Weakness in Boston

After posting significant gains in ’04 and early ’05, the real estate market in and around Boston seems to be one of the weakest in the country now.

I would guess that there are a number of similarities between the Boston area market and the NY area market and that trends up in Beantown will eventually make their way down the coast to NYC and the Jersey Shore. The similarities include a local economy that is highly dependent of Wall Street, a lack of developable land, boomers heading out of state (as opposed to Florida or Arizona, where boomers are heading in state.)

“The Bay State’s once high-flying real estate market is rapidly losing altitude, sales numbers released yesterday show.

Condo prices are apparently peaking, while house sales plunged last month, the Massachusetts Association of Realtors reported.

The group said house sales fell 9.2 percent in November, dropping to 3,713 units last month from 4,089 in November 2004.

The condo market also showed signs of finally topping out after years of spectacular gains.”

More…

Hoboken 2 Bedroom Condo Glut

I spoke with a Hoboken resident this week that follows the market there very closely since he owns a few rental properties. He confirmed what I have been hearing, which is that sales of two bedroom condos that are not directly on the waterfront have ground to a halt since about late September, early October. These types of condos, which are also in Jersey City, Edgewater, Weehawken, Brooklyn and Queens, are the classic starter properties for recently married couples with one or no kids and are only purchased with the intention of moving out to the ‘burbs within 3 to 5 years, or whenever the second kid comes, whichever is sooner. I believe that couples that have difficulty selling these Hoboken condos will not be showing up at open houses in Holmdel or Howell this spring unless first, the Hoboken seller lowers there asking price significantly and second, the Holmdel seller does the same.

False Advertising

I have driven by this house on a number of occasions and most recently noticed that the realtor sign has changed from Weichert or ReMax or something to Sothebys. Apparently, the old agency could not sell this $399,900 house so the owners hired another realtor. But that’s not the point. The point is misleading advertising. After seeing this house listed for a few months I decided to see what the asking price was and looked it up on the MLS. I found the house right away since it is the cheapest in Little Silver and was amazed that the photos being used on the MLS makes it look like the house is directly situated on the Shrewsbury River. I can verify that the house is on Silverside Avenue and that the view depicted on the MLS is not from the backyard, but from a public boat ramp that is at least 250 yards down the street. Moreover, between the house and the river are at least six other houses and backyards. In short, what you see in the picture is not what you get.

What you do get though was not disclosed in the MLS description. For having the privilege of paying the asking price of $399.9k, you can live directly next to the New Jersey Transit North Coast Line. Yes, the house is located right next to one of the busiest train lines in the state. What must make living next to the train line even better is the fact that the house is next to a track crossing so that the train engineer has to blow his horn before hitting the crossing. In case you were thinking about spending $400 thousand for a house in Little Silver with no river view and is next to a NJ Transit train line, you might want to consider that on a normal weekday approximately 38 trains pass by the house heading north every weekday and approximately 38 trains pass by the house heading south each weekday. The first train to reach Little Silver station each weekday arrives there at 4:06 AM.

PS.

I did some digging and found out this house was bought last spring for $308,000. The owner of this POS house in Little Silver also owns two houses in Eatontown, which were both purchased within the past two years.

NY Times RE Blog Misses the Point

Archduke Killed by Serbian Bomb Thrower
Japanese Bomb Pearl Harbour
Berlin Wall Falls

Snip...

"I wonder whether the proliferation of the bubble blogs signifies something else: the concentration of conventional wisdom, which is evidence that the conventional wisdom is wrong. It is a truism in the world of journalism that the moment a phenomenon is covered in the newsweeklies (or the Today show), the trend has passed.

Is this the blogosphere counterpart proving conventional wisdom is wrong, or do we have to wait for the Time cover? These blogs, while they perform the noble service of tracking the movement of prices and other real estate data in local markets, are great outlets for schadenfreude. Take a look at the comments section in some of these to see how joyfully some people wait for their neighbor’s foreclosure.

