To the Westgate questioners:

Here is a link to all the untis in Westgate I and II, which are either active, attorney review, under contract or closed (since January 2009). Bear in mind that the agent for 111 Linda Lane still hasn't changed the status from U to C as of this morning, but it did indeed close. I know, I was there :)))

Dan,

At least tell us that state it's in, or if it's in Edison since your profile says you are from NY and you are posting on the Edison pages :)

BTW congrats !!!!!

BTW folks,

I just got into a contract on a town house [location secret :-)].
There were 6 bids on the house and it went over listing price. It was on the market for less then 7 days. Ofcourse, one needs to note that the house was very realistically priced while listing.

Hope this Helps all of you who are tracking the markets.

OK I am losing it, 111 Linda sold for $345,000. My listing in Westgate is listed at $337,000. Sorry that;s what I get for answering questions when very tired.

OOPS.... I forgot to mention, there are currently 6 units on Westgate Drive that are under contract, and two which are in attorney review.

On Linda Lane there is one unit (#171) in attorney review. That's it.

Rainman,

ALL the units in Westgate Phase I (Westgate Drive) and phase II (Linda Lane) are the same, (different layouts only occur comparing end units with interior units for the most part), and a few do not have skylights. When they built phase II (Linda Lane) they learned form their mistakes in phase I, and added visitor parking in each cul-de-sac and on the street, made the retaining walls out of concrete and used metal instead of wood as the deck ballustrades.

What drives the prices is proximity to the tracks and upgrades that have been done. Linda Lane tends to sell higher because they are ALL far from the tracks. 69 Westgate had updated kitchen with center island and granite, hardwood floors in the kitchen, finished basement and updated baths. It's sale price was an anomaly though.

Since January 2009 the units on Westgate Drive have sold betrween $369,000 and $297,000 with the average being $325,000. In comparison, in 2008 the units sold between $359,000 and $310,000 and the average was $333,000.

As far as Linda Lane goes, I just closed 111 Linda Lane on Monday for $337,000. That was the only sale on Linda Lane so far this year. Last year (2008) they sold between $385,000 and $345,000 with the average being $365,000.

Right now there are 7 units on Westgate Drive available, ranging from $364,900 (????) to $305,000.
There are two on Linda Lane priced at $349,000 and $349,000 respectively.

As far as their selling well even in this market, it's because of the area and their affordability for what you get. They are quite spacious, have 2 bedrooms, loft and 2.5 baths. All have garages and basements (not many developments in Edison have garages and/or basements and if they do they are often pricier) and the development has tennis, pool and community clubhouse. The maintenance fees are reasonable too.

Hope that answers your questions.

Actually of lot of these units in the West Gate(s) are very similar for the most in relation to layout and size with only a few different layouts and finished basements, etc.

These units are by no means small or for that matter like traditional townhouse style housing. There are many amenities, garage, lot and street parking although easy to get lost in the complex with everything looking the same on the outside, finely manicured landscape, quiet neighborhood which is considered very safe by those living there, tennis courts, jogging/walking paths and a fairly secluded feeling environment although close to everything, stores, trains, highways, good schools, etc.

I suppose many people find those things desirable and enough so to be willing to pay the price.

As to why people flock to this complex as with many in the North Edison area, it is just a centrally located, desirable area, the units although all look the same outside are pretty nice and well kept inside and can vary in look and design inside drastically depending on the level of upgrades, although the association fees are high the grounds are pretty well kept as well.

People can live here and be close to the train to NYC yet be in a complex that has open spaces, the people that do live here , absolutely love it and although many naysayers on this site may not agree, this complex is and always has been hot and as long as the unit is well kept and perhaps upgraded don't generally stay on the market long.

Contrary to popular belief, the sky is not falling. Sure there are many people out of work but not everyone or even a majority by any stretch of the imagination and that is self evident by your own observations. People wouldn't be buying new homes if they were out of work.

According to realty times and even a few of the national press outlets housing volume of units sold is up as well as prices although not higher than compared to pricing this same time last year.
http://realtytimes.com

BTW. Which complex do you want comps for? Westgate, Westgate II, or others in the area? Active, Pending Sold or all of the above?

Mary Petti and Vicktor Kaminsky,
I have found your posts to be very relevant to situations raised and informative. Thank you for sharing your time and expertise.

Do you want to look at this North Edison market (may be share some comps for Westgate) and what is driving it despite the job losses and wall st meltdown? Especially for these small townhouses, are a lot of people downsizing or choosing smaller homes hence putting a floor for such units in desirable areas?

In response to question asked about big price drop in 08820, I can talk about one desirable TH community in 08820- Westgate Square. which has units with 2BR, loft, basement and garage

It seems the prices have stabilized here again- I have not heard of a recent closing that was less than $330K talking of units not close to the track) and some homes are still going as high as 355K~infact 69, Westgate Dr, Edison closed for 369K in Mar '09- a real head scratcher-what was there in THAT unit?

Also with the quiet zone soon to be in effect at Inman crossing, the rail road noise that was one factor for significant difference in prices of Westgate I vis-a-vis II(the newer complex) will be less of a factor anymore driving some convergence in pricing.

