The State of Affairs

Well, it’s been almost 5 months since we sold our house, and the market really isn’t telling us to hurry up and do something. Luckily, my wife has been pretty happy so far hunkered down in this apartment for the time being, since her parents are so close. I too have really not missed much of the house. Sure, I miss my garage and my tools, but my thorough belief that what we are doing right now is going to pay off exponentially, and knowing it will enable me to be able to spend a lot more time in the garage down the road, has made this somewhat painless for me. In fact, the day we sold the house I felt so relieved. Selling our house and finding a new one are two seperate things. So far, the decision seems to be the right one. My realtor says the house is worth 50K less than it did 5 months ago. Thank you tax credit, lol.

So, besides working, I’m spending a lot of time following the market, specifically in a few key spots. I have found the following sites to be useful, and I read them everyday.

1) patrick.net – this site is Cali based, but it really keeps me balanced. When the entire populace is drunk on homeownership because it’s been beaten into us for years, this site helps me avoid the social stigma and focus on the math. Plus, they aggregate a ton of articles daily that are market related.

2) njrereport.com – this is a blog about NJ housing, wiht most of it’s readers in the bloomfield area I think. Most of them seem to be savvy, many are in the market or work in the business, and they tend to be pretty short the market obviously. But I have learned a lot reading this every morning.

3) I just picked up on Reggie Middleton and his website. From what I have read so far, I like his analysis. I also check out zerohedge.com often as well, but it’s not really focused on housing.

From these sources, I feel very confident that the worst (or best, depending on where u stand) is yet to come, and I think the longer we can prolong our purchase decision, the better off we will be. I scan listings on zillow.com probably once every two weeks, and try to focus on the closed houses. Most of them are shorts and REO, so it’s tough to get any photos, and trusting the MLS data is like believing a used car salesman when he tells ya the breaks were done last week.

In the end, I’m finally putting my Ivy League economics degree to work, and every bit of info that is meaningful suggests that the market isn’t just going to go down, it has to go down and go down hard. Right now, sales are dead. We’re in this limbo period where existing bagholders who are underwater or just late to the game are slapping signs on there lawn with ‘07 prices, hoping some young couple will come along and assume the position. But there is no one to assume the position. The NAR data will say sales were up 4% this past month, which is laughable. Sure, investors who are buying bundles of homes under the 270K threshold and flipping them quickly are artificially inflating this metric. But in reality, the market is beyond dead right now. There is such a tremendous gap between sellers and true price discovery right now, I’m enthralled at what the future will hold the next few months. I’m also curious to see as these homes are eventually unwound and more tax appeals are won, what is that going to do to the already stretched local budgets. This will be the new normal for years now, layoffs of public workers and emergency funds, magic accounting to save jobs as the taxpayer/union battles go on and on.

Should be interesting.