Friday, August 25, 2006

Blogging Will Be Slow

I will be on vacation next week, therefore blogging will probably be pretty slow.

If you have any comments or observations, please leave them here for now.

46 Comments:

Anonymous Anonymous said...

There haven't been many bloggers here lately. I don't know why. This is a great blog - I've been here for a few months and appreciate the information. As someone who is contemplating buying a home for the first time, this blog has given me hope. Thanks, littlesilvered!

Friday, August 25, 2006 7:57:00 PM  
Anonymous Anonymous said...

OK - so I am looking at investment properties in LBI...here is how out of whack things still are. I just received a listing for an ocean front duplex listed at $2.4 million. It claims to generate $80,000 a year in rental income. If I put $400,000 down and have a $2million mortgage just mortgage payments (at 6.5%) would total more than $150,000 a year. That does not inlcude taxes, insurance, utilities etc. So I would have a yearly shortage of more than $70,000... Wow what a great investment...hook me up.

Friday, August 25, 2006 11:11:00 PM  
Anonymous Anonymous said...

North Dover- Toms River, NJ Revaluation next in town !!!!

Smaller homes hit harder by revaluation
Friday, August 25, 2006

By DEENA YELLIN and DAVE SHEINGOLD
STAFF WRITERS

http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk0NSZmZ2JlbDdmN3ZxZWVFRXl5Njk4MTA0NiZ5cmlyeTdmNzE3Zjd2cWVlRUV5eTM=


WASHINGTON TOWNSHIP -- It seems like reverse logic.

On busy Pascack Road, the owner of a modest home assessed at $192,100 and situated on 0.43 acre received a 52 percent tax increase this year.

A few blocks away on the more scenic Gorga Place, the homeowner of a new-construction home assessed at $417,500 and situated on 1.35 acres is enjoying a 12 percent tax break.

Based on the township's new tax assessments, it pays to own a pricey home.

Some residents faced sticker shock, and others breathed a sigh of relief last month when the township mailed out its tax bills.

Residents of the town's costlier homes, clustered on Washington Township's western border, saw minor tax increases or, in many cases, actual tax cuts because their assessment generally went up less than those of lower-priced homes.

Some of the expensive homes on Katharina Place, Gorga Place and Horizon Court received tax cuts in the range of 12 percent to 17 percent, according to an analysis by The Record. One Gorga Place home had a 17.6 percent tax cut, from $14,324 to $11,810.

On the other hand, more moderately priced homes on Taylor Avenue, Pascack Road and Ridgewood Road are being charged 10 percent to 15 percent more because their assessments generally went up the most. Some assessed values of those homes rose by more than 155 percent.

On some streets there is a hodgepodge of tax values, with neighbors paying vastly different tax bills. For example, on Ridgewood Boulevard North, five homes had disparate tax bills with their values rising 109, 123, 132, 140 and 148 percent, respectively.

Assessments are the values on which actual property tax bills are established. The assessments are supposed to reflect actual market value so that all property owners pay their share of the local property tax burden. But over time, the values become out of date as different neighborhoods rise at varying rates. When that occurs, inequities in the local tax system need to be balanced out through a property assessment update. The updates are generally done every decade or so, usually at the demand of the state.

According to a computer analysis of the township's revaluation, the median assessment on all homes in the township, which is the point at which half are below and half are above -- rose 126 percent, from $232,900 to $527,000. But the typical assessment on the most expensive homes in town, or those worth at least $300,000 before the revaluation rose only 113 percent, while the median assessment on the less expensive homes -- those valued at under $200,000 before the revaluation -- shot up 138 percent. The median tax on those homes jumped 12.5 percent, from $5,850 to $6,580.

Homeowners can be cheered by the fact that the overall property tax burden shifted slightly from residential to commercial property owners because of new construction at the shopping mall. Nevertheless, with the township being one of the most commerce-free zones in the county, homeowners still bear 96.6 percent of the property tax burden.

"Once the tax bills were sent out, people started complaining that they didn't expect them to go up so high," said Mayor Rudy Wenzel, whose own taxes rose roughly $700. "If you have a small house on a good piece of property, you could get hit harder because, technically, you could build a larger home on that lot."

Wenzel said the recent tax revaluation makes him pessimistic about the future. "I see big increases coming up because of education and the high cost of municipal employees. I don't see growing ratables to help us cover it in the next few years. The high cost of living here is sending people to other states."

Councilman Bob Schroeder said the council is doing what it can to address the high taxes. "We run the township efficiently. The council is addressing all the departments to see where we can cut costs. We're also looking at sharing services with neighboring communities."

But the state is wasting tremendous amounts of money, he said. "Trenton needs to cut spending to lessen the blow to taxpayers here."

