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For those who already have a lot of wealth and lots of investments in stock market, economy probably feels like it is booming, and borrowing costs are at historical lows: If Prices Are Falling, Why Are the Rich Buying?
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Rates are at historic lows and the spread for jumbo loans has shrunk dramatically. As CNN Money explained:
Normally buyers have to take out a jumbo loan to finance any mortgage beyond the $417,000 threshold (http://www.fanniemae.com/aboutfm/loanlimits.jhtml - broken link) ($729,000 in high-cost cities such as New York). These loans have higher interest rates because they are considered non-conforming — or higher risk — and are not backed Fannie Mae or Freddie Mac. In 2009 buyers of high-end homes paid 1.8 percentage points more in interest than the average buyer. But in 2010, that spread had shrunk to just 0.6 points more.
They can also fix that rate for 30 years. The 30-year-fixed-rate-mortgage may be a victim of the new lending reforms. Mark Zandi, chief economist of Moody’s Economics addressing the administration’s recent report on reform:
“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages.”
For everyone else, economy may still feel like we're still in The Great Recession.
We have been looking for a house in Westfied for a while, and we noticed that while the rest of the country is in downward housing spiral, Westfield does not seem to be affected. We keep seeing very expensive houses (in the $800K range), which require a lot of work. And we keep hearing that phrase, "this is Westfield"! Westfield is very nice. Many things to recommend it, but it is not Park Avenue. How do sellers justify such unreasonable prices. Our price range is not insignificant, up to $700K, for a standard 4 bed/2 bath home. But we either see homes that are total fixer-uppers, or in what is termed "part of town where real Westfield residents wont buy." Not even sure what that means. Any input or suggestions would be appreciated!
I think what's keeping for some of these higher range prices from falling in Westfield is the high listing price from what I would consider small homes -- capes and the like that are trying to make 3x the profit. Yes, it's a great town but if you purchased your cape in '03 for $300k and are listing it for $600k, then you're simply not doing your research. Once these homes start to take a dip (and they will, as there are many on the market), then the larger style homes will adjust accordingly. But I agree with what you're saying. The inventory has been quite low for that price range which hasn't helped. The only other thing I would add is if you're going to buy at the higher price range, buy in the areas that are considered best within the town. Perception is underrated when it comes to real estate and your concerns now will likely be the same concerns of any future buyers for your home. Those will at least tend to hold their values better and rebound best in the long term as well.
For those who already have a lot of wealth and lots of investments in stock market, economy probably feels like it is booming, and borrowing costs are at historical lows: If Prices Are Falling, Why Are the Rich Buying?
For everyone else, economy may still feel like we're still in The Great Recession.
Housing market may be bifurcated in same manner.
I don't think that the westfield crowd is particularly rich. Although they might have kept their jobs and incomes I don't believe they have any additional benefit in this economy. Westfield prices are simply in a bubble territory and are coming down as anywhere else. In fact, I don't understand what so special about this town. Long (nondirect) commute, high taxes and high schools NOT in top 10 in NJ (according to sat scores).
I don't think that the westfield crowd is particularly rich. Although they might have kept their jobs and incomes I don't believe they have any additional benefit in this economy. Westfield prices are simply in a bubble territory and are coming down as anywhere else. In fact, I don't understand what so special about this town. Long (nondirect) commute, high taxes and high schools NOT in top 10 in NJ (according to sat scores).
It's the top school district in Union county (BOE), and so not being top 10 amongst 300+ school districts is sort of misleading. It's top 10%-15%, I think most are satisfied with that.
That being said, what attracts my family to a town like Westfield is the access to mass transportation (yes, maybe long commute to NYC but it's all relative, as it used to take me 1 hour, door to door when I lived in midtown west NYC and was commuting from my gig in Meadowlands), close to a major intl airport, close to beaches (under a 2 hr drive), close to shopping.
In fact, the walkability factor is one that I would say is high on the list of most new families---especially those trading their Brooklyn pads for this type of suburban life. This town offers all that -- as do only a handful of other Northern NJ towns, and guess what, they are all priced high and have held their values well ---doesnt mean they wont go down but not to the extent of Newark Nj for example.
As far as taxes, I know plenty of folks in less affluent towns paying easily $10K + and are getting very little in return. Taxes are insane all over NJ.
I think the thing is, in general, not directed to the OP, all you hear about is "housing crash housing crash," and it gives the impression that you should be able to buy a perfectly updated 4 br center hall colonial with 2.5 bathrooms for 500K in Westfield or Ridgewood or wherever.
Don't underestimate the wealth in Westfield. Have family still there & dh grew up there- many,many are in the financial sector. Their bonuses this year were Unaffected by the economy- many back to the 5 & 6 digits.
Westfield homes have fallen a little, but if you are looking to make an investment & can afford the property taxes (probably around $15K for a $700K house) it is one of the safer towns to put your money in.
BTW there were no 4Br capes for $300K in 2003. We tried to buy there in 1996 and most 3Br homes were close to $300K even back then. We wound up paying $270 for a 3Br in 1996 in Mountainside- sold last year for $530- 14 yrs later (with a lot of $$ put in over the years as any home owner knows).
Don't underestimate the wealth in Westfield. Have family still there & dh grew up there- many,many are in the financial sector. Their bonuses this year were Unaffected by the economy- many back to the 5 & 6 digits.
Westfield homes have fallen a little, but if you are looking to make an investment & can afford the property taxes (probably around $15K for a $700K house) it is one of the safer towns to put your money in.
BTW there were no 4Br capes for $300K in 2003. We tried to buy there in 1996 and most 3Br homes were close to $300K even back then. We wound up paying $270 for a 3Br in 1996 in Mountainside- sold last year for $530- 14 yrs later (with a lot of $$ put in over the years as any home owner knows).
you're probably right as those 4BR capes I've seen are more like 3BR and likely expanded. BTW -- Not a bad $$$ return for you...
It's the top school district in Union county (BOE), and so not being top 10 amongst 300+ school districts is sort of misleading. It's top 10%-15%, I think most are satisfied with that.
That being said, what attracts my family to a town like Westfield is the access to mass transportation (yes, maybe long commute to NYC but it's all relative, as it used to take me 1 hour, door to door when I lived in midtown west NYC and was commuting from my gig in Meadowlands), close to a major intl airport, close to beaches (under a 2 hr drive), close to shopping.
Nothing of what you say makes Westfield exceptional (2 hours to the beach!). In fact, the train to NY is 1 hour and would expect 1:30 door to door. So if one commutes daily spends 3 hours commuting daily not to count the hassle of transfer. I would never choose this town if I worked in NYC so it is surprising how NYC income can support the westfield bubble.
Don't underestimate the wealth in Westfield. Have family still there & dh grew up there- many,many are in the financial sector. Their bonuses this year were Unaffected by the economy- many back to the 5 & 6 digits.
Westfield homes have fallen a little, but if you are looking to make an investment & can afford the property taxes (probably around $15K for a $700K house) it is one of the safer towns to put your money in.
BTW there were no 4Br capes for $300K in 2003. We tried to buy there in 1996 and most 3Br homes were close to $300K even back then. We wound up paying $270 for a 3Br in 1996 in Mountainside- sold last year for $530- 14 yrs later (with a lot of $$ put in over the years as any home owner knows).
A friend of mine purchased I think same year - 3 bdrm on the "good" side of town for barely over $200.
I must have missed this. Can you explain? "...Raritan Valley line goes midtown direct..."
Thanks
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