They may be capturing popular sentiment, but taken collectively, the bubble blogs might also be a signal of no bubble at all. It could just be a sign of piling on.– DAMON DARLIN"

Full Blog Post

Eastern Monmouth MLS at 2899

Last week the count was 2948. The number of listings continues to drop. A decline in existing home sales tomorrow will indicate that houses are being pulled from the MLS during the holidays rather than inventory being absorbed by an increase in sales.

Existing Home Sales Out Tomorrow

Existing home sales for the month of November are scheduled to be released tomorrow at 10:00AM EST. The Consensus estimate is for a year over year decline of -1.3%. In October, the year-over-year decline was -2.7%. Personally, I think the decline is going to be a little bit steeper than the consensus estimate.

Rentals in Little Silver

I know Little Silver pretty well and I’m pretty confident in saying that the town has never had a noticeable number of single family houses for rent. Just this weekend though, I saw two single family houses for rent that were in the same old sub-division just off of Willow Avenue. I’m still not quite sure what an increase in rentals means, as I saw the same thing over the Fall in nearby Fair Haven. What I think it means though is that speculators are trying to time the market to try to sell their investment (house) after prices have gone up. The speculators with these houses must be thinking that if they wait a year and collect rent checks in the meantime, then they will be able to make a profit on price appreciation alone.

Selling a House this Weekend

The NY Times talks to some Shore realtors about the real estate market for this time of year.

snip...

Pauline Poyner, a Coldwell Banker sales agent in Rumson, a New Jersey oceanfront community, said some families deliberately look for a house while they are together over the holidays. (This is in line with Mr. Shallis's reason No. 5: "Since many people take vacation around the holidays, buyers have more time to look for a home than when they are busy working.")

"Driving to a nice community near the shore," Ms. Poyner said, "can always make for an enjoyable trip, especially if you see the house of your dreams." One of her listings, a $5.9 million house built of hand-chiseled granite, is the highest-priced house on the market in the Jersey Shore area. She has had several appointments to show it in the last two weeks, Ms. Poyner said.

full article...

Look for Open Houses this Weekend at the Shore

Somebody on one of the other blogs said that they saw someone was holding an open house on Christmas eve. If anyone sees any open houses signs at the Jersey Shore on Christmas eve, or even Christmas, I would like to hear about it. I would guess that holding an open house this weekend would be a real signal of desperation.

Complaining Realtor Question

Here is a Q&A article from Marketwatch. A realtor wonders why there is little interest in his open house.


BONITA SPRINGS, Fla. (MarketWatch) -- Issues on people's minds: How come no one is showing up at my open houses and who do I contact if I think someone may be a victim of mortgage fraud?

Full article

New Home Sales Plummet

[WASHINGTON (Dow Jones)--New-home sales fell as mortgage rates reached three-year highs during November, reversing a surprise surge in another sign of housing sector cooling.

Sales of single-family homes decreased 11.3% to a seasonally adjusted annual rate of 1.245 million, the Commerce Department said Friday. That was the largest drop since a 23.8% plunge in January 1994.

Inventories climbed to a new record, while prices tumbled.]

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Random Jersey Shore Real Estate Thoughts

I have developed a lot of opinions and biases living in and around Monmouth County since the 70s and since it’s a slow news day from my perspective, I though I would share some of these biases, opinions and facts as they relate to local real estate and the local area in general. In no particular order of importance, or to some people, any importance:

