always at work. People who are caught up in a bubble never look back for historical examples.

Regardless of the time frame, this market will suffer a severe setback/crash. This is the function of the market. Markets have a way of allowing everybody on board before the counter-move begins. The final blow off top will be attributed to the easy financing that opened the door for everybody. Unfortunately, that door is now shut, they are all trapped. Make no mistake about this, this bubble has popped, not yet in prices. The only question will be the end result/consequences.

Those who cannot remember the past or take the time to study the past are condemned to repeat it.

BC Bob

9/08/2006 08:50:00 PM  
Blogger chicagofinance said...

Does this sound fishy?



As much as I hate to think it. My initial reaction was closer to the SAS camp. I thought drug or gambling problem, but any other expensive vice will fit the bill.

9/08/2006 08:56:00 PM  
Anonymous Anonymous said...

160k
-36000 child care or private school
-36000 mtg
-12000 car exp
-8000 vac
-10000 student loans??
-8000 all util
-5000 upkeep/lawn/snow/
-10000 groceries
-10000 club memberships
-5000 dining out
-2400 gas
-2000 kids uniforms
-6000 clothing for 5
-3000 charitable/church/other
-5000 crap we all waste money on

Yeah, maybe no gambling or drugs. Above expenses are typical for family of 5, executive. They're not making enough to save. This couple needs to drop their golf club membership and stop eating out.
With three kids in private school, need more money if they want to save.

Pat

9/08/2006 09:48:00 PM  
Anonymous Anonymous said...

Here's the word on the street around Grove St. in JC.

Some asking prices are now back to 2005 peak--a 3 family which must need work but on a good block near Hamilton Park at 759,000 (was 810,000 in June); a one family in a similar locale at 499,000 (was 565,000 last fall).

I had to get off the train two nights ago at Pavonia Newport for a medical emergency. Walked back to Van Vorst past the foundation for the first of the two Trump towers (the second won't get built). the Donald is late to the party. On the next block, there's another 40 or so story condo building 6 months further along, 6 months to a year from completion--a mute, inglorious shell. Grove Point, by Grove Path, is 20 or so stories, not completed, marketing sex in the city longer after the cache for this scheme left town. Liberty Harbor, over by the hospital downtown, is huge too, and half built too. They are slow at completing it--problems? Saw a van for the Beacon the other day too, which can't be beyond phase 1--won't get there.

A staggering number of places still must come to market or rot as shells, in other words, in the next two years--projects already started, can't be stopped unless they are left to rot.

The carnage will be intense in JC in mho even if we don't go into recession. Sounds like we will.

Glad to be renting, even though I too have lost ground financially this past year.

WM

9/08/2006 09:58:00 PM  
Anonymous Anonymous said...

As someone who just bought I have to admit that this blog has given me second thoughts but, after a bit of math, buying made a lot of financial sense compared to renting.

We had been looking for the past year to buy as our personal circumstances, first child and rent(3500) make it seem like the right thing to do. After a lot of looking around we found a house my wife loved. Original asking was 699K and after some back and forth we got the house for 640K. We put 20% down with a 30 fixed.

Our gross income is 265K, so our mortgage of 512K is less than half our income; we can easily make our payments/taxes (9500 annual).
Expect to be in the house for 10 years. Also the new location reduces my commute by about 40 minutes each way.

I think buying was a good choice for us, The simple reason is that buying is basically a forced savings program, subsidized in the form of interest payments being tax-deductible. In my case, after taxes, and deductible interest - the rest is principal, which I basically pay to myself, in the form of equity.

This compares quite favorably to the almost $3500 I used to pay in rent (for a smaller and much shittier apartment), even if 10 years later(which is how long we plan on staying) I sold our house at the very same price I had bought it. This is precisely why rising rents matter a lot in the equation.

For me, the worst case scenario, would be if some unforseen circumstance forced us to sell prematurely, in that case I may well have to eat a 20% loss.

I guess I have to balance this potential worst case scenario against the savings I will get from not paying 3500 in rent and no landlord who keeps rising my rent every year. Yes, I could put the $500/month that I am paying extra over renting into the stock market, but the stock market is much more volatile than the housing market, and I am already tied to the whims of the stock market thanks to my 401k, so investing in my own house has another big advantage: diversification and spreading my risk.

