Home prices slow, but continue to show gains

Posted in Economics, Housing Recovery, National Real Estate | 154 Comments

From Bloomberg:

Home Prices in 20 U.S. Cities Rose in June at a Slower Pace

Home prices in 20 U.S. cities rose at a slower pace in the year ended in June as declining affordability and weak wage gains kept appreciation in check.

The S&P/Case-Shiller index of property values increased 8.1 percent from June 2013, the smallest 12-month gain since January 2013, the group reported today in New York.

Price gains are slowing as more houses are coming up for sale and investors retreat to the sidelines. That, combined with an improving job market, could put homeownership within reach of more Americans grappling with disappointing wage growth and strict lending rules.

“We’re seeing more inventories coming on line, which is putting downward pressure on prices,” Anika Khan, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “In general, we have seen prices rise at a faster pace than the fundamentals would call for. There’s a normalization happening.”

The median forecast of 27 economists surveyed by Bloomberg projected an 8.3 percent gain in the 12 months ended in June. Estimates ranged from 7.7 percent to 9 percent.

Another report confirmed price gains are decelerating. Property values rose 0.8 percent in the second quarter from the previous three months after increasing 1.3 percent at the start of the year, according to figures from the Federal Housing Finance Agency.

Don’t blame it on the Boomers, blame it on Gen X

Posted in Demographics, Economics, Employment, Housing Recovery, Risky Lending | 100 Comments

From HousingWire:

Generation X housing woes impact entire mortgage market

Generation X, people 35 to 49, got hit the hardest by the financial crisis and as a negative side effect are now prohibiting the rest of the market from making any progress.

Generation X homeowners are far more likely to be underwater on their mortgage than millennial and baby boomer homeowners, according to the second quarter Zillow Negative Equity Report.

As a whole, the national negative equity rate dropped to 17% in the second quarter, with more than 8.7 million homeowners with a mortgage owing more than their home was worth. This is expected to continue to drop, falling to 14.9% by the second quarter of 2015.

“On the surface, the housing recession did not overtly impact millennials’ housing wealth to the degree it did generation X and the baby boomers, as most millennials were likely too young to have purchased a home during the bubble years,” said Zillow Chief Economist Stan Humphries.

“But as this huge generation begins to consider buying homes, they’re entering a market still very much in recovery and far from anyone’s definition of normal. Because so many homes are stuck in negative equity or are effectively underwater, the inventory of homes for sale is severely constrained, leading to more competition for those that are available,” he continued.

To put it in perspective, approximately 42.6% of generation X homeowners are underwater on their mortgage, compared to 15.3% of millennial homeowners (20-34 years old) and 31.1% of baby boomers (50-64 years old).

The fed hopes that the housing market recovery would accelerate once employment growth revived and younger adults were able to get jobs.

But until that happens, the least expensive homes that millennials are more likely to buy are mostly underwater. Among all homes with a mortgage, 28.2% valued within the bottom third of home values were underwater in the second quarter, compared to 15.8% of homes in the middle tier and 9.2% in the top tier.

And then Baby Boomers who are trying to move out are also stuck since they are unable to find move up buyers for their homes.

But will the banks pay up?

Posted in Foreclosures, New Jersey Real Estate | 88 Comments

From the Star Ledger:

N.J. law would levy hefty fines against abandoned homes, absentee creditors

At one time, the opulent McMansion at the corner of Greentree Road and Lamson Lane in Washington Township was the definition of a dream home. High ceilings anchored by a crystal chandellier in the foyer, a wrought-iron and monogrammed gate that opens to a three-car garage, an expansive tiled patio surrounding an elevated, in-ground pool, an industrial-grade outdoor kitchen — the list of its amenities goes on and on.

But now, scattered papers, broken toys and trash lay beneath the chandelier. At least a dozen piles of rotting trash are scattered throughout the backyard. The letters M-O-L-D are drawn vertically alongside the double front doors where a note from FedEx is stuck, indicating an October 2013 package went undelivered.

While the Lamson Lane home is a particularly dramatic example, vacant and overgrown properties pose a problem to municipalities throughout the state, and Assemblyman Paul Moriarty (D-4 of Washington Township) hopes his newest bill-turned-law will help get them cleaned up.

The bill, which was signed into law last Friday, gives towns the ability to go after banks that own problem properties where it matters most — their pocket books. It allows municipalities to charge hefty fines to creditors that own properties in violation of the township’s code, a minimum of $1,500 a day for in-state creditors and $2,500 a day for out-of-state creditors.