-Bayshore towns are nicer than they used to be, except for Keansburg.
-Driving down Bay Avenue in the Highlands reminds me of pirates sometimes.
-Fair Haven cops will eventually pull you over.
-The east side of North Ward Street in Rumson is the best place to own a house (mansion) in Monmouth County, if you can afford it.
-Points west of Route 9 might as well be Ohio.
-Little Silver is the less expensive alternative to Rumson.
-Fair Haven is the more expensive alternative to Red Bank.
-Never drive through downtown Freehold during the day.
-I would probably never buy a house in Sea Bright unless it had already been there at least 50 years.
-The Amboys are not part of Monmouth County.
-Ocean Grove is strange.
-Hazlet reminds me more of Matawan than it does Holmdel.
-Many parts of Long Branch look like nice places to live if you want to send the kids to private school or don’t have kids.
-The Asbury Park Press has its operations and head quarters in Neptune.
-First Avenue in Atlantic Highlands is looking more and more like a mini Broad Street in Red Bank.
-Towns that are one town further west from beach towns might offer value some day. For example, Wall is cheaper the Belmar, Spring Lake Heights is cheaper than Spring Lake, Neptune City is cheaper than Avon.
-House prices in Middletown are extremely dependent on what high school zone your house is in. All else being equal, the house in the Middletown South zone will trade at a premium to the house in the Middletown North Zone.
-The Monmouth Mall is a mess, drive an extra 20 minutes to the Freehold Mall.

Fed Funds are Going to 5%

This is from the Dow Jones. No link. Short term interest rates are going to keep going up in 2006. Even if these rate hikes still don’t move the long end of the curve higher, the increase in short term rates will make the cost of adjustable rate mortgages even higher than they already are.

(Dow Jones) Merrill Lynch is ready for the Fed funds rate to hit 5%. The Fed futures contract indicates an 88% chance the Fed raises rates on Jan. 31. "It's hard to believe that, if it goes again, Bernanke will be able to just stand pat, unless the economy or market collapses," the firm writes, "and new chairmen typically don't go once if they go at all - they go at least twice." Given that, a move on Jan. 31 "would practically ensure that we get to 5% on funds by late spring." (PJV)

Mortgage Applications Down Again

Snip…

[The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week to December 16 fell 4.0 percent to 594.6 from 619.3 the week before.

The group's seasonally adjusted index of applications for mortgages to buy homes fell 5.2 percent to 453.1 from the previous week's 477.9.

The index is considered a timely gauge of U.S. home sales.
"Housing has passed its peak," said Robert Brusca, chief economist at Fact and Opinion Economics.]

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Everything Is Great at the Shore

This article paints a very euphoric picture of the real estate market down in Atlantic and Cape May counties (NJ). While I don’t doubt that serious money has been made, I’m pretty sure that the party is over down in the Stone Harbor area and that lots of people who bought within the past three years will be looking to sell in the next couple of months.

“STONE HARBOR - Dale Pritz comes to the shore for its sandy beaches, cool ocean breezes and a $1,000 per day. That isn't what Pritz pays for his shore vacation. That's what he gets every day his investment property sits here. "They're going up $1,000 a day. I did the math," Pritz said. Pritz, who owns a body shop in York, Pa., is one of many real estate investors flocking to the New Jersey shore to make some quick money. Eight months ago, Pritz bought a modest rancher on 87th Street for the not so modest price of $965,000. He demolished the rancher, for the value is in the land, and built a $390,000 mansion more befitting this island of upscale homes.”

More…

I Bet Inventory Spikes in Early January

As we have seen the past few weeks, inventory levels at the Shore have been dropping. Myself, and others have attributed this drop mostly to de-listings during the holidays rather than an increase in sales.

Many people believe that inventories are going to start to rise nationwide in the Spring because that is when most people decide to sell their house. Although I also expect this to happen nationwide, I bet that inventories grow quickly in January at the Shore and in the New York area in general. This is because many homeowners and speculators in our area will try to list their houses early, compared with the rest of the country, under the expectation that Wall Street bonus money will be paid out at the end of December or in early January. (Areas of the country not so reliant of Wall Street bonuses can wait till later in the year.) Whether Wall Street bonus money buys real estate is another question, but it will be interesting to see inventory levels in a few weeks.

Maybe this early listing should be encouraged. Tell people who are looking to sell to list the first week of January when Wall Street bonuses are paid and not wait until March when much of the bonus money has already been spent.

Reigning in Risky Mortgages

Federal banking regulators are attempting to limit the amount of exotic and risky mortgages that are being given to probably mostly naive borrowers.