The revaluation took 10 months to conduct and the new tax rates went into effect in January.

"We had very few tax appeals, so not so many people are complaining," said Joseph Politi, president of Market Value Appraisal Service Inc. in Fair Lawn, which was paid $259,000 to conduct the revaluation.

He said there are several reasons someone's home value could increase while someone else's decreases. "Some homes might have been assessed too low last time. One house could have had an addition, which requires higher taxes. Different neighborhoods increase in value at different rates. Someone with a bigger piece of property will have a larger increase than a nicer house on a smaller piece of land."

Politi advised homeowners that "if their property would sell for the amount the house was valued at," then it is correct.

"People have been underpaying in taxes for years. Now the system finally caught up to them. Nobody wants to hear that," he said.

Saturday, August 26, 2006 12:34:00 AM  
Anonymous Anonymous said...

The NJ property tax situation is a total disgrace. Five hundred and sixty seperate municipalities, all chock full of pigs feeding at the trough of nepotism & patronage. Vastly bloated local budgets full of waste and fraud abound in NJ.

These local yahoos always shift blame to Trenton and claim to be cutting costs everywhere all the time. But anyone familiar with NJ knows damned well that Trenton is only part of the big picture.

Consolidate these one-horse sleepy-eyed little burghs and you will eliminate hundreds & hundreds of useless, ineffectual and wasteful positions that only exist because these nothing little towns do. It boggles the mind to think about just how much money is wasted on simply running & staffing these local entities on a daily basis. If some common sense prevailed, much of this management/service could be centralized, thus eliminating a lot of the unnecessary municipal waste.

Sunday, August 27, 2006 1:16:00 AM  
Anonymous Anonymous said...

Total crappy weather at the shore this weekend and many empty open houses.
I agree the tax situation is scary here. How does it work if you buy a new home? Based on the purchase price? I see some houses for sale with @4k property tax - they are old homes probably bought 20 years ago. So if they are asking 600k now, how would you be taxed?

Sunday, August 27, 2006 12:37:00 PM  
Anonymous Anonymous said...

Interesting article on TheStreet.COM

Lots of factors brought down the house.

Mr. Rant

Monday, August 28, 2006 9:03:00 AM  
Blogger njcoast said...

Looks like some sellers are starting to take it on the chin in these recent sales. With realtor commissions, realty transfer fees, and mortgage interest payments they are all barely breaking even or losing. And these went into contract 2 months ago before all the home bubble bursting articles hit the main stream media!

Monmouth County
Ocean twnshp. MLS #10083691
Closed price-$358,000
original ask price-$409,000
Last sale-8/04-$321,000

Asbury Park MLS#10082502
Closed price-$185,000
original ask price-$230,000
Last sale-9/04-$147,500

Fair Haven MLS#10085436
Closed price-$516,000
original ask price-$529,000
Last sale-6/05-$499,000

Monday, August 28, 2006 12:58:00 PM  
Anonymous Anonymous said...

I've noticed that the Realtor cheerleaders have been missing in action. I wonder why. NJ shore real estate is turning out to be the internet bubble of the new millenium. Wait until the keys start to come back to the banks, then you'll really see the panic. When prices fall 40% and then stagnate there for a few years, I'll be a buyer. And what if you have a 'noreaster like '62? Talk about the setup for a perfect storm, well, this is it.

Monday, August 28, 2006 8:01:00 PM  
Anonymous Anonymous said...

Comparing actual real estate to the internet is absloutely ridiculous. I have studied the Internet bubble and even wrote a report on it. The internet bubble happened because people bought into something with no actual value. Despite the fact that prices are inflated there is of course inherent value in a home. It is crazy to think that prices will drop 40% all over. Yes there will be 40% drops in specific cases, but the bottom line is that people still need to buy homes.

Monday, August 28, 2006 9:21:00 PM  
Blogger chicagofinance said...

There is more development than people who will buy. So, in fact, some of these homes ARE NOT needed!

Touche and chalk one up for the boooyaaa army!

Monday, August 28, 2006 9:52:00 PM  
Anonymous Anonymous said...

Of course "people will still need to buy homes."

But people still needed to invest, buy tulip bulbs, etc.

It doesn't mean that people don't eventually "get" what value really means when adjusted for risk.

In fact, the mania can go 180 degrees. The same herd mentality to took the masses on a buying spree can easily panic them and send irrationality off in the opposite direction.

If you expect the market to hold up simply because "people need to buy houses" you assume that people will somehow suddenly become rational thinkers, which they won't.

Reminds me of that line from MIB:

"A person is smart. People are dumb, panicky, dangerous animals and you know it."

