'Shadow Inventories' in top towns (Westfield, Ridgewood: bank owned, for sale, real estate)
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Looking to move to Jersey after not following the #1 rule for our 1st home purchase in 2006, location, location, location --- (which to be honest was also not applicable based on the facts that schools were not on the scope of importance as the wife was just pregnant)...quickly learned our lesson.
So now we're looking at the towns that make sense based on what we want for QOL. We're not rich but have managed to save and have good income, little debt, Credit is +770, so getting good deals in interest rates/loans will also fall in line.
We're looking mainly in Westfield, Cranford, Basking Ridge, Ridgewood. Our budget is 650k tops, for a nice minimum, 3 BR, 2Bth with a yard, close to town as we're 'urbanites'. It's still winter so we know there are very few listings, but this upcoming shadow inventory nightmare looming, sort of gets me worried as it could mean another serious dip in pricing. This is not Vegas or Miami but what are your thougts about this looming avalanche in these type of NJ towns? Even 10-15 'not foreseen' foreclosures in these towns can drive values down quite a bit. After basically taking a 100k in equity to get out, we can't afford to do this again.
Its really hard to tell. The northern part of New Jersey seems to be a little more stable than Southern NJ. How long do you think you will live in the house you buy? Saw this article in the New York Times: http://www.nytimes.com/2010/12/12/re...te/12njzo.html
Bergen County stabilized in 2010 with the average single family home up 1%. However the unemployment #'s really need to get better for their to be any kind of housing recovery.
Do I have a crystal ball? No, and neither does anyone else - so it's all just guess work.
That being said...IMO I think that we are still going to see prices dip a little further and the market further depress. A large portion of what's available on the market is short sales - a large portion of which are not going to sell due to consumers staying away from what would be a good deal due to misinformation from agents, attorneys, friends and family. A lot of what doesn't sell will eventually become bank owned and will depress the market further.
Couple the above with rising interest rates (already up almost 1% in the last month) and steady high unemployment rates to further depress things. As more jobs become available wages 'should' go down as there's so many people competing for the same jobs, which means less money for people to buy homes with......further depressing the market.
Do I think we are going to see a 25% decrease in homes? No. But I do think we are going to continue to stagnate for the next 1-2 years at which point things should start to get better.
LFSR, i'm in a very similar situation as you, right down to the budget and one of the towns you're looking at. My question is, wouldn't we want home prices to decline this year? Right now it seems like prices in the town i'm looking at haven't really declined the past few years. If they do fall 10%, then we'll be able to buy alot more house for the money. Right now i feel like i'd be paying 200k+ more than my current house just to switch towns (and not get any improvement in the house).
LFSR, i'm in a very similar situation as you, right down to the budget and one of the towns you're looking at. My question is, wouldn't we want home prices to decline this year? Right now it seems like prices in the town i'm looking at haven't really declined the past few years. If they do fall 10%, then we'll be able to buy alot more house for the money. Right now i feel like i'd be paying 200k+ more than my current house just to switch towns (and not get any improvement in the house).
Our goal isn't to purchase based on determining/guessing at the bottom. I do expect a fair vaule. Because our plan would be to stay long term and see our kids grow up in one of these towns, we can come to terms if another 5%-10%dropped off after purchase due to market conditions. Wouldn't be happy about it but again assuming these losses would be made up within a 10-15 years, we can live with that.
Hopefully it will be the other way around after we purchase. That being said, based on what I see now for sale, it looks like we can expect more difficulty in negotiating with a 2007 purchased home sale who is hell bent on not losing any 'value' and may in fact add more to the sticker price, then an owner who has been in their property 10+ years and will do well regardless of a declined market in the past couple years (assuming of course he didn't take out addtl loans against that home). I hope that's not the case but looking at some homes out on the market now, I see just that.
None of those towns had much new inventory to begin with (except maybe Basking Ridge, don't know the area that far out well), so they are unlikely to have much of a housing glut.
It sounds like you're applying the logic of a boom-and-bust state to New Jersey. Bad idea. Real estate does not rapidly appreciate or depreciate in New Jersey. Things are overall very stable with relatively little new construction and steady home values. The state is already densely built; it's the mostly densely populated state, by far, in the country.
Although prices in my town, a good town in a good county, albeit not in the class of the towns mentioned in the OP, have come down quite a bit in the past few years. Like the OP, i could be down $50-80k off a $450k house just from 5 years ago. However it doesn't seem like there's been any depreciation at all in Basking Ridge.
None of those towns had much new inventory to begin with (except maybe Basking Ridge, don't know the area that far out well), so they are unlikely to have much of a housing glut.
It sounds like you're applying the logic of a boom-and-bust state to New Jersey. Bad idea. Real estate does not rapidly appreciate or depreciate in New Jersey. Things are overall very stable with relatively little new construction and steady home values. The state is already densely built; it's the mostly densely populated state, by far, in the country.
If I was applying the 'logic boom-and-bust state' as you call it, I wouldn't be paying over 200k for any home in NJ. The reality is that when all things sort of hit max overdrive (on going int'l war(s), bad govt top to bottom, union wars, corruption scandals, high unemployment, etc) then it affects every community.
Most would have thought 2 years ago that negotiating with the teacher's union in NJ would have been impossible but somehow people finally had enough. So I don't think it's so cut and dry as you paint it.
I tried to get a foreclosure or short sale, but sadly, most of the kind of houses i was looking for (and the OP is now) are under-represented amongst foreclosures. the bulk are lower end houses, condos, and nicer dwellings in harder-hit areas (Vegas). The few foreclosures/short sales in the nice areas you mentioned tend to get snapped up by firms that have funds set up to do that specific function. They then fix the places up and mark-to-market, taking the spread as profit.
It would be MUCH easier to get a foreclosed/short sale property if you can pay cash, if you are located in the area (so you can hit auctions or see houses quickly) and if you are willing to waive all contingencies. Most of us can't or won't do that, pushing us to the retail market.
I don't think prices are going up (agree that they are stagnant), but good luck on finding a bargain.
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, we can't afford to do this again.