Just my 2cents about my take on our situation.

9/08/2006 10:26:00 PM  
Blogger rymingrealtor said...

Given you are a realtor, what do you think of my hypothetical story posted under the NAR story from yesterday? Do you think a complaint is in order either from me or from the owners of "Unit A" that is still not rented out. I really mean it, would love to get your feedback.

Was it a real story or hypthetical?

KL

9/08/2006 10:37:00 PM  
Anonymous Anonymous said...

Was it a real story or hypthetical?

KL
9/08/2006 11:37:38 PM


It is a real story that has some minor details changed. But the following detail is real: a realtor-owner who told her colleague to show her own property not the one she was listing.


AFE

9/08/2006 10:54:00 PM  
Anonymous Anonymous said...

here in south orange we're seeing the same in terms of a slowing build-up. condo projects that supposedly had begun have stalled
(although that is always the case here), and asking prices for units that are available seem to have dipped.

9/08/2006 10:54:00 PM  
Anonymous Anonymous said...

9/08/2006 11:26:43 PM

We make good money but would i bet on making the same kind of money over the next 30 years? 20 years back the answer would have been a resounding yes. The world is flatter today and flattening process has increased considerably over the last couple of years.


I'm not sure whether the bubble is going to pop next year but from what i see a bubble pop will do more to the economy than mere a 20% reduction in home prices.

9/08/2006 11:01:00 PM  
Anonymous Anonymous said...

I posted earlier at 9/08/2006 11:26:43 PM

I actually anticipate my salary increasing in the next 30 years. That along with the effects of inflation will reduce the cost of the house every year to us given our 30 year fixed.

9/08/2006 11:09:00 PM  
Blogger patient homebuyer said...

greetings from sunny california

just wanted to let you know it is

just a buyers market (wink wink )

out here, on vacation and san diego

is one big condo sale

lots of flim flammers out here

ive missed this blog

also porsche is the officila car of

santa monica. lots of heloc money

9/09/2006 01:51:00 AM  
Anonymous Anonymous said...

I was going to rent, but am fighting down a strong urge to own again. So I forced myself to run some numbers, and the exercise helped me understand why so many folks have been overbuying real estate using creative financing. In my buying model, a mere 5% annual apreciation dropped my "effective" housing cost to $285/month. Of course, a mere 5% annual depreciation almost doubled my effective housing cost and it gets worse from there. Still, I can see how the prospect of "earning" 5-10% through RE appreciation with money that only costs you 3% (where some intro rates were) looked like a no-brainer two years ago. It's all a function of the assumptions you make.
--CJ Sell-out

9/09/2006 06:11:00 AM  
Anonymous Anonymous said...

cj

Were you using the calculator on cepr.net which makes internal assumptions re inflation?

Or were you using a calculator like http://www.vlender.com/cgi-bin/calc/rent_vs_buy.cgi

Pat

9/09/2006 06:21:00 AM  
Anonymous Stan said...

Anon 11:26pm -
I'm curious where in the New York area you can have a bad apartment for $3500 that has commute 40 minutes longer than a nice house for $650?

Were you living in Manhattan and commuting to Pennsylvania?

A better comparison would have been to compare rents in the area in which you eventually bought.

9/09/2006 07:59:00 AM  
Anonymous Anonymous said...

Pat, That caluclator is pretty nifty, but it seemed to miss several points. One is that is does not seem to account for return on alternative investment of your "non" downpayment if you are a renter. In my case,that is a pretty high number as I have cash/freed equity but a relatively low income. Another is that it doesn't seem to escalate property taxes or maintenance costs. I am not very sophisticated about building spreadsheets so mine doesn't touch inflation either--but on a very basic level, which is probably how many people look at it, 100% financing using an option ARM looked like a brilliant move if you assumed prices would continue to rise at 10-20% a year.
CJ

9/09/2006 08:55:00 AM  
Anonymous Anonymous said...

OK, Skeptic, back for your second point

2. paying for a home has a more favorably tax consequence than it used to have.

There has to be some truth to this, but how much does it matter?

Also profits from a house sale only come when the value of the house has risen. Even Lereah isn't pushing that notion at the moment.

Of course taking profits also means moving to another cheaper home (investment properties aren't treated the same) so that is another limiter on the people who benefit from this.

