There's a house (3 bedroom) for sale at 5 Lincoln Avenue that's listed for $520,000 or so that's located in the Washington School section. Any thoughts on this house or the neighborhood in general? Is it priced right?

Thu Jul 3 2008, 09:56

As a follow up to the distressed sales issues. Some of the 47 people who bought units from the distressed 412 Morris Ave sale for around 200 K for a 2 bed 1 bath are now trying to flip them. Note 412 Morris Ave Unit 43 is isted for 300K, underpricing the SMALLER 2 Bed 1 Bath units in 390 Morris Ave.

As more of these distressed flips hit the market for sale they will destroy the small condo market in Summit, so much so you will see a 2 Bed 1 Bath condo/co op trade for about 215 K by the end of this year, exactly around the same prices that the 412 Morris Ave condos sold in the distressed sales in April.

So very easy to see how numerous distressed sales in one particular sector of the market will definitely affect the prices of the non distressed market

Fri Jun 13 2008, 14:03

Marc,

Then how would you properly value MLS 2476782 (list $324 900 DOM 140 ) and 2476249 (list $338 000 DOM 141) both 2 bed 1 bath at 390 Morris Ave. The last comparable sale was on 29 June 2007 for $319 K . Would you put more weight on that one sale about one year ago or the 47 distressed sales last month across the street at 412 Morris Ave.

So according to you the one 1 year ago is the market and the 47 sales one month ago is the micro market?

Also, the 2 that are currently for sale have been for sale for almost 5 months so I would say they are not priced right!

What I am trying to point out is that this market is in price discovery where so much uncertainy in the economy, funding and home prices forces to throw out what you have been doing for valuations the last 10 years and adjust to this new market where many of the old rules of valuation no longer apply.

Lou

Tue Jun 3 2008, 11:01

That's fine if you want to define a micromarket of one project that had trouble. The original question pertained to Summit in general. Foreclosures are not prevalent in Summit, therefore they should be discounted in studying housing trends for the town.

-Marc

Tue Jun 3 2008, 06:58

To further my point from today's Housing Bubble Blog:

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The Arizona Daily Star. “Think you know what your house is worth? You might want to take a deep breath and think again. The rising number of foreclosures is reducing property values in a possibly unprecedented way. Not only are foreclosed properties flooding the market, but they are also becoming the only standard of comparison for other homes sold in some areas.”

“Foreclosed properties usually are not included in appraisals because they are considered under ‘duress’ and not reflective of fair market value, said Bruce Smith, of Equity Valuation Services. However, ‘when those become predominant in the neighborhood, then they become the market,’ Smith said.”
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For sub 400 K condos in co ops in Summit... distressed sales are the market comparison.

Tue Jun 3 2008, 06:05

Marc,

I might agree with you if there were only statisically insignifcant amount of distress sales into a normal/robust market. However, 47 distressed sales into an already weak market -- in which 47 sales represent more than 4 times the current inventory of sub 400 K condos/co-ops in Summit. To ignore those sales is tantamount to ignoring the basic rules of supply and demand.

In effect you are asking us throw out 80 % of the sub 400 K condo/condo sales in Summit for 2008 because they don't fit into a definition found in your NAR playbook. To me greater than 50 % becomes "typical" and representative of curernt sales. If foreclosures were only about 5 % of the market we might be able to ignore this. But not in this market, this is not a normal market.

In fact, given the economic idicators and coniditions coupled with the state/city job cuts already announced and more to come in the summer. Plus the fact Summit will be raising property taxes. This will greatly affect the sub 400 K condo market in Summit. Therefore expect more foreclosures to come.

Due to the large number of these distressed sales are providing substantial competition to the "normal" market, thus need to be considered. In a market dominated by foreclosures, to ignore them is to ignore what is happening in the market.

Mon Jun 2 2008, 03:54

Louis,

A basic principle of valuation is to throw out sales that do not reflect typical motivation. The definition of market value:

"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

A foreclosure sale in Summit DOES NOT reflect typical motivation. Therefore it must be thrown out when calculating changes in values for homes in this market.

-Marc

Sun Jun 1 2008, 20:08

Victor, sounds like you're a little angry that your listing is going to expire soon. That home is obviously overpriced...it was listed for less 4 years ago and didn't sell. The busy road interesection is an issue, plus a few others. Its not what I would call a typical Summit home.

