Saturday, January 14, 2006

Weekend Open Discussion

Open discussion for the weekend.

Feel free to post about local observations and news, open houses you've stopped in to, the FSBO situation in your neighborhood, or anything else you would like to discuss.

I'm planning to see a few houses on Sunday in Essex (Caldwells, Verona and Cedar Grove). I'll let everyone know how that goes. And the answer is yes, I am still actively looking. Will I buy? Nope, not until I find a deal that makes sense financially (and economically).

On the FSBO front, I've noticed a spectacular amount of FSBO activity in Clifton. On my block two homes are for sale, both are FSBO. One of the homes was listed through a broker a few months ago but the word on the street was since the broker didn't bring in any traffic, he decided to drop them. Many other homes in Clifton have swapped over to FSBO from being broker-listed. I've also noticed some high-DOM FSBO homes switch over to Foxtons. It seems sellers just don't want to fork up the commissions, and if they are going to, it's going to be to a discount broker.

Any other local reports on FSBO activity? It's an important factor here because those homes represent underreported inventory. If more and more sellers start going down the FSBO route we're not going to see those represented in the inventory data..

Caveat Emptor!

Friday, January 13, 2006

New Jersey Fundamentals Continue To Erode

N.J. economy lagging in key areas, State House seminar told

Hughes and his Rutgers colleague, Joseph J. Seneca, addressed state officials at an annual State House seminar in Trenton. The economists predicted that the state would add 35,000 to 40,000 jobs in 2006 - about the same number added in 2005. Just over 4 million people work in the Garden State.

The rate of job growth is below the rate of previous economic expansions, when the state added an average of 75,000 jobs each year. Last year, New Jersey employment grew at an estimated 0.8 percent, well below the national rate of about 1.5 percent, Seneca and Hughes said.

Worse yet, many of the new jobs in New Jersey have been in lower-paid fields such as health care and leisure and hospitality (mostly restaurant workers).

At the same time, the state has seen minimal growth in the highly paid financial sector, with 16,700 new jobs from 2000 to 2005. And the information sector, which includes the telecom industry, lost 31,500 over that span, while professional and business services lost 12,200.

Caveat Emptor,

Thursday, January 12, 2006

A Steal At $155,000

In this case, a picture is worth 1000 laughs..

The home is located in Paterson, NJ. The seller is asking $155,000 and states that it's perfect for a first time homebuyer or investor. Perfect for what? I'm not exactly sure.

So what does $155,000 buy elsewhere? Well, if you were willing to move to the Memphis, TN area, you could purchase this home.

Or perhaps you might consider San Antonio, TX where $155,000 will get you this 3br/3ba.

Perhaps a brand new home in Macon, GA is more your style? It's $100 less than the Paterson home above.

I'd take my chances in any of the towns I posted over that wreck in Paterson any day. Is it any wonder that so many people are leaving this area? I hope this pictures give you some sense of the value of a home. Bubble in North Jersey? What bubble?

Caveat Emptor!

Wednesday, January 11, 2006

North Jersey Sellers Not Waiting Until Spring

Northern New Jersey home sellers are not waiting for spring to sell their homes, unless of course, January 1st marked the unofficial start of the spring season.

Listings of Residential SFH in Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union and Warren counties on GSMLS have skyrocketted 3.06% from last Wednesday, January 4th until today. The total month to date increase has been approximately 3.4%, a significant level of activity for what has historically been a slow period. In fact, we haven't seen weekly increases of these percentages since the hottest periods of last summer.

January 4 - 11047
January 11 - 11385

Caveat Emptor!

(NJMLS and Hudson MLS numbers to resume next week)

Price Reduced! Stratosphere Edition 1/3-1/11

Welcome to another edition 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.

I'm going to change things up a little bit to keep the content fresh. I'm sure readers here don't need to be convinced that sellers are dropping prices quickly, so I'm going to look at Price Reduced! from some new angles in the upcoming weeks.

In this edition of Price Reduced! we'll be looking at price reductions of properties with asking prices above one million dollars. Weakness at the high end has been known here for some time now, the media has started reporting about it lately as well. On to the Stratosphere Editition of Price Reduced!

