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Re: JC Real Estate Market Recent Activity
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Home away from home
 
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This is a better analysis than mine. On the other hand: I think that people are less likely to take out the wacky mortgage loans now, so, on average, maybe the effective average cost per $1,000 of actual loan value in the real world has increased more than 200% because the mix of loan types has changed a bunch. One question I would have is if there are any people here who've actually gotten regular jumbo mortgages since mid-August and, if so, what the rates really were. Quote: in DTJC it's not the same people buying as 10 years ago. Clearly. And maybe the shift is going to continue, because the Jersey City parents I meet who've moved out to the suburban-type suburbs don't seem to be all that thrilled with the suburbs. It could be that a lot of parents who would have chosen the suburbs in the past are going to go with Waterfront Montessori or take a deep breath and try P.S. 37.
Posted on: 2007/9/27 6:45
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Re: JC Real Estate Market Recent Activity
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Home away from home
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Alb, your notion of prices being relative to consumer buying power has validity, but your sense of proportion is off. If we borrowed $600k at a 30 yr our payments would look like this:
5.5%=3406 7.5%=4195.29 9.5%=5045.13 Rates haven't gotten near 9.5 for qualified buyers and even that payment isn't nearly double original the payment. What it would be double of is the ridiculous ARM's and "interest only" loans people took. So there's more than one variable than rates, you've got to include the banks current skittishness. SO my point about downtown vs Teaneck is that the same population in Teaneck will no longer be able to afford as big a loan, but in DTJC it's not the same people buying as 10 years ago. The demographic has changed, and accounts for a percentage of the price rise. Just how much remains to be seen. Loan calculators can be fun http://www.bankrate.com/brm/popcalc2.asp
Posted on: 2007/9/27 4:06
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Re: JC Real Estate Market Recent Activity
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Home away from home
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One way to estimate the drop would be to start with the actual monthly payment and work backwards. If interest rates have increased, then the higher interest rates will increase monthly payments a lot. If, say, the typical monthly payment on a $600,000 mortgage loan was $3,000 per month in 2002 and is now really about $6,000 per month, then, from the perspective of the buyer, the same $600,000 loan is twice as expensive, even though it's for the same amount of money. In other words, to a buyer, the monthly cost of owning a typical $600,000 Jersey City home is twice as high as it was a few years back. If, even after the slump, the price has risen to, say, $800,000, then the monthly cost of ownership is 2.66 times as high, not just 1.33 times as high. The price would have to fall 25% just to get the monthly payment down to 2 times the 2002 payment.
Posted on: 2007/9/27 3:42
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Re: JC Real Estate Market Recent Activity
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While I agree with that, as opposed to numerous areas where the demographic stayed the same, just paying more with ridiculous mortgages. I think it will sink some, just like Hoboken did in the 90's despite a similar demographic change. I can't see a reason a ranch in Teaneck can't drop 50% after rising 300%, but a 20% drop here would be reasonable to expect, perhaps more.
Posted on: 2007/9/26 22:28
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Re: JC Real Estate Market Recent Activity
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Not too shy to talk
 
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2007/7/2 22:44 Last Login : 2012/10/8 4:55 From Hidden Valley
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For people wondering about Jersey City. I think it is completely different than 99% of other markets in this country.
It is undergoing a major change over the last 10 years which will more than compensate for uncertainties in the mortgage and housing markets as a whole.
Posted on: 2007/9/26 21:50
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Re: JC Real Estate Market Recent Activity
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Home away from home
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They did create the crisis, but by deregulating the S&L's so they could make very risky investments with government guaranteed deposits.
Posted on: 2007/9/26 17:50
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Home away from home
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One thing that could make things worse is that Congress is so dysfunctional. On the other hand, one thing that could make things better is that people still remember the Resolution Trust Corp. It led to all sorts of crookedness, but I think it got the market moving again pretty quickly, and I think the S&L crisis was a more serious crisis than the mortgage loan crisis. I don't remember the details, but I think the federal government somehow created the S&L crisis by changing lending and real estate tax laws in a way that systematically crushed the S&L system. Only extremely profitable S&Ls could survive the changes. As far as I know, the mortgage lenders have just been dorks. I don't think the government has stomped on the mortgage lenders the way it stomped on the S&Ls.