It also requires those out-of-state creditors to designate a party located within New Jersey to handle maintenance of any property it forecloses on.

“It’s just a paper asset in a portfolio to [creditors],” said Moriarty as he observed the damaged Lamson Lane home last week. “But to the people who live here, it’s an eyesore that’s affecting their property values, an eyesore in their neighborhoods.”

Many neighbors near those homes are concerned not only with the physical appearance of neglect, but with insects and diseases incubating in stagnant pools, animals that take over abandoned properties and criminals who may seek out the homes for squatting or scrapping.

But when Donovan attempts to track down the property’s owner, she’s often led on a wild goose chase that ends with financial middle men refusing to disclose the true identity of the creditor.

“I might have a list of five to six companies that I have called and hope one of them will take responsibility for the property, and nobody does,” said Donovan, who added New Jersey is one of only a few states that do not require the party that pays taxes on a property to reveal the bank that’s putting up the funds.

Going Long Jersey

Posted in Demographics, Housing Recovery, NYC, New Development | 98 Comments

From the NYT:

Life After Brooklyn

By many measures, Jeff Huston and his wife, Lisa Medvedik-Huston, arrived late to Williamsburg, Brooklyn. They weren’t among the first waves of artists and hipsters in the early-to-mid ’90s to cross the East River in search of cheaper, grittier confines. When they rented a spacious, duplex loft two blocks from the Bedford Avenue subway stop in 2007, they found a safe neighborhood already dotted with clothing boutiques and wine shops. The height of the real estate boom was approaching, and condos were rising along both the waterfront and McCarren Park.

Yet Brooklyn was still emerging from its postwar slump, and the borough felt new to many, including the young couple. It was five years before the first episode of “Girls” aired on HBO. The concerts that excited the neighborhood were held at an unused city pool, not a world-class arena christened by Jay Z. And real estate investors eager to make all-cash deals were still fixated on Manhattan.

Over the past several years the couple witnessed the much-bemoaned arrival of banker types, chain stores and tourists. Brooklyn has become a global brand.

And last year, when they were ready to buy, the couple quickly realized they had been priced out. “I can’t tell you how many listings said, ‘cash only,’ ” said Mr. Huston, whose real estate search included everything from $500,000 apartments to $900,000 fixer-upper rowhouses and took him from Williamsburg to Bedford-Stuyvesant. “That was a wake-up call.”

And so the Hustons bid farewell to Brooklyn. In October, they spent $550,000 on a 2,000-square-foot loft in a converted suitcase factory in Jersey City Heights, a section of Jersey City that overlooks Hoboken. “We weren’t sure there was anyone like us in the neighborhood,” he said. Then a Brooklyn-style coffee shop arrived. “The line down the street was all people like us. We could have been in Williamsburg. It was all, like, expats.”

July home sales at 10 month high

Posted in Economics, Housing Recovery, National Real Estate | 108 Comments

From Forbes:

July Existing Home Sales Hit Highest Pace Of 2014

Sales of previously-owned homes in July rose for the fourth straight month, hitting their highest pace in 2014, according to data released Tuesday by the National Association of Realtors.

Sales of existing-homes–which include single-family homes, townhomes, condominiums and co-ops–climbed 2.4% to an annual (seasonally adjusted) pace of 5.15 million in July. That tops June’s downwardly revised annual (seasonally adjusted) pace of 5.03 million and is the highest rate in nine months.

July’s numbers are good news for housing after a sluggish start this year, when the market was weighed down by winter storms, underwater mortgages, tight inventory, and rising mortgage rates. However, the numbers can’t match housing’s 2013 hot streak: last month’s pace was 4.3% below the July 2013 (last year’s peak), when the pace stood at 5.38 million units.

Still, the slowed pace of price gains is helping to normalize the market. And as housing prices rise, more people put their homes on the market, easing inventory levels. “The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market,” said Lawrence Yun, NAR chief economist. “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise.”

Existing-home sales data is an important bellwether of the housing market, since the vast majority of homes are resales rather than new construction. At the end of July there were 2.37 million existing homes available for sale, a 5.5-month supply at the current sales pace. (A six-month supply is considered a healthy market.) Unsold inventory is 5.8% higher than a year ago.

For now, home prices are rising at a slower rate than last year’s breakneck pace. In July the median price of an existing-home was $222,900, 4.9% over the median price one year earlier. Year-over-year, home prices have now risen for 29 consecutive months.