I think this is just one more incentive to attract people to buy. I actually think this credit will be increased every year until they can get rid of the inventory and put all the foreclosures behind us. Last year it was 8000, this year it will be 15,000 next year it will be 25,000. I don't think they have any other option with large inventory and unemployment at 10%

As of now this is just a proposal so I wouldn't hold my breath, hope is one thing, actions are another.

Remember it was proposed before and already shot down by this congress once already and then reinstated in a modified $8,000 form that you see today because of all the noise realtors made about it.

"The legislation wouldn’t be applied retroactively to purchases completed before the date of enactment, Watson said"

Are they saying hold your purchase till the bill is signed if you want to take advantage of higher credit !

The $15,000 is nothing new, maybe just brought back to the table for review. This was the amount originally suggested by the republicans and nar during the presidential elections, the incentive at one point was endangered of being done away with all together but after intense nar lobbying obama changed his mind and allowed it.

That would be fantastic if they allowed the incentive increase especially since we're bound to be paying higher taxes ;-)

Now they are considering increasing tax credit to 15,000. Still not significant enough but a step in the right direction.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a…

This page only says "It is possible for the lender to obtain a deficiency judgment", that is true for recourse loans aka 2nd & 3rd loans.

This site is what all your posts trying to tell me I was wrong was about?

It sounded like you had some kind of concrete evidence proving my statements wrong and instead post a web page with a vague reference from a web site owned by an investor "PCF Investment Group, Inc." that advertises "Sell Your Mortgage Note, trust deed or other cash flow FAST!". YIKES... I thought you had a little more than that!

Listen, I said it before no matter even if the lender had recourse if the terms they agree to in a short sale have them agreeing not to come after the seller to try and get any more money from them and will consider the note paid settled, that is a contract and can be enforced just like a mortgage.

This argument or casting of doubt just shows how little the general public really knows about the intricacies of such matters and should consult with a professional that does this for a living instead of trying to put them down at every turn or complain about their fee and how much its not worth it when there is obviously much value in using a knowledgeable Realtor for such matters.

just posting what i found. link attached.

Sak, Yes I'm sure, it's not if the "state" is recourse or non recourse, it's if the loan is a recourse or non-recourse type.

Read the definition of a Recourse Loan http://en.wikipedia.org/wiki/Nonrecourse_debt

Regardless if New Jersey would allow recourse, like I previously said when doing a short sale you don't agree to it unless the lender agrees to sign away possible recourse rights they may have in return for your cooperation to sell the home in a short sale saving the banks thousands vs. doing a foreclosure.

I think I explained all of this in detail before or was that in another answer? I find a lot of these questions being repeated over and over and explaining them to be a full time job in itself.

If you found information on the internet to the contrary, please post it. I'd like to examine it, as I'm sure others reading this blog would as well.

If I'm wrong enlighten me, posting your source or web reference in the space trulia provides conveniently below when making a post. All the cut & paste and questioning with doubt doesn't do much in the way of clearing things up.

Don't cause more confusion, if you have come across evidence to the contrary just post it. I won't be offended, I like to stay informed, heck things change all the time and if you know something I don't I'd like to learn about it.

Either way following proper short sale procedures and covering all the bases in the manner I've explained would make this a moot point.

Have a nice day!

Victor, Are you sure about following statement you made ? From what I have found reading over internet just now it seems NJ is not one of those non recourse states.

============SAK============
"By the way, do you know that bank will come after you for remaining money even after agreeing to short sell ? they will go to court and get judgment to get paid balance out of all your other investments. be careful."

============Victor============
I think I know a lot more about short sales than you, What do you do for a living again? I do short sales!

Anyway, let me educate you a about short sales...

If there is one lender they can't "come after you" if they agree to a short sale because the first lender is a secured lender (Non-Recourse Loan Type).

Didn't know you had one Dan, please do!

This should help all realtors appreciate what I said below about paycuts in my company...

http://www.businessweek.com/magazine/content/09_23/b41340467…

Do note that this is just the base pay cut. There are no bonuses this year!

Thank you Victor for the offer to help! I plan to stick with my Realtor.

common victor..
Now I feel really insulted that you thought I would actually learn something that I didn't already know by reading that blog by Cathy.
"Throwing Money Away"????
That is soooo 1990s way of thinking. I have seen much better arguments supporting buying vs renting.
Cathy's blog lacks substance or anything new at all..
I don't know why she bothered to blog. Even main stream media reports more useful information.
By the way 8000 dollar credit will just go towards closing/moving/furnishing costs which is not recoverable when you sell your home.
They were initially thinking about 25000 dollar credit which would have made a significant difference.
I think it is a classic case of government being short sighted.
If they actually give a tax credit of 25K or even 50K, it will put a serious and real bid under the market from really strong hands and put a permanent stop to the slide in home prices.
Government can easily recover that money by higher property taxes and employment taxes from saved jobs in real estate and other related industries.
Instead of that, they are printing money to keep mortgage rates low. If what happened in 10 year treasury market and mortgage rates this week is any indication, it is about to blow up in their face
Oil is back up to 65 and Gold is pushing 1000

"Remember that NJ home owners cannot take state tax deduction anymore starting this year."

