Real Estate in New Jersey
Real Estate in New Jersey
is a very valuable commodity.
Whether you are referring to North NJ, Central NJ or South
NJ; real estate in New Jersey has a tremendous amount of
value. This is if you are interested
in selling or buying.
This is from a recent article from
The Sun Sentinel
Nation's love
affair with McMansions shows signs of waning
By JUNE FLETCHER
The Wall Street Journal
Posted June 16 2006, 11:15 AM EDT
Mickey and Jane Finn put
their five-bedroom, 6,200-square-foot home in Leesburg, Va.,
on the market in April, but already they've cut the price to $899,900 from
$1.1 million. Now, they've decided to put it up for auction.
What's the hurry? Down the street in their leafy subdivision, two
similar-sized houses are also on the market, and around the corner, five
more have for-sale signs. The Finns, who paid $692,000 for the new house in
2002, recently retired and, with their two children grown, they're eager to
move to a place half the size. ``We don't need this big a house anymore _
if we ever did,'' says Mr. Finn, age 63.
The golden age of McMansions may be coming to an end. These oversized homes
_ characterized by sprawling layouts on small lots, and built in
cookie-cutter style by big developers _ fueled much of the housing boom.
But thanks to rising energy and mortgage costs, shrinking families and a
growing number of retirement-age baby boomers set on downsizing, there are
signs of an emerging glut.
Interviews with dozens of real-estate agents, sellers, developers and
housing economists turn up signs across the country. In an affluent Dallas
ZIP Code, where half the houses have four bedrooms or more, home sales fell
31 percent in the first quarter compared with the previous quarter. But
sales rose 23 percent in a nearby ZIP Code where 7 percent of houses have
that many bedrooms. In Santa Fe,
N.M., homes in the
2,000-square-foot range sell within weeks, while larger ones languish for
months, says broker Pat French. In the Boston metro area, sales of homes with
four or more bedrooms were flat in the first quarter from a year earlier;
sales of homes with three bedrooms or fewer rose 14 percent. New Jersey appraiser
Jeffrey Otteau says the inventory level statewide for large, $1 million-plus
houses stands at 13 months, more than twice the state's overall average of
six months.
There is no formal definition of what constitutes a McMansion. (Some would
say it's any home bigger and showier than your own.) One broadly accepted
definition, used for this article, is a house larger than 5,000 square feet
_ about double the national average _ with four or more bedrooms that is
built cheek by jowl with similar houses. Most have been erected since the
mid-1980s, when major developers such as Toll Brothers and K. Hovnanian
Homes began to chase couples who wanted more space _ and luxury _ than they
had when they were kids. These houses often boast grand, two-story
entryways, three-car garages, double-height family rooms and master-bedroom
``suites'' equipped with sitting areas and whirlpool tubs. Developers
market the homes under names such as the Grand Michelangelo, Hemingway and
Hibiscus _ while detractors have dubbed them ``garage mahals,'' ``faux
chateaux'' or ``tract castles.''
The 2003 American Housing Survey, the latest available, found nearly 3.2
million homes in this country with 4,000 square feet of space or more _ the
largest category the group tracks _ up 11 percent since the previous survey
in 2001.
Part of the big-house mania was fueled by speculation as home prices
surged, says housing economist and consultant Thomas Lawler in Vienna, Va.
``Folks bought megasized houses well beyond their needs to increase their
investment in real estate,'' he says.
Now, some boomers in their late 50s are counting on selling their huge
houses to help fund retirement. Yet a number of factors are weighing down
demand. With the rise in home heating and cooling costs, McMansions are
increasingly expensive to maintain. Nationwide, electricity rates have risen
12 percent over the past three years, while the price of natural gas for
heating has risen 43 percent in the same period, according to the U.S.
Energy Information Administration. That means it can cost $5,000 a year or
more to heat and cool a 5,000-square-foot house in a city such as Farmington, Conn.,
according to Connecticut Light & Power Co.
The overall slump in the housing market also is crimping big-home sales.
The volume of newly built homes sold fell 11.2 percent in the first four
months of the year from a year ago, while sales of existing houses fell 5.7
percent, says the National Association of Home Builders and the National
Association of Realtors. Thursday, one of the biggest home builders, KB
Home, cut its earnings outlook for the year, citing declining demand. Bruce
Karatz, chairman and chief executive, said demand has fallen ``largely due
to a sharp reduction of speculative purchases and an oversupply in new and
resale inventory.''
Meantime, the jump in interest rates has put the cost of a big house out of
more people's reach. With 30-year mortgages at 6.2 percent Thursday, a
$700,000 loan costs about $4,300 a month, up from $3,900 when rates were
5.28 percent in June 2003, according to Bankrate.com. ``The young people
coming up don't have the means to absorb these big houses,'' says Mr.
Otteau, the New Jersey
appraiser.
Since February, Kris and Ray Victory have been trying to sell their
five-bedroom house in Brookville,
N.Y., built in 1987 with a
sunken living room and a fireplace in the master-suite wing. The couple
raised three children in the 8,000-square-foot home, but they say younger
families seem turned off by its $1,000-a-month utility bills and $25,000
annual taxes. ``Buyers tell us it's too big,'' says Mrs. Victory, a
45-year-old electrical engineer. The couple recently shaved $200,000 off
the $2.35 million price.
