Housing report from New Jersey via Otteau Appraisal Group
SPRING MARKET STALLS EARLY
The New Jersey housing market took a sharp turn for the worse in April as contract-sales activity declined 11% from the prior month and ran 20% below the April 2005 level. At the same time, the inventory of unsold homes on the market increased by nearly 6,000 homes in April and now stands 71% higher than a year ago. That this deterioration comes in the midst of the prime spring selling season when home sales would normally be accelerating provides solid confirmation that the transition to a buyer-controlled market is now complete.
Different from one year ago when buyers were competing with each other by increasing their offering prices, it is now the sellers who find themselves in a scramble to gain the interest of buyers. In most cases, that will require a reduction in asking price to recapture the lost sense-of-urgency which dissipated once inventory increased and home prices ceased their upward spiral.
In examining the market from the perspective of price levels, there are significant disparities. The unsold inventory of homes on the market presently accounts for a 7-month supply (up from 3-months one year ago). This supply is however less for lower priced homes as demonstrated in the table at right (6-months below $600k, 10-months between $600k-$1-million, and 14-months above $1-million). The weakness in the market in excess of $1-million is likely to worsen in coming years due to a combination of economic and demographic trends which will further disadvantage the luxury home market in New Jersey.
Homebuilding industry report: "Brutal"
* Homebuilder Standard Pacific recently reported that its gross orders fell 22 percent from a year ago, and its shares dipped to a new year low after the company announced it would cut its earnings guidance amid lower new home orders, media reports said.
* Technical Olympic USA Inc., a homebuilder operating in 10 states, today said it expects combined sales orders in the second quarter to be down 25 percent to 40 percent from the second quarter last year, according to reports.
* "What the industry is going through appears to be much more brutal than most had anticipated even just a few short months ago," wrote AG Edwards analyst Gregory Gieber, according to the Associated Press. "Last year, our view was that it would be a soft landing, but as 2006 started to roll forward, our concerns grew and we abandoned the soft-landing view."
Janis Mara, Inman News |