We'll see about that when Corzine gets the boot...

By the way the majority of buyers are do not have or are not putting down 20% down payment, more like 3.5% FHA or 5% conventional.

I'd advise you to ask a CPA to check your math, not a realtor when it comes to tax issues.
I don't think you factored in the $8,000 tax credit for 2009, here just read this to learn a little more about rent vs. buying in this market by Cathy Chaudemanche http://www.trulia.com/blog/cathy_chaudemanche/2009/05/rent_o…

Didn't read the full story, NY Times is a rag with fact check issues, they don't do it... Anyway you said main stream media and that was enough for me not to waste my time. ;-)

I also saw the main stream media only starting to report on the $8,000 buyer tax rebates like its a brand new program when its been out for months and prior to that Bush put out a similar stimulus program but it was $7500 and needed to be paid back.

NY Times
"The rental market in New Jersey, which up to now has only grown stronger as the sales market declined, is finally showing its own signs of weakness."

That tells me that the buyers are coming out of the woodwork because as the market declined if rentals grew stronger, what is causing rentals to get weaker? Either way was there something in there about being at 2000 rent levels?

Thank you ny times virtual paper boy but I'm not signing up for it.

Victor,
Check this link
http://www.nytimes.com/2009/05/31/realestate/31njzone.html?_r=1

Main stream media also finally woke up to the fact that rents are collapsing

victor,
I personally think tax benefits of home ownership is the most misunderstood benefit in home buying.
If you have some time can you do a quick calc on the tax benefits for a family making 100K that would buy this home for 240K assuming 20% downpayment?
In my opinion, their loan amount will be 192K and their additional tax benefits compared to standard deduction will be less than 1000 dollars the first couple of years and they will be better off taking standard deduction from third year.
But I might be wrong and would really appreciate if you could correct my math.
Remember that NJ home owners cannot take state tax deduction anymore starting this year.

Home Shopper your forgetting to factor in the tax breaks, rebates and write offs home owners get.

Rents from 2000 to 2009 has changed a lot, if your landlord hasn't raised your rent I'd thank him and maybe you shouldn't move!

Dan, where in Princeton are you looking? I'm familiar with many of the builders, complexes and neighborhoods there. Let me know if I can be of service to ya there to, I've helped a few buyers in that area this year already.

Took Victor's advice to heart :-) and went back to look at prices in WW/Princeton. The drop there is in line with the market.

bye bye 08820 and all the folks here. This was a helpful discussion though!

victor,
I agree with you that the rentals you handle different from those offered by my landlord.
But if I compare it to Edison Glen, they are newer and offer better services.
And here we have somebody trying to sell and Edison Glenn apartment for 240K and they have monthly expenses of 300 in property tax and 200 in condo fee. This home was sold for 103K in 2000 and the rents for these kind of apartments haven't moved much since then. That is why I was saying rentals offer much better value unless this apartment is priced somewhere around 150K. But the seller will never do that. He will continue to eat the negative cash flow and eventually sell it for some nominal price that he is happy with, without factoring in all the expenses and lost capital appreciation over the years. That is why we see home resales falling even though the median price is not falling much. This will just make it very difficult for Realtors and any body who makes a living on home resales.

Yep,
Touchy bunch on this side of the river, but being a country boy I never expected to really fall in love with The City so much. I guess I am just annoyed with this entire home buying process. I would pass on the back yard pool, and have on several houses that I can afford. But having a place to grow some collards and mustard greens does sound good. Found a great place to buy, but I found out today that their lawyer isn’t even returning my lawyers phone calls. That was the second heavily researched offer I placed. Third times the charm?

To bad Edison is out of my commuting range….

Tim

My you New Yorkers are a touchy bunch. lol...

The Revlon outlet is caddy corner to my office, I can probably throw a baseball from our front door and hit it, well maybe not that close but almost. In any event you talk as if real estate prices haven't dropped in NJ, they have and much of what sold for in 2006 at 700K is probably in the mid to high 500's or low 600's today.

I don't know about DC being so stable, most of those folks live in the neighboring towns of Virginia and Maryland anyway. I've been there a lot over the last two years, lots of family working for the government there and there are tons of homes sitting on the market and selling for much less then a few years ago as well. So I'd have to question that statement just from what I've seen and heard from family living there.

Tim, I understand you like the city (NYC) but your answer has a lot more emotion tied to the value rather than value to the property. You can play or swim in your own private back yard, park for free in your own garage, mainly because you need to take a taxi or train everywhere and are willing to spend $364K on an old beat up tiny apartment vs a much larger home with way more amenities for the same price.

I'm sure all those cab and train ride expenses every year equal what I spend for car expenses yearly and with the added bonus that I can use it to travel to other states and areas where there are no trains. ;-)

Well... Victor...while I am trying to provide insights into what a buyer like me, who has been a Real Estate investor, is thinking these days... it would be helpful if Realtors like you could help us understand their side of the story.

