Home prices drop in North Jersey in 1Q (sales, 2009)

[ghuber]

NorthJersey.com: UPDATE: Home prices drop in North Jersey in 1Q

[NatasNJ]

Originally Posted by ghuber

NorthJersey.com: UPDATE: Home prices drop in North Jersey in 1Q

Impossible. Wasn't I told the bottom was Nov 2008? These must be some skewed numbers or something.

[NatasNJ]

Slightly off topic.... But this can't help..

"One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping."
Foreclosures jump in April but repossessions fall - May. 13, 2009

"Retail sales fell for a second straight month in April, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop"
Retail sales fall again in April, denting recovery hopes - USATODAY.com

[MoorestownResident]

No surprise:

"Home prices dropped almost 13 percent in the New York metropolitan area, which includes North Jersey"

The article indicates that sales in the most stressed markets are up substantially. NYC metro is going to suffer longer. Prices in the Philly/SJ markets are steady.

[MoorestownResident]

Great report by a professor at PENN. Philly metro area is considered -1% undervalued. The mid-atlantic region as a whole is fairly valued except in areas closer to the shore. Check slides 27-36.

http://www.econsult.com/articles/PHPI_2009Q1.pdf

[JG183]

excellent find, thank you for posting that link.

slide 35 definitely puts things in perspective

[MoorestownResident]

No problem. It should put things in perspective. People here have little idea what they are talking about. They think a 100% run means a 50% drop. Ain't happening. This decline has been severe and it is basically over.

But the point is - the Philly area and much of NJ was SIGNIFICANTLY UNDERVALUED for YEARS before the boom, the boom just took it moderately overvalue, now most of the region is about fair value.

I agree, it is excellent, detailed analysis.

[BobKovacs]

Originally Posted by MoorestownResident

No problem. It should put things in perspective. People here have little idea what they are talking about. They think a 100% run means a 50% drop. This decline has been severe and it is basically over.

For example, the Philly area and much of NJ was UNDERVALUED for YEARS before the boom, the boom just took it moderately overvalue, now most of the region is about fair value.

I agree, it is excellent piece.

"Fair" based on what?

[pfwnj]

Interesting that you would draw that conclusion from that report.

Slide 20 shows that affordability is still well above historical levels (higher being less affordable)
Slide 21 shows that rent-income ratios are still well above historical levels
Slide 22 indicates a slight decrease is necessary to reach the 1980-present trendline
Slide 35 shows an increase in foreclosures (which will not hit the market for months)
The final slide is a cartoon lampooning the current state of US homeownership.

I see no analysis presented by the professor himself - he seems to have just run the numbers and then quoted a research firm without adding his own conclusions. You are left free to draw your own conclusions, but I see no reason to weight the views of IHS Global Insight over the bare facts presented in the other slides. In fact, there is no analysis whatsoever provided in the report - the only analysis is done by IHS Global Insight and presented verbatim as a fact.

No mention is made of how IHS Global Insight arrives at their conclusions - it merely states that this firm believes that houses are "fairly valued". There's not even a definition of "fair value". Does that mean competitively priced? Likely to appreciate from this point forward? Some percent decline off the peak? If home prices were fairly valued in Q4 2008 (which quarter system are they using?), why have they continued to fall in many of the areas they claimed were fairly valued last year (nearly all of NJ is green, and nearly all of NJ fell in price Q1 2009)?

Maybe IHS Global Insight knows something the rest of us don't, but without some idea of their definition of fair value and the process used to arrive at their conclusion, it has to be taken with a grain of salt like any other conclusion lacking transparency.

[MoorestownResident]

Originally Posted by pfwnj

Interesting that you would draw that conclusion from that report.

Slide 20 shows that affordability is still well above historical levels (higher being less affordable)
Slide 21 shows that rent-income ratios are still well above historical levels
Slide 22 indicates a slight decrease is necessary to reach the 1980-present trendline
Slide 35 shows an increase in foreclosures (which will not hit the market for months)
The final slide is a cartoon lampooning the current state of US homeownership.

I see no analysis presented by the professor himself - he seems to have just run the numbers and then quoted a research firm without adding his own conclusions. You are left free to draw your own conclusions, but I see no reason to weight the views of IHS Global Insight over the bare facts presented in the other slides. In fact, there is no analysis whatsoever provided in the report - the only analysis is done by IHS Global Insight and presented verbatim as a fact.

No mention is made of how IHS Global Insight arrives at their conclusions - it merely states that this firm believes that houses are "fairly valued". There's not even a definition of "fair value". Does that mean competitively priced? Likely to appreciate from this point forward? Some percent decline off the peak? If home prices were fairly valued in Q4 2008 (which quarter system are they using?), why have they continued to fall in many of the areas they claimed were fairly valued last year (nearly all of NJ is green, and nearly all of NJ fell in price Q1 2009)?

Maybe IHS Global Insight knows something the rest of us don't, but without some idea of their definition of fair value and the process used to arrive at their conclusion, it has to be taken with a grain of salt like any other conclusion lacking transparency.

Chart 35 show how significantly undervalued the hottest markets now are - as much as -35% undervalued. The rest of points are irrelevent. The inflation adjusted index on slide 22 to the 80s trend line is within normal statistical standard deviation and drives home the point that homes are fairly valued relative to the long term trend in inflation adjusted prices. In addition to that, and more importantly, the trend line was signficantly BELOW the longer term trend for TEN YEARS prior to the boom. The boom in the mid-atlantic was partly a reversion to the mean from the 80s fallout, the 87 market crash and the 90-91 recession.