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Georgeh, Both Buyer and Seller in Tinton Falls, NJ

Are more houses selling in the entry level market or luxury market?

Asked by Georgeh, Tinton Falls, NJ Sun Mar 9, 2008

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Dear Georgeh,
If you are interested in the New Jersey, it's a pretty open question. If you asking about Rumson, Avon-by-the-Sea, Spring Lake, Colts Neck, Sea Girt, Brielle, or waterfront those markets tend to be strong in the luxury home sales. People that have money will look there and buy there. If you have a luxury home for $700,000.00 or better, they will tend to sit longer in places like Tinton Falls, Howell, Freehold, Long Branch, Middletown, Wall, etc. where you will find more middle income buyers looking to trade up. However, in those areas you will get more in a home for that price than in the Spring Lake or places similiar. Overall, in Monmouth and Ocean county, $200,000 - $400,000 price range is what is going faster than anything in this early Spring Market. If you are looking for specifics in a certain area, I would be more than happy to help you. Real Estate is local and every town in different. I specialize in Monmouth County since 1992. All the best to you. Lucy
0 votes Thank Flag Link Wed Mar 19, 2008
Don’t know, but the luxury inventory is sitting. Blame it on the inability of buyers to get jumbo notes (next to impossible) or chalk it up to fear.

Pimco's Bill Gross wrote an excellent article, back in 1980, about housing called the "The Plankton Theory." In short, just as an ocean's health can be judged by the number of it's lowest life form, plankton, so can a housing market. In this analogy, the first-time home buyer is the plankton. (The article, updated for our times yet erringly similar to the 1980’s original, is linked below.)

With a renter buying a starter home, the starter home’s sellers then move up to a bigger place. And they buy a bigger place, and so on, and so on and so on. So, as you can see, the only way to truly remove a “unit” of housing is to get that first starter home in this long chain sold. And then the magic happens.

Right now, as you can see, this normal cycle is broken. Renters, as you’ll hear many here lament, are staying put. Faced with rapidly falling home prices the plankton are happy to float along. Homeowners aren't moving up to the bigger houses because they can't sell their own. Add to it the glut of inventory through-out the spectrum of homes, brought on by an easy-credit fueled asset mania, the likes of which has never been seen, and you have quite a situation on your hands.
0 votes Thank Flag Link Sun Mar 9, 2008
Hello Georgeh,
In my market, it is the opposite. There are more high priced homes than lower priced homes--ie, more homes for sale over $1 million than under $1 million. The high end homes are moving much better than the lower end homes. I believe there are 2 reasons: first, people with money in this market know they are getting a deal with prices low and rates low and second, people who are paying 750,000-1,000,000 expect more from the houses in that price range than they are offering. So, the lower priced houses are sitting and the high end are selling.
My market is Spring Lake/ Sea Girt, fyi.
If you have specific questions in Tinton Falls, I'd be happy to help you individually via email, or you can go to my website and order a market snapshot for free. It is material derived from the Monmouth County database of our MLS and will not only show you active listings, but closed properties, too, for the last 6 months. The service is free.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Sun Mar 9, 2008
George
Picture a triangle. At the bottom are lower priced homes. The top of the Triangle are the million dollar dream homes.
The lower the price, the more qualified buyers there are. The higher the price, the fewer the number of qualified buyers.

So there are more homes for sale at lower price ranges, and fewer homes at higher price ranges.

As a general trend, when a market shifts (meaning fewer homes sell) there are a couple of sub-trends:
1. Better-priced homes sell frist (homes that buyers see as having more value)
2. Over-priced homes sit, and sit, and sit
3. Higher end homes still sell, actually at a proportionally better rate than entry level homes. The reason for that is that buyers at the higher level have more financial leverage.
However, there are fewer transactions in the upper pricing tier, so in most areas you see a perhaps exaggerated drop in the median price.

Hope this helps.
0 votes Thank Flag Link Sun Mar 9, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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