Some more info to share.
1. Revlon which has offices in NJ/NY including Edison, announced today that it is cutting workforce by 400 worldwide (approx 8% of total workforce worldwide). One can pretty much guess that the cuts will happen largely in US and Europe as companies are ramping up in BRIC countries and cutting in US and Europe.
2. Was out to DC/Maryland area over Memorial day. Learn't first hand from my friends that 700+K TH's are down to 525K 'ish values. Quite a drop as compared to the NJ market though jobs are pretty stable in DC area because of Federal Govt.

HTH

Oh come on Victor I expect better from you….

I live on Manhattan and grew up in the rural NC. Comparing NYC to anywhere else is not comparing apples to oranges, but is really comparing oranges to elephants. While I am going to move to NJ, it will be with great regret that I cannot stay on this island I love. If I was not pushing 50 and having an extreme urge to dirty my hands in my own soil, I would probably ride the market and save to purchase my $364,000 950 square foot two bedroom with a 1948 electrical panel and Lowes cheapest cabinet kitchen. I could do great things here and make money while I am doing it. If you come back to this apartment next summer, for a few thousand more, it will be updated. Heck, these apartments are certainly selling and have continued to sell throughout this market crash, so a lot of people are finding great values on this island….ummm…unlike that wilderness west of the river.

I still maintain that listing price is not the top motivator in any purchase. I know I am tending to examine what a property cost per month after my purchase rather than the actual list. Heck, the tranportation cost alone probably makes up for $100,000 in listing price. IE even if i take a train to work every day, in NJ i will absolute require a car. My tranportation cost in my current location can be reduced to zero if necessary. Can you say that in Edison and still get to a movie, resteraunt, grocery store ummm work?
Tim

Dan just out of curiosity are you a New Yorker?

The prices in NYC for 600-800 square foot tiny apartment condo are insane, in many cases being way over $300,000 so I find that assessment from a New Yorker (if you are) kinda funny regardless if your statement is true or not.

FYI a 10 -20 year old home is pretty new in the scheme of things when you look at the average age of homes out there is much older. I would look more into the location, amenities, upkeep, upgrades and condition of the home as more important factors but that's just me.

If you're expecting to get a brand new home for under $300K you're going to need to be shopping in south jersey or way out west near PA or look for adult community housing.

Since this discussion has been very helpful, the following info may help you all.

I work for a Fortune 200 company in NY. While we are doing quite well, our company has been laying off people so that they can report good numbers to Wall Street and thereby maintain their credit rating. We just had a 8% cut in salary for everyone except the staff earning below 75K.

Seems an asking price of 300+K for a 2/3 BR Town House that is 10-20 years old is just too much money for value.

Home Shopper, I'm sure your not making your buildings rent prices (I don't claim to know everything or what is happening in every building in every area).

I do know that the Government can't demand that companies fire workers on H1B or L1 visas and require them to hire local help, especially in an Obama administration that just ain't gonna happen.

Sounds like you may live in an apartment building and apartment rentals are not as desirable as single and multi-family homes which are the types of rentals I was referring to. I know there are many apartment complexes offering a free months rent and other offers like that but that usually also involves signing a longer lease term and at minimum a 3% year rental increase. I used to manage a few of these buildings and that was the usual modus operandi. These building would also have absolutely no problem renting and filling vacancies with section 8 and other subsidized renters. Don't believe for a second apartment building owners are hurting. These owners usually fill their occupancy the best they can get regular appraisals and extract every penny of equity of them to reinvest elsewhere, I've dealt with several of these guys and they are all multi-millionaires and are very aware of what they are doing. Vacancy rates matter more for them over rent prices (not that rent prices don't matter, just to a slightly lesser degree)

Sak, it totally depends on the complex, management and owners if they will modify a lease. Usually I find their actions don't make much sense on the surface but they will rather wait until your lease renewal comes up and offer you the other apartment with a new lease at a new rate over keeping the tenant in the same apartment. (They do have their reasons for doing this no matter how stupid it sounds on the surface) but it's still worth a try.

Home shopper, fyi... you don't have to move next door to get rent reduced. just call them when your lease is about to be over and explain to them that it will be good for both if they give you market rent and free months deal for the same apartment. it will save them hassles of finding new tenant and save you hassles of moving.

one of my friends did this.

Victor,
I really am not making this up regarding rents. For the first few years, rent did not increase, I guess because of post-dotcom recession. Then they increased by $50 per year for couple of years, probably end of 2006 and 2007, then again they stopped increasing rents. So, I am now paying 100 dollars more than what I originally paid in 2001. But, if I move to another apartment, may be even next door, the new rent is back to 2001 levels, and on top of that I get 2 months free. Back in 2001, we did not have a gym or free shuttle to train station, but now we have those and also 24hr security, online rent pay, centralized maintenance line, etc... It is unbelievable, but true.
All the theory about people being foreclosed upon adding to rental demand makes sense in theory, but whats happening in practice is totally different
The only possible reason for that could be falling demand for housing in the region.
It is anybody's guess as to why housing demand is falling in the region
My guess is that, there were a lot of Indians in the region working on H1B and L1 visas employed by Indian outsourcing companies to clients on wall street. Now these wall street clients don't have the need for these temporary workers or are being forced by government to hire local resources to save jobs. So, these Indian companies have asked their employees to come back to their home office. Some others who used to rent here have purchased homes in some newer developments in the past 4 years and left the region. Now we are left with a whole bunch of empty apartments.

