Country Classics in Hillsborough, New Jersey, is a very popular development that has been building since 1991.  When it is finished several years from now, it will have about 800 homes, mostly two-story with full basements and two- or three-car garages mostly on lots less than half an acre.

Country Classics has not totally escaped the real estate troubles of the past two years.  Looking at price trends over the past five years we see the following for "resales" (not new by the builder, who since 2006 is building again and competing with his former customers):

2004     10 sold and closed     Median sale price: $603,750 

2005     11 sold and closed      Median sale price: $686,000

2006     11 sold and closed      Median sale price: $715,050

2007     12 sold and closed     Median sale price: $680,000

2008      9 sold and closed     Median sale price: $659,000

In this development there was a decline of 4.9% in median price from 2006 to 2007, according to the sales reported in the Garden State Multiple Listing Service (GSMLS).  From 2007 to 2008 there was a decline of 3.09% in median sale price of resales.  Part of this decline may be attributed to the competition from the builder, who is vigorously marketing, including finished basements occasionally in his base price.  Right now, his base price is $699,900.

 What is the point to all this?  Value increases (and decreases) all come down to individual homes, and in this development some floor plans have more appeal than others.  Usually, the bigger homes garner more attention as well as more money.  Certain lots - not always the largest - have more attractiveness than others.  Some amenities are more appealing than others.  But the bottom line really is that sellers in developments where the builder is still building, really shouldn't sell unless it suits their own time frame and lifestyle. 

 But isn't that what owning a home should be about anyway?  Don't try to time the market on the basis of a guru's recommendation.  Suit your needs and lifestyle.

For more information on Country Classics, go to:http://tinyurl.com/b2bl3c
.

Since the homes policy announcement of last week, a few people, even Realtors®, are looking at the first-time buyer provision with disappointment.  Apparently, they need to know what the definition of a first-time home buyer is.

According to the provisions announced, a first-time buyer is one who has not owned a primary residence for three years.

Isn't that better than what most assumed?  You betcha.  If you sold your home in 2005, knowing that the market was going to tank/crater/crash and you opted to rent, you could very well derive some benefit from buying now.  You could in fact be eligible for an $8000 tax credit - not a deduction, but a credit.  Credits are direct dollar-for-dollar offsets against taxes.  Your federal taxes should demonstrate clearly that you haven't owned a home for three years.  Go for it!

Doesn't that feel better now?

The President today announced his plan to rescue homeowners in mortgage trouble.  Those who criticized him two weeks ago for not having a plan are now criticizing him for the plan he has.  As Kurt Vonnegut wrote in Slaughterhouse Five - "and so it goes." 

However, I'm more concerned by the continuing criticism by those of us who have been paying our mortgages (at least semi-regularly) that those bad people should not be "bailed out."  It reminds me of a Russian fairy-tale that is probably centuries old.

Russian peasants have a tradition of being jealous of their neighbors' good fortune.  Against that background,  a peasant finds and releases from a desperate situation a wood sprite.  The sprite tells the peasant that he, the sprite, will grant any wish the peasant has.  However, he will give double to the peasant's neighbor, whether it be gold or whatever.  The peasant thinks for a moment and then says "poke out one of my eyes."  So, the peasant loses one eye, but his neighbor is blinded.  What a triumph!

Those who are not having difficulty paying our respective mortgages might think that our neighbors who "bought too much house" deserve to be foreclosed on.  But if our neighbor is foreclosed on, the home will become vacant and the house may very well deteriorate and its value decrease.  Imagine, if you will, that you own a house worth $500,000, and your neighbor's house was worth $500,000, but couldn't be sold for more than $400,000 after a lending institution foreclosed.  And imagine as well that your employer tells you that they like you so much that they are going to transfer you to East Japip.  When the appraiser comes to call, what do you think your home will be valued at?  $500,000?   $400,000?

Do you really want the value of your home to be tied to your "matter of principle?"  Wouldn't you really be willing to pay taxes to "bail out" your neighbor (so long as the amount you paid was less than $100,000)?  Think about it.  Really, poke out one eye so your neighbor could be blind?

And the "moral hazard" issue (rewarding the bad behavior of defaulting on one's mortgage) is one which is not in your best interest when it costs you $100,000, is it?  I can feel very caring about my neighbor when such caring saves me $100k.  How about you?