"WASHINGTON (AFX) -- Banks and other mortgage lenders should exercise caution when offering nontraditional mortgage products like interest-only loans and payment-option adjustable-rate mortgages, U.S. regulators said Tuesday.
In a proposal, regulators including the Federal Reserve said banks should assess borrowers' abilities to repay such loans before making them and that banks should recognize these loans warrant "strong risk-management standards." Loans like the ones singled out by regulators allow borrowers to defer payment of principal and, in some cases, interest.

The proposal was written by the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision and the National Credit Union Administration."

More...

More Open House Observations

As I described yesterday, I went to two open houses in the Belmar area on Sunday. Another observation I would make is the amount of pricing disparity that existed between the two similarly sized houses in the exact same neighborhood. House number 1 was listed for $50,000 more than house number 2. However, house number 1 also needed at least $25,000 more worth of work and upgrades to make it as nice as house number 2, which did not need any extra improvements. In short, at a minimum, house number 1 was priced at least $75,000 more than house number 2, even though both houses were in the same neighborhood and were about the same size.

In the coming months, I would expect the clearly delusional home owners, like those that own “house number 1” to adjust their asking prices lower to conform with the new lower market prices. As of now though, and as the broker of house number 1 suggested, many house sellers still think the market today is as strong as it was last spring and have yet to adjust to the new reality.

Weird Rationale

The broker who was selling the nicer of the two houses that I saw yesterday made a convoluted attempt to rationalize why this is an ideal time to buy a house. It goes something like this:

Houses that are for sale now have actually been on the market for longer than normal. Therefore, those sellers are more desperate to sell now, making it a good time to buy. Conversely, the houses that will be listed in the spring are new sellers, and they will be less desperate to sell, so the deals will not be as good.

As we all know though, old Fall 2005 inventory + new Spring 2006 inventory = huge Summer 2006 inventory = Fall 2006 price crash.

I/O ARM 3-1 Mortgages the Norm?

I was looking through the real estate catalogs you get outside of Shoprite or 7-11 and noticed that some houses are advertised with an estimated monthly payment amount. This is has been a standard adverting gimmick for a few years as far as I can tell. However, I also just noticed that the estimated monthly payment is no longer calculated on a straight 30 year fixed rate mortgage basis. Instead, the payments are calculated using the newer exotic mortgages. In the catalog I saw this weekend, the realtor doing the advertising used an interest only ARM according to the tiny print in the disclosure statement at the bottom of the page. I bet a lot of people don’t bother reading the disclosure statement in these catalogs.

Builder Confidence Tapering Off

[Confidence of single-family home builders slid further this month from its summer peak, yet remained well within the positive range, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December, released today. The overall HMI declined four points from a slightly revised November number to 57, while the component measuring builder expectations for future sales held firm at 65.

“Many builders sense some tapering off of single-family buyer demand, but remain reasonably confident in the ongoing strength of their markets,” said NAHB President Dave Wilson, a custom home builder from Ketchum, Idaho. “They obviously are reacting to higher interest rates and energy costs, along with some buyer resistance to high house prices.”]

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Open House Observations

I went to two open houses today in the Belmar area. Both houses were similar in that they were small, non-descript, summer vacation type 2 bedroom bungalows that were probably worth $150,000 each, at best, only 3 or 4 years ago. The asking prices for both houses were in the $400,000 to $450,000 range.

I was mostly interested in the broker comments than the actual houses and found the divergent opinions interesting. One broker gave the usual spiel that it was important to buy now before prices go up in the spring. The other broker was much more realistic and suggested that the owner of the house she was trying to sell missed the peak and that the owner might have been able to get his asking price last summer. This broker also attributed the run up in prices in the Belmar area to "funny money financing."

Only one house had a sign in sheet and the sheet had only about 4 names on it at about 3:00. I asked the brokers who was looking at the house and the broker indicated that many of the lookers were nosy neighbors, which suggests real buyer interest is limited. In any event, I hope to post more observations later.

This is Encouraging

Las Vegas condos toppling before they start.