HOME SHOPPER
Your a tenant for 8 year and your rent has gone down? They didn't do an annual % increase for inflation?

"They do understand that they are on the hook if home price depreciates by more than 5% or if the buyer looses his job or something right? There got to be some kind of back door way for them to make a quick buck and dump these mortgages on tax payer again through fannie/freddie or something. "

BAILOUT MONEY... is probably your answer however for a price drop but if banks were worried about that and didn't have their bases covered elsewhere (statistically the bases would normally be covered by the majority of people who do pay their mortgages but now bailout money will cover the banks loses)

Note this: Starting next month mortgage brokers (not bankers who lend other peoples money) will not be permitted by the banks to use their own appraisers anymore.

I see slow downs and corruption coming from the banks... Obama's peeps need to read these blogs!
As it is there are many banks trying to put pressure on appraisers (illegally) to bring back lower appraisals than the comps actually support.

2nd Note: A stable prosperous economy is based on debt money system meaning "debt is money" the more debt the healthier the economy in theory however once we begin printing money and borrowing from other nations that is when problems arise.

Presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in the United States.
http://www.facebook.com/note.php?note_id=209651925444

Thomas Jefferson: "The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Homes,

I have no doubt rents are falling. Rents are generally based somewhat in property values. My annual rent is approximately 5% of what my landlord feels this apartment would sell for in the open market. And since he is selling co-ops in this building for that price, I am certain he has done his calculation well. But have you considered the fact that rents may also be dropping BECAUSE it is such an affordable time to buy for the renter and qualified renters are falling in numbers?

Victor,
Thanks for the complement, I like the way you think as well. Being a nurse, I well understood your meaning with dealing with various cultures in our society. Heck as a southern gentleman in Yankee land, I understand it double from both sides.

Don’t get me wrong, I may be an ardent Obama supporter, but I am sane enough to realize the man and OUR congress is insanely mortgaging our country to the hilt with little to no regard to real value for our buck. We will most definitely pay it forward to the next generation(s). As the long line of fishermen in my heritage always said, “The best we can do in a gale is point the boat into the wind and pray.” Most of ‘em lived well into their 80’s and 90’s. I guess it is good advice.

I hope that is what I am doing now. Only time will tell.

Tim

Victor,
Really appreciate the feedback you provide about on the ground situation regarding mortgages and short sales.
So, what would be the interest rate for a 5% down non-FHA loan. Do these banks turn around and sell these mortgages to government again? They do understand that they are on the hook if home price depreciates by more than 5% or if the buyer looses his job or something right? There got to be some kind of back door way for them to make a quick buck and dump these mortgages on tax payer again through fannie/freddie or something.

I am not making up the info regarding falling rents. I am seeing it happen in front of my eyes. check this website http://bestrentnj.com/ they have a lot of rentals in our region. I happen to be their tenant for the past 8 years. so, I am just reporting my experience.

Home Shopper, no problem I don't take any of this personal but do like to get the facts straight.

As far as people who buy now needing "20% down payment unless you qualify for a FHA loan", they can actually get a conventional loan with as little as 5% down with most lenders or 3.5% down using FHA.

Depending on the bank and borrower will determine difficulty and time to obtain a mortgage. Some banks are dragging their feet and stalling to get a closing done but if a buyer will take my advice I'll have them avoid those lenders.

Several of the banks I usually do business with will give loans without as long as the buyer is cooperative and has halfway decent credit scores, we've done many closings in under 30 days (short sales as the obvious exception). It really depends on the lender and the type of buyer, bad credit lending is extremely difficult now if at all, I'm seeing minimum credit requirements of 620 FICO from reliable lenders. I do know a local PNC branch that is still offering 100% financing if the credit is 640 or better on 1-4 family homes, condos my be an exception depending on the complex.

"This kind of attitude of dumping the losses on banks is very dangerous in the long run."

I completely agree with you however people are doing it at an insane pace (nobody cares about the banks or consequences resulting from these actions, we'll always pay for it one way or another "Gov Bailouts")

The only thing slowing down the pace is the banks horrible communication and response times for making short sale approval decisions. Currently wait times for short sale approvals are 8-11 months on average (seems like they're getting slower).

The president encourages this with his reckless behavior putting out programs with ridiculous guidelines most without even reading. They go one step further to encourage home owners NOT in trouble to renegotiate the terms of their loans with our tax dollars as the buffer and paying the lenders, owners and 3rd parties who successfully modify these loans bonuses. On top of those bonuses pays all of them additional bonuses for every year the home owner remains in the house under the new terms up to something like 5 years.

Our bailout cash might as well be burned if you look at how its being wasted but Obama and his congress will pass whatever bills they want without checks or balances, who's to stop them. They don't even bother reading these bills (UPDATE: now they got a speed reader to read them the bills but that was only tried once and he didn't even finish. These politicians are making a mockery of our system and government operations and being very arrogant about it.)

SAK
You're looking at real estate strictly from an investors view and any investor can tell you the time to buy is when prices are falling not when they are flat because that time is so short you can blink and it will pass.