Monday, August 28, 2006 9:56:00 PM  
Anonymous Anonymous said...

Well said, however I never said that the market will hold at its current level. I was merely stating that you are not going to see a market where all homes are selling for 10%, 20%, or even 45% of the asking price. If you think that all of a sudden people are going to be able to scoop up 15 houses for pocket change you are crazy. If you hold that mentality and wait and wait for a the absolute bottom you are going to miss the boat again. Historical indexes show that price gains and losses are cyclical. All of the figurs I have seen point to a time period of 3-7 years.

Monday, August 28, 2006 10:02:00 PM  
Anonymous Anonymous said...

Mr 10:02 PM is right you know. No matter how irrational the markets get to the upside, they also get irrational to the downside, but ultimately, there are seasons to this.

Wait, I just had this picture of Chauncey Gardener from Being There.

Where you can continue to put up new inventory, like Asbury Park, prices are going to be under pressure for a while. Where there are less opportunities and the neighborhoods are solid second home neighborhoods, it is not going to be brutal.

Unless I have missed the news, the population of the US continues to rise, so the comment "So, in fact, some of these homes ARE NOT needed!" is only correct short term.

Mr. Rant

Monday, August 28, 2006 10:41:00 PM  
Anonymous Anonymous said...

Not true. Nobody needs a second home. Real estate prices at the shore have been out of whack for years, and the long awaited price correction is here. Just because the population is growing doesn't mean they're going to buy beach houses. The argument is ridiculous.

Monday, August 28, 2006 11:55:00 PM  
Anonymous Anonymous said...

10:02 PM -

Homeownership is at a record rate (~72%). the long run mean is ~59%. Hence, you have a lot of people owning real estate that otherwise dont have the economic wherewithal. Also, this situation is a mirror image of the internet bubble. Prices are now substantially above their fundamentals. like tech stocks, which have an intrinsic value, real estate is now trading much higher than what the normal fundamentals will support. If prices revert to their long term mean, you can (and i think prolly will) have a 20-40% correction. (Thats for NJ, not nationally.)

As for population, it takes generations for population dynamics to change. As for NJ, there are ~1mm net people leaving the state. (according to statistics)

I believe the inflection point will be when the banking industry starts reporting higher delinquency rates and defaults. If a serious banking disruption occurs, you could see regulators step in and curtail the usage of exotic mortgages and raise equity requirements.

As for your tech bubble comparison. Remember, it was the frenetic nature of buying driven by greed and herd mentality. Once this subsides, prices (no matter what the asset is) will revert to the mean...it always does..people could have still bot tech stocks after the bubble burst, but many chose not to because the expectations of future gains and the fear of losses were too great..the same thing will happen in real estate.

Once we enter the recession next year, risk appetite will dwindle and credit will compress.

Tuesday, August 29, 2006 8:23:00 AM  
Anonymous Anonymous said...

i am not too confident about this stat. let me double check:

"As for population, it takes generations for population dynamics to change. As for NJ, there are ~1mm net people leaving the state. (according to statistics)"

Tuesday, August 29, 2006 8:31:00 AM  
Anonymous Anonymous said...

Speaking of storms, I was cleaning my garage this weekend and came across a week's worth of APP newspapers covering the December 1992 storm. I was stunned to see the 14 year old pictures of (1) what the coast used to look like in Monmouth County, and (2) the damage caused by this storm.

Sea Bright, main street under six feet of water. Monmouth Beach, Rumson, Little Silver, Highlands, all with homes under water. The bays were flooded for days, and didn;t drain.

You look at all the building that has taken place since that storm - are these new residents? Does anyone look at the past history?

Tuesday, August 29, 2006 8:41:00 AM  
Anonymous Anonymous said...

"Homeownership is at a record rate (~72%). the long run mean is ~59%. Hence, you have a lot of people owning real estate that otherwise don’t have the economic wherewithal."

These are two separate statements and do not support each other. If the percentage ownership is up and the number of people actually capable of ownership has risen FASTER than the increase, you would actually have pent up demand!

I think the point is that home ownership has risen faster then peoples true ability to consume, and to that I would tend to agree. How much beyond and how long till peoples abilities catch up is unclear.Per capita income has risen in NJ year over year.

I would be interested to see per capita numbers adjusted for inflation compared to the rise in median shore prices adjusted for inflation.

"Not true. Nobody needs a second home."

While nobody needs a second home, imagine a world other than the one YOU live in, one where people want a second home and don't intend to sell just because a blog says the world is over. Now imagine a world where more people are born who a) need primary residences and b) some percentage will join the ranks of wanting and able to afford a second home. Hence, now bear with me, a + b = new housing demand.

