The National Association of Home Builders(NAHB)/Wells Fargo Housing Opportunity Index data shows that the New York-White Plains-Wayne, N.J, which includes Bergen County, NJ is the least affordable area in the nation.
A meager 11.4% of homes in the area were affordable to families earning a median income of $63,000. The index first started recording data in 1991 and this is the first time a metropolitan area outside of California took the bottom spot.
The national trend is for housing to become more affordable but the NY Metropolitan area hasn't seem to gotten the message, even though house prices have begun to drop in some areas. The chart below shows just how fast houses were becoming out of reach. Though that didn't stop lenders from giving out the money to buy these homes. But that's why we're in the position we are now.
Here in Bergen County, it looks like house prices will take a big tumble. The following chart compares the year over year change in median house price sold in Bergen County compared to the National numbers. As we can see, when the national prices rise, Bergen County's house prices rise faster, when they fall, they fall faster. It looks like we're in for a big correction as house prices start approaching a rate where people can afford to buy without it being such a drain on their finances. We have a long way to go.
![[This is a Roller site]](http://www.bergenjerseyforeclosures.com/blog/info/resource/images/roller-logo.gif){kind=logo}
Prices in Bergen County are not going to fall that much. Please, I have beeen hearing that kind of doom for 3 years now. I still see plenty of $1 million + houses sellig in my area realtively quickly.
Posted by Donald on August 21, 2008 at 05:55 PM EDT #
Then why are you having a hard time selling your home in your area for less than 800k when homes in the area are going for more than $1million? You've been listing it on and off for a couple years now right?
Posted by Tom on August 21, 2008 at 06:27 PM EDT #
And you also have to remember that NYC is included inthe affordability index and the city is NEVER going to be "affordable," which is precisely why most people there rent rather than own.
Posted by Donald on August 21, 2008 at 05:59 PM EDT #
What you say makes no sense. Housing was more affordable in the area at one point so why shouldn't it be again. If housing isn't affordable, who is going to buy it?
The index shows that in the period from 1991 through 2003, on average, people making the median income could afford to buy 40.21% of the houses on the market. In the period between 2003 and the latest data, on average people making the median income could only buy 8.9% of the homes.
Houses were affordable in the area and they will be again. It is impossible for homes to stay so expensive when so few can actually afford to buy them. It's really simple.
Posted by Tom on August 21, 2008 at 06:19 PM EDT #
So if prices here are so unaffordable, then why have they not declined as much as they have in California and Florida? Many people, including Sam Zell and Alan Greenspan have said that the market will likely bottom next year. If prices here were going to drastically decline, they would have done so already.
Here is a great piece as to why prices will not decline that much:
http://www.nytimes.com/2008/03/18/opinion/18tabarrok.html
Posted by Donald on August 21, 2008 at 07:02 PM EDT #
Donald,
That article is from march and since then house prices have been steadily declining. Why haven't house prices fallen? Good question. Demand surely has. Houses aren't selling anywhere near what they were during the bubble. Buyers and lenders got some sense. Sellers, are still asking for high asking prices because they can't sell lower because of their mortgages. Some people that don't know any better are still buying.
The spread between the discount rate and the mortgage rates banks offer has grown in an effort to try and rebuild bank reserves. This can't last forever without creating great problems for the economy.
You've already lost nearly half the profits you made from selling your nyc condo. I think it's time you stop listening to you're realtor before you lose it all.
Posted by Tom on August 21, 2008 at 08:08 PM EDT #
Greenspan is a bonehead who has called a bottom in housing several times. As has sam zell dowen played its severity. Bioth were wronh and will be wrong again
THE MAIN PROLEM IS HOUSES ARE UNAFFORDABLE BASED ON INCOMES!
IT IS THAT SIMPLE. 30% DROP FROM THE PEAK P[RICES WILL SOLVE ALL OF THIS.
IT IS GOING TO HAPPEN AS LAYOFFS CONTINUE IN THE FINANCE AREA.
