I have been doing yet another of my real estate reports for local Northern New Jersey towns.  I normally look at towns along the Midtown Direct Train line of New Jersey transit, otherwise known as the Morristown line.

This time I was taking a look at the Millburn NJ Luxury Real Estate market.  I posted lots of great statistics about the last 2 years as a comparison over at the NJ Real Estate Blog.

What I was able to come up with is that there are a number of home owners who are holding out for higher prices in Millburn New Jersey.  That is not surprising but the numbers seem higher in Millburn than in other local towns.  In my mind this sets Millburn up for a possible round of capitulation, meaning that if the spring market of 2009 is not better than the spring and summer market of 2008, or should I say, if the financial crisis which we went though in September and is still going on causes lots of these people in Millburn to loose jobs ...  then we likely would see a number of these hold outs give up as neighbors discount their homes in order to get them to sell.

You see, if you want 2 million for your home, and the average price in your neighborhood for a similar house to yours is 1.8 million it is highly unlikely you will convince a buyer to pay 2 million for yours.  Even if you could, and appraiser is going to come along and tell the mortgage bank well it is only worth 1.8 million and that will be all the Mortage company will be willing to lend on.  So your choice will be to reduce to the 1.8 million or loose your buyer.

So your holding out for 2 million in Millburn NJ and the average price has been 1.8 million, but now the spring market comes along and some of your neighbors decide they have to get their homes sold, so they reduce their prices, that hypothetically pushes the price down to 1.7 million with the appearance that prices could go lower.  What do you do, wait for higher prices which might be 5 years away, or cut your losses?