"Real estate prices at the shore have been out of whack for years, and the long awaited price correction is here."

How many years and to what extent do you base your analysis? Or is sensationalism borne of ignorance?

"Just because the population is growing doesn't mean they're going to buy beach houses. The argument is ridiculous. "

Lets see, hmm second home ownership dates back to Egyptian times, so it is safe to say it probably won't end anytime soon. Of course then only the very rich had second homes, today significantly more people enjoy second homes. So I guess you are incorrect again.

Mr. Rant (I love being correct!)

Quick facts on NJ

US Census 2000 Total Population 8,433,276
US Census 1990 Total Population 7,730,188
US Census 1980 Total Population 7,365,011

Tuesday, August 29, 2006 9:32:00 AM  
Anonymous Burner said...

Historic real estate averages an increase of 3.5-4.5% per year.

No matter who is right, and wrong with this ping pong match, one thing is for sure: there are no bargains to be had. I know many people making over 200K per year that cannot buy what they'd like. A market with no entry point has no legs.

Over leveraged home owners are going to bring everyone down by way of association (or "comps" as we like t o call them). Bottom line: property disposition, and rising inventory is going to hurt even people whom can afford the house, or second house, they live in. It only takes a couple bad apples per neighborhood to drive buy side leverage. Hold on tight folks.

Don't forget to double up on ownership when prices do hit bargain levels again! Might as well make the most of a downturn.

Tuesday, August 29, 2006 4:29:00 PM  
Anonymous Anonymous said...

If you do have a house that won't sell, try making it stand out with a WellcomeMat:

www.wellcomemat.com

Tuesday, August 29, 2006 4:31:00 PM  
Anonymous Anonymous said...

Bravo Burner, well said.

"3.5-4.5%"
Are those numbers adjusted for inflation? What is the basis of the inputs, national, state or local?

Mr. Rant

Tuesday, August 29, 2006 7:09:00 PM  
Anonymous Anonymous said...

why invest in real estate when you can make more in the stock mkt? if the economy and housing tanks, the stock market will present better buying opportunities. dont "double up" your housing investment... unless you enjoy catching falling knives...let the market sell off, then buy baby buy!!

Wednesday, August 30, 2006 7:07:00 AM  
Blogger Rainman18 said...

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Thursday, August 31, 2006 4:23:00 AM  
Anonymous Anonymous said...

Someone said. "why invest in real estate when you can make more in the stock mkt?"

...for us it is only because we spend a fortune to rent on the shore every year anyway so I would include that in my analysis... and I would pour every extra penny I had into paying off the house so in the next 8-10 years I would stop renting it out all together and use it myself full time...bottom line you have to want a shore house - not an investment - otherwise I agree you would be better off in the market.

Thursday, August 31, 2006 4:23:00 PM  
Anonymous melissli said...

I've decided to stop lurking to say how much I enjoy this blog. It has provided so much education and given me information that I would have NEVER gotten from my realtor. Is there any way to find out how Jersey Shore sellers are responding to lowball offers? I've seen some North Jersey data on another blog, and I am curious to see if any Monmouth/Ocean sellers have realized that the dream is over. Thanks Again!

Friday, September 01, 2006 10:02:00 PM  
Anonymous Anonymous said...

Hello, I am interest in purchasing a two-family residents at the New Jersey Shore?I like the town of Belmar, Manasquan and Spring Lake Heights.

Does anyone know of property for sale? I have looked on realtor.com but dont see any good property. Thanks, Joe.

Saturday, September 02, 2006 7:57:00 AM  
Blogger njcoast said...

Melissa- here are the last 2 sales of the shore towns in Monmouth County.And before Mr. Rant goes on one of his diatribes, these do not show what the previous sales are- you have to do your own research- although I did list a few that were on the MLS.

Spring Lake
112 Tuttle Ave
Original list-4/06- $2,150,000
Closed-9/06- $1,650,000
11 Mercer Ave.
Orig. list-3/02- $4,695,000
Closed-8/06- $3,350,000

Sea Girt
508 Boston Blvd.
Orig. list-9/05- $1,999,900
Closed-9/06- $1,560,000
416 Crescent Pkwy
Orig. list-7/06- $949,000
Closed-8/06- $997,000

Brielle
10 Captian Bailey Ct.
Orig. list-3/06- $1,750,000
Closed-8/06- $1,250,000
633 Locust Rd.
Orig. list-4/06- $929,000
Closed-8/06- $875,000

Manasquan
29 Ocean Ave
Orig. list-5/06- $694,900
Closed-8/06- $662,500
257 Beach Front
Orig. list-12/05- $799,000
Closed-8/06- $687,500

