So is the sale of my home hopeless? (Morristown, Chatham: days on market, unemployment)

[HeadedWest]

Originally Posted by JamesBoyer

I have a strong feeling that, if you guys want to wait for prices to come down to the level you are talking about, you will be waiting for a long time.

Ultimately, the level of debt has to correlate to the level of income.

[HeadedWest]

Originally Posted by Bill Keegan

Well, I don't know who said there was no bubble.

Bill Keegan, meet James Boyer.

[sholden]

Originally Posted by JamesBoyer

A 2% foreclosure rate is only disastrous for those being foreclosed on.

It is when the rate is more like 20% that it becomes disastrous. The rate has been over 20% in many parts of Florida, Arizona, Nevada, and California for a few years now. Take those 4 states + Michigan out of the picture and the financial collapse would not have happened in the finance industry.

Foreclosures really start to affect the real estate markets and the values when 20% to 50% of the sold listings month after month are Bank Owned Foreclosures selling at cheep prices. That is when it becomes disastrous. I have friends who are strong Realtors in Florida and Arizona who talk of the foreclosure market basically dominating their real estate markets. That is totally not the picture you have with a 2% foreclosure rate.

I'm late on replying... but oh well.

People sell their house every 10 years or so. So 10% of homes should be up for sale each year. If 2% of homes are being foreclosed on each year then, that's 20% of the up for sale homes already. Well 17% but let's also assume that we also get fewer houses voluntarily on the market as people stick it out.

[halfoffpeak]

Originally Posted by JamesBoyer

The markets don't seem to be frozen. They are a little slow but not frozen.

House prices went up 100% in a period of six years. Only a lunatic would buy with today's asking prices. A fair price would be half off peak. So if a comparable house went for $500K in 2006, one should not bid more than $250K on it today. Unfortunately sellers are stuck on old prices and that is why market is slow.

**********Bid half off peak******************************

[sholden]

Originally Posted by halfoffpeak

House prices went up 100% in a period of six years. Only a lunatic would buy with today's asking prices. A fair price would be half off peak. So if a comparable house went for $500K in 2006, one should not bid more than $250K on it today. Unfortunately sellers are stuck on old prices and that is why market is slow.

**********Bid half off peak******************************

Don't forget people bought at peak, years after they had to have heard the "it's a bubble" cries.

Enough people clearly are lunatics that who knows what will happen.

[Roselvr]

Originally Posted by halfoffpeak

House prices went up 100% in a period of six years. Only a lunatic would buy with today's asking prices. A fair price would be half off peak. So if a comparable house went for $500K in 2006, one should not bid more than $250K on it today. Unfortunately sellers are stuck on old prices and that is why market is slow.

**********Bid half off peak******************************

Depends.
Not every market in NJ is the same.
How much would it cost to build the same house?
You have to figure what a piece of land is worth, and the biggest, is there even land to buy? Most places there is not.
Next you have location.

The reason prices went up is because in the desirable towns there was no land to build. People started tearing down or going in and improving.

More has to be taken into consideration before saying how much things should go down to.


I also think there will be sales for now until April. The people that need to move want to be closed by June/July


FWIW, I'm not an agent..
Just bought & sold May 08.

[sholden]

Originally Posted by Roselvr

Depends.
Not every market in NJ is the same.
How much would it cost to build the same house?
You have to figure what a piece of land is worth, and the biggest, is there even land to buy? Most places there is not.
Next you have location.

The reason prices went up is because in the desirable towns there was no land to build. People started tearing down or going in and improving.

More has to be taken into consideration before saying how much things should go down to.


I also think there will be sales for now until April. The people that need to move want to be closed by June/July


FWIW, I'm not an agent..
Just bought & sold May 08.

The NJ population increased 3.7% from 2000-2006, so "they're not making new land" doesn't seem to justify prices doubling. And with the financial sector collapsing, how many people are going to leave NJ for places with a lower cost of living now that they've been laid off from their high paying NYC job.

If you are moving sideways, then it doesn't matter what the market is like, in decline or rising, it balances out since either the place you are buying is cheaper or the place you are selling is worth more. It's people increasing their debt level who worry about declining markets, seeing the comps sell for $50k less than you paid is unpleasant for them.

Of course as I've said before I could be completely wrong. One thing I'm pretty sure about though is that prices will not double in the next 6 years, without everything else more than doubling in price (if the inflation genie escapes the bottle).

[elflord1973]

Originally Posted by Roselvr

Depends.
Not every market in NJ is the same.
How much would it cost to build the same house?
You have to figure what a piece of land is worth, and the biggest, is there even land to buy? Most places there is not.
Next you have location.

The reason prices went up is because in the desirable towns there was no land to build. People started tearing down or going in and improving.

More has to be taken into consideration before saying how much things should go down to.


I also think there will be sales for now until April. The people that need to move want to be closed by June/July


FWIW, I'm not an agent..
Just bought & sold May 08.

Ah, another valuation metric -- "replacement cost". This has surely gone up with the commodity spike in 2008, though perhaps not by 100%. And the mid term outlook for this doesn't support increasing costs (commodities are caught in the world wide deflationary spiral).

The scarcity argument doesn't hold much water unless population is increasing. Numbers I've seen show it as flat for the New York metro area and most of the surrounding suburbs.

[theoakman]

The reason prices went up is because in the desirable towns there was no land to build. People started tearing down or going in and improving.

If they tear down a house and build a bigger one, then sure, you can make a case. Unfortunately, you saw run down cape houses that haven't been updated in 30 years fetching twice what they did in 1998. The dense population wasn't a factor either. The price differences for a densely populated area of New Jersey were priced into the market well before this bubble began.

[Lusitan]

Originally Posted by Roselvr

I also think there will be sales for now until April. The people that need to move want to be closed by June/July

There will be sales for now until April, and then after April prices will plummet even faster when people realize that the hoped for "spring recovery" is a pipe dream.