Missyme,

I was talking to a representative from Weichert Title the other day and he was recalling how in the 90s when he purchased his first home, he did so in an inflated market. In which case, when he resold it 7 years later, he sold it for almost the same price as when he first purchased it.

I looked up the house you mentioned and found that it is a 2 bedroom cottage. Just based on the number of bedrooms, if you look at what sold on the mls, it doesn't surprise me that the numbers come back at:

$200k, $255 and $278k. I am not an expert if your area and the three houses that came up on MLS may or may not be comparable to the house you are speaking about above.

What was said from previous responses is true. In certain townships, and even just this past couple of months, we have experienced a miniboom, with the tax credit deadline. Even if it will be extended, an aspect of the deadline that I like is the credit for trade up buyers i.e. current homeowners who have owned for 5 years or more and plan to sell and buy another home. If this credit passes, we will see a healthy stream of home sales that will take us into Summer 2010.

According to NAR, on a national level homes haven't been this affordable since 1970. And if you look at the Otteau report, if they purchased in 2002 with a yearly appreciation of 5%, if houses have come back down to 2003 prices in NJ, at best the house you referenced may have appreciated $12,500.

Hope that helps!

Hi -- there are several answers. First of all, asking price and selling price are not always related. Someone can ask a million dollars for a home, which in this case, would make it "priced to stay." Selling price is the real market indicator.

Having said that, if you think that homes have gone up somewhre in the neighborhood of 30 - 50% since 2002, and they've dropped on average about 20 - 30%, that still leave room for growth. Jeffrey Otteau, the NJ market analyst and appraiser, believes that we are currently experiencing late 2003 - 2004 pricing. Worst case scenario, 2003 experienced quite a bit of growth over 2002, which could put this home in the right ballpark leaving some wiggle room.

Homes below 300K in NJ have also experienced a mini-boom with the first time home buyer credit.

Bottom line, however, you mention they are trying to sell, which doesn't correlate with sold at 75K more. Not knowing the home, it's location, and comparison to its peers in Kinnelon, I can't make a sound judgement as that would require a market analysis to determine at whay price like homes have sold and for how many days on market. It is, however, plausible, vs. anyone who paid 200K at the peak of 2005, who would probably suffer only the downside of the market since their purchase.

Note to Trulia's web team!

I had to break my post into 2 separate ones (annoying) because despite while typing the answer the character count "characters left" showed I had still about 30 characters left (of the 5000 allowed), at the moment of posting the answer on this thread, the system would complain that the amount of characters on the answer was over 5000.
Therefore something is wrong... either the system is not peoperly keeping track of the character count or the validating function the message goes through is screwy... maybe if the text gets encoded for web use (such as %20 instead of a space, then the validating function will need t take that into account because a space is 2 character long in text but when encoded will be represented by a 3-character code such as %20

Best!

All very informative answers from respectable agents... I wonder if it's likely to be a simple matter of can't do.

In the case of homes sold by owners (not developing companies) gets quite simple. It really boils down to one of two possible scenarios. EITHER: the seller needs to sell the property due to financial needs (or other pressing issues). In this case the buyer will "get lucky" because a seller in need may result more flexible therefore despite he will obviously look for (at least) not loose money on the sale, he may be willing to make less than what he could do at current market prices (due to a pressing need) OR: the seller can afford to hold onto the property (no matter if he bought for investment or to live in that property) hence inflated or not, he will ask for the current market price or higher, because it's just natural for him to get an ROI on his property. Imagine the house being sold was purchased few years ago at 500K and now can sell for 650K... It's obvious that the seller will consider anything less than 650K a loss... which may be very realistic after all, because he's been paying a ton of mortgage interests to get that 500K property at the time he bought it.

In case of properties sold by developers it's hard for them to let go of an ROI that was projected the buying frenzy started as it was getting fueled by unregulated lending practices... and sadly we all know what that caused today. It's hard to wake up and deal with the fact that you will not make "a killing", but just "a living" (and a quite decent one I may add) after the property you developed has been sold... well do not expect them to give in so easily and start changing price tags on houses. They are still out to get those who do have money to spend, it's still worth to give it a full shot before lowering the prices to a more reasonable amount... they know that the moment they do that the property will sell for sure... so why not try to squeeze all that's possible out of it, maybe they will catch a few willing to bury themselves in dept for that property. And as much as I dislike such practice, I can't really blame them for it. (continues...)