Avon-by-the-sea
502 Sylvania Ave
Orig. list-5/05- $769,900
Closed-7/06- $684,000
115 Sylvania(bed & breakfast)
Orig. list-9/05- $2,349,000
Closed-7/06- $2,200,000
*Last sale-10/93- $550,000

Belmar
1600 W. Pine Tree Way
Orig. list-2/06- $329,000
Closed-8/06- $240,000
205 Eighth Ave
Orig. list-5/05- $1,150,000
Closed-8/06- $980,000

Bradley Beach
200 Evergreen Ave
Orig. list-5/06- $1,000,000
Closed-9/06- $880,000
108 Hammond Ave
Orig. list-5/06- $599,000
Closed-8/06- $579,000

Asbury Park-
33 Ridge Ave
Orig. list-3/06- $209,000
Closed-8/06- $200,000
* Last sale-3/04-$107,00
919 Mattison Ave
Orig. list-4/06- $229,000
Closed-8/06- $225,000

Ocean Grove
148 Inskip
Orig. list-7/06- $399,000
Closed-8/08- $275,000
107 Central Ave
Orig. list-8/05- $974,000
Closed-8/06- $750,000

Loch Arbour Village
Euclid Ave
Orig. list-9/05- $999,900
Closed-4/06- $900,000

Allenhurst
105 Elberon Ave
Orig. list-4/06- $1,700,000
Closed-8/06- $1,100,000
211 Spier Ave
Orig. list-5/05- $3,500,000
Closed-5/06- $2,500,000

Interlaken
418 Bridlemere Ave
Orig. list-5/05- $725,000
Closed-8/06- $682,500
602 Woodmere
Orig. list-2/05- $1,100,000
Closed-6/06- $799,000

Deal
232 Norwood Ave
Orig. list-2/06- $950,000
Closed-6/06- $800,000
151 Monmouth Rd
Orig. list-4/06- $899,000
Closed-6/06- $735,000

Long Branch
373 Warburton
Orig. list-6/06- $329,000
Closed-8/06- $312,500
455 Brighton Ave
Orig. list-3/06- $599,000
Closed-8/06- $566,000
*Last sale- 8/05- $457,000

Monmouth Beach
20 Gulf Pt. Rd.
Orig. list-5/04- $1,295,000
Closed-8/06- $1,100,000
4 Mann Ct.
Orig. list-9/05- $1,089,000
Closed-8/06- $845,000

Sea Bright
456 Ocean Ave
Orig. list-4/06- $1,850,000
Closed-8/06- $1,750,000
534 Ocean Ave
Orig. list-12/05- $1,200,000
Closed-8/06- $825,000

Rumson
24 Forrest Ave
Orig. list-7/06- $609,900
Closed-8/06- $605,000
40 Warren St
Orig. list-6/06- $1,495,000
Closed-8/06- $1,420,000
* new constuction

Atlantic Highlands
45 South Ave
Orig. list-11/05- $389,000
Closed-9/06- $325,000
*Last sale-8/05- $260,000
110 Wesley Ave
Orig. list-5/06- $449,900
Closed-8/06- $449,900
*Last sale-7/97- $175,000

Saturday, September 02, 2006 3:11:00 PM  
Anonymous Anonymous said...

Just got back from a week on LBI--my 30th or so in 35 years since I was in a stroller.

Weather was a mixed bag: mostly bad, some good, some strange--we left this morning in a sandstorm; the sand drifted up into the streets, totally obliterating the fences, and covering the bench that adorns the end of each street. Trudging to the water's edge, I could hear Maurice Jarrre's theme music from Lawrence of Arabia in my head: "I must get to Aqaba!"

What follows is a mixture of conjecture, rant, and bewilderment. (With maybe a soupcon of commonsense unintentionally thrown in the mix.)

Observations:

