patrick.net

No it is even crazier in the premium areas in the central OC (Irvine). Upper 400s to low 500s can only get you 3 BR Attached Condos here, some may not even have a backyard. HOAs for these condos go from $200 to $400 a month. 1% base property tax and for new developments you also have 40 year bond of mello roos about $4000 a year. Not sure about the medium income in your area, probably higher than OC.

Did incomes go up 90% over the last ten years? I think your intuition is correct.

The median income in the Northern NJ/NYC is about 24% higher today than it was 10 years ago while prices of homes rose about 90%. The debt-fueled frenzy is now gone. As we all know, if you don't have a stellar FICO and at least 20% to bring to the table, you're not a real player. With that in mind, the house prices still need to drop considerably to meet the long-term mean. As Patrick explained here, if you don't know who the sucka is in the game, the sucka is you, the buyer. If you're a buyer, then lowball. If the seller gets "insulated", hand them a hankie, let them know you're offer decreases by 1% per month if you don't find something else and walk away.

insulated = insulted
you're = your

typos! :)

And here's a good one for you: I actually had a house tour guide tell my wife and I to take out a HELOC on my current house and use that money to put down on another house BUT... BUT... don't let the bank know the real reason why you're using the money. LOL! Great one, isn't it? Oh, I've got plenty of good stories but that one is my favorite!

it comes down to where people with money want to live. I bet Northern NJ is pretty nice.

toothfairy says

it comes down to where people with money want to live. I bet Northern NJ is pretty nice.

What if it was just as nice ten years ago? Not taking shots here, but that is a pretty unsophisticated measure of a place's future or present worth if nothing has actually changed. Take a development in a town in a county in a state.... something that hasn't changed at all in 20 years. Income is up in that area, say, 70% from that period 20 years ago. All things being equal (including interest rates and inventory/population balance), there's no reason prices should be up 150% from then.

Im just trying to make sense of it all myself.
I see the same thing in my area. Prices double and people still coming out of the woodwork buying million $ houses.

Maybe folks made a lot of money flipping properties during the boom.

Yes, everyone has money here in Northern NJ. Because, as we all know, we live in proximity to New York City, they're not making anymore land, we have multi-colored unicorns running through the hills of Hunterdon County and our State song is "When You Wish Upon a Star".

well apparently they do have money otherwise housing prices would have gone down

The #1 reason for these things usally have to do with public schools. I am not aware of New Jersey, but Irvine is a go to destination for family with school age children in a metro area of nearly 20M people. Mosy people who buy in Irvine do it for the intention of going to public school in lieu of private schools so the value is quantifiable

The #2 reason is whether there are new homes built in the same neigborhood, if the population was 50K in 1980 and it is 55K now, chances are there are more demand than supply to create a premium over time.
This is a way middle class neigborhood becomes upper middle class and upper middle class elite

The private sector is still hemorrhaging here as the big pharmacuticals are slowly fading away and the telecoms are long gone. Again, wages rose about 24% over a ten year period and houses rose 90% over a 5 year period and backed down slightly. The sh1t sits on the market and one id1ot dives in with help from Mommy and Daddy and gets duped all for the sake of having that "home" on that "street" in that "town".

Meanwhile the other 1diots hold out hope and use their 401ks, savings and whatever else they can sell that isn't nailed down to keep up the image. It was a scam, here and everywhere else. The buyers got used as a pawn in the sting and got thrown to side once the heist was complete. The difference here is that the smoke and mirror ruse is being dragged out much longer. Remember, I already have a house, with better than 50% equity. The reason I'm p1ssed is because the agents and the industry are still using con games to bait the buyers and the sellers are still in denial. I don't want to pay $650,000 on top of $13,000 in property taxes for a house that needs a roof and a new furnace.

toothfairy says

Im just trying to make sense of it all myself.
I see the same thing in my area. Prices double and people still coming out of the woodwork buying million $ houses.

I try to make sense of it too, and I really can't. I understand the fundamentals, but they are so out of whack with the way prices are in certain areas. I can only attribute it to a delayed price discovery and a collective amount of willing delusion.

SF Ace,

There is no place left to build in North Jersey. The more affluent towns have already been established. In fact, the population has been virtually the same for the last 20 years. That's what's so frustrating. Wages rise at the so-called rate of inflation, UE at 9.2% here and prices of houses almost double with a slight backslide. No asset fails to revert to the mean... I'll wait, but it really s*cks and I can't figure it out.

