Flattening Prices in NJ
This was in yesterday's Asbury Park Press. The article mentions people from NJ moving to the Carolinas. As I posted earlier in the week, I visted NC over the weekend and met a number of people who moved from NY and NJ to NC because the taxes are lower and the houses are bigger and cheaper.
Snip...
"But the demand is also determined by people's ability to afford the mortgage and property tax payments — something that will be hindered by slowly rising mortgage rates and salaries and wages that have failed to keep pace with the cost of living for many working families.
In the end, prices reflect what people are willing to pay for a product or service. The demand will fall if a comparable product can be had for less somewhere else. New Jersey's challenge is to keep homeowners from turning to Pennsylvania, Delaware, the Carolinas and elsewhere for a place to live.
The flattening prices in New Jersey may be another sign that the state is pricing itself out of the market. It's a reality officials in Trenton and in every municipality in the state must begin to confront."
More...
Snip...
"But the demand is also determined by people's ability to afford the mortgage and property tax payments — something that will be hindered by slowly rising mortgage rates and salaries and wages that have failed to keep pace with the cost of living for many working families.
In the end, prices reflect what people are willing to pay for a product or service. The demand will fall if a comparable product can be had for less somewhere else. New Jersey's challenge is to keep homeowners from turning to Pennsylvania, Delaware, the Carolinas and elsewhere for a place to live.
The flattening prices in New Jersey may be another sign that the state is pricing itself out of the market. It's a reality officials in Trenton and in every municipality in the state must begin to confront."
More...
posted by Little_Silvered at 6:58 PM
1 Comments:
It is a question of reality. People are buying homes they can't afford to live in.
All an IO loan is the ability to live in something you really can't afford. I see many of my friends who are just married and are purchasing homes using IO loans. An IO loan is a risk. You are speculating that the house will continue to appreciate. Sure it will over time, but it could also lose value in the short term, 5 years.
I don't know what makes them think that in 5 years when they are going to want to start paying off the principle, why they think at this time they will be able to afford it. Wife will probably have a few kids (which are expensive) and the husband will be the only source of income.
I think we are looking at a future crisis in the market.
Of course, the agents will tell you they think that things will continue to rise and the mortgage guy will tell you to mortgage the most you get approved for..
Me, i will sit back in my two bedroom apt in Hoboken and I will have a ton of homes to choose from in the near future when they all foreclose.
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