Rental Property Investor · Queens, NY · Member since 2018 · 99 posts · 70 votes
Hi BPers, after waking up from the megamillion lottery dream. It's time to get back to RE investing. I've been following the house prices in Essex County, Union County, and Middlesex County. I see the prices have dropped anywhere from 5% to 20%. I know part of it was an increase of interest rate, but I think it is more of a market speculation where most people believe the market is inflated at the moment and wait for an adjustment. If it were a few sellers who hope to cash in their properties as quickly as possible, then it would be certain properties are dropping prices, but I see a house price drop in general in these counties. Any RE agents who specialize in those county care to share your thoughts?
Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
7y
YES, prices are dropping here in Hunterdon County. It used to be that only the 400K+ houses sat on the market for months but now I see that more modestly priced homes are sitting longer and houses are coming on the market for lower asking prices than we would have seen a year or two ago. We sold two houses last year for full asking price in 3 and 5 days. We just put our latest flip house under contract after a measly six showings in two weeks and are selling it for 35K less than listing price. Granted, that house had some challenging features but we were surprised by the lack of traffic. We also sold our own home earlier this year, took three weeks to go under contract, then fell through four weeks later (on the buyer's end), sat on the market for another three weeks and we went under contract for 45K less than original asking price. This is definitely making us shift our strategy. For one thing, we are looking to move into commercial buy and hold. We also have to be tighter with the numbers on our flips, has to be an even better deal for us to carry the risk moving forward. I think it is related to the high property taxes, high cost of living in NJ in general, the new SALT law and creeping mortgage interest rates...those who don't buy with big profit margins built in will be challenged to make money when they exit the deal.
Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
7y
YES, prices are dropping here in Hunterdon County. It used to be that only the 400K+ houses sat on the market for months but now I see that more modestly priced homes are sitting longer and houses are coming on the market for lower asking prices than we would have seen a year or two ago. We sold two houses last year for full asking price in 3 and 5 days. We just put our latest flip house under contract after a measly six showings in two weeks and are selling it for 35K less than listing price. Granted, that house had some challenging features but we were surprised by the lack of traffic. We also sold our own home earlier this year, took three weeks to go under contract, then fell through four weeks later (on the buyer's end), sat on the market for another three weeks and we went under contract for 45K less than original asking price. This is definitely making us shift our strategy. For one thing, we are looking to move into commercial buy and hold. We also have to be tighter with the numbers on our flips, has to be an even better deal for us to carry the risk moving forward. I think it is related to the high property taxes, high cost of living in NJ in general, the new SALT law and creeping mortgage interest rates...those who don't buy with big profit margins built in will be challenged to make money when they exit the deal.
YES, prices are dropping here in Hunterdon County. It used to be that only the 400K+ houses sat on the market for months but now I see that more modestly priced homes are sitting longer and houses are coming on the market for lower asking prices than we would have seen a year or two ago. We sold two houses last year for full asking price in 3 and 5 days. We just put our latest flip house under contract after a measly six showings in two weeks and are selling it for 35K less than listing price. Granted, that house had some challenging features but we were surprised by the lack of traffic. We also sold our own home earlier this year, took three weeks to go under contract, then fell through four weeks later (on the buyer's end), sat on the market for another three weeks and we went under contract for 45K less than original asking price. This is definitely making us shift our strategy. For one thing, we are looking to move into commercial buy and hold. We also have to be tighter with the numbers on our flips, has to be an even better deal for us to carry the risk moving forward. I think it is related to the high property taxes, high cost of living in NJ in general, the new SALT law and creeping mortgage interest rates...those who don't buy with big profit margins built in will be challenged to make money when they exit the deal.
Wow, thanks for the insight Jennifer, getting an actual scenario on the numbers really help understand which side of the wind is blowing. I couldn't agree more on the property tax is really a deal breaker in many cases. When you mention your looking into commercial buy and hold, do you mean multifamily or buildings with 5+ units?
Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
7y
Either large multifamily (10+ units) with totally outsourced property mgmt. or mixed use business/residential or straight commercial (strip mall, etc). Also considering self-storage if the right deal were to come along. Very uninterested in being a landlord so looking for something big enough that we can hand off mgmt. to someone else.
Either large multifamily (10+ units) with totally outsourced property mgmt. or mixed use business/residential or straight commercial (strip mall, etc). Also considering self-storage if the right deal were to come along. Very uninterested in being a landlord so looking for something big enough that we can hand off mgmt. to someone else.
Yes, that definitely is a less headache buy and hold strategy. Having one big building is more manageable than 10 scattered SFH. I have also looked online at some commercial apartment buildings out of state, some seemed pretty great.
Yes, prices have softened, but being based in Union county taxes vary greatly. Right now on mls there is a house in Mountainside- 349k ask with taxes of 7,600 There is a listing in Roselle 124k with taxes 8,100 There are ways to find good deals, even in a declining market, you just need to be thorough with the research.
Northern NJ · Member since 2018 · 128 posts · 39 votes
7y
I know all real estate is local so take it for what is worth.
I am in Baltimore at courthouse auction currently and already heard from 2 associates that things are softening on prices, sales and rentals (all fronts). This is in addition to the search e-mail agents in Northern NJ which are almost always coming with price change on lower side.
Real Estate Broker · North Caldwell, NJ · Member since 2016 · 51 posts · 15 votes
7y
My clients are seeing many more price reduction alerts than new listing alerts in the emails they receive due to rates rising and seasonal timing. The fall/winter seasons are when more aggressive deals are done as sellers are more serious about getting out, you can set your watch to this behavior every year. To a lesser extent, you're seeing more fixer uppers than move in ready homes that failed to sell in the spring/summer-these individuals have finally gotten their wake up call and made drastic price cuts. Finally, back to the sellers being more serious, the buyers for their homes often have to sell as well, and want to drop that home sale contingency ASAP....thus resulting in further price reductions in the market on their own homes.
I serve Essex and Morris counties. Hope this helps.
Northern NJ · Member since 2018 · 128 posts · 39 votes
7y
Being multiple property owner, I hope this is seasonal activity but I don’t think same seasonal argument was made in last fall/winter/spring to my knowledge.
Rental Property Investor · Rutherford, NJ · Member since 2016 · 116 posts · 91 votes
7y
Tax reform miiiiiiight be playing a role in this as well. SALT deductions are capped at 10k now, which in the NYC area is easily hit by even moderate income folks (relative to the area, would be considered high income most other places in the U.S.). I said miiiiiiight because I have a feeling a lot of people in this area don't understand how much more expensive it got to live here because of "tax cuts".
Rental Property Investor · Rutherford, NJ · Member since 2016 · 116 posts · 91 votes
7y
But as a buy and hold rental investor, I am giddy about prices dropping in the area as should any other long term investors. Finally opportunity is coming back.
But as a buy and hold rental investor, I am giddy about prices dropping in the area as should any other long term investors. Finally opportunity is coming back.
Yeah, but multi family in certain area is still very competitive. More due diligence and numbers crunching are needed to execute a deal.
I've seen a slowdown in action as well, in Middlesex County. There was a lot of activity during the summer (lots of lookers, but lots of buyers as well, looking to move before school starts). Now, not as much, seems like the action now is driven by more serious buyers. I've had to lower my ask on a flip house by 10k (buyer in the summer flaked on me) - thankfully found a new buyer, closing next month.