(...continued)
Developers selling new properties have invested X amount of dollars and projected earning of Y% on such investment. Naturally the calculation of that percentage still reflect the market bubble period that occurred before the economic downturn, scams and scandals (see Madoff, AIG, Lehman Bros., Sub-prime loans, etc.), banks tightening of the purse strings, credit becoming stagnant, and so forth. Developers rode the bubble and saw people flocking to property and ready to contract debt they couldn't afford... so real estate offices turned into factories selling homes like cupcakes. So the bubble came and went... but apparently developers are still in denial. As they wouldn't even believe something self-evident: the selling party is over.
But it's not just greed here... developers could sell the properties and still walk away with a respectable gain... but now imagine YOU developed a site and you poured 5Mil. in expenses. Although most of those expenses are deductible that's not the point. As "DevelopingCompany Inc.", given the market prices, the area, the luxury appliance you put in, yada-yada-yada, you projected that you could have a ROI that would be equal to say 500% therefore you are invested 5Mil to get 25Mil in return when all unit in the developed property got sold. That's just business, not greed. You will take those 25M and start other developments and keep moving up in the market.

The problem is that the projected ROI is no longer realistic today for a ton of reasons.
Therefore as a developer you'll have only few options:
- keep raising buzz about your unsold property as it's now costing you mantainance,
- resort to auctioning the property (with starting bid) and get people in your building because more will come once all new tenants will indirectly advertise the place for you and amplify the buzz,
- increase open house sessions and flood the real estate databases (like trulia ;D)
- throw in some extras to attract more buyers from free vespa to a free car!
http://www.ibtimes.com/contents/20091007/luxury-real-estate-…
- lower a few thousand dollars on the purchase price to attract new buyers who will think they are getting a deal, while the one who's getting out on top will be you because, since the unsold property costs you X to maintain each year, by offering 50% of that X as a discount on purchase prices, once the property will be sold, not only you closed the sale and turned a liability into an asset, but at the same time you avoided to spend a 50% of the what you would have paid in maintenance costs... not to mention that finally you have liquidity to reinvest!
In the end unless houses will be sold solely to wealthy crowds at exorbitant prices, costs will have to be re-dimensioned or we can all pack now and move to Mexico!

Last I heard we were around 04 prices (not 02) assuming 10-15% per year increases from 02 -04 that $250K home could be worth in excess of $300K . In addition what they ask may not be what they get, Dont be surprised if they do though.

Hello MissyMe,
Thank you for your question. I can understand your feelings but every home owner is different in how they price their home. Realtors will advise homeowners and it is up to them to either agree or go with what they think. I cannot comment on this particular homeowner, but I know this house and will say that during the time they owned it, the market did go up to the top in 2005 and has been coming down since then.
Every homeowner and every property is different and unique in how it will or can be marketed but ultimately, the market will tell one if the list price is right or not. If it is not selling, then it most likely is not priced right unless there is another issue with the home. This is what we tell all our homeowners and it's true almost all the time, when it is priced right, it sells.
It is possible that the homeowner ( as many homeowners think these days) expect offers to come in so low so they leave room for offers and negotiation this way. Many homes in our town are priced very well and have moved quickly. In fact in the last 3 months we have seen steady sales that are up 20% from last year (in the under 500 range) Kinnelon is a desirable town, blue ribbon schools and offers a lifestyle in Morris County that is great for those who like a more natural setting and value an area that preserves land and water supplies.
Getting back to the subject home, It is a large piece of property that can be developed to some extent (to the right of the garage) and it does offer a great view of the resevoir.
I see you are a home buyer. The best way to understand the value of any property is to work closely with a Realtor who knows the inventory and lives and works in that area.
I live and work in Kinnelon as a top Broker-Sales Associate and would be happy to help you understand our market more thoroughly and look for homes if you are looking to move here.
Please feel free to reach out to me at 973-768-1888 directly.

Dear Missyme,
In a "normal" real estate market, homes apprectiate about 5% per year nationally (according to NAR). With that in mind, 2004-06 were grossly inflated with a rise many times that. Home prices have slid back depending on which area of the country you reside. In some areas, we have seen only a 10-15% drop since 2005-6 when we had the highest prices.
So a home purchased in 2002 would likely have a small increase in value or be close to what they paid. The best way to tell is hire a buyers' agent so they can run recent comparables. A home priced too high will need to "get real" and accept what the market value is, not what they want.
New Jersey is still holding value in most counties because it is still a desirable part of the country...in between 2 major cities. Homes priced well and look good tend to sell quickly. Remember, sellers can ask whatever they want, doesn;t mean they will sell! Best of luck in your home search.
Elisa Dewees
Re/Max Main St.
856-866-2525