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Should I stay or should I go now?

Update on 6/18/2011 – Well, what the heck do I know.  The house referenced below at 454 Fairway Road ultimately did sell for $1,100,000 on May 5th, 2010.  But I stand by my other comments below.  Oh, and we finally did purchase a house.  We move in on July 7th.
I developed more than a passing interest in the real estate market during the terrific 2+ years I spent at Network Communications, Inc (NCI), working on market leading brands The Real Estate Book and Unique HomesTREB, as The Real Estate Book is affectionately known, gets virtually all of its revenue from individual Realtors reaching into their own pockets to market their listings.  But when the # of listings, # of transactions and average sales price all head south, livelihoods dependent on these numbers are going to be hit hard. While we sensed what was coming, this wasn’t the driving factor in my decision to leave NCI.  Rather, Karen and I were seeking a different quality of life (better) and schools (much better), both of which we found after settling in Ridgewood, NJ.
First, a little bit of background about Ridgewood:

Ridgewood is a village in Bergen County, New Jersey. As of the United States 2000 Census, the village population was 24,936. The village is an upper-middle class enclave in Northwest Bergen County. The Village of Ridgewood was created in 1894. According to Wikipedia, the first home was built in Ridgewood in 1700.

Unless you have had your head in the sand for the past few years, you know that the real estate market has taken it on the chin, particularly in California, Florida and Nevada. However, it is one thing to understand on an intellectual level what the national trends are.  It is another entirely to look at the impact on a single community.

Ridgewood Sales Prices – ’96 – ’09

Based on the # of transactions, average sales price and an assumed average 5% commission, the gross commission generated in Ridgewood more than doubled between 1999 and 2005 to $17.6M.  Though the final-final #s aren’t in, it looks like gross commissions will be lower than a decade earlier in 1999 with fewer than half as many transactions. I think it looks like the # will come in at roughly $7M, give or take.  The table above and the graphs below tell the story.

Village of Ridgewood Residential Real Estate – Sales Price and Volume Trends

I started looking at all of this two nights ago as I tried to make sense of a home that had come on the market that day at 454 Fairway Road, Ridgewood, NJ. This is a pretty good location (^3).  It is big enough that it would be comfortable for my family of five. Built in 1965, however, it has none of the charm or curb appeal of the many older homes in town.

For background, my family and I have been living as tenants since we moved to Ridgewood in August ’08.  From a purely economic standpoint, this has turned out to have been a very good thing given the decline in housing price.  But we had to move at the end of our first year here and who knows what the situation will be when our current lease is up in August.  We don’t talk about it much, but we all miss the stability of having a home that is ours, that we know (or at least believe) we will be in for years to come.   So we are actively looking at the “new” inventory that has started to come onto the market in the past couple of weeks.  (I use the scare quotes because some of this “new” inventory is suspiciously similar to properties we looked at last year, though 454 Fairway Road wasn’t one of them.)

454 Fairway Road, Ridgewood, NJ 07450 – Limited Curb Appeal

Asking price: $1.149M.  Value: Don’t know. We’ll see what it eventually sells for, if it sells at all.  Zillow’s Zestimate for this property is $812K.  Even for Zillow that is a big discrepancy.  Given that the house next door sold in 2009 for $800K, I’m thinking that this house was mis-priced by a wide margin.

454 Fairway Road, Ridgewood, NJ 07450 – Comparison to Nearby Properties (Estimated Values by Zillow.com)

So, we’ll go take a look at this house, like we have done with so many other properties. I’ve got my pen ready to sign.  I just don’t know yet if I’ll be signing a contract to purchase or another lease.  Stay tuned…