The positive affect from this, if it exists at all, is negligible.

Lindsey

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

Back for another round Skeptic

3. people have an amazing number of ways to finance a home relative to the past.

I think this is actually the most legit positive if the lenders weren't abusing the crap out of their clients and putting them into financial instruments they can't fathom.

Also, this has greatly increased risk in the system, apparently without appropriately compensating for it.

These loans also change the nature of a home purchase from meeting a basic need in a cost-stable manner to an investment which carries risks.

9/09/2006 09:15:00 AM  
Blogger rymingrealtor said...

It is a real story that has some minor details changed. But the following detail is real: a realtor-owner who told her colleague to show her own property not the one she was listing

AFE

I have run into unethical behavior in all types of situations, these include areas that don't always cost you money. I have young children, and believe me unethical behavior is also in the school system, are all teachers and administrators guilty- abolutely not! I handle it by going up the ladder one by one - teacher, principal, superintendent. In your situation, agent,broker, then real estate commision.

Let us know you end result.
KL

9/09/2006 09:44:00 AM  
Blogger rymingrealtor said...

** Please note ***

Sometimes I make typos that can be mistaken for spelling errors. And vice -versa

Yes I am a little paranoid lately about the spelling issue.

KL

9/09/2006 09:46:00 AM  
Anonymous Anonymous said...

Stan,

Yes you are right; we lived in Manhattan and I worked and commuted to the suburbs were we just bought.

You're also correct that a rental where we bought would have been cheaper but not by much, maybe about 2500 for a comparable apt, but we really needed the extra space this house affords.


Stan said...
Anon 11:26pm -
I'm curious where in the New York area you can have a bad apartment for $3500 that has commute 40 minutes longer than a nice house for $650?

Were you living in Manhattan and commuting to Pennsylvania?

A better comparison would have been to compare rents in the area in which you eventually bought.

9/09/2006 08:59:14 AM

9/09/2006 10:46:00 AM  
Blogger skep-tic said...

Lindsey,

Addressing your points in kind

"I think it's reasonable to place the floor for high income in Greater NYC at $150K"

There are a lot of towns around NYC where the median income is $150,000+. For example (town, median income, number of households):

WESTCHESTER

Rye, NY
$186,103
5,227

Rye Brook, NY
$205,363
2,166

Scarsdale, NY
$316,453
5,894

Edgemont, NY
$203,781
2,510

Chappaqua, NY
$284,785
5,225

Bronxville, NY
$227,990
2,449

Katonah-Lewisboro, NY
$187,841
6,394

Armonk, NY
$239,485
3,609

Briarcliff Manor, NY
$233,819
2,342

Ardsley, NY
$189,398
3,226

Pelham, NY
$158,241
4,110

LONG ISLAND

New Hyde Park, NY
$158,942
7,860

Jericho, NY
$189,889
4,581

Manhasset, NY
$210,949
5,300

Roslyn
$177,180
5,783

CONNECTICUT

Greenwich
$149,330
23,596

Darien
$215,062
6,746

Ridgefield
$159,968
8,535

Weston
$219,126
3,349

Westport
$181,007
9,626

New Canaan
$211,711
6,970

Wilton
$207,940
6,027

NEW JERSEY

Glen Rock, NJ
$148,159
4,027

Basking Ridge, NJ
$154,367
10,305

Holmdel, NJ
$159,018
5,371

Millburn, NJ
$185,672
6,866

Skillman, NJ
$169,983
6,515

Mountain Lakes, NJ
$200,584
1,338

Ridgewood, NJ
$148,445
8,726

Chatham, NJ
$149,175
7,171

Source: S&P (2005)

I apologize if I've left any towns in NJ out. I'm more familiar with Westchester/CT.

Anyway, as you can see, there are a lot of very high income people in the NYC-metro area. There are likely tens-of-thousands more $150,000+ families in NYC.

There are many additional such households in cities that do no have such high medians, such as Stamford, CT and Hoboken, NJ.

Figures like the above lead me to believe at times that the median income figures for the region as a whole are not so helpful in judging the fundamental value of local real estate.

9/09/2006 12:08:00 PM  
Anonymous Anonymous said...

When does the fed meet to set rates in September?

Do you believe that they will raise them?

What do you expect to happen to the markets?