MLS# 2093423 - Madison, NJ
Previous Price $2,100,000 (Reduced from $2,450,000)
Reduced Price $1,850,000 (11.90% Reduction)

MLS# 2219899 - Mahwah, NJ
Previous Price $2,100,000
Reduced Price $1,900,000 (9.52% Reduction)

MLS# 2206117 - Saddle River, NJ
Previous Price $8,699,000
Reduced Price $7,999,000 (8.05% Reduction)

MLS# 2213831 - Green Brook, NJ
Previous Price $1,289,000
Reduced Price $1,189,000 (7.76% Reduction)

MLS# 2210077 - Morris Twp, NJ
Previous Price $1,395,000
Reduced Price $1,295,000 (7.17% Reduction)

MLS# 2102493 - Montgomery, NJ
Previous Price $1,395,000
Reduced Price $1,295,000 (7.17% Reduction)

MLS# 2226156 - Livingston, NJ
Previous Price $1,029,000
Reduced Price $959,000 (6.80% Reduction)

MLS# 2202794 - Watchung, NJ
Previous Price $1,575,000
Reduced Price $1,475,000 (6.35% Reduction)

MLS# 2204629 - Montville, NJ
Previous Price $1,649,000 (Reduced from $1,699,999)
Reduced Price $1,549,000 (6.06% Reduction)

MLS# 2111633 - Essex Fells, NJ
Previous Price $1,485,000
Reduced Price $1,399,500 (5.76% Reduction)

MLS# 2107841 - Summit, NJ
Previous Price $1,749,900 (Reduced from $1,799,000)
Reduced Price $1,650,000 (5.71% Reduction)

MLS# 2211077 - Greenwich Twp, NJ
Previous Price $1,790,000
Reduced Price $1,690,000 (5.71% Reduction)

MLS# 2092292 - Warren, NJ
Previous Price $1,799,900
Reduced Price $1,699,900 (5.56% Reduction)

MLS# 2111240 - Bernardsville, NJ
Previous Price $2,950,000 (Reduced from $3,150,000)
Reduced Price $2,795,000 (5.25% Reduction)

Caveat Emptor!

Tuesday, January 10, 2006

Red Hot Real Estate Takes On New Meaning

From the NY Daily News:

Playing with fire

The fire that gutted the Crown Heights brownstone next to mine Saturday morning could easily have killed me and my family, had we been asleep or unlucky. But my wife and I caught an early whiff of the smoke that suddenly began billowing into our home shortly after 10 a.m.


But more than just the smoke stinks. Yesterday, a Fire Department spokesman told me the burning of 600 St. Marks Ave. has been classified as arson. No arrests have been made. Investigators should be sure to check city property records, available online at, which show the house changed hands three times in less than two years, each time for considerably more than the place was plausibly worth. In February 2004, a longtime owner named Gloria Moore sold the house for $640,000 to a woman named Francillia Ryan, who in turn sold the house to Janet Howard in December 2004 for $790,000.

A few weeks ago, on Dec. 19, the house changed hands yet again, bought by someone named Crispin Booker for $850,000. None of the speculators who flipped the building ever actually lived in the place, a notorious eyesore inhabited by a group of five to 10 regulars. Some tenants collected bottles all day and stashed them in front of the building; others were involved in sketchy transactions that kept a stream of visitors passing in and out at all hours. The Sanitation Department issued more than $1,200 in fines for the bottles and other garbage in front of the house.

The fact that the place was a dump somehow didn't deter loan officers, appraisers and insurance agents from lending higher and higher amounts of money on each flip, until Citibank, according to city records, lent an astronomical $850,000 just weeks ago. No one on the block thought the building was worth anywhere near that much.

Neighbors tell me that an ominous warning was allegedly made to the building's residents the night before the fire to quit the place or else. The rumor gained strength when one of the tenants ran up and down the block as the fire burned, yelling that the blaze was set.

I didn't expect the arson stories to start hitting until owners were significantly underwater and there was no longer any doubts that the housing market had collapsed..

Caveat Emptor,

FDIC New Jersey State Profile - Winter 2005

FDIC State Economic Profiles have been released for Winter 2005:

New Jersey State Profile - Winter 2005

New Jersey’s economic growth moderated during 2005

New Jersey’s job growth rate has eased after reaching a four-year high in first quarter 2005. After declining steadily for the past two years, the state’s unemployment rate slightly increased in the third quarter 2005 primarily because of an increase in the labor force.

New Jersey’s easing job growth during the first three quarters of 2005 primarily reflected less growth in the government (state and local) and construction sectors and increased manufacturing job losses. Two-thirds of the state’s net new jobs added were in retail trade, health services, and restaurants. The rate of job losses in the state’s telecommunication industry declined as consolidation slowed.

Camden led the state’s areas in job growth, while Newark-Union continued to lose jobs.

New Jersey’s housing activity may be transitioning to a moderate pace this winter.

At 13.7 percent, New Jersey home appreciation remained strong in third quarter 2005 (13th highest in the nation), although the rate has eased after reaching a cyclical peak of 18.5 percent one year earlier. Appreciation rates slowed across all of the state’s housing markets.

