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This recent NY Times article is about as well balanced an article you will find on the state of NJ's housing market. According to Jeffery Otteau, the NJ affordability index was 122 in 2000 (the higher the better), it was 107 in April and most likely higher today. The index declined to 81 at the peak of the market. He goes on to say that the market has 'overcorrected'.
The index is a % of income needed to purchase a home. So 122% means that the average household had 22% more income needed to buy the median priced house in NJ. With that number currently well over 100, the interpretation is the same today. The average household has more than enough income to purchase the median priced house in NJ.
Maybe in some areas, but I'm not seeing it so much in Northern NJ. Yes, prices have dropped some. But even after drops, I'm still seeing people asking close to $500,000 for 3BR/2BA capes in decent (not even super fancy, but decent) towns.
When those houses get to under 300K, then I'll say they're where they need to be. (Houses in this area never going to be 150K again, but the prices people are asking are still ridiculous.)
That whole article is about north jersey. Asking and selling prices are two different things. And some consumers are still hung up on the 3,000 square foot house.
Yeah no way in northern NJ and places close to NYC. It still needs to drop more. Especially now that people need to save more for down payments since its hard to get a mortgage now without one even if you have good credit.
It's easier today to get a mortgage than it was 6 months ago. Otteau says additional 9% decline in 2009 from the timing of that article, means about -6% decline from current levels statewide - at his -1% decline rate per month - which is likely to be concentrated in northern NJ. He says no recovery next year but that suggests stability. That could mean small gains in some areas and declines in others. The point is, the decline in the state of NJ is basically over according to Otteau and the market has 'overcorrected'. He is basically the authority on NJ's housing market which is why it is in the NY times.
Last edited by MoorestownResident; 07-10-2009 at 06:48 AM..
This recent NY Times article is about as well balanced an article you will find on the state of NJ's housing market. According to Jeffery Otteau, the NJ affordability index was 122 in 2000 (the higher the better), it was 107 in April and most likely higher today. The index declined to 81 at the peak of the market. He goes on to say that the market has 'overcorrected'.
The index is a % of income needed to purchase a home. So 122% means that the average household had 22% more income needed to buy the median priced house in NJ. With that number currently well over 100, the interpretation is the same today. The average household has more than enough income to purchase the median priced house in NJ.
Jeffery Otteau has been wrong several times in the past few years. He didn't even see housing bubble 4 years ago. So why care about what he says?
Forget him, Fed chairman Benny also said the housing price increase was supported by fundamental demand-supply (remember Benny saying subprime default is contained and will not spread into other part of economy!!!!).
Believe in your own analysis and move on.
There was a good discussion on Bloomberg radio yesterday evening about how greens shoots are turning into yellow weeds.
Otteau is the most repected and independent guy in NJ real estate. Whether you agree is not important. His analysis is important.
There isn't any analysis just some affordability numbers and no analysis of trends in median income, effects of wall street job losses, etc. The full report might have some of course, but I'm not paying for that.
This is the guy who in 2006 said (emphasis mine):
"""
Sales are up for the first quarter of 2006, but down 12 percent from the pace set last year. And inventory is up 65 percent. Buyers are waiting to see if there really is a bubble, Otteau said.
"71 percent of the population expect a price collapse in the next 12 months. That won't happen. But the fear of that drummed into the public has buyers worried. They have no sense of urgency," he said..
"""
So he might be well respected, probably not by anyone who actually acted upon his analysis in 2006 though.
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