Sun Jun 1 2008, 17:42

To address "Morris County" comments in a non confrontational way...

I do plenty of work in Summit, Chatham, Basking Ridge, Bridgewater, Bernards, Bernardsville, Scotch Plains, New Providence, Millburn, Maplewood, Springfield, Berkeley Heights and in other areas of Essex, Morris, Somerset, Union and Middlesex counties. Extremely familiar with the market...

How can you make a broad sweeping statement that all homes are up 2% in Summit?
Show me that data I'm missing it somehow! My Glenside Ave listing disproves that on its own and I know off the top of my head about 10 others in the Hospital area of Summit which have sold for less than the asking and less for what they could have got just a few years ago, so tell me how that is UP 2%???

I'm not negative on the market at all but you've got to be realistic and not just throw out numbers from thin air.

28 Glenside Ave., it's not a distressed property either! It is corporate owned due corporate relocation not a foreclosure or short sale. Tell me how many homes in summit are priced at or below $359,000 and offer 3% sellers concession toward closing cost, have all appliances included, new central a/c, new hot water heater, all new electric, well maintained gas furnace, new'er roof, most of the windows are new. The only problem with the house is busy road and could spackle and paint inside. NOT DISTRESSED!!!

This house was just lowered to this price, previously it started at $382,500 and has been relisted several times, has not sold and been on the market for about 1 1/2 years before me it was listed with Weichert in summit. Still not seeing the 2% increase? ;-) "Not Being Confrontational"

I've got the cheapest single family home on the market in Summit PERIOD that includes Townhouses in the comps as well !!! Plus offering to pay closing costs, Go Figure!

Worst case scenario it's a partial handy man special without needing loads of work, just cosmetics.
Yet you say all of Summit is UP so I guess therefore it must be up! Sorry, my mistake...

--
Victor Kaminski
Owner / Broker Manager
Marivic GMAC Real Estate
2056A Lincoln Hwy. (Rt.27)
Edison, NJ 08817-3330
Office: 732-650-9911 Ext.302
Cellular: 908-884-5757
Toll Free: 1-866-745-GMAC(4622) Ext.302
http://www.MarivicRealty.com
http://www.realrep.com

Sun Jun 1 2008, 14:02

Marc,

Saying to throw out data points because of distressed sales is foolishness. As they are real sales and can and should be used as comps.

For example, the reason why all those condos currently in Morris Ave and co-ops Summit Ave are never going to sell at those prices is inot in small part because of the 419 Morris Ave Summit Park auctions in which you could buy a 2 bedroom 1 bath 1,100 sq. for about $200 K. 47 units sold at auction (i believe 3 failed because they couldn't get funding), taking alot of demand out of the condo market. Do you believe these sales should not be counted because they were at auction? Do you believe that 47 sales at 200 K for a worse product that people are asking about 300 K has no impact? Do you really believe that is so? It is all part of the same market. -- whether the sale is a owner under distress or not This is a market in which lots of price discovery is occuring.

Can you please find me a property that sold in 2005 or 2006 in Summit that is selling or sold for higher in 2008?

I can give you many examples of properties that have decreased in value.

Also, if you would like to make a sale, please find me a property in Summit that is cashflow positive.

Unfortunately, I believe they don't exist and investors will not come back into this market until cap rates are above funding rates. The days of banking on price appreciation are over. The old days of getting positive cashflow out of an investment property need to occur for this market to stablise.

Sun Jun 1 2008, 08:51

I typically look at the average and this is a repeat, but here it is again..if I take it back 12 months, the average home sale price in Summit is $1,106,216 ....back 12 months from April 07 gives me about 100K less. This is from the Garden State MLS based on reported sales. Of course, you have to look at circumstances, neighborhood and condition. Summit is definitely a stable market due largely to the trainline and proximity to NY

Sun Jun 1 2008, 07:57

Hi Louis,

Just a note. Not all Realtors are biased. I don't operate that way.

As to your data, I would be careful. Homes that are purchased then put back on the market within a year or two are usually indicative of distress. They are not arm's length transactions, and probably should not be utilized.