This dynamic could become more acute in coming years. As the nation's 78
million baby boomers, born from 1946 through 1964, become empty-nesters and
hit retirement age, many are already selling their trophy homes and trading
down to smaller models. There are roughly the same number of people in the
next pool of potential buyers, but they're marrying later and often have
smaller families: U.S. Census statistics show that the average household
size in 2005 was 2.57 people _ down from 3.14 in 1970.
Already, the McMansion oversupply is acute in places like Loudoun County, Va.
In the fast-growing area northwest of Washington,
D.C., thousands of hulking,
red-brick colonials sprouted over the past 10 years on quarter-acre lots
that had been carved from farmland and woods. In May, 4,719 houses were for
sale, more than three times the year-earlier level. The number of sales
dropped 39 percent to 484 in the month, and the number of days a home
remained on the market lengthened to 70 from 14. ``Sellers are dying out
there,'' says local real-estate broker Michele Stash.
In one Loudoun subdivision, Tom Green, a 47-year-old airline pilot, put his
five-bedroom house on the market six months ago for $1 million so he and
his wife could downsize to a $592,000 townhouse nearby. But his home had to
compete with 38 others for sale in the neighborhood with four or more
bedrooms. His 5,600-square-foot, five-bedroom house, which he bought new for
$515,000 in 2000, didn't get a nibble for months. Finally, a relocating California family
agreed to buy it if the Greens would leave behind their high-definition TV
and a lifesize Spiderman statue that had been a gift from Mr. Green's
sister _ plus slash the price to $820,000. (They also had to throw in a
cookie jar with ``Biscuit'' _ coincidentally, the name of the buyers' dog _
written on the side).
The Greens complied. The buyers, John Zuccaro and Cindy Fonseca, say they
were emboldened to make their demands when they saw how much the market had
cooled since April 2005, when they sold their three-bedroom house in Torrance, Calif.,
for its full asking price of $759,000 in only five days.
Though huge houses continue to be built across the country, many architects
and builders appear to be responding to shrinking demand for McMansions. In
the latest quarterly survey by the American Institute of Architects, 68
percent of the 500 residential architects polled said home sizes are stable
or declining, compared with 58 percent a year ago.
For anti-McMansion activists, who hate to see big homes supplant smaller
``teardowns'' in established neighborhoods, a decline in demand may be good
news. Homeowners in some areas have successfully lobbied for laws designed
to rein in the light-and-view-blocking monsters: Last year, Arlington County, Va.,
limited home footprints to no more than 30 percent of a lot, while Wood-Ridge, N.J.,
recently said homes could take up no more than 55 percent of a lot.
Faced with dwindling demand and a fall in their stock prices, many national
builders are starting to focus more on smaller houses, which often feature
separate dining and family rooms but just two bedrooms. K. Hovnanian Homes,
long known for McMansions, is building such houses under its ``Four
Seasons'' label in nine states. Toll Brothers is creating communities like
Cranbury Brook Villas in Plainsboro, N.J., which has two-bedroom homes
ranging from 1,656 to 1,958 square feet that can be equipped with lofts,
sunrooms and dining-room accent columns (the ``Bayberry'' model starts at
$389,975).
Yet some families have found it hard to downsize. In Phoenix, David and Mary Mumme, both 49,
are selling their 4,938-square-foot house, partly because their oldest son
is heading to college and partly because maintaining the house and yard _
with pool and waterfall _ takes about eight hours a week. They're asking
$1.8 million, about three times what they paid for it six years ago,
because they saw nearby houses sell quickly for about $2 million last year.
But even though the house has 12-foot ceilings, marble countertops and
skylights in the closets, no one has made an offer during the month it's
been on the market.
John and Barbara Fiore, both 54, had to slice $50,000 off their $900,000 price
to move their 5,500-square-foot house in Warwick, N.Y. Ms. Fiore, who has
five grown children, says she worried that no one would want her
six-bedroom home while it sat on the market all last year, because today's
families are smaller. (The eventual buyer was a married doctor with three
young children.) The delay in selling ``was scary,'' says Mrs. Fiore. The
Fiores, who built the house 14 years ago, now live in a three-bedroom house
nearby that's less than half the size. Meanwhile, Mrs. Fiore's parents
recently sold their Warwick
house in a month _ but it's only 2,500 square feet.
And even some young couples who have tried the big-house life are getting
out of it, trading space for higher-quality construction. Last October,
Andrew and Sheri Leppert of Alpharetta,
Ga., both 32, exchanged their
four-bedroom, 2 1/2-bath home for a smaller one that has only three
bedrooms and two baths _ yet, at $450,000, cost 50 percent more. Ms.
Leppert, a homemaker who now has a young child, says she was attracted by
the new house's details _ including beaded-glass windows, wide-plank
flooring and 9-foot-tall doors made of solid wood _ which elevated it in
her mind above the ``Georgia sprawl'' house she was leaving. She and her
husband never used the fourth bedroom of their old house, she says, and she
doesn't miss cleaning the extra space. ``Taking care of it became a
burden,'' she says.
Tip #23
Home Buying Tip, Big Ticket Items:
Before you buy a home
you should avoid buying any big ticket items. When this is found out during the
credit process or reporting it can make mortgage banks nervous.
Even if you will be able to get a loan, you might not be able to get
the best available interest rate.
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Tip #24
Home Selling Tip, Listing Right:
A common mistake when people list their house (especially in a
buyers’ market) is list the house at a high price that they
don’t anticipate to sell it at.
They figure that if they get it then GREAT but if not they can
always lower the price.
This is not a good practice because what mostly happens is it will
stay on the market for a while and make potential home buyers nervous because
it’s been on the market so long.
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