Snip...

[Liberty Tower and Ivana Las Vegas will not be built, county and other land records indicate. And while these towers aren't the first condominium plans to bite the dust, experts say other failures will surely follow.

"It's the combination of rising construction costs, rising land prices and the fact that the mid- and high-rise condo market (in Las Vegas) is still in its infancy," said John Restrepo, principal of Restrepo Consulting Group.

He said the fever to build a condo tower in Las Vegas was equivalent to a gold rush. But getting a condo project off the ground is tougher than drawing up a rendering and having a slick marketing campaign.]

Mores...

Informative Blog

Here is another informative blog. It is called "Another F@cked Borrower." It's written by a mortage broker and some of the stories he tells really make you think that the housing bubble, when it bursts, will be a bigger mess than is imaginable.

The Rumson House is Still Listed

As most readers of this blig know, I have been following the listing of this house in Rumson since last April. It has now been almost 8 months and the house is still there, unsold. Since about last April, the listing price has been reduced to from $940k to $749k. If you want to see where it is located, here is the link to google maps. Its at the corner of South Ward and Waterman. I drove by the house a few weeks ago and was not impressed. I thought that it might be on the water, but its not.


MLS ID#: 10038427

Eastern Monmouth MLS down to 3005

Last week it was 3023.

Mortgage Demand Down

Mortgage Applications Drop Again

Don’t forget that the drop in mortgage applications is seasonally adjusted.

Snip…


“The MBA's seasonally adjusted purchase mortgage index fell 3.5 percent to 477.9 from the previous week's 495.1. The index is considered a timely gauge on U.S. home sales.”

Who Needs a Realtor?

Curbed.com posted a link last week to a For Sale By Owner (FSBO or FizzBow) listing for an apartment in Brooklyn. The people selling the apartment built a pretty impressive website to showcase their apartment and have apparently generated a lot of free publicity and buyer interest.

Now that the housing market is stalling and inventories are building, it looks to me like other sellers are going to have to get creative in order to generate interest from potential buyers.

This Looks Like an Interesting Book

Here is a review from the Detroit Free Press

“June Fletcher has an advantage among the crowd of authors telling Americans "how to survive the coming crisis." Her book, "House Poor" (Collins, 212 pages, $21.95), describes a disaster that really might be in the making.

Fletcher, who writes about housing for the Wall Street Journal, pulls together ample evidence that the more than four-year boom in U.S. home prices has passed its peak. She weds her warnings to straightforward advice about home buying and selling, keeping to the icy channel of common sense.

Fletcher hammers her points home with highly readable prose and unsettling statistics. Halfway through this year, she says, investors bought 23% of all homes nationwide. That's a fourfold increase from the norm.

A quarter of all U.S. homeowners, she says, are overextended on their housing expenses, meaning they pay more than 28% of their monthly gross pay on shelter.”

More…

Commerce Bancorp Cut Earnings Guidance Last Week

While I was away on vacation, New Jersey based Commerce Bancorp. cut there earnings guidance. The reduction in earnings at the bank is due to the continuing flatness of the yield curve. The implications of a flat yield curve for real estate are negative. Eventually, if banks hope to improve their margins, they will have to increase lending interest rates on longer term loans, which are mostly mortgages. As mortgage rates rise, so do monthly payments rise unless the price of the house trends down.

Snip…

“Commerce is repositioning its balance sheet by selling $1.5 billion in fixed-rate securities with a yield of 4.6% and replacing them with higher yielding securities that carry a yield of 5.2%. In selling the low-yielding bonds -- most likely mortgage-backed securities -- Commerce will take an after-tax loss or $18 million.

The bank's earnings are falling short of expectations, in part, due to the continuing flattening of the yield curve, or the spread between short- and long-term interest rates. The narrowing spread is making it more difficult for banks to make money from the lending and deposit operations.

"The continued flattening of the yield curve over an extended period of time has produced an interest rate environment unlike that seen in many years,'' the company said in the filing. "The convergence of short-term rates and longer-term rates has reduced the company's net interest margin.''