Real Estate prices throughout history have been cyclical and you just need to decide if you want to wait until prices are on their way down or after they begin to hit bottom and begin to rise, wither way you may find yourself buying at the same price.

HOME SHOPPER
Your info about rental prices falling is not true, at least from what I've seen locally. I have seen rental prices rise as home prices fall. All those people selling or getting foreclosed need to move and they become renters. As rental property inventory falls and demand rises, rental prices rise as well (supply and demand).

TIM
Despite our differences and political positions. I like the way you think and agree with a lot of what you say and how you say it. I dislike politics because the deceitful behavior of politicians.

Although I tend side with one political party more than the other on few issues, I dislike them all.
I do get involved and side with the lesser evils and use my BS detector to sniff it out. I'm not devoted to any party just the issues.

Political affiliation is a smoke screen for the general public. Politicians are all the same with only slight differences. The issues they support changes as the demographics of their followers do.

I just created two political pages of possible interest, feel free to contribute:
Jersey Politics http://www.facebook.com/pages/Jersey-Politics/102995228551
United States Politics
http://www.facebook.com/business/dashboard/?ref=sb#/pages/Un…

Home Buyer,
The answers of a year ago are antiquated in today’s market as today’s answers will be next year. For the past 8 years, I obviously agreed that renting was better than buying as I rented. For the past 8 years, I have literally been priced out of the housing market. I could have probably gotten one of those subprime mortgages and basically lost my shirt in the deal like so many people. If you anticipated the kind of crash we are experiencing, please tell me more. Better yet, open up a financial planning firm and make some money for you insight.

So as you may see, I am a fan of history. What has happened before will happen again. I was raised on stories of the great depression by my mother and grandmother and lived through the economic shocks of the 70’s and 80's. No matter what you think of Mr. Obama and his policies, he is mortgaging our collective futures. China appears to be the favored nation of choice for our loans. In the past, Japan, Britain and other countries have shared that most favored nation position. At some point, this level of borrowing will take an impact on our nation by a significant increase in interest rates and then eventually inflation.

I don’t want to take up the cult like mentality of many of the desperate realtors that post the “buy now before it is too late” mantra. Frankly for many people trapped in mortgages higher than their property values, now is definitely not a good time to buy. Also I feel that if one is looking a holding a property less than 5 to 10 years, it is an awful time to buy. But for me and a select few that are looking to stay put 10+ years, the window of affordability is now and it is very narrow.

Maybe I will maintain a presence here for years so I can see you and Sak and others trying to figure out all the answers to house market bottoms with 12% interest rates and then 20% inflation rates. Those are my projections for the next 10 years. As Einstein pointed out, all and all my view on the universe is relative. It is definitely not your views. As I pointed out this morning, this is a debate that nobody can win.

I know one thing, the house that I am working to buy today cost $1695 to build in 1926 (the land was not included in that price). I wonder how many bust and booms this house has weathered. I tell you, I'm obsessive about this process.

Tim

Tim,
In my opinion rent vs buy is more a decision between renting or buying a place that you want to live in.
If you cant really rent a house that you like on a long term lease at a rate cheaper than buying it, then obviously it makes sense to buy it.
I am sure you can rent a house with an extra bedroom and a large kitchen.
I have been on this forum for over an year and I was not able to convince anybody with my answers.
Everybody has strong opinions and don't really change them. The dialog we are having here has reminded me of some of the arguments I used to have with other on this forum. So, I looked through some of my old answers and I anticipated things quite accurately. But I wasn't able to convince anybody then or now. I guess we will have to wait and see yet another year.

Home Shopper,
First of all, going FSBO equates to me along the lines of choosing the best cardiac surgeon you can afford then electing to do the coronary bypass without the circulating nurse.

I have considered the rate of return on a home. I have also taken into account that the home will most likely loose value in the upcoming year. I have also taken into consideration there is maintenance and improving the property involved in owning any house I buy. In fact, up until the market passed me by, I was considering gut renovations.

I am more than a bit obsessive about things and my realtor can tell you that when I put in an offer on a house (I’ve done two) it comes with a huge amount of research on my part. After all, it is my family’s financial future at stake here. At the very least, the last two years of market crashes has taught me that diversity is a key to survival. I have a pension plan at work that is undergoing a deep financial strain (most are these days). I have a 403(B) that has also hemorrhaged value in the last year. I also have a savings account that is not keeping up with the cost of inflation. And the way people are flocking towards precious metals leads me to believe that next great crash will come there. So just give me an example of absolute safety and high returns on investment in this market and I will consider staying where I am.

So tell me, when you looked at the diamond ring for your wife, did you look at the return on your investment first? Sometimes value is intangible. For me, having a house with a kitchen big enough for both my partner and me to maneuver within while cooking is probably worth tens of thousands of dollars. Having a living room that can fit more than two guest another ten or twenty thousand. Having room to put up my mother in her declining years if she so chooses to leave her home….priceless.
Tim

Tim,
I don't think rent vs buy is as simple as you think.
For example, in the past 4 years, rents have gone down while property taxes and other home maintenance have gone up and NJ state is eliminating state tax deduction. I agree that over a long period, like 30 years, rents will definitely go higher, but you also have to consider the rate of return offered by other investments like gold, stocks and commodities over a 30 year period.
rent vs buy is an easy decision if you don't view home as an investment. but if you expect financial gain by buying a home, you will most likely be disappointed, particularly in central NJ. Don't forget the 6% realtor fees you will have to pay when you sell. If you decide to go FSBO, you will most likely get a lower price to offset that.

