Where are the Open Houses?

I guess it’s too hot to hold open houses in July as there seem to be fewer and fewer each week. Since there is still a ton of inventory compared to last year, Realtors and Sellers must have decided to take a break from holding so many open houses over the past couple of weeks. Maybe open houses are just not very effective.

Much of the inventory at the Shore seems pretty stale. I see the same houses for sale week after week. One area that looks like there are a lot of houses for sale is in Long Branch, especially in some of the more marginal areas. I think that Long Branch has a lot of flippers that are starting to get worried and are listing their houses more quickly than they probably initially wanted to in order to try and get out without too much pain.

Also, here is a post from NJCoast. If anyone can refute these numbers, I would like to see the data, otherwise, the slowdown in sales is pretty remarkable.

said...

Closings so far for the month of July:
Rumson- 1
Spring Lake- 0
Monmouth Beach- 1
Little Silver- 2

"Homebuilders start fessing up"

From Prudentbear.com.

Go this link to see comments from DR Horton and the other homebuilders.

From D.R. Horton: “…right now I truly believe that there are a lot of fence-sitters out there. They don't have to buy because of the fact that the appreciation is not like it has been over the last two or three years, so if they don't buy today, they're not going to miss an uptick in the house price, so there’s not really much motivation for them to buy unless they really need a home. “And also we have significantly higher cancellation rates, which all builders are experiencing. So when we look at our fourth quarter, what we're trying to do is give you an absolute bottom line number that we can hit or exceed. And I guess I don't want to get in to any other builders on this conference call, but I get confused when I look at some of the numbers that I'm hearing other builders produce and report, and it reflects margins staying the same in the next two quarters. And that's just not out there, and if it's out there, we'll be glad to be the beneficiary of that, but we're not going to assume that.

On the Phoenix market – “I can tell you that market is going to get softer going forward, so we're looking at this future market with very, very clear vision – with no rose colored glasses on – and we don't want to paint a picture of anything else other than what we're actually seeing in the market place out there. And if we're going to get punished and we’re going to get pummeled because of the fact that we're being more accurate than some people think we need to be, so be it.

On the California market – “So I think really, clearly, what's affecting the demand in a number of our markets is simply we've depleted the pool of affordable buyers by escalating real estate prices in a number of our market, and then that has been somewhat aggravated by the fact that interest rates have worked their way up, although I will tell you that interest rates don't have a hill of beans to do with our business in a large way. If you – listening to somebody this morning – if you look at the 30 year mortgage rate, it's still one of the lowest it's been in the history of the U.S., so it's not the fact that a less than 7% 30 year mortgage rate is not available out there. I think it's a function of the fact that median homes price – median price of homes – especially, look at Las Vegas. Two years ago, the median price of homes went up 50%. The next year it went up 25%. What happened? Pool of buyers dissipated.

"...weeks or months at a time with no offers"

The RedBankGreen Blog pointed out to us this story from the Star Ledger.

Snip...

[Today, sales agents say homes in Monmouth and Ocean counties at all price points sit and sit, sometimes for weeks or months at a time with no offers.

And sellers, who have grown accustomed to property values doubling and tripling in recent years, have started to lower their asking prices -- in the McLoughlin's case by as much as $400,000 -- to move their homes.

"Like everywhere else, sales have slowed down quite a bit and asking prices have dropped some," Stevens said. "It used to be not a question of if you would sell, but when you would sell. If someone listed their property at too high a price, given more time, the market would rise to that price and it would sell. That's not the case now. What we're seeing is a lot of owners having overpriced listings and the market is not rising to meet them anymore."]

See RedBankGreen for the full story.

Eastern Monmouth MLS at 4560

Last week the count was 4511. Just a guesstimate, but I think the market clearing price is at least 15% below current asking price levels here at the Shore.

It's Not a "Buyers Market" Until the Blogs Say So.

Ben Jones, The BubbleMeter, the Marin Bubble Blog and all of the other Blogs who correctly predicted over a year ago the bursting of the housing bubble that we are seeing now will also be who decides when it is a "buyers market." The NAR has no business calling this a "buyers market" given their pathetic predictive abilities.

"NEW YORK (CNNMoney.com) -- It's official - even the nation's leading group of real estate agents now says it's a buyer's market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers.

The news came in the National Association of Realtors' report for June, which showed that home sales fell to the slowest pace since January while price gains were the smallest in over a decade."

More...

Existing Home Sales Down

It’s pretty easy to see that home sales at the Shore have slowed.

