Otteau Report on the Shore
"A huge loss in high-paying private sector jobs in New Jersey could affect home sales along the shore while a corresponding rise in government jobs is also bad for the housing market because it drives up property taxes.
Those conclusions come from Jeffrey Otteau, whose Otteau Valuation Group Inc. tracks housing trends for the real estate market. His latest report, the 2007 Real Estate Forecast, contains some dire news about job trends.
“New Jersey has added 59,700 jobs since December 2000 of which 53,700 have been government jobs,” Otteau said.
The private sector has lost about 120,000 of the higher paying jobs in professional and business services, manufacturing, information and financial employment. From a real estate perspective, Otteau said this job loss equates to 31,000 home sales at $750,000 per house or 23,000 at $1 million per structure."
...snip...
“The shore is at great risk here because it is the higher paying jobs that account for vacation-home purchases. New Jersey is losing these jobs, which will greatly reduce demand for vacation homes. A large portion of housing demand is second-home buyers,” Otteau said.
Full article...
Those conclusions come from Jeffrey Otteau, whose Otteau Valuation Group Inc. tracks housing trends for the real estate market. His latest report, the 2007 Real Estate Forecast, contains some dire news about job trends.
“New Jersey has added 59,700 jobs since December 2000 of which 53,700 have been government jobs,” Otteau said.
The private sector has lost about 120,000 of the higher paying jobs in professional and business services, manufacturing, information and financial employment. From a real estate perspective, Otteau said this job loss equates to 31,000 home sales at $750,000 per house or 23,000 at $1 million per structure."
...snip...
“The shore is at great risk here because it is the higher paying jobs that account for vacation-home purchases. New Jersey is losing these jobs, which will greatly reduce demand for vacation homes. A large portion of housing demand is second-home buyers,” Otteau said.
Full article...
posted by Little_Silvered at 9:14 AM
5 Comments:
Well there is some bright spots "South Jersey has a better forecast than North Jersey,” Otteau said.
His report also puts the housing market at “near bottom,” but he predicts first-time buyers reentering the market this year and affordable homes leading a recovery.
Such trends have also been studied by Rutgers University economist Nancy Mantell, who like Otteau pours over state Department of Labor statistics.
Surely you have missed the gist of this article if you are looking at the "bright spots". Here is the exact problem with this market - "Housing costs have jumped 87 percent in the past five years while salaries rose 16 percent. The report says first-time buyers are being priced out of the market. Otteau projects somewhat of a correction with a drop in home prices of 3 percent this year."
The fundamentals are out of whack. Prices have soared irrationally as they do in all bubbles. Either prices stay the same for 10-15 years until the fundamentals catch up or prices come down.
Interesting info I paste from my MarketWatch newsletter...
"Affordability Affects Population Growth, Migration Trends
People are leaving the California coasts and the Northeast at a faster rate than prior years, primarily because of housing affordability. The high cost of housing is slowing population growth in many coastal markets, and migration trends suggest that more people are moving to markets where affordability is better.
In Southern California, the coastal markets of Los Angeles and Orange County are reporting an actual decline in the adult population, and San Diego had only a slight increase. Oregon, Arizona, Nevada and Utah have been the beneficiaries.
Even Florida's in-migration has slowed because of housing affordability. An annual migration study conducted by United Van Lines shows that the Southeast states with the highest rate of inbound moves are North and South Carolina, Alabama, and Tennessee, where home prices are still relatively affordable compared to their own histories."
It's so simple even Sally Growler may be able to understand. No population growth no home buyer market.
I wonder if the shore will mirror this problem.
“Nearly half of all Americans believe the housing market is poised to go from bad to worse over the next few years, according to a new survey.”
“Leo Nordine, a Redondo Beach, Calif., real estate agent specializing in bank-owned properties, says the sentiment jibes with what he’s seeing in Southern California’s once-scorching real estate market. ‘I’ve been through a couple of these cycles already,’ Nordine says. ‘And I think this next one will actually be worse. The buyers are controlling the market now.’”
“Nordine thinks the Southern California market will decline over the next few years, with prices eroding about 10% each year. As prices have softened, he says, many sellers are already pulling their houses off the market.”
The New York Post. “The number of New Yorkers forced into foreclosure is skyrocketing, especially in Nassau County, where foreclosures have jumped a stunning 82 percent in the past year. According to RealtyTrac, the number of city foreclosures went up 15 percent in 2006 from the year before, while Long Island jumped 55 percent. The national rate surged by 42 percent.”
“‘People in general are living outside of their means,’ said wealth manager J.J. Burns. ‘This generation wants everything now. People are not saving for the rainy day.’”
“In the city, Staten Island led the pack with a 47 percent rise in foreclosures, usually initiated by banks when homeowners can’t pay their mortgages. Foreclosures in Brooklyn and The Bronx rose about 25 percent each and Manhattan saw a 4 percent increase.”
“Foreclosure increases are higher in the suburbs - Westchester jumped 44 percent, Suffolk County shot up 32 percent and Nassau County rose a shocking 82 percent.”
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