Guest Blogging for Grim

This week I (little_silvered of the Jersey Shore Bubble Blog) am helping Grim with his blog while he is on vacation as he helped cover for me while I was on my vacation last week. Although I am more familiar with the Jersey Shore real estate market compared to North Jersey, I do keep an eye on what’s going on in Hudson County, particularly Hoboken.

Reading Craigslist and Hoboken real estate ads over the past few months I have noticed that Union City is being pushed pretty hard as the “new” Hoboken. Some real estate ads have gone so far as to call Union City “West Hoboken.” This is false advertising in my opinion since Union City is more like “North Jersey City” or “East Newark.” In any event, if you are thinking about buying a house or condo in West Hoboken, do not be fooled, there is no such place as West Hoboken.

The NY Post has an article today about Union City.

“December 10, 2005 -- Hoboken. Jersey City. Montclair. For a decade these were the cities whose names were dropped when the conversation turned to New Jersey real estate. Well, it's time to add another name to the list: Union City.

The traditionally quiet town, which lies just west of Hoboken, 200 feet above the Hudson River, has more than 30 new developments under way. Plans call for high-rise condos, a branch of the Hudson County Community College, the opening of a light rail station and three new schools to address the anticipated population growth.”

More….

Sellers chop asking prices as housing market slows

This is a story out of Boston/Mass however I think it is important to post here. We've already started to see beginnings of similar behavior in Northern NJ. Boston and Mass begun their decline earlier than the NNJ market, thus may serve as somewhat of a predictor of things to come for Northern NJ.

Cuts of up to 20% are now common as analysts see signs of a 'hard landing'

Boston-area homeowners trying to sell their houses are sharply reducing asking prices -- in some cases, by $100,000 or more -- in response to the sudden slowdown in the real estate market.

...

The median price of a single-family home in Massachusetts has dropped 7 percent in the past two months, to $349,000 for sales that closed in October. But reductions in asking prices of 10 percent or 20 percent are now common in both high and moderately priced neighborhoods, according to real estate agents and listings of homes for sale.

...

''The evidence -- both early data and the anecdotes -- are pointing more toward a hard rather than a soft landing" in the housing market, said Nicholas Perna, an economic consultant in Ridgefield, Conn. ''Prices could come down. Could it be 10 to 15 percent? There's no way of knowing, but what we're getting is more clues that you've got a decline in prices underway.

...

Last February, Gary and Susan Kazmer were confident of selling their Foxborough home for $949,900. He had landed a high-level job in Manhattan, and the couple planned to relocate their three daughters during the summer to a house they purchased in Mendham, N.J., with a bridge loan.

They built the Foxborough house on a pond in 1997 and filled it with extras: two marble fireplaces and hardwood floors with dark cherry borders. ''We called it our wow house," he said.

But it attracted little interest at that price, and Gil Campos of Re/Max Real Estate Center in Foxborough lowered the price to $899,000 in early August. Since then, it has been reduced four times, to $800,000. ''That's an unbelievable spiral," he said.

The Kazmers' limbo ended this week, when they accepted an offer, which Campos declined to disclose.

Like I've said before, we've already begun to see the beginnings locally. It's only a matter of time now before we're headed down the same path as the Boston area. Until then, enjoy the snow!

Caveat Emptor!
Grim

Will be away from 12/10 to 12/17

I'm going to be away from the blog starting from this Saturday, December 10th until the following Saturday, December 12th. Apologies in advance to all my regular readers. In my absense I've invited two guest bloggers to report on the Northern NJ Real Estate Bubble. The first is 'Richie', a Northern NJ resident and regular blog contributor. The second guest blogger will be 'Little Silvered' of the NJ Shore Bubble Blog (shorebubble.blogspot.com).

I promise to try to make an attempt to stop in during that time, but I'm not sure that I'll have reliable internet connectivity during that time.

Caveat Emptor!
Grim

Northern NJ Weekly Inventory Update 12/7

Another decline in active listings this week, the rate at which sellers have been retreating is starting to show a marked uptrend..

GSMLS
(Berg, Ess, Hud, Mor, Pas, Som, Sus, Uni, War)
11/30 - 12624
12/07 - 12316

Added this week: 933 (Up from 797 last week)
Sold this week: 732 (Up from 517 last week)
Removed (Expired/Withdrawn): 655 (Up from 410 last week)

NJMLS
(Ber, Ess, Hud, Pas)
11/30 - 5771
12/07 - 5717

Hudson MLS
11/30 - 1804
12/07 - 1807

To give everyone an idea of where inventory levels have fallen to, the GSMLS levels I'm seeing this week are about what we saw in late September. NJMLS is about mid October. However, Hudson MLS is still pushing new highs weekly.

Caveat Emptor!
Grim

U.S. Housing Market Expected to Decline

Hot off the AP wire:

U.S. Housing Market Expected to Decline

The U.S. housing market will see a sustained decline next year, causing a drag on the nation's economy but falling short of triggering a recession, according to a new economic report.

"We expect housing to start slowing the economy this quarter or the next," Edward Leamer, director of the quarterly University of California, Los Angeles, Anderson Forecast, wrote in the report to be released later Wednesday.

The cooldown in the housing sector is likely to be spread over several years, with as many 500,000 construction jobs and 300,000 financial sector jobs lost, the report said.

...