The bank expects its net interest margin in the fourth quarter to range between 3.50% to 3.55%, down from 3.67% in the previous quarter.

Net interest margin is a measure of the profitability of a bank's lending and deposit operation.

Jersey Devil Land Development

Today’s APP has a story that describes all land available in the Pinelands for future development. Apparently there is plenty of room. When the housing bubble deflates enough at the Shore, I bet that development projects on the edges of the Pinelands will come to a screeching halt. I think that much of the development of the Pinelands over the past ten years was caused by the run-up in houses prices in Middlesex County, Monmouth County and Northern Ocean County. I think that many locals from those areas that did not have to commute to NYC each day sold their houses for decent gains and moved into bigger houses further south into the Pinelands. Given that house price appreciation is finally starting to stall, it seems likely that fewer people will be willing or able to sell their house in West Long Branch and move to Lacey.


Separately, too much development in the Pine Barrens will disturb the natural habitat of the Jersey Devil, or Bigfoot, or any number of ghosts.

[BY KIRK MOORE
STAFF WRITER

More than 40,000 acres of land remains zoned for growth in the Pinelands counties, leaving plenty of room to meet housing demand over the next 20 years, according to a new study released by state Pinelands Commission officials.

Atlantic County has the most room left by far, with a potential 18,150 acres still vacant, followed by Ocean County with an estimated 9,310 acres left in its growth areas, according to a housing task force the commission assembled from state and county planning agencies.

"The development goals that were designated in 1980 were thought to be more than sufficient to meet housing demands into the middle of this century," said John Stokes, the commission's executive director. "Based on the best population estimates that exist today, it's abundantly clear these Pinelands areas still have more than enough capacity to meet Pinelands housing demands in the next 20 years and past the 2020s."]

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For Sale / For Rent

I was perusing the local Shore MLS and came across a listing for one of those new townhouses in Long Branch (the ones on Ocean Avenue near Rooney’s Crab House). The listing had the townhouse as both for sale and for rent. I think that this is some sort of new tactic by investors as I don’t recall seeing a dwelling listed as both for sale and for rent in the past. This tactic seems kind of desperate and suggests to me that 1.) the rental income will not cover monthly expenses (or else why not keep the property if its cash flow positive?) and 2.) the current price at which the property can be sold will not yield a worthwhile return. The owner, therefore, seems to be willing to wait until the market turns more favorable by trying to get at least some rental income.

Is anyone else seeing these types of for rent / for sale listings?

Has anyone noticed an increase in the number of single family houses that are for rent in their particular town – Jersey Shore or elsewhere?

Bonds Say Housing Bubble is Bursting

It doesn't seem like the yield on treasury bonds has to go up in order for mortgage rates to go up. The spread between the risk free rate and mortage rates is widening because the probability of default is increasing for mortgage loans.


[In the U.S. bond market, the housing bubble has burst.

Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default.

"We've been hearing about risks of a house-price bubble, easy credit and loans to borrowers that really don't qualify, and now in the last couple of months we're starting to see things turn for the worse," said Joseph Auth, a bond fund manager who helps oversee $135 billion at Standish Mellon Asset Management in Boston. "We don't know if it's going to be a hard or soft landing."]

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Red Bank is the New Hoboken, or Vice Versa

The Asbury Park Press has an extensive article comparing Red Bank and Hoboken. The only similarities between Hoboken and Red Bank is that 1.) its nearly impossible to park in both towns and 2.) both school systems suck.

Snip...

[Red Bank could be considered Hoboken by the beach. It's already been on the radar of both scenesters and savvy business people as the next big thing — an established downtown with a cultural life attracting customers from near and far.

"Is it becoming Hoboken? We are Hoboken," said Jones in her Broad Street store. "The stores here are primarily independently owned, similar to Hoboken. That's what keeps it unique."

Like Hoboken, Red Bank could be at a crossroads for the future.

