Will Housing Prices go down in New Jersey?

Question

Will Housing Prices go down in New Jersey?

Answer 1

Right now more and more houses were putting on the market, compare to last year the inventory is almost double. So far the demand is about the same though. The time to sell all the inventroy is about 5 to 6 months based on the current pace.

The psychological factor is changing, people are expecting the price drop.

The real estate boom in the last few years was substained by investors. Many people get out their equity to buy investment properties using variable rate mortgage.

There are two ways to make money in Real Estate.

The capital gain/price appreciation and the rental income.

When the market is booming people can invest and ignore the Cash Flow, it doesn't matter whether the rental cover the mortgage or not because the appreciation is the major part of gain. However the negative cash flow which is the case right now will create tension on those investors and force them to sell.

So at some point when most sellers realise that it is hard to sell and are willing to lower the price, that will create a chain reaction and the market will collapse.

Answer 2

Yeah right......If they do our economy will be in a depression!