Posted on: 2007/9/26 17:42
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Re: JC Real Estate Market Recent Activity
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Home away from home
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This is true, and I'm sure the lenders that are still making loans are trying to make them here. The problem is that a lot of the lenders get capital through the national investment markets. The investors hate all sorts of lenders and borrowers right now, not just subprime mortgage lenders and borrowers. Because of that investor hostility toward lending and borrowing money, even lenders that only lend to millionaires with great credit might have a hard time getting the investor money they need to make loans. Of course, in the real world, there are smart people out there figuring out ways around these obstacles, but doing that might take a few months and cause huge headaches for people who want to borrow money and buy homes immediately.
Posted on: 2007/9/26 17:07
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Re: JC Real Estate Market Recent Activity
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Home away from home
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If "you can afford it" without taking out a mortgage loan, then, of course, you should buy the property outright. The problem is that most buyers need to take out mortgage loans to pay for $600,000 homes, and the market for jumbo loans -- mortgage loans for more than about $300,000 -- is in a state of panicked paralysis right now. The mortgage loan companies can't get the cash they usually get to operate, because the investors are so spooked, so some loan companies (e.g., Countrywide) are suspending their lending operations. The bad thing about owner financing is that it's probably a terrible system for most people. The good thing about it is that it can be made available even when regular mortgage lenders are all hiding in a cave.
Posted on: 2007/9/26 17:01
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Re: JC Real Estate Market Recent Activity
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Home away from home
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In the past, the rent to own market was small and not so great. If the current mortgage market paralysis ends quickly, or people can actually get loans if they put a little effort into it, then rent-to-own arrangements will continue to be rare. If the paralysis continues, THEN sellers might start setting up these arrangements, and maybe some desperate sellers would agree to this now if a buyer made it easy. The problem with this arrangement for the seller is that the seller ends up having to police the loan and collect the payments. If the buyer runs into problems, the seller has to spend a lot of time and money getting the home back. A problem for both the buyer and the seller is that transaction costs will be high. You'll have to try to find an honest lawyer who understands all of this stuff, and what can go wrong, and set this up for you. My assumption is that this is expensive, and that sorting the good lawyers from the mediocre lawyers in this area is difficult. A problem for the buyer is that the buyer has to put up with dealing with a quirky, inexperienced individual lender, rather than a big institution. Countrywide might have a 24/7 customer service line, but chances are that John Doe, the Former Owner of the Home, won't have people in Singapore to pick up the phone at 4 a.m. EDT. On the other hand: if the current regular mortgage market paralysis does continue, and if lots and lots of people start setting up owner financing or rent-to-own arrangements, then the mortgage bankers will start selling administration services for owner financing/rent to own arrangements. So, in 2 years, it could be that an owner financing arrangement will look to the consumers involved almost exactly like an ordinary mortgage loan.
Posted on: 2007/9/26 16:51
Edited by alb on 2007/9/26 17:35:01
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Newbie
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I agree with Bert's comment about prices going down more in areas outside downtown because there are fewer subprime folks who bought downtown.
The homes that we looked at that I referred to in an earlier post were outside downtown -- JSQ, Lincoln Park and the Heights. We did encounter a few desperate sellers and I suspect there will be more in the next year. One other observation: there were some streets that had several homes for sale around the same price, but one home would be nicely renovated and the others were rundown. There's just no way that some of those rundown homes are going to get anywhere near their asking prices, at least not while similar homes that have new kitchens, baths, landscaped yards, etc. are sitting on the market.
Posted on: 2007/9/26 16:45
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Re: JC Real Estate Market Recent Activity
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Home away from home
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Quote:
ianmac47 wrote: Quote: 
Posted on: 2007/9/26 16:39
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Not too shy to talk
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There is one with a some sort of affordable mortgage plan. Google Harbor Lights Condominiums. It is a new project that will be built south of WALDO lofts. I don't think the developer is very ethical though. Watch out for that. But the units sounds very affordable.
Posted on: 2007/9/26 16:18
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Newbie
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There will probably be significant discrepancies in price developments of single-family house / townhouses in Jersey City when comparing downtown with the rest of the City.
If subprime lending is any indication, prices outside of downtown should go down more than in downtown. Check nj.com / New Jersey by the numbers for subprime data. The percentage of subprime buyers in downtown is very low.
Posted on: 2007/9/26 15:41
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Newbie
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if someone can please explain to me the pros and cons of "rent to own" i might be spared searching and moving twice
Posted on: 2007/9/26 15:34
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Re: JC Real Estate Market Recent Activity
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Home away from home
Joined:
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I don't think there are any 'rent to own' around here. It is probably not worth it. If you see something you like and you can afford it, why not buy it. If you are from out of town, try renting short term so that you can shop around more carefully.