Rising interest rates and increasing home prices have contributed to declining home affordability in New Jersey. Housing affordability has eroded at a greater rate in the state than the nation over the past several years). Excluding the Vineland and Camden metro areas, the majority of the state’s housing markets were less affordable than the national average.

Reduced affordability and rising interest rates may be contributing to a moderation in housing demand this winter. The rate of existing single-family home sales in New Jersey has slowed since second quarter 2004. This trend has been most apparent in northern New Jersey where home sales declined in the third quarter 2005 compared with the similar 2004 period, while the rate of sales growth in central and southern New Jersey has trended down since mid-2004.

Nothing really new here, and certainly nothing earthshaking. In fact, much of what we've been discussing here for months.

Caveat Emptor,

Jersey's New Slogan - "Will The Last Person Out Please Turn Off The Lights"

This one is going to take the prize for the oddest source of information yet. It turns out, United Van Lines (the residential mover), has been conducting migration studies annually, since 1977.

United Van Lines Releases 2005 Migration Study

During the year 2005, many people packed up and moved their homes to the Southeast and West, while the Midwest and Northeast experienced an increase in residents leaving, as measured by the business trends of United Van Lines, the nation’s largest household goods mover.

United has tracked shipment patterns annually on a state-by-state basis since 1977. For 2005, the accounting is based on the 226,353 interstate household moves handled by United among the 48 contiguous states, as well as Washington, D.C. In its study, United classifies each state in one of three categories -- “high inbound” (55% or more of moves going into a state); “high outbound” (55% or more of moves coming out of a state); or “balanced.” Although the majority of states were in the “balanced” category last year, several showed more substantial population shifts.

States in the Northeast and Midwest generally showed an outbound trend, according to United’s records. New York (59.8%) has been an outbound state since the survey was established, but after eight years as a balanced state, Rhode Island (57.0%) jumped to the high-outbound list this year. Continuing their outbound tradition, New Jersey (60.4%, outbound since 1997) and Pennsylvania (56.0%, high outbound for the past two years) also saw residents depart.

Interesting that we're approaching almost 10 years of out-migration. The New Jersey residential real estate market detached from fundamentals starting in 1997. Affordability is certainly taking it's toll on population. We all have anecdotal stories of friends or families picking up and moving away because of our high cost of living.

I'm sure many of you have heard about the contest for new state slogan. Here is my proposal:

"Will The Last Person Out Please Turn Off The Lights"

Caveat Emptor!

Monday, January 09, 2006

Call For Topics & Open Discussion

A number of regular readers here suggested an open discussion forum and it does make sense, so here is how I propose to do it.

Each Monday morning I'll open a new open discussion and topics thread. We can use that for any general discussion (on topic or not) as well as any questions from readers. I'll keep that topic open for the week, and close it when the next thread is opened.

I receive quite a bit of email each week, some of them actually pose very interesting scenarios. Feel free to continue to email if you wish, but I ask that if you don't mind posting up your question or scenario, please do so even if you do it anonymously.

If anyone has any ideas for a new topic or some new aspect of North Jersey real estate they would like me to explore, please reply with your ideas.

Let the free-for-all begin!

North Jersey High End Feels Pain

It seems like the NY Times is jumping on the Lowball! bandwagon. The weakness in high-end properties should be obvious to readers now. There are no shortage of million dollar homes in each edition of Price Reduced! and Lowball!

From the NY Times this weekend, registration required:

A Relative Glut of Million-Dollar Homes

GOOD news for wealthy people who want to buy very expensive homes in New Jersey: Top realtors in exclusive areas report that the supply of homes priced over $1 million is up - in some cases way up - and homes are taking longer to sell, resulting in some serious deal making.

"There are some very high-priced homes selling, and they are selling for incredible deals," said Jacelyn Botti, president of Weichert Realtors.

Until recently, Mrs. Botti said, the average home sold by Weichert - the state's largest real estate agency - had been selling for 98 or 99 percent of its asking price. But starting some time in June, brokers began to see some high-end houses sell for significantly less than the asking price.

In Mendham, for instance, the house at 7 Charolaix Farm Road, listed for $12.76 million, sold for $9 million - 71 percent of the asking price - after more than a year on the market. (The highest-priced homes traditionally take a longer time to sell, Mrs. Botti noted, but a year is "quite" long.)

In Bernardsville, the estate of John Dryden, the founder of Prudential Insurance, at 450 Claremont Road, listed for $12 million, sold for $7.4 million - 62 percent of the asking price - after 546 days.

In Peapack, 27-29 Willow Avenue, listed for $13.9 million, sold two months ago for $11.5 million - 83 percent of list price - after 307 days. And last month, in Mendham, 475 Bernardsville Road, listed at $6.9 million, sold for $6 million, or 87 percent of list price, after 302 days.


