Bloomfield Century 21 Realtor, Geoff Gove, looks at the numbers…From EcoRealty.com.

The typical American family, who makes the nation’s median income of $64,000 a year, could afford to buy 70.8% of all homes sold in the United States during the last three months of 2009. By comparison, only 55% were affordable in the second quarter of 2008.
The National Association of Home Builders judges a home to be affordable if a family making the median income could devote no more than 28% of their take-home pay toward housing costs.
There was a huge variation in affordability around the nation. All five of the most affordable major housing markets were in the Rust Belt, led by Indianapolis, which has been the nation’s most affordable major metro area for more than four years. More than 95% of all home sold there were classed as within the budget. Detroit was the second most affordable major market with 93.4%. The least affordable city? New York, at 20%.

Gove says our local market, though, seems to have bucked the trend. “Montclair is a world unto itself and is surviving well. New Jersey is tenth in the country for susceptibility to foreclosures – our proximity to New York City has helped us hold our value better than other states.”

Gove thinks local housing prices have dipped as far as they’ll go. “In the housing market, we now have the perfect storm: low prices, low interest rates, and high inventory. The next four-five months will be very telling.”
Julie Salmon at Coldwell Banker in Montclair says national numbers are an interesting index, but real estate is so local that she doesn’t pay too much attention to those trends. “You don’t know if the market has bottomed out until you’ve passed it,” says Salmon. “Things feel like they’ve picked up. Since February 1, there are 47 new homes on the market, and because inventory was so low for so long, there’s pent-up demand. I don’t know where that will take us.”
Salmon and Gove both said that homes in the $400K – $800k range are moving quickly after a dead winter, but the high priced homes and the condo market are still suffering. “There are a lot of empty nesters who want to downsize, even moving from homes to condos, and first-time home buyers won’t reach that high,” says Gove.
Meanwhile, sales of newly built homes took an unexpected 11.2% tumble, falling to a record low in January, according to government reports.
For a look at what houses are fetching in Montclair since January 1, check out Julie Salmon’s blog, Snippets Etc.

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11 replies on “Have US Housing Prices Hit Rock-Bottom?”

  1. Oh, please.
    Realtors ALWAYS think
    In a rising market: “they’re only going to continue going up, better buy now!”
    In a falling market: “they’ve bottomed out, better buy now!”
    Asking a realtor what is going on the housing market is like asking a tip-earning waiter if you should have the $12 pasta or the $48 steak.

  2. Bottomed?
    Not even close.
    Did you miss the news today? Reported today: 25% of the home mortgages are underwater and worse month for new home sales in decades. Unemployed people don’t buy homes.
    Hate to be a party-pooper.

  3. All I know is that it’s a great time to be a buyer.
    That said, a house in Montclair recently went into a bidding war. Even in this economy, a price tag can shoot up when the Manhattanites arrive ready to party.
    Those of us who live here know now is not the time to be paying full assessment value. Or to be messing around with bidding wars.

  4. Property tax on a 620k montclair home is 15k. If your household income is 150k, you have 100k left over after the state and feds get done with you. 15% of that 100k goes to property taxes. That leaves just 13 k for mortgage payments, insurance, sewer and water and upkeep. That property tax is a big bite.

  5. Hey Chris where do you come up with the 13k number? Is there a 28% of take home pay on housing rule that no one told me?

  6. Real estate is currently being stimulated by 1.2 trillion dollars of government Mortgage Backed Security (MBS) purchasing which is artificially reducing interest rates most likely by 1%. This is slated to end in March. The $6,500-$8,000 tax credit is slated to end in April. This artificial floor in housing prices is about to be removed.
    Expect a slight rebound or leveling off in home prices over the next few months. Then around July 23rd, when May’s Case-Shiller report (first report without housing stimulus) is released, you’ll know if we are near bottom. FYI, From December 2008, through December 2009, home prices in the NY Metro dropped 6.3%. The recent increase in sales activity is seasonal. To buy now is just plain stupid. First, housing prices will not rebound quickly or at all in the next few years. Second, a lower home price is better than a higher interest rate because you can always refinance when interest rates lower again. You will not get back the lost equity ever.
    But go on and trust a website that receives a decent chunk of its revenue from realtors.

  7. Picking bottoms and tops are usually exercises in futility since you don’t know until it is over as stated above. A few anecdotes about increased traffic in a season where that normally happens do not make a trend. You need to look at data on a larger time frame. Given the standstill that occurred last year at this time, realtors should be able to point to year over year data and say they are doing well, but only on a relative basis. Take a look at the horrendous new home sales from yesterday. I don’t think this thing is done. Remember that after the last bubble burst in the late 80s, house prices fell for 7 years. We are only in year 3.
    I agree with you stu, but I don’t think we even have to wait until June, the turndown is already starting. The homebuyer tax credit effect is burning out.
    I hope these links to charts via CalculatedRisk work. New Home Sales are not at a bottom:
    New against Existing Home Sales:https://4.bp.blogspot.com/_pMscxxELHEg/S13OnIjk–I/AAAAAAAAHUs/YG2i8Xxyvyg/s1600-h/EHSGapDec2009.jpg
    Loan Performance House Price index through Dec: https://2.bp.blogspot.com/_pMscxxELHEg/S31vlr2ALjI/AAAAAAAAHiM/shWlfFiJyp4/s1600-h/CorelogicHPIDec2009.jpg
    Along with an expectation of falling prices, the tax burden and the uncertainty of tax increases are what has put my house search in Montclair on hold. I do plan to buy eventually, but I don’t want to try to catch a falling knife.

  8. New Jersey is 10th from the top in foreclosures, but “Montclair is surviving well”? Yeah…right. Is this post meant to be information for readers, or just free advertising for Realtors?

  9. I agreed with Julie that high end homes are moving briskly — but only in Montclair. With many more homes on the market, Bloomfield has had half the sales at half the selling prices. It’s much more of an entry level market.

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