*Hundreds and hundreds (maybe thousands) of houses with for sale signs--lots with "Reduced!" plackards affixed.
*Hundreds (or, again, thousands) more houses with For Rent signs--and rentals were slow this season, by at least one agent's reckoning. I was able to negotiate a significant reduction in rent for my second-from-beach Cape Cod in Brighton when I started looking in July.
*Retailers said that a crappy end to August and Labor Day weekend caps one of the worst seasons in memory. One guy at a long-standing business said that vacationers over the last few years have "short arms and deep pockets"; they are increasingly forced to choose between rents and "amenities."
*Stores were in weeks two and three of their end-of-season sales.
*Fantasy Island STILL doesn't get it: Open the damn rides at 2:pm, instead of 5. My kids were driving me nerts--but the pizza place at Bay Village is still top-drawer.
*The vibe down there has changed--simply the consequence of people paying more and expecting more. I don't claim to speak for the masses, and I still love the place, but if the wife or I want to buy Lilly Pulitzer togs or JP Tod loafers, we'll go to Southampton, Bayhead or brush up on my Thurston Howell, III lockjaw and go back to Chatam, MA. Three story McMar-a-Lagos festooned with vinyl Victoriana and built on the former sites of capes and two-bedroom bungaloes does not a Malibu make--LBI is, despite the massive influx of funny money, just not a fashionable summer resort, at least not south of the causeway. (And only in isolated sections north of it at that. Though I gotta say that Barnegat Light looks better now than it did ten years ago.)
*The former Brighton Manor motel, a cheesy little dump where I used to rent a Sat. night to extend my vacation another day, is now efficency condos, priced at $199k/unit (down from $240k at initial offering). The barely renovated rooms are maybe 180-200 sf, with teeny kitchenettes (microwave, sink, fridgelet, but no stove). If the owners cut the number of units in half, made each a two story floor-thru, and charged $219k, maybe it'd be worth a look. But for now, the bubble has a name, and it's Brighton Manor Condos on LB Blvd (Near the ACME!). In fact, if I had to create a picture of the bubble, it'd be the lovely sea-foam green accented former motor lodge perched behind signs in the parking lot screaming, "OPEN HOUSE! REDUCED!! LIMITED TIME OFFER!!!" signs in the parking lot. My guess is, the last unit will be sold for under 100k--maybe $79k. It'll be a date that will live in infamy...
*Mustache Bill's diner in Barenegat Light has incredible fries and really good white chowder.
* Surf was crappy. Glad I didn't finally break down and buy a board.
*It's still a swell place. I admire/envy the folks who bought before the Bubble. And I'll show no Schadenfreude for those who end up losing their shirts. LBI is a place that can make Mr Spock irrational. It's a shame prices got so out of wack, and that a lot of people are gonna get hurt when they return to Earth.


By way of digression: The tatty cape I rented for $2500/week was listed for $1.2 mil. It was nicely redecorated with Ikea/Target stuff, but the systems were a disaster--e.g., 15 amp fuse box. The realtor calls it a tear-down--I'd rather buy a lot and not have to deal with demolition. I took one look at the place and decided that it was a "flipper." A quick check with the neighbor confirmed my suspicion: A couple once owned the place for a long time as a summer cottage; they put little work into it. The present owner bought in early '05; he paid in "the high eights."

The new owners prolly decided to rent it while it's on the market. Big mistake. The remnants of T.S. Ernesto exposed the place's weaknesses: The owners put in cheap-o window a/c units, but didn't caulk--result: horizontal rains caused extensive water damage to floors and newly-painted/restored sheetrock ceilings. The winds blew roof shingles off. Inside, the furniture was in unsafe/shabby condition, etc. Owners probably don't know sweet f-a about renting--there was no cleaning equipment, just an electric broom, and no mop--which meant that wife and I were using bedspreads to stanch the bleeding.

(Yeah, I should have checked it out in person, but I didn't think it was necessary--I mean, screw me for taking the word of the agency from which I had rented for the past ten years [the rental agent whom I worked with this summer is a middle-aged "sales associate" who in a year's time likely will be back to doing whatever it was he did before he put on his realtor's jacket]. Before this year, I used to deal with the broker, an upstanding [for real estate] woman named Sharon, who now owns the place.)

Other tid-bits: This place (our rental) had a spotty rental history this summer--there were lots of open weeks as late as mid-July. Now the owner has to either do repairs from T.S. Ernesto and hope the place lasts out the fall (rainy) season and winter. To pay for it, he can put in an insurance claim and hope to sell before he has to renew his policy, which will, naturally skyrocket in price.

Either way, this guy probably sank $25 grand into "renovating" the house, and might be carrying a big mortgage, or at least losing principle on a cash purchase when he could be getting a minimum of 5% gain elsewhere. He may have gotten $20-24k in rental income this summer, less the agent's 10%--and, with the peeling paint and stained, possibly water damaged sheetrock, there is NO way people can inhabit the place this week. Great investment--what he loses per unit, he'll make up in volume...

There must be dozens or even hundreds more like this owner on LBI. My gut says that after all is said and done, he'll be lucky to get in the high sixes, low sevens. And the neighbor who filled me in on the owner's story was a discernably, yet discretely, amused by this owner's folly--it's gotten to the point where even long-timers (ESPECIALLY long-timers) want the madness to end. Greed is so unsexy.

So, how was your summer?

-Jamey

Saturday, September 02, 2006 5:08:00 PM  
Anonymous Anonymous said...

People are pouring out of the shore today (Sat.) - weather did them in. I guess there aren't too many people interested in sticking around for the "open houses" tomorrow.
I see lots of homes on the market, still overpriced, some small reductions, not much selling going on.