I believe that they might hold off because of the November elections. Just want to know what to do with a short term cash position and a long term fund that has gone up almost 20% in one year.

9/09/2006 12:53:00 PM  
Blogger cs said...

I have been following Essex closely and also West Milford and other outskirts a bit. It's very interesting that W Milford seems to have tanked harder with Essex towns trying to keep their prices up. It seems like much more reductions need to take place in Essex.

-cs

9/09/2006 03:29:00 PM  
Anonymous melissli said...

I enjoy often reading this blog and I am benefiting from the education it has to offer. I decided to stop lurking and post because I saw something interesting on realtor.com. Apparantly, you can get what they consider local market conditions from "experts" in the industry. I found a realtor who is posting his opinion on each site in my area (ocean/monmouth couties). Here is what he had to say about Jackson, NJ (my hometown):
"The average "Days on the Market" (DOM) decreased to 74 but the Sales Price to List Price Ratio remained strong at 98%!

The current average List Price of homes For Sale in Jackson remains high at $503,478 despite a decrease in buyer activity over the same time last year.

Pricing will be CRITICAL over the next two months for Sellers who need to sell but they if they "price it right", they can still get alot of money for their home!

Buyers can expect to enjoy a little more variety and "negotiating power" this spring but they SHOULDN'T expect any price decreases in the near future!"


Of course, this is just the opposite of what I have been reading here and on similar blogs.
In addition, how deceptive to list the DOM and list price/sales stats, when it is now common knowledge that realtors are often relisting properties to avoid showing price reductions or lengthy stays on the market.

Just thought I'd share...I was pretty angry reading the statement, and I felt like venting to those who may care.

Thanks again for the info,
Melissa

9/09/2006 05:06:00 PM  
Anonymous Charles Murray said...

I KNOW IT'S FRUITLESS TO POST THIS BUT WHY NOT. a lot on this post are rooting for real estate to crash. They want to buy at what they feel is a reasonable price. Let's say it does crash. They have an offer accepted on a house listing of $400,000.00 at 50% off = $ 200,000.00 at closing the homeowners insurance is $150,000.00. Value of building less land value. Remember this is not the real world, there is no buildable land in NJ worth $ 50,000.00 but I will continue. Thet move in and the house burns down. What do they do? Go back to renting and making the landlord rich. If you have a brain you see this can't be real. housing cost are real. It's all about replacement costs!

9/09/2006 05:23:00 PM  
Anonymous Anonymous said...

Why do you yhink the reators make the markt?

9/09/2006 05:47:00 PM  
Anonymous Anonymous said...

AMASING SOMEONE SAID THEY BOUGHT A CONDO IN bOSTON IN 88 HELD FOR 10 YERS AND BROKE EVEN stupid is that condo worth the same today? I don't belive the story

9/09/2006 05:57:00 PM  
Anonymous Anonymous said...

Charles Murray said

You sound a little crabby Chuck.

Are you underwater now?

Real estate blah blah blah. It can go up and it can go down. Accept it. It is going down now.

9/09/2006 06:56:00 PM  
Anonymous Anonymous said...

Hi, Charles:

I'm two beers into the night, so maybe just reading your idea a little off.

Are you saying that any homeowner with insurance whose house burns down just goes and rents? I'm not sure if you are treating former renters who purchase differently from other owners for a specific reason.

When you say replacement cost, can you give more details on this?

I've always thought of housing not as a replacement cost asset, but as an expense asset, so I've compared the cost of buying, to the cost of renting...but maybe I'm off on this.

Pat

9/09/2006 08:09:00 PM  
Blogger WickedQuiver said...

September 09, 2006

by Bill Bonner

Festering Dudgeon

9/09/2006 09:48:00 PM  
Anonymous Anonymous said...

Feel sorry for Charles, hes in
the land of OZ,

has to be a realtor.

spoke to one yesterday who tried
to explain ,,, oh , were here in
NNNJ. Its slow, but .

Poor thing. She was also in OZ.

9/10/2006 09:44:00 AM  
Anonymous Anonymous said...

Boston condo '88 story is true.
Recent sale from 6/06 shows
84.5% gain over 19 years,
most in the last six (after we sold).

draw your own conclusions.
what will be the gain over the next
six years?