Fast Eddie,
If the price cannot be substantiated at current level, why can't you sell your property, cash out and become a renter? According to you you bought it 10 years ago when the price was less by nearly half; I bet the comparable rent hasn't inflated up by the same amount since then. So it can be cheaper to rent than own. And when the price finally comes back down, you can buy bigger house with same money.

Don't know who would want to live in New Jersey - let alone spend that kind of money for a house in that landfill...

I grew up on the east coast in the Delmarva area - I'm now on the west coast - but Jersey was always referred to as "dirty Jersey" or the "arm pit of the east coast." Yes, it's close to NYC, but the state is filthy and the road system is horrible. That may be the most over-valued state in the country.

Future Cash Buyer,

My daughter starts high school in 2012 and the public high school in my town is not an option so I'm moving one way or another in the next 12 to 24 months. If the house prices are still insane by then, I will consider renting. I never considered it before but the dynamics have changed so drastically, that it's starting to make sense.

joshuatrio,

Don't forget the big hair, The Sopranos and Snooki (lol)! Maybe the Turnpike going through Linden and Elizabeth isn't too hot but drive through Somerset, Hunterdon, Warren, Sussex and Upper Bergen and tell me if it's dirty. Over-Valued? Over-taxed? Most of it, probably! Which is why I still can't figure flat wage increases, nominally as opposed to property taxes and house prices doubling.

"It’s beyond absurd and I think potential buyers are suckers for even making any bid unless it’s a considerable lowball."

I'm in northern NJ too. If I come over to your house tonight and make a lowball offer, I assume you will take it, right? Or did you mean that buyers are suckers if they don't make lowballs on OTHER peoples' houses?

HousingWatcher,

I'll price my house at 3.5% appreciation year over year since the time I bought it. I paid $225,000 for it so I'd price it around 315K to 320K if I wanted to sell today. It's a modest house in a modest neighborhood. The guy across the street about a block down from me has his house listed for $419,000 and it's basically the same house as mine. He said he's not taking less than 399K. The house sits... and sits.

My Dad passed away a year ago and we had to sell the house. Similar houses in his neighborhood are sitting forever, way over-priced. We went 10% less than similar listings w/o an agent and got an all cash deal in 3 weeks.

So, let me ask you, are you underwater? I want to sell my house, not ride the market down endlessly. And I'm not funding someone elses retirement. I'll wait. If I have to sell and then rent, I'll do so if it means my daughter goes to a certain school that appeals to us. And yes, the buyers are idiots if they fall for the bullsh1t and overp-pay. Anything desirable in the nicer neighborhoods in Bergen and Western Essex County are still absurdly over-priced.

nope, I'm not underwater. But my property taxes in Bergen Co. are $15k a year, so I would like to sell for that reason. Ideally I would like to dump the house on some fool before the taxes hit $20k.

after owning for some time I really couldn't imagine going back to renting at this point. You would have to pay me a lot more than the difference saved by renting.

HousingWatcher,

Hey, I agree with you. I think it's all absurd. We were targeting Bergen County but I shake my head in disbelief. It's frustrating, without a doubt.

HousingWatcher says

nope, I’m not underwater. But my property taxes in Bergen Co. are $15k a year, so I would like to sell for that reason. Ideally I would like to dump the house on some fool before the taxes hit $20k.

Alpine?

No, I don't live in Alpine. Would be nice if I did though. Where do you live klarek? Are you also in NJ?

Unfortuately there are virtually no places in NJ with low taxes. You pretty much need to leave the state. We definitely need some sort of Prop 13 in NJ. Hopefully Christie will look into this when he's done villifying teachers.

Mr.Fantastic says

15k a year?!

TX is just as bad, if not worse in areas. NJ takes the CAKE though. They have income tax, sales tax AND beat your bottom property taxes. TX only has absurdly high property taxes (think Bexar County - SA area - where you pay $16k on a nice home but not a mansion). TX also has a sick sales tax.

I'm no longer from Bexar County. We think of moving back occasionally...cost of living is lower but the taxes can eat a person alive. You get a sweet house for $750k but you pay FOREVER out the nose for it (over $15k in prop tax). NJ...??? Ouch. Capital Ouch.

what? the bay area limousine liberals complaining about high taxes?? Mon Deiu!