Saturday, September 02, 2006 5:37:00 PM  
Anonymous melissli said...

Wow, more than I expected! I enjoy the ones that came down a mil after a year. I prefer not to look at the previous sale price unless I'm looking to buy the house...The price increase makes me want to puke. Anyway, I am realizing quickly that the previous sale doesn't usually matter, because most of the sellers I'm finding drained all the equity out of the house 2 years ago. They don't care much that they paid $200K for the house when the current mortgage is for $450. I am just going to keep doing research and try to benefit from someone else's misfortune.
Thanks Again,
Melissa

Sunday, September 03, 2006 3:44:00 AM  
Blogger njcoast said...

Watch out- schadenfreude brings bad karma.

Sunday, September 03, 2006 9:49:00 AM  
Anonymous Anonymous said...

Interesting stuff, Jamey. That belonged on the main blog page and not buried in the comments section.

And you're the first person in a long time that I've seen properly use brackets as embedded parens. As minor but still impressive touch. Kudos.

Sunday, September 03, 2006 10:32:00 AM  
Anonymous Anonymous said...

You certainly cannot generalize that most sellers have no equity in their homes....while real estate prices have come down, it is foolish to think you are going to be able to scoop homes up at bargain basement prices, and that now all of a sudden everyone is going to be able to afford beach front homes. Yes many people listed their homes at unrealistic prices, but do not think that their newly reduced prices are going to leave them in the poor house.....

Sunday, September 03, 2006 2:39:00 PM  
Anonymous Anonymous said...

Melissa you sound very bitter...

Sunday, September 03, 2006 2:41:00 PM  
Anonymous Anonymous said...

Let me 'splain it to you Lucy, if you can purchase a permanent home for $500,000, a second home, although smaller, close to a beach is probably worth about the same. On LBI, "flippers" who bought small Capes in 2004 and 2005 in the sevens, are now asking $1 million. I would submit that those cottages are really worth in the five's, and will settle there when this washes out. Long timers like us bought our houses for $100M twenty years ago, and it makes us sick to see what is going on. We retired here, and can't believe the McMansions and people tearing down perfectly restorable homes. We think reality is beginning to set in, and in a year or two this is going to be a pretty quiet place again. What has happened here reminds us of the movie "Independence Day", except that these Aliens are the big city folks with deep pockets.

Sunday, September 03, 2006 5:06:00 PM  
Anonymous Anonymous said...

You assume that everyone who is selling is a flipper, and that is just not true. Maybe they make up a large percentage of recent buyers in vacation towns, but in the more extablished towns where there exists a winter community the sellers are those who have lived there for many years. Everyone here who is relishing the thought of people losing their shirts, are simply jealous that they missed the boat. Of course there are people on here who are simply interested in real estate at the shore and like to comment on price changes. But people like Melissa who "enjoy" peoples misfortunes should be ashamed of themselves. Not everyone is a greedy flipper.

Sunday, September 03, 2006 5:20:00 PM  
Anonymous Anonymous said...

"But people like Melissa who "enjoy" peoples misfortunes should be ashamed of themselves"
Hey, easy! I'm not saying that I "enjoy" people being in trouble. Any situation where someone may lose their home is unfortunate. However, I did not put them in that situation, and I do not see any problem in doing my homework when it comes to buying a home. A seller who NEEDS to sell is going to be more likely to entertain a lowball offer, rather than someone who is just putting their house on the market to see what they can get.
"it is foolish to think you are going to be able to scoop homes up at bargain basement prices, and that now all of a sudden everyone is going to be able to afford beach front homes"
Do I think I am going to get waterfront property in Brielle for next to nothing? Of course not. But I have lived at the Jersey Shore all my life, and I see no reason why I should not be able to find a reasonably priced modest home in the area where my friends and family live.
"You certainly cannot generalize that most sellers have no equity in their homes"
Oh Lord, I did not say most sellers took out their equity. What I said was, while I was researching some homes in my price range (through public records), I found many that took the equity out of their homes, then put it on the market shortly thereafter, I guess assuming it would sell for x amout of dollars. Some of these houses have been on the market for some time. So is it so unreasonable if I put in a lowball offer in that price range, knowing what they now owe on the house? Isn't that a win-win? Or does everyone have to make $250K on the sale of their home? Hell, they can always say no.
"Melissa you sound very bitter.."
I guess I do. Damn. I'm not ashamed to say I am a little bitter about the fact that I cannot afford a decent home in my hometown. We did miss the boat! We were going into attny. review on a home we were buying in 1998, then had to pull out because my husband got laid off from his job. That snowballed into years of financial trouble, and when we finally saw the light of day, handyman specials were out of our reach. So, yes, I am excited that a door may be opening. True, the reasons the door opened may mean misfortune for others, but I am walking through it either way.
Melissa

Sunday, September 03, 2006 10:54:00 PM  
Anonymous Anonymous said...