Posted by The Hammer on August 25, 2008 at 10:45 PM EDT #
I've lost half my profits from my NYC apartment? And how do you know this? How do you know what my profit was? What are you doing, stalking me now? Your entering a road that you will regret going down, pal. I know precisely what my profit was and I have not lost anywhere near half of it.
And you still have not answered my question: Why are prices in California and Arizona down 28%, yet they are only down 7% in NJ, per the Case Shiller Index???
Posted by Donald on August 21, 2008 at 08:57 PM EDT #
Donald,
I think you made a mistake buying the house you did when you did and I was concerned for you not to make the same mistake. If it bothers you so much I won't bring it up again. You're the one that posted the information about your purchase online in the first place. I wouldn't call reading stalking. It also doesn't make sense that you're trying to paint a rosey picture of the market while you're having such a hard time selling.
California, Florida, NV were the biggest bubble states and they fell the fastest because they had a lot of subprpime exposure. NJ on the other hand, has a decent amount of subprime but the alt-a seems to be in higher proportion than other states. CA, FL and NV also had higher price increases. NJ is higher than the national average. Historically, it seems that the NY area starts to fall slightly after the rest of the nation because of the financial industry in the city. With more layoffs and and cost cutting on wall st we should see even more.
All the indices indicated that houses are not affordable in this area. How can house prices stay where they are if people can't afford to buy them? The banks can't give out loans like they used to anymore. Just today I heard another story of a deal breaking down because the financing fell through.
The better question to ask is why haven't house prices fallen along with a rapid drop in demand?
Posted by Tom on August 21, 2008 at 10:10 PM EDT #
And I don't listen to realtors. I have not spoken to my realtor since May. If you want to have a debate about the issues, then that is fine. But I advise you to stop bringing my personal situation into this because you know nothing about it, just like I know nothing about you.
Posted by Donald on August 21, 2008 at 09:00 PM EDT #
And you know you're always welcome to not comment if it bothers you so much.
Posted by Tom on August 21, 2008 at 10:33 PM EDT #
I hae never posted details of my Manhattan aprtment online, so either you are doing research behind the scenes or your guessing all of the numbers. Yes, I have written about my NJ house, but that is not why I got angry. I really don't care whether I sell my NJ house because I am going buy in Manhattan either way and I will list my NJ house as my primary residence so that I don't have to pay the city income tax.
And if your wondering why I have not sold, it's because I let loose on my agent back in May and I no longer talk to her and she won't even rtrun my calls. If I cancel the contract, list with a new agent, and then sell, I still owe the current agent the commisison so I can't sell this year because of that (unless I pay a double commission)
Now, back to the issue of why house prices have not fallen. I think that is because you have much fewer desperate sellers in NJ as you do in places like CA and FL so they don't have to lower their prices. Foreclosures are down in NJ month to month for 2 consecutive months.
And I don't think it is true that nobody can afford to pay the current prices. Rather, it is because they don't want to pay them.
Posted by Donald on August 21, 2008 at 11:19 PM EDT #
I said I wouldn't talk about your house so I sent you an email
regarding my thoughts on that.
Regarding house prices. Foreclosures may be down month over month, but
it looks like that might have more to do with banks being willing to modify
loans for people in trouble and being more realistic with short sales than
anything else.
Median income means half the households make more than that and half
make less. If half of the people can only afford 11% of the homes on the
market, when historically that figure was around 40% that's an obvious problem
there. If things stay that way, and house prices don't fall, just means there
will be less buyers. It's pretty simple. Less buyers means prices will have to come down to compensate for lower demand. There are other factors keeping house prices up but they won't last.
Posted by Tom on August 22, 2008 at 06:34 AM EDT #
Duck...is that you? We missed you over on the njrereport. Won't you come back. Please?
Posted by Yo momma on September 04, 2008 at 08:26 AM EDT #
Sadly, he informed me that he won't be commenting on my site anymore because he got tired of me bringing up how he still hasn't sold his house whenever he kept trying to paint a rosey picture of the local real estate market.
Posted by Tom on September 04, 2008 at 10:10 AM EDT #