I like to watch what is going on in Hoboken and Jersey City and I have been told that not too many deals are getting done. Instead, the rental market is heating up after four or five years of virtually no ability for landlords to increase rents. The increase in interest to rent is probably a sign that there is a decrease in interest to buy. Also if you look at Craigslist.com you can see that some condo owners are now trying to rent out apartments in JC and Hoboken. What looks like is happening up there is that condos that were intended to be flipped are not selling and instead these flippers are trying to rent them out.

“The pace of sales of existing homes in the United States fell 1.3 percent in June to the slowest since January as condominium sales tumbled and selling prices marked their weakest gains in 11 years, a trade group said on Tuesday.

Sales of existing U.S. homes fell to a seasonally adjusted annual rate of 6.62 million units in June from an upwardly revised rate of 6.71 million units in May, the National Association of Realtors said. June's rate was down 8.9 percent from the 7.27-million-unit pace set a year earlier.”

Full article…

Finally an Article About the Jersey Shore

There are some comments from Kara Homes at the bottom of the article.

"For now, Stephen and Jaime Dane are living in a summer rental in Avon. Their new four-bedroom home at K. Hovnanian Homes' Manors at Metedeconk development in Jackson is under construction.

"Right now, it is a big hole with some bricks around it," said Stephen Dane, 32.

The Danes put down a deposit in February and expect to move into their home in January. Some may say it was a great time to purchase a new home. The builder, working with its own mortgage company, gave the Danes a $10,000 credit for improvements inside the house and another $10,000 for upgrades outside.

"We have a nice big home," Dane said. "We were happy with the incentives that they gave us."

Once red hot, the market for new homes in New Jersey has begun to cool."

More...

Fiasco in Florida

Here is a great article about the state of the real estate market in Florida. It looks like the market is turning very ugly down there.

"Inventory - Our current levels are all time highs. We’ve never seen anything like this. If you want to believe the NAR numbers, so be it. In the previously hot markets, inventory levels are well beyond a year, and in some markets 2-4 years. You have hundreds of thousands of homes in the hands of flippers, not to mention all of the unsold inventory the builders are sitting on, and you still have the normal market of people selling for reasons like death, new job, etc.."

Full article...

WSJ Says Inventories are Growing

The Wall Street Journal covered the housing bubble heavily in today's edition. In a piece titled "For-Sale Signs Multiply Across U.S." the WSJ noted that inventories are up all over the country.


"The housing market continues to weaken in much of the country as inventories of unsold homes rise and many sellers cut their asking prices, a quarterly survey by The Wall Street Journal shows.

There is no sign of a broad collapse of housing prices about a year after the once-hot coastal markets entered a long-anticipated cooling phase. But the general level of prices is edging down in some areas and leveling off in others, while the supply of homes for sale keeps rising.
The number of homes on the market in Orlando, Fla., for example, is nearly five times the year-earlier level, while the inventory has quadrupled in Phoenix and Tampa, Fla., and nearly tripled in the Washington, D.C., area.

In another sign of the housing market's growing weakness, the Commerce Department said housing starts fell 5.3% last month from May, to an annual rate of 1.85 million."

No link.

Eastern Monmouth MLS at 4511

Last week the count was 4452. The weekly inventory increases seem to be accelerating again. I'm pretty surprised we passed the 4500 mark so quickly. In the third week of July 2005, there were only 2864 homes for sale.

Here Come the Bad Loans

Snip...

"The company also set aside $60 million for bad loans, more than doubling the $26 million set aside in the same period last year. Net charge-offs rose slightly to $76 million from $72 million.

Despite the rise in bad loans, Chairman and CEO David A. Daberko called the credit quality "sound," and said that he was pleased with the earnings."

Full article...

Let’s Hear Some Stories - Part 4

Continuing the same post from last month, I would like to hear stories and anecdotes over this weekend about the state of the real estate market here at the Jersey Shore.

The Consumer is Tapped Out

Aside from the DR Horton news, and homebuilders in general getting whacked, there were at least two companies that had bad news to report this week that may indicate the American consumer does not have as much money to spend this year compared to last year.

Brunswick Corp., a maker of boats, said that boat demand is not as strong as expected and that earnings for the year would have to be reduced. (I said a few months ago here that I thought I saw more boats for sale.)

Also, Polaris, a maker of snowmobiles and ATVs, also said that sales would be weak.

I think that the weak demand for recreational vehicles is partly relective of high gas prices and partly reflective of the reduce ability of consumers to extract equity from their houses to make big ticket purchases.

What's the Deal With Kara Homes?

