USA Today is reporting that new home sales have dropped – again – to their lowest point in some sixteen and a half years. Well…duh. Is anyone surprised by this news? We have a horrible economy and that certainly isn’t helping, but has anyone actually looked at the price of a new home these days? It’s outrageous! That is, of course, unless you want to live in the Ozarks somewhere or unless you have Mommy and Daddy money paying for the home.
Speaking for young adults in New Jersey, it is almost virtually impossible to buy any home (new or used) that is on the market. Property taxes, car insurance, student loans, groceries, gas, cell phone service, cable service – everything costs way too much money per month for anyone to buy a home. For a young, single guy like me bringing in a one-person income – forget about it! But I even know married couples who are having a hard time putting together enough money to buy a home in a place where they actually want to live in this state.
Times are tough and it sucks.
I agree with you wholeheartedly Joe. Anyone with an ounce of common sense realizes what a house of cards we have in house prices, no pun intended. My wife and I sold in 1999 and afterward saw the prices triple on our old house. We are now renters and have people we know through our kids who ask us when we are going to buy to which I reply when prices go back to normal. That is answered by, what is normal? I reply when prices relative to incomes are back around 2000-2002 prices.
My wife and I tried to buy in 2001 and 2002 and saw prices shoot up shortly there after which is when I gave up looking. We were told we were unrealistic by our neighbors but I had already owned a house when I was 20-35 and knew how much house we could afford (we were above median household income). It was they who had no idea how crazy prices had become. At a party last November I was again asked when we were buying to which I replied when prices correct and where I pointed out that nobody in the room could afford to buy a house with 20% down. The person was horrified that I said it, but it is the dirty little secret in suburbia now because so many people borrowed against that increase in equity that is disappearing now.
My wife’s and my family is afraid that we might move because the opportunities in employment and housing are better elsewhere as well as quality of life. I have learned much on the internet through blogging especially on the housing bubble. One you might be interested in focuses on New Jersey. Jim Bednar has a blog called New Jersey Real Estate Report, which convinced me that NJ is due for quite a correction.
Great points (and a good story about one of the dirty sides of suburbia).
My real estate agent buddy recently sent me some listings in Freehold that seemed incredibly under-priced (3 bedroom, 2 bath single family homes in the low $200,000s). Well, I took it upon myself to drive up to the area where these houses were and son of a bitch! The entire place was overrun with undesirable types. In other words, there were literally packs of shady looking people walking in groups of 7- 9 all over the neighborhood (and I mean I saw about a dozen or so groups of these people walking around). It was really awkward – I’ve never even seen that type of stuff in Newark (saw it a little bit in Camden, though).
On the other hand, I’m going to look at some townhouses in Tinton Falls this Friday afternoon and I really don’t think that they’re priced right for the market ($270,000ish). You are absolutely correct – this real estate market has a big correction coming its way and New Jerseyans better get ready for it because it’s going to hit hard.