I am thinking of selling my condo, but I have two neighbors who hasn't found a buyer for the last several months. Probably they are overpriced. I'm not sure what to do either. I have my eye on this condo that went down in price two times. Maybe I should buy it and rent my old place out.
Posted on: 2007/9/26 15:15
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Re: JC Real Estate Market Recent Activity
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Not too shy to talk
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2007/7/2 22:44 Last Login : 2012/10/8 4:55 From Hidden Valley
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Prices are going to come down a little, but that is just a correction from the 200% increases we witnessed over the early 2000's.
I don't think they are going to crash by any means, but when you look at a "normal" 5-6% annual appreciation in the housing market over eternity, then you have the outrageous appreciation over the last 8 years, that leads me to believe there is a correction coming. I do think you will see a small correction now, then an extended period (3-5 years) of flat prices while natural forces catch up. The mortgage problem is temporary, that will work itself out, when normal business and lending practices prevail over 350 credit scores getting 105% financing on properties.
Posted on: 2007/9/26 14:46
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Re: JC Real Estate Market Recent Activity
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alb wrote:
For sellers who have to sell immediately, the best thing is probably to address the mortgage market paralysis by figuring out how to sell through some kind of rent to own arrangement I am looking to buy a condo in jersey city I am just afraid to buy now but i do want to move to JC immediatly can some one tell me if offering a "rent to own arrangment" is possible? what are the drawbacks?
Posted on: 2007/9/26 14:37
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Re: JC Real Estate Market Recent Activity
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Newbie
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I have been looking to buy a single-family home/townhome in JC for the last few months. For what it's worth, here's my perspective:
We've looked at about 15-20 properties since June. Of those, only one has sold (for near the asking price, I think). Two were under contract and came back on the market this month because the buyers' financing didn't go through. I'd say at least half of the others have dropped their price. We actually tried to buy one place that dropped it's price by 100K, but the home inspection showed major structural problems, so we backed out. We are moving to the area for my job, and at this point, we are resigned to rent for awhile. If we found the right place, we'd buy, but at this point, I do feel like prices are going to come down a bit. And renting will give us time to find the right place. There's my two cents.
Posted on: 2007/9/26 14:34
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Re: JC Real Estate Market Recent Activity
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Home away from home
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bill wrote: lol, i saw this on craigslist $88000 1BR condo near JSQ, perfect for nyc commuters eventhough its near jsq, <100k is pretty cheap.
Posted on: 2007/9/26 13:36
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Re: JC Real Estate Market Recent Activity
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Home away from home
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lol, i saw this on craigslist
$88000 1BR condo near JSQ, perfect for nyc commuters
eventhough its near jsq, <100k is pretty cheap.
Posted on: 2007/9/26 13:09
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Re: JC Real Estate Market Recent Activity
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Home away from home
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First, I'm absolutely not an expert. Second: I think one issue here is that a lot of property owners who have a choice, including my landlord, have pulled properties off the market because they think prices are too low. Third: It looks to me as if there is still plenty of pent-up demand for property in this area, partly because housing in New York is so expensive, but the mortgage crisis has made it really hard even for nice, hard-working people with good credit to get through all of the paperwork necessary to take out an affordable jumbo loan. The sellers are there, the buyers there, and the mortgage lenders are in a bomb shelter somewhere. Certainly, there are foreclosure problems, but the market paralysis problem here has more to do with raw terror than with people's failure to make mortgage payments. For sellers who have to sell immediately, the best thing is probably to address the mortgage market paralysis by figuring out how to sell through some kind of rent to own arrangement, or by offering some other kind of owner financing.
Posted on: 2007/9/26 7:41
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Re: JC Real Estate Market Recent Activity
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Home away from home
Joined:
2007/6/12 19:00 Last Login : 2013/5/10 16:39 From Donny City
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You ain't seen nothing yet...
Quote: Toto, I don't think we're in Kansas anymore! 
Posted on: 2007/9/26 6:24
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JC Real Estate Market Recent Activity
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Newbie
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Just trying to get some color into what people are seeing in the JC real estate market. Have been following it as a resident for quite some time - specifically brownstones - and have seen quite a few price reductions over the past week - is the market really that slow? I recognized it was not going gangbusters but these prices are $699K to $629K and $699K to $595K over a matter of 30 days or so.
thoughts?
Posted on: 2007/9/26 4:34
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