High rents are pushing mom-and-pop stores from Hoboken's main drag of Washington Street onto the side streets. Red Bank residents and business people worry about the same thing happening here.]

More...

New NY Times Housing Bubble Blog

The NY Times has a new blog about housing. Called "A Walk Through."

This clip is from yesterday. Notice that the italicized sentence says a build up in inventory leads to excess demand when the Times meant excess supply. Jason Blair or Krugman must have written that sentence. In any event, welcome to the Housing Bubble Blog universe NY Times, I hope you have lots of coverage of the bubble in the local tri-state area.

snip...

"Many markets around the country are now moving into the phase that follows a run-up in prices, when a build-up in inventory leads to excess demand and then a drop in prices.
Over the next several months there will be many reports like these. To save time, here’s a round up of this week’s Hissing Sound."

More...

Home Owners Want To Eat Cake Too..

Property owners seek tax adjustments - From the Times-Beacon on LBI..

About 260 have made appointments with the tax assessor to talk about the new reassessments for their homes.
...
"It appears to me the standard they are using is above the standard we have down here," said Philip Biazzo of Dock Road. "Why aren't they using a standard that's a real standard?"

Biazzo said the revaluation is being "done in a bubble" of high housing prices.

Tax Assessor Frederick R. Millman said the reassessment was ordered by the Ocean County Board of Taxation and affirmed by the New Jersey Board of Taxation because assessments fell below 70 percent of true market value and the discrepancy is continuing.

Maybe I'm biased, not being a homeowner, but if property "values" rise, it only makes sense that taxes should rise with them. Unfortunately, housing price bubbles are a double edged sword. Many people are high as a kite on the free money (equity) it's given them, however when the tax collector comes, they somehow feel like the increase is unjustified. Well, you had the appreciation, now pay the piper. Now, I understand long time residents, especially older residents on fixed incomes, can be pushed out of homes they've lived in all their lives. This is, of course, unfortunate. However, it is entirely the governments fault for causing this. So if you are outraged about it, talk to your local politicians. Not about eliminating or reducing taxes on long-time residents, but by eliminating the tax loopholes and agencies that let this home price escalation get so out of hand. Treat the problem, not the symptoms.

Millman said the housing market is cyclical.

"If there was a sudden drop in the market or a sudden spike in the market, we would do this (a reassessment) for the following year," Millman said.

Local government give back money? Sorry, I'll believe that statement when I see a local government reassess a whole town downwards.

Caveat Emptor,
Grim!

Shore Affordability

The National Association of Homebuilders & Wells Fargo released their third quarter affordability statistics yesterday.. I briefly discussed the fact that Northern NJ made the top ten over at my blog, but I want to take a closer look at what is happening to affordability at the shore.

NAHB Third Quarter Affordability

First a bit of a primer on how this data is broken down. The federal government defines a set of areas called Metropolitan Statistical Areas (MSAs). The MSAs we are interested here are the following:

Edison, NJ MSA
Somerset Co.
Middlesex Co.
Monmouth Co.
Ocean Co.

Atlantic City, NJ MSA
Atlantic Co.

Ocean City, NJ MSA
Cape May Co.

Third Quarter Affordability
170 MSAs from across the country were ranked from most to least affordable (the higher the number the less affordable)

Atlantic City MSA - Ranked 121
Edison MSA - Ranked 130
Newark-Union MSA - Ranked 140
New York-White Plains-Wayne - Ranked 161

Caveat Emptor,
Grim

Grim at the Northern NJ R E Bubble Will Guest Blog

I am going to be on vacation until next Friday. In the meantime, Grim, from the Northern New Jersey Real Estate Bubble will be guest blogging.

Listings Are Dropping Fast at the Shore

As I posted yesterday, listings at the shore were down week over week. I took a look at the Eastern Monmouth MLS today and noticed that listings keep going down. I doubt that houses are selling faster now than they were a few weeks ago and believe that people had been "testing" the market by listing their house to see how much it might be worth. I think there is a general assumption among housing bears that inventory will swell in the Spring when the traditional selling season returns.