Botti said there has also been a rapid swelling of inventory in Hudson County, which includes the increasingly upscale havens of Hoboken and Jersey City, and in Bergen County, which includes wealth-saturated Saddle River. In those two counties, inventory of million-dollar homes was up 58 percent at the end of 2005 from the same time in 2004.

In Morris and Essex Counties, the number of homes for sale was up 33 percent in December compared with the year before.

"This has been escalating very quickly since August," Mrs. Botti said. In June and July, there was an overall "listing supply" of two to three months, meaning there were enough houses on the market to supply all those looking to buy within that time frame. In September, the listing supply had grown to five or six months, and now, Mrs. Botti said, it is 8 to 10 months statewide.


Jeffrey G. Otteau, whose Otteau Appraisal Group, based in New Brunswick, provides real estate brokers with statistics and analysis of the residential market based on its own research, said that in New Jersey the number of highly paid jobs is not growing and that this is negatively affecting the high end of the real estate market.

From mid-2002 to mid-2005, the state gained 104,000 jobs, Mr. Otteau said. But for the three highest-paying categories - information providers, financial services, professional and business services - there was zero increase in the number of jobs.

Caveat Emptor!

Thanks to chaoticchild for bringing this article to our attention.

Sunday, January 08, 2006

Buyers Drop The Ball Before New Years! - Lowball! 12/22-01/08

Welcome to the first edition of Lowball! for the New Year!

Lowball! takes a look at home sales over the past week from a very different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales over the past week and pick out the sales that have the highest percentage difference between asking price and selling price.

The reason for Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, lowball offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced. This week I tried to grab listings that were more affordable than many I've posted in the past.

The first in our list this week is rather special. I'd like for readers to pause and really take note of what I'm about to say here.

MLS# 2107491 - Union, NJ
Listing Price $395,000 (Reduced from $429,900)
Sales Price $285,000 (27.9% Lowball!, 33.7% from OLP)

Not only has the price reduction of this listing been an incredibly significant 33.7%, but something even more important, this listing sold below the original purchase price. This townhome was purchased by the recent seller in April of 2003 for $305,000. This home has just sold, two and a half years later for $285,000, a loss to the seller. Special congratulations go out to the lowballer that bid almost 30% under asking. Not only did you get a great deal for yourself, but you provided me with proof for me readers that real estate isn't always 'the best investment you'll ever make'.

On to the list:

MLS# 2086128 - Washington Township (Warren), NJ
Listing Price $599,990
Sales Price $432,990 (27.8% Lowball!)

MLS# 2109897 - Phillipsburg, NJ
Listing Price $189,000
Sales Price $145,000 (23.3% Lowball!)

MLS# 2073216 - Washington Township (Morris), NJ
Listing Price $850,000
Sales Price $665,000 (21.8% Lowball)

MLS# 2218354 - Livingston, NJ
Listing Price $2,395,000
Sales Price $1,925,000 (19.6% Lowball!)

MLS# 2112371 - Ringwood, NJ
Listing Price $1,200,000
Sales Price $990,000 (17.5% Lowball!)

MLS# 2203103 - Green Brook, NJ
Listing Price $1,176,130
Selling Price $975,000 (17.1% Lowball!)

MLS# 1637848 - Mount Olive, NJ
Listing Price $469,900 (Reduced from $525,000)
Sales Price $390,000 (17% Lowball!, 25.7% off of OLP)

MLS# 2085209 - East Side Historic, Paterson, NJ
Listing Price $599,000 (Reduced from $659,000)
Sales Price $500,000 (16.5% Lowball, 24.% off OLP)

Note: For those looking to purchase in the very expensive 'prestige towns'. Take a ride through the East Side historic district in Paterson. Incredibly beautiful homes that would be in the millions if they were in another town. What happened here? The deterioration of a once beautiful area. There are other such beautiful areas in Newark and Irvington as well. These communities were once prestige towns as well. Don't be fooled into thinking upscale communities are immune from the process of disinvestment and decay.

MLS# 2067772 - Watchung, NJ
Listing Price $2,390,000 (Reduced from $2,690,000)
Sales Price $2,000,000 (16.3% Lowball!, 25.7% off OLP)

MLS# 2099509 - Oakland, NJ
Listing Price $799,900
Sales Price $680,000 (15% Lowball!)

MLS# 2066486 - Chester, NJ
Listing Price $3,500,000 (Reduced from $4,950,000)
Sales Price $3,000,000 (14.3% Lowball!, 39% off OLP)

MLS# 2093612 - Little Falls, NJ
Listing Price $279,900 (Reduced from $299,900)
Sales Price $240,000 (14.3% Lowball!, 20% off OLP)

Caveat Emptor!