A few posts ago, some readers were reporting that they heard that Kara Homes was on the verge of a bankruptcy filing. If anyone has any information regarding Kara Homes, I would like to hear about it. Also, someone else said that all of Kara's Tradewinds' homes in Sea Bright were bought in a single transaction. Does anyone have any information about this too?

Finally, from my own observations, I don't think that the Kara development in Navesink (on rte. 36) is doing very well. From what I can see, there are still a lot of homes for sale and the entire project does not seem like it is fully constructed yet.

Home-Builder Grp Sees Housing Prices Falling In '06, '07

This was from a wire story I saw today.

By John Spence

The U.S. housing market will continue to unwind after the multiyear boom with slower price increases and fewer housing starts as interest rates move up, according to a report released Wednesday by the National Association of Home Builders.
"We are coming off a very strong couple of years for the housing industry, and markets are now starting to cool to more sustainable levels," according to David Seiders, chief economist of the Washington, D.C.-based trade association representing home-construction companies.
"Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts," he said in a statement accompanying the study.

Full story...

Eastern Monmouth MLS at 4452

Last week the count was 4418. The rate of inventory growth seems to be slowing, but not as much as I would have thought this deep into summer.

Broader than Expected

Standard & Poor’s changed its outlook on Toll Brothers to stable from positive. I think many readers of this blog and others have known for over a year now that the downturn in housing demand would be pretty broad and sharp.

“NEW YORK, July 10 (Reuters) - Standard & Poor's on Monday changed its outlook on luxury home builder Toll Brothers Inc. (TOL.N: Quote, Profile, Research) to stable from positive, citing declining new orders in the housing market.

"The outlook revision is due to negative new order trends that have been deeper and broader than anticipated during the early stages of the overall housing market correction, precluding an upgrade in the near term," S&P said in a statement.”

Full article…

HOV Takes Over Keyport Project - Fixed

As long we are speculating about the future of Kara Homes, I thought this article might be somewhat indicative of events to come. Hovananian, one of the largest home builders in the country recently took over a project in Keyport. It looks like maybe the original and much smaller developer took on more than they could handle.

"Red Bank-based developer K. Hovnanian has taken over the Parsippany-based Woodmont’s townhouse project at the corner of First and Broad streets, according to John Semple, an in-house attorney for the developer.

Semple appeared before the Borough Council at its regular session on Tuesday, June 20."

More...

FYI, this is how the large public home buiilders plan to survive the downturn, by taking market share from smaller competitors, and ideally, running them out of business using the strength of their balance sheets.

Manhattan Glut of Condos

The lack of sales in the City is definately not good for the Jersey Shore. Manhattan or Brooklyn or Hoboken sellers are the natural buyers of single family houses in Monmouth County

"A sharp drop in the average price of Manhattan condominiums could revive concerns that the luxury condo boom, which has been seen around the five boroughs at an increasing rate since 2002, could result in a glut of apartments or developers rethinking their pricing expectations.

The second-quarter price drop versus last year is to be disclosed today when some of the city's largest firms release real estate statistics.

Much of that concern, according to some real estate analysts, is the byproduct of the 1980s, when thousands of new housing units hit the market as housing demand was softening. They say that an economic recession, rising inflation, high unemployment, and high mortgage rates led to serious housing price declines and an absorption rate of new units measured in years, not months. That cycle is now visible in other national housing markets - particularly those infiltrated by short-term investors - such as Miami and San Diego."

Full article...

Let it Wash Away

A reader of this blog sent in this article about beach replenishment on LBI from The New Yorker. It's pretty amazing that the whole debate about beach replenishemnt and beach access and who will pay for what and when seems to be unique to New Jersey, as if we are the only state in the union that has beaches.

snip...

[In order to start pumping sand, the NJDEP and Army Corps need about 800 oceanfront property holders to sign easements. The documents do two things: First, they grant the government the right, in perpetuity, to rebuild the dunes on private land. “This is not a one-shot deal,” says Dave Rosenblatt, administrator of the NJDEP’s Office of Engineering & Construction. “We’re going to have to come back and redo this.”]

full article...

Esatern Monmouth MLS at 4418

Last week the count was 4400.

I think we are finally starting to see a slowdown in the inventory build. I don't think houses are selling faster, rather, it looks to me like listings are being pulled. As most readers will recall, I wrote last last week that the Rumson house this blog has been tracking for a year is now up for rent as well as for sale. In the same small neighborhood there are another 2 houses for rent, which leads me to believe that people are trying to generate some cash from renting out their properties since the houses are not selling at the prices the owners want.