"On all these grounds, we believe housing is due for a sustained decline," economist Michael Bazdarich wrote in the Anderson Forecast. "The remaining questions are how hard the fall will be and when it will begin."

...

"If the housing market slows more than we are expecting, a recession is not out of the question," Ratcliff wrote.

Economists (real ones, not the NAR clowns) are not holding back anything anymore. It seems that beating around the bush and lightly touching on these issues is long gone. The UCLA Anderson report is scheduled to be released later on in the day, however it is only available for purchase and not a public report. I'm sure once the report is released we'll get more details on the newswires. From the preliminary reports and press releases, it looks like the economists over at UCLA are taking a more 'grim' position on the market, their last report was forcasting a 'soft landing', it doesn't look like that is the case anymore.

Caveat Emptor,
Grim

Price Reduced! 11/29-12/5

It's time for another episode of Price Reduced!

For all the newcomers to this blog, Price Reduced! takes a look at a handful of significant price reductions across Northern NJ. The purpose of this exercise is to serve as proof that the Northern New Jersey real estate market has long since been overvalued and has started the long hard decline back to the mean. These listings are in no way an endorsement by myself, nor do I believe they are a bargain or a value. Even reduced, I still believe these homes are still grossly overpriced. With that, the listings please!

MLS# 2212277 - South Orange, NJ
Original Price $489900
Reduced Price $389900 (20.4% Reduction)

MLS# 2203905 - Sparta, NJ
Original Price $969900
Reduced Price $799000 (17.6% Reduction)

MLS# 2108329 - Washington Boro, NJ
Original Price $279900
Reduced Price $249,900 (14.3% Reduction)

MLS# 2080776 - Livingston, NJ
Original Price $879000
Reduced Price $755000 (14.1% Reduction)

MLS# 2101786 - Franklin, NJ
Original Price $675000
Reduced Price $580000 (14.1% Reduction)

MLS# 2064423 - Bloomfield, NJ
Original Price $599900
Reduced Price $525000 (12.5% Reduction)

MLS# 2110446 - Denville, NJ
Original Price $499900 (Reduced from $519,900)
Reduced Price $439900 (12% Reduction)

MLS# 2208171 - Franklin Lakes, NJ
Original Price $9995000
Reduced Price $8950000 (10.5% Reduction)

MLS# 2094152 - Rockaway, NJ
Original Price $584900 (Reduced from $599,900)
Reduced Price $526900 (10% Reduction)

MLS# 2101054 - Washington Twp, NJ
Original Price $1150000 (Reduced from $1300000)
Reduced Price $1050000 (8.7% Reduction)

Weekly Statistics (GSMLS Only):

Reduced Listings This Week: 636
Average Price Reduction: 4.00%
Total Dollar Reduction: $13,389,221

Now, to all the buyers and readers of this blog, I am not posting this information for you to drool over thinking these are great deals. These are not great deals. These are the first price reductions along a very long road downward. If I threw a knife up into the air, would you try to catch it on the way down? No, you'd wait until it hit the ground and then pick it up. The same rule applies here. Alot of people lost alot of money buying on the downside of the stock market after the Nasdaq crash in hopes of a fast recovery. There will be no fast recovery here. Sit tight, grab some popcorn and enjoy the ride.

Caveat Emptor!
Grim

You Can Take N.J. And Shove It!

More and more Americans are moving to get away from overheated housing markets.

Many residents of high-priced housing markets around the country are cashing out and moving to more affordable areas.

'Take this house and shove it'

Another article about the exodus of people out of high priced areas. When you think about it, bubble areas should theoretically be self limiting once you hit the affordability threshold that causes demand to significantly drop off. So why hasn't this happened? Well, my opinion is that loose lending standards made it possible for people to buy regardless of affordability.

On Long Island, the once bucolic suburb but now heavily developed region next to New York City, about 70 percent of residents are at least somewhat concerned that high housing costs will drive their families from the region.

And this is not a far-off issue -- 45 percent said it was at least somewhat likely that they would move out during the next five years.

Imagine that, 45% would just pick up and leave. Now, sure, I'm sure that number is a skewed a bit high when compared to how many will actually leave, but it's still quite compelling.

Caveat Emptor,
Grim

Northern New Jersey November 2005 Home Sales Data

November sales data is in! Regular readers will likely recognize this graph, I've been updating it each month for a few months now. For new readers, this graph shows year over year unadjusted sales for 2003, 2004, and 2005. The reason I think this graph is important is that it shows the normal seasonality of the real estate market and allows comparison of current sales with historic sales for the last 2 years. This graph is based on GSMLS sales for the counties specified on the graph only. It does not include NJMLS or other FSBO sales. However, due to the fact that GSMLS is the largest MLS system in this area, I have faith that this graph illustrates the trends just fine. This data alone would be inadequate to use on a county level. Also, just because I get asked every time I post this. An analysis like this on a city by city level would be inappropriate, the sample size is much too small thus making the data too volatile, it's only when you look at multiple counties aggregated that you get a true picture of activity.



I think this data illustrates the anecdotal evidence we've been hearing about perfectly. Unlike the NAR and NJAR data that contains data up to 4 months old, this data is 'fresh'. We can see that sales fell off relatively quickly after the summer peak come in significantly below last years numbers. It will be interesting to see how we track through the traditionally dead February. If you thought DOM numbers were getting high now, just wait until February.

Caveat Emptor,
Grim