Gosh Sak,
Where is the floor in your analogy? In 1929 the floor was actually in 1932 after the Hover administration did little in three years to stabilize the economy. That depression took 25 years and a major world war including post war economic boom to recover to its 1929 highs. And even at that, the US was the only major world economy that did not have extensive war damage which is probably why our country enjoyed such prosperity in the 50's despite the debt of that major world war.

Rent vs. Buy is such an easy equation. Get 30 year fixed, and the mortgage payment will never go up regardless of economic forces. In 25 years, inflation will make those payments less than they are today in relation to my income potential. I may or may not loose market value in my home in the next 25 years, but it is meaningless until I choose to sell. As it stands now, my rent has kept pace with my salary and will continue to do so. I am positive the same was true in all the post crash scenarios.

That being said, this buyer’s market is going to be fueled the people that have some remaining equity in their homes and by people like me that are first time home buyers (IE we rent now.) For your sake, Sak and the sake of our collective economy, there are hopefully enough of us out there in this market to make this the bottom. Since you state you are both buyer and seller, perhaps it is not a wise moment to scream gloom and doom. As one thing is definitely true, “if people do not start buying, the market is just going to crash more.’

I may not have a good idea where the floor is, but I at this moment I see two alternatives. Either the floor is very near, or it is very far. If it is near, then buying now is a good option. If it is far, the economic headlines will not be about home prices and short sales being good or bad, it will be about the bread lines that stretch blocks and blocks and thousand of people applying for the one job available. OH, wait, don’t we have that now? Maybe near and far are not so wide a margin now.

Tim

fact is market in central NJ has not bottomed yet. market could possibly go further down quite a bit and it's still risky to buy. that's all my posts are trying to show.

you are not supposed to catch falling knife in the air. you are supposed to pick it up only after it falls flat on the ground.

Sak,
I love a good debate, especially one in which nobody can win. I debate like you all the time. It drives my partner nuts. But then again, I really think humans choose life partners on the basis of who is most likely to send one over the edge of sanity. If one takes divorce numbers in this country that happens about 50% of the time.

Sak, when I first was training to do nursing so long ago, they told me that my profession was more of an art than science. That any time one deals with people, especially people that are facing the worst possible things in their lives, those people will do unexpected things. I was taught that even though my scientific training would give me the basis of ‘likely’ outcomes, that in the end, the medical decisions for an individual could only be made by that individual. Regardless of whether I view that decision as right or wrong, my professional ethics require me to support that individual’s decision.

The reason I say this is because in this thread and in many other threads on Trulia, I see the same level of ethics being used. I may not exactly agree with Victor on neither his views nor his politics, but I genuinely see him doing his best to help you understand this market and you repeated attacking him. Much like a Monday morning quarter-back, we can sit here nit-pick on how the plays should have been done, or we can take what we know and use it to our advantage.

No matter how you slice it, our country is in great economic danger. I personally think that the one of the major reason that has kept us from going into a full fledge depression is the fact that there has yet to be a mass panic regarding banks and property values. Frankly, in my uneducated view, the only reason we are not calling this a depression is that first the Bush administration and now the Obama administration has banned the word from our lexicon (a la 1984). If you draw correlations between now 1929, 1893, 1873, or even way back to 1837, you will find that depression always start with a market that was out of control, then crashed, then people panicked. As unfair as it is, supply and demand AND peoples’ emotions rule our economic system. You can look at the numbers all you want, study them until the next millennium, but that emotional aspect of the equation will always beat you.


Two years ago, I looked at buying a house and what this gave me was probably a better understanding of the market than average people. My thought then was, ‘if I can’t afford a mortgage how are people making less than I affording a mortgage.’ Well, that question has been answer, they aren’t. Heck, people making scads more than I aren’t affording their mortgages. We can sit here and blame anyone and everyone about that fact, but the undeniable truth is that many individuals got a boat load of bad advice 2 years ago. THEY took the bad advice and THEY made some bad decisions. I’m sure that the bad advice was grounded in real economic numbers. HECK, probably the same economic indicators that are guiding us today. I would even go so far as to say that the people that gave the bad advice acted in good faith based on those numbers. I’m would almost bet that economic and realtor students get the same lecture about art versus science that nursing students get. Because when one boils it down, our economics are much like the human body. It is a multi-faceted system that is in some level of balance. Alter one aspect of that balance, and the body seeks to restore that balance. When one pushes to hard in one direction, the balance cannot be restored and the system crashes. Cry foul all you want, but what we are in now is that multi-faceted system restoring its balance. Hopefully, peoples’ emotions will allow the market to return to some level of balance before they allow their emotions to guide them into a panic and a real depression.

Good luck in your endeavors.

