Predictions for 2009 NJ Real Estate Market? (Bernardsville, Rumson: sales, houses, neighborhoods)

[kalim2008]

Predictions for NJ:

1. It won't get as bad as CA, AZ, NV, or FL.

2. The market will remain relatively stagnant or declining for YEARS (due to a stagnant economy, declining dollar, and surging energy prices), and I'm not talking about the seasonal upticks in Spring/Summer.

3.We'll get less flippers and speculators hopefully, and more buyers who value their home for what it is - a long term investment.

4. We'll get less Mcmansions being built on overdeveloped areas for awhile (hopefully), a godsend since some of these monstrosities have cropped up in my part of the neighborhood, looking like outsized mutated and abnormal giants among smaller colonials.

5. We'll get people being more responsible about their credit, as well as lenders who are more cautious.

[kalim2008]

Originally Posted by CuCullin

Actually, that was the biggest decline the NASDAQ has had, shared by the NYSE. Most 401k's this year will post a loss.

7 years <> long term. The S&P 500, for example, has increased roughly 150% since 1970, inflation-adjusted.

it's long term enough for people retiring recently who just got 401ks in the 1990s (e.g. my mother's 401 k ended up with huge losses when she retired)

[AJGIANTS]

Originally Posted by kalim2008

So much for the theory that the market will give good returns over the long run...that's 6% return over 7 years, less than 1% return a year - you'd do MUCH MUCH better putting your money in a CD or even a savings acct.

I guess those 401ks aren't as great either.....

Originally Posted by kalim2008

Predictions for NJ:

1. It won't get as bad as CA, AZ, NV, or FL.

2. The market will remain relatively stagnant or declining for YEARS (due to a stagnant economy, declining dollar, and surging energy prices), and I'm not talking about the seasonal upticks in Spring/Summer.

3.We'll get less flippers and speculators hopefully, and more buyers who value their home for what it is - a long term investment.

4. We'll get less Mcmansions being built on overdeveloped areas for awhile (hopefully), a godsend since some of these monstrosities have cropped up in my part of the neighborhood, looking like outsized mutated and abnormal giants among smaller colonials.

5. We'll get people being more responsible about their credit, as well as lenders who are more cautious.

Number five is the Key.

[CuCullin]

Originally Posted by kalim2008

it's long term enough for people retiring recently who just got 401ks in the 1990s (e.g. my mother's 401 k ended up with huge losses when she retired)

401k's aren't guaranteed for just that reason, its all about timing.

Multiple investment avenues for retirement should be explored, not just one. Also, it would have been more beneficial had your mother started earlier. For people in my age bracket, social security is 100% something that can't be counted on, which is why I have multiple IRA's plus a 401k through my current employer, as well as stocks, my house, and my own business.

You don't *have* to take all of your money out of your 401k the moment you retire, theres a chunk of years before you have to take payouts.

[MaverickDD]

"South Jersey" cannot be painted with a wide sweeping brush, and I'm happy to see so many contributors to this forum being somewhat specific with regard to what locales they're referring to in their posts.

South Jersey has vastly differing markets. Sure, there's the Delaware Valley to the west, but there are also the mid-state Pine Barren hamlets as well as Long Beach Island, Greater Atlantic City, and the Southern Shore to the east.

As I see it, beach towns (and those near them) will see serious price drops. As economic hardship hits, and one is forced to choose between paying the mortgage on their home in say ... West Chester (PA or NY, it doesn't matter) ... OR "that darling half-million-dollar third-of-a-beach-house condo" they were lured into buying while on vacation at the Jersey shore, guess which one gets paid?

Properties in OC that sold for $50,000 in 1996 were selling for $500,000 in 2006. Nine-hundred percent appreciation over 10 years is not sustainable. It made no economic sense in 2006, and it makes even less now. No, I do not think prices at the beach will drop back to 1996 levels, but a 35% pullback off of peak prices would not surprise me.

A friend of mine is interested in buying his first home in the Greater AC or Southern Shore areas of South Jersey. (He works near the airport.) Today, he can afford to buy in Pleasantville. By autumn, for the same money he can buy in Absecon. Next year, he'll be able to buy in Somers Point. The following year, Ocean City?

Okay, maybe that's a bit overstated. Maybe not.

Jersey's Southern Shore is simply gorgeous. It arguably has the some of the best beach properties in the Eastern US ... but IMO, way overpriced -- (kinda like St. George Island in Florida).

[Delphi]

Originally Posted by AJGIANTS

exactly- until prices get to where they were at the beginning of the boom its not over.

Based on my economic analysis, I don't think price will go down to pre-boom era. There has to be a hand-shaking point midway between pre-boom and post-boom. And at this hand-shaking point, sellers and buyers and lenders (most important 3 sides of the transaction) will all become to more serious to make the transaction happen. Until then, one or the other of these 3 sides will keep bending backward.

Yes, there will always be people who want to buy/sell no matter what and those are the people that will lower their expectations to make this happen and hence new comp will be set.

[todd72173]

2009- Bad
2010 - Worse
2011 - Worse Yet
2012 - Near bottom

I say atleast another 5 Years until we reach bottom. Thankgod Im renting now.

[CuCullin]

That would actually be fantastic for me... once the gf is working full time (1.5yrs left!), we plan on buying another house... so I personally wouldn't mind if this trend continued for several years, but I don't 100% see that happening. Bottoming, imho, will probably happen in 2009-2010, as I see it, and a slow increase from there - just my guesstimate.

[darylnb]

I don't have any predictions to make but we just bought a house and since late last year we were out there looking for a house to buy. The first one we liked was on the market less than a week when we saw it and we didn't get a chance to bid since they accepted an offer that same day. The second house, we had to compete with 3 other bidders. We lost! We saw a couple more homes that were nice and reasonably priced and they were off the market pretty quick. These homes were all priced well and are in good neighborhoods. I don't think the market is that bad in NJ. But houses that are overpriced, fixer uppers, those with structural issues and those that are on a busy street stay on the market longer.

[TheEmissary]

Originally Posted by tahiti

without doing the math, it seems it'll drop to levels had the rise been at the historical average (5% yr?)....which makes sense to me.

tahiti - I find your real estate assessments to be on the mark! After this mess sorts itself out, NJ will probably return to housing prices at the inflation rate + 1% or so. NJ will always be an expensive place, relative to the rest of the country, and will remain so. There was an article in the New York Times Sunday magazine a few years ago, about NJ being the first state that will be totally "built-out" in a couple of decades. Land costs are at a big premium compared to the rest of the country and that will tend to keep housing prices high. There's no need to worry that NJ's median housing prices will match Mississippi's anytime soon or ever!