Yes, property taxes are highest in the country on top of the "unstoppable" house prices. Six times the median salary for something considered liveable is absurd. If you want something that looks even close to middle to upper middle tier, be prepared for a $650,000 price tag minimum. Now, the 30 yr. fixed looks like it's going to break lose. Good luck! And how do those Option ARM resets in 2011 to 2012 look? LOL! Hello! You want to add in healthcare costs and general cost of living as well? Wait until you read those stories into 2012 and beyond.

Future Cash Buyer says

No it is even crazier in the premium areas in the central OC (Irvine). Upper 400s to low 500s can only get you 3 BR Attached Condos here, some may not even have a backyard. HOAs for these condos go from $200 to $400 a month. 1% base property tax and for new developments you also have 40 year bond of mello roos about $4000 a year. Not sure about the medium income in your area, probably higher than OC.

You missed his point. You are talking about "premium areas" of California. He's talking about the slums in Northern NJ that are filled with starter homes that still have kitchens and socket outlets from the 1940s.

the reason prices aren't moving in NJ is because the foreclosure crisis hit NJ about 2 years later than everywhere else in the country. Meanwhile, the banks have already been bailed out and they have been sitting on the giant inventory of foreclosed homes. Every block in NJ is filled with a vacant home. As long as the banks are permitted to keep those properties off market using the government as a backstop to support their balance sheet, you aren't going to see a price collapse in NJ.

It's not just NJ. It's the entire NYC metro area. Things have gotten better, but their still not near the mean.

It's not just NJ or NYC area. It's entire northeastern suburbs near metro cities from MA to VA.

coldstoli says

what? the bay area limousine liberals complaining about high taxes?? Mon Deiu!

Vous devez me faire confondre pour quelqu'un d'autre. Mais je vous remercie, olseau de nuit, d'avoir pris le temps de vous inscire juste pour dire ca a moi.

yes, $15k a year.

Where in Bergen? My inlaws are in Verona in Essex county and the prices are WAY WAY down from the peak. Yes they pay 15k a year in taxes also, and the township just cut them back from 10 to 5 leaf bags a year.

artistsoul says

Bexar County - SA area - where you pay $16k on a nice home but not a mansion

Try Cameron county, I'm only paying $2100 on 2700 sq ft with a 3/4 acre property in the middle of town 20 minutes from South Padre.

bob2356 says

Try Cameron county, I’m only paying $2100 on 2700 sq ft with a 3/4 acre property in the middle of town 20 minutes from South Padre.

Low taxes there is more a factor of the cost of homes in that region. I think you handle rentals out there, right? I couldn't imagine living anywhere in TX other than the Austin / San Antonio "Hill Country" Area. Right now, taxes in Bexar County are 2.15%, Comal and Kendall Counties (also in Hill Country area) have slightly lower property taxes, but still comparatively high. Your example home in Cameron County is probably only assessed less than $200k...so of course your prop taxes are reasonable!

The most relevant issue in terms of this thread is that NJ taxes are high enough that, like certain areas elsewhere, folks who have owned homes for decades are having to consider moving solely b/c they won't be able to swing the property taxes anymore. Certainly, very high property taxes are a hinderance if you are trying to consider retiring in NJ. $15K or $20k per year can really cut into most folks retirement funds.

artistsoul says

I couldn’t imagine living anywhere in TX other than the Austin / San Antonio “Hill Country” Area.

To each his own. I really liked living in the Rio Grande valley and look forward to living there again someday. It's like being on a tropical island in the Caribbean. Sugar cane and cotton everywhere, hot and muggy so you are inspired to spend lots of time at the beach, and almost no one speaks english. On a serious note the cost of living there is so cheap it has to be experienced to be believed.

HousingWatcher says

nope, I’m not underwater. But my property taxes in Bergen Co. are $15k a year, so I would like to sell for that reason. Ideally I would like to dump the house on some fool before the taxes hit $20k.

I can't imagine why anyone would pay more in property taxes alone than the should be paying in rent.

Obligatory NJ picture:

HousingWatcher says

nope, I’m not underwater. But my property taxes in Bergen Co. are $15k a year, so I would like to sell for that reason. Ideally I would like to dump the house on some fool before the taxes hit $20k.

That is like my yearly rent. Sounds like no deal to me.