For example, you mention 7 West End. Did you notice that the comments say this: "SUBJECT TO LIENHOLDER'S APPROVAL"? They are being foreclosed, so this data is not valid for abstracting home value changes.

The principle of using resales of the same home during two periods is sound, but you need a large sample size to establish viability. You also have to be sure that nothing changed in the neighborhood during that time. You also need to recognize that the home may not be in the same condition now as it was then. A lot of bad things can happen quickly to a home if it is not properly maintained. Also if it was marketed professionally then, but is being marketed poorly now, the value could drop for that reason alone!

Fact is, Summit prices are off about 6% from 2005-2006. Median home price was $905,000 then, and is $850,000 now.

-Marc

Sun Jun 1 2008, 07:36

Based on the price data, I would say Summit prices are off about 20 % from the peak.

Just a few examples,

7 West End Ave sold for $495 K on 20 April 2005 now offered at $399 a 19.4 % decline

181 Kent Place Blvd sold on 24 Jan 2006 for 1. 95 mio was listed as of 2 weeks ago for $1.6 mio a 17.9% decline.

There are several more examples of this. My advice to you is to do your own research and make your decision based on the facts. You can check where properties last sold on the union county tax assessor website http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?menu=index&ms…

Also, remember that when you ask realtors and other real estate professionals for information that they are biased because they want to shed a certain light on what is happening in the market.

Best of luck.

Sun Jun 1 2008, 07:08

Victor, I see you're from Edison. I don't mean to be confrontational, but how much business do you do in Summit? It sounds like your listing was just overpriced. In 2007 Summit went up 2%...thats a fact.

Sat May 31 2008, 21:50

Summit is one of those funny places that depends entirely on the property and the section and perhaps at times the STREET which it is on. Ask any agent with experience in the Summit market and they'll tell you the same.

I have a listing in summit right now which the asking price has dropped almost $50,000 and still has not sold but is now starting to get a lot more activity since the latest price reduction and incentive of offering buyers 3% toward closing costs.

This is exactly why I don't like to give wide sweeping statistics like the media and stock brokers analizing the real estate market do, it can be bad and misleading for your particular situation. I hate to sound flipped sayin it depends, but "It Depends!"

All depends on the home Xavier, why are you looking to buy or sell?

--
Victor Kaminski
Owner / Broker Manager
Marivic GMAC Real Estate
2056A Lincoln Hwy. (Rt.27)
Edison, NJ 08817-3330
Office: 732-650-9911 Ext.302
Cellular: 908-884-5757
Toll Free: 1-866-745-GMAC(4622) Ext.302
http://www.realrep.com
http://www.MarivicRealty.com

Sat May 31 2008, 19:48

Hi Xavier,

The answer is: No.

For the 6 month period ending 4/11/2008, the median home price in Summit was $850,500, while the average was $1,075,800. For the same period ending 4/11/2007, the median home price was $875,000, while the average was $1,046,900.

So the median is down slightly, while the average is up slightly. So there has been virtually no change in prices in the past year. The differences are not statistically significant.

The median list price is also unchanged from last year to this year at $895,000.

Days-on-market is also unchanged at 40-60 days, and the typical sale-to-list-price ratio is at 94-98%, also unchanged from last year.

So, Summit pretty much defines a stable market right now.

Good luck, and if you need more information, please contact me via my website or phone!

-Marc

Marc Paolella
Relocation Director
Licensed Realtor NJ
Licensed Appraiser NJ & NY
Century 21 Joe Tekula Realtors
Phone (direct): (973) 584-4235 (forwards to cell when mobile)
Phone (office): (973) 584-7580
Fax (973) 584-5092
e-mail: marc2000@verizon.net
text: 914-588-3787
web: http://www.marcpaolella.com

Fri Apr 11 2008, 21:43

The answer is "no". Its early in the year, but in 2007, the prices increased 2%. This year will prove to be a good one. The market in Summit holds strong due largely to the NY train, schools, great town.

Call me and I'll show you around! I specialize in the towns along the Midtown Direct.

Susan Zanzonico
Weichert, Realtors
Top 2%
973-214-5872
www.HouseBeautifulNJ.com

Fri Apr 11 2008, 20:52