9/10/2006 11:19:00 AM  
Anonymous Anonymous said...

Time for No. 4 Skeptic

"4. RE is a traditional play against inflation. It makes sense to own RE when inflation is high."

This only makes sense if inflation is high (and in particular high against housing prices).

Now I'm not a big fan of the way inflation is now being calculated, but we are supposedly not in a high inflation time. Certainly relative to home prices inflation seems low.

Lindsey

9/10/2006 12:16:00 PM  
Anonymous Anonymous said...

to Skeptic, responding to your response.

Accepting your numbers (for the moment) I think that would mean a hell of a lot more of my high income earners in Greater NYC than 1 million. That may be true, but I would tend to doubt it.

I don't have access to the S&P numbers, but I did a quick google on Holmdel on I have Money mag placing median income there at

$121,253

here is the link:

http://money.cnn.com/best/bpretire/snapshots/33029.html

9/10/2006 12:25:00 PM  
Anonymous Anonymous said...

Back to it Skeptic

5. while population growth is flat, fewer people live in a household than 20 yrs ago... more wealth going to the upper class, these people increasingly own multiple homes.

I like the logic, but keep in mind that housing size is fungible. Also, I am guessing that some high income households have been created by working parents with working children at home after college. That seems among the easier paths to getting household income over $150K. In that case, it seems unlikely that the head of household would have access to the full income at that point to use for a housing purchase.

Also, considering the current level of home prices, it seems only fair to raise many of those "second home" owners up to at least $250K if they are going to be buying a second house around here for anything other than a straight investment play.

Lindsey

P.S. NYT has Holmdel median at about $127K

9/10/2006 12:47:00 PM  
Anonymous Anonymous said...

Last one on the table Skeptic

6. houses are more expensive to build than ever. ...Thus, the supply of middle class homes is artificially low, and prices cannot come down too far.

Supply and Demand, as basic as it gets.

Unfortunately, current market conditions (soaring inventory) seem to indicate that there is an oversupply of homes at the moment.

If the supply of homes were artificially (or any other kind of) low, we would expect declining inventory at current prices. Clearly that is not happening.

I don't think anyone knows where equilibrium in the market is, but right now everything says housing supply far outstrips demand.

I have enjoyed this. I've tried to keep it civil and I think you have too, so we hopefully shed more light than heat.

I don't want to see a housing market crash, and I want even less to see a more broadly affective overall collapse, unfortunately I've got a feeling I may see both.

Lindsey

P.S. NYTimes Skillman number was about $128K

9/10/2006 12:55:00 PM  
Blogger skep-tic said...

Lindsey,

S&P numbers I cited are available on schoolmatters.com (S&P site devoted to evaluating school districts--- has a lot of general demographic info too).

The NYTimes numbers you cite are from the 2000 census. As such, I believe they are pretty outdated.

Addressing a couple of your other points (somewhat randomly):

According to the NAR, Vacation-home owners reported a median income of $120,600 in 2005.

http://tinyurl.com/pn76u (WARNING: PDF)

Given the amount of high income people in the NYC area, one would expect significant second homeownership in the region.

Regarding supply-- most of the new construction in the past few years has been either condos or luxury SFHs. It is hard to deny that there is a glut of condos, but the construction of affordable SFHs has certainly lagged.

On the other hand, there is probably an oversupply of luxury homes. I tend to believe that there will be deep discounts in this segment of the market that will have a cascading effect down the line. In any case, my overall point here is that new construction never really addressed the persistent high demand for entry level SFHs in recent years.

Re: inflation, I think the argument here is whether high inflation manifested itself in areas outside the CPI, housing being one of these areas. There was a massive increase in credit and overall devaluation of the dollar in the past few years and it is strange to think that this was not inflationary.

Anyway, at the end of the day I am solidly in the bubble camp. I just think that from time to time it is good to try to make the best possible argument for the other side. Thanks for the exchange

9/10/2006 03:15:00 PM  
Anonymous Anonymous said...

Almost forgot, my prediction for where asking prices are at the end of the year is...

7 percent lower compared to mid-July.

In Monmouth County that puts the medians for the three MLS's at:

E. Mon. $445K
W. Mon. $558K
S. Mon. $735K

Those numbers still seem awfully high.

Lindsey

9/10/2006 11:15:00 PM  

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