Melissa-I'm in a similar situation. Back in 2000, I was in attorney review to purchase a home for $150,000. The deal fell through -sellers fault, not mine. I continued looking but in 2001, I was transferred out of state. I returned to the shore in 2004 because I was not happy in my job and missed family/friends. I cannot afford to buy a house here now. the house that I was in contract to buy in 2000 was sold in 2005 for $350,000. I'm not jealous or angry that i "missed the boat" - I'm glad i didn't move and then had to sell the house and move again. Like you, I'm excited by the prospect of a normal real estate market where first time buyers can afford to purchase homes in their own hometowns.

Monday, September 04, 2006 6:46:00 PM  
Anonymous Anonymous said...

It's not that people waiting to buy will revel in the suffering of sellers. Rather it's the arrogance of sellers that has gotten old.

Monday, September 04, 2006 6:52:00 PM  
Anonymous melissli said...

I agree, and arrogance is good way to describe the attitudes of many sellers. A very good friend of mine had his split level home in Freehold on the market for $419, not a handyman special, but definitely needing work. No takers at $419, but he did receive an offer for $400. He countered at $412, and refused to take a penny less. His reasoning? He wanted the 12K to cover the 3% realty commision, so he would clear an even $300K on the sale. The buyer said forget it, he received no other offers, and has since pulled the house off the market. He honestly feels that, because he put in a $7000 kitchen and some new siding, that he is entitled to a profit of that magnitude after 6 years. I guess the market fed that attitude for a while, but I am just wondering how long it will be before sellers change their tune on just how much is an "acceptable profit".
Melissa

Monday, September 04, 2006 7:50:00 PM  
Anonymous Anonymous said...

wow...a judgemental bunch...

it is sick the amount of entitlement some people have.
a couple of years sitting on a home, then poof, an extra hundred (or two or three) thousand?
not fair, to the rest of the population. The people who did not buy a house before, shouldnt buy one now, just watch all the prices go down, greed should not be rewarded with profit.

WAIT for IT!!!!
make the profiteers fault, it is not my problem that these people are in over their heads.

West Long Branch, just taken off the market, a two bedroom $650,000
four years ago they bought it for 335,000.....
how is it justified?

-ADM

(look not to Karma,it is a tool of control.)

Monday, September 04, 2006 9:57:00 PM  
Anonymous melissli said...

Sarcasm? I can't really tell, truthfully. But just in case it is:
The people who did not buy a house before, shouldnt buy one now, just watch all the prices go down, greed should not be rewarded with profit.
My reasoning for waiting for prices to go down has nothing to do with not punishing the greedy. I think it may have something to do with my actually being able to afford my monthly mortgage, call me crazy. Would you buy anything for full price if you knew it was going to go on sale next week? "These jeans will be 20% off next week, but Tommy Hilfiger seems like a nice guy, so let me buy now and help out his profit margins, I hear Ally may need a new BMW."
Whether or not you feel I am being judgemental, pleeese do not tell me that someone walking away from a $288,000 profit because of a $12,000 realtor fee cannot be catogorized as greed. I imagine that there are very few people who would call that decision wise.
Melissa

Monday, September 04, 2006 10:47:00 PM  
Anonymous melissli said...

P.S
Perhaps the bursting bubble is karma at work....
The cosmic reward for selling a falling down 2 bedroom shack for half a mil.

I'm Just Saying.

Monday, September 04, 2006 10:55:00 PM  
Anonymous Anonymous said...

diatribe
One entry found for diatribe.
Main Entry: di·a·tribe
Pronunciation: 'dI-&-"trIb
Function: noun
Etymology: Latin diatriba, from Greek diatribE pastime, discourse, from diatribein to spend (time), wear away, from dia- + tribein to rub -- more at THROW
1 archaic : a prolonged discourse
2 : a bitter and abusive speech or writing
3 : ironic or satirical criticism

Dear Melissa;
You go girl. If real estate gets to your level, jump in both feet. When my wife and I first bought a 250K home in 1991 I was sure I would be in debtors prison in a couple of years. Funny thing was, the next year my firm went out of business and I had to fight hard to start my own business and it was the best thing ever. Out of adversity, we rise.

As for the guy who didn't hit the 400K bid, "LOSER" .

Mr. Rant

Tuesday, September 05, 2006 10:16:00 PM  
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Tuesday, September 19, 2006 3:37:00 PM  

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