Tim

Victor,
I am sorry if I misunderstood what you wrote.
Reading your post, I thought you were making a case that real estate always goes up and even if you buy at the top, all you loose is your interest payment and since nobody makes any down payment anyway, none other than the banks loose any money.
I agree that you weren't really advising anybody to use that approach and merely stating the facts about what went on during the past bubble.
I just don't think that it will last a long time. Now a days, you have to make a 20% down payment unless you qualify for a FHA loan right?
This kind of attitude of dumping the losses on banks is very dangerous in the long run. The investors in mortgage backed securities will completely back off, leaving the government as the only lender.
Now, Fed is printing money to buy mortgages. But once investors realize what is going on, they will back off from treasuries also, at which point even Fed can't do much.
here is the 10 year treasury yield chart http://stockcharts.com/charts/gallery.html?$TNX
See how the yield has broken out of the long term moving average. We can only hope and pray that it goes below the moving average again. But anybody who has any experience reading charts will agree that it is a clear breakout and is on its way to 5%. It is easy to guess where mortgage rates will be at if treasuries are offering 5%
This walkaway nature of home owners is very dangerous

Home Shopper... please comment on my posts not others interpretation of them.

After you've read my post tell me what exactly what was inappropriate about my it and point our where I gave advice let alone inappropriate advice?

Reminder you were commenting on my statements made about 4 posts under this one.

Sak what are you talking about and How the heck did you come to that whacked out conclusion from my post?

Boy you're reading too much into it and your biased reply reflects it.

Talk about a spin-master putting a spin on things, WOW your interpretation of my words is from way out of left field.



Your example of a guy "who lost his pants" shows how the next buyer will get the house cheaper and how realtors can help people in that position. I don't know how you managed to turn the buyer into the loser with that scenario?

I grew up knowing one mans loss is anothers gain, how you spin on that is beyond me.
Talk about negative people!

First you complain how expensive homes are then about Realtors helping people in trouble do short sales. What do you want them to do sell for a higher price in this market? Will you buy it? I don't get your point?

If you really were a buyer looking for the best deals you'd be all over short sales (some of the best deals around if your not in a hurry to move and can wait for bank approval of the sale. (one mans loss is anothers gain)

You said:
"By the way, do you know that bank will come after you for remaining money even after agreeing to short sell ? they will go to court and get judgment to get paid balance out of all your other investments. be careful."

I think I know a lot more about short sales than you, What do you do for a living again? I do short sales!

Anyway, let me educate you a about short sales...

If there is one lender they can't "come after you" if they agree to a short sale because the first lender is a secured lender (Non-Recourse Loan Type).

Subsequent loans are another matter and are Unsecured loans (Recourse Loans) where they could can after you "IF" you don't know what your doing and don't get them to sign a release of liability as part of the short sale settlement.

If the lender were to come after you, the worst they can do is get a deficiency judgment from the courts but they'll have a hard time collecting on it. Ask any attorney!!!

They can't garnish your wages, seize your personal property or come after you in any other way to actually collect that judgment. I have judgments I'm holding against people for tens of thousands of dollars from the courts which are near impossible to collect unless I get a collection agency to harass it payment out of them via empty threats like collection agencies use.

Credit card debts are far worse than judgments from short sale agreements because those are installment loans payment trade lines that effect your credit a lot worse.

IF A SECOND LIEN HOLDER GETS A DEFICIENCY JUDGMENT
which is an unsecured loan, you can settle with them after a closing much like with credit cards and collection companies do for other kinds of judgments and discharged unsecured debts.

MORE OPTIONS IF YOU CARE TO GET INTO IT...
Another option would be to ignore them (After a Short Sale) all together (not very ethical or responsible) and wait until they sell the bad debt (usually 120-160 days later) to companies that buy it for pennies on the dollar (collection agencies/ junk debt investors) and then negotiate a settlement with them or ignore them all together.

Once a debt has been charged off there are ways to legally deal with the collector and possibly even have negative remarks removed all together from your credit reports.

The buyers of this kind of debt really don't have a leg to stand on if you respond to the first letter they send out ("the charges" - thinking legally called an answer) by disputing it asking them to present proof of the debt. This is why you'll see soon after another collection company calling you, because bad debt continues to be sold in hopes someone can collect it.

According to Fair Debt Collection Practices Act the purchasers of bad debts need to meet the burden of proof that a debt actually exists and that can only be done with original documentation of the bill which they won't have to sufficiently prove legal authority to collect, without it everything is hearsay and that is not admissible in court.

The collector will tell you otherwise continuing to lie and harass you but if you know what to do you can turn the tables on them using the law in your favor to sue them for violation of the Fair Debt Collection Practices Act but I'm not going to get into detailed tutorials how to beat the system.

TIP:
Credit counseling, it's the biggest scam going Google "debt settlement" or check out the video on this guys site describing how it works, you can watch the video without buying the course to understand what I'm getting at with my above comments. http://www.mortgagereliefformula.com/07/12/how-to-settle-cre…

DISCLAIMER:
DON'T TAKE MY ADVICE CONSULT YOUR OWN CREDIT EXPERT, FINANCIAL & LEGAL ADVISORS I AM NOT AN ATTORNEY AND CANNOT GIVE LEGAL ADVICE OR AN CPA TO GIVE FINANCIAL ADVICE.