Sales pace and price level varied widely by region in July. In the Northeast, the pace stayed flat from June to July but was 9.9% below the rate one year earlier. The median price in this region was $273,600 in July, 2.4% above the price in July 2013.

Distressed homes (foreclosures and short sales) accounted for just 9% of home sales in July, down from 15% one year earlier. That marks the first time the market share of distressed properties has dropped to single-digits since NAR started tracking them in October 2008.

The share of first-time buyers in the housing market rose slightly in July (for the second straight month) to 29%, but remains historically low.

Distressed sales continue decline in June

Posted in Economics, Housing Recovery, Risky Lending | 136 Comments

From CoreLogic:

Distressed Sales Accounted for Just 11 Percent of Total Home Sales in June

Distressed sales (REO and short sales) accounted for 11.4 percent of total home sales in June, the lowest share since December 2007 and a strong improvement from the same time a year ago when this category made up 15.8 percent of total sales. Within this category, REO sales made up 7.2 percent of total home sales, and short sales made up 4.2 percent of total sales in June. At its peak, the distressed sales share totaled 32.5 percent of all sales in January 2009, with REO sales making up 28 percent of that share. The more recent shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount compared to healthy sales than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0-percent distressed sales share, but the pre-crisis share of distressed sales was traditionally about 2 percent.

Michigan had the largest share of distressed sales of any state at 27 percent[1] in June, followed by Illinois (24.1 percent), Florida (23.6 percent), Nevada (22.7 percent) and Georgia (20.7 percent). California experienced a 14.6-percentage point drop in the distressed sales share, the largest of any state. Of the largest 25 Core Based Statistical Areas (CBSAs) based on population, Chicago-Naperville-Arlington Heights, Ill. had the largest share of distressed sales at 27.4 percent, followed by Miami-Miami Beach-Kendall, Fla. (26.4 percent), Orlando-Kissimmee-Sanford, Fla. (24.8 percent), Tampa-St. Petersburg-Clearwater, Fla. (24.6 percent) and Las Vegas-Henderson-Paradise, Nev. (23.9 percent). Sacramento-Roseville-Arden-Arcade, Calif. had the largest drop in its distressed share, falling by 17.1 percentage points from 33.1 percent in June 2013 to 16.1 percent in June 2014.


Posted in National Real Estate, New Jersey Real Estate, Politics | 90 Comments

From the Star Ledger:

Business leaders pushing Meadowlands casino plans as Atlantic City casinos close

Business and community leaders huddled in the Meadowlands this morning to discuss the district’s next big bet: casinos.

With Atlantic City’s gaming industry sputtering, lawmakers are looking to revisit the question of whether to expand casino gaming outside its borders, with the Meadowlands being a likely target.

Last month, the Meadowlands Regional Chamber of Commerce released the results of a survey of 93 northern New Jersey businesses, 76 percent of whom felt that the best place to put a new gambling facility would be the Meadowlands Sport Complex.

Talk of a possible 2015 referendum has the chamber updating its 2011 “vision plan” for the region to include as many as four casino-style gambling facilities.

The expanded plan includes a resort casino district, a so-called “racino” with slot machines at the Meadowlands Racetrack, a convention center and expanded parking to accommodate visitors to the facilities, as well as the long-stalled American Dream Meadowlands project, where construction is expected to return in full swing soon.

“A casino will allow the Meadowlands to draw on an already existing customer base that wants to gamble and be entertained, but is currently driving past us to get to casinos in nearby states,” chamber president Jim Kirkos said before the meeting.

Atlantic City’s gaming revenues have been on a downward trend since 2006, falling from a high of $5.2 billion to $2.8 billion last year. Industry analysts attribute much of that decline to competition from neighboring states that have legalized gambling. Those who support pushing New Jersey gaming northward say it could help recapture some of the revenue bleeding outside state borders.

Another proposal would put a $4.6 billion casino project next to Liberty National Golf Course in Jersey City.

Meanwhile, more out of state competition is looming, with four resort-style casinos expected to be approved in New York state by fall, according to The New York Times.

NJ to Banks: Clean em’ up

Posted in Foreclosures, New Jersey Real Estate, Politics | 97 Comments

From the Courier Post:

Christie signs bill allowing towns to crack down on problem properties

Gov. Chris Christie has signed into law a measure empowering towns and cities to fine banks or creditors that fail to properly maintain vacant properties in foreclosure.

The bill was approved by the New Jersey Legislature in June and signed by Christie on Friday. It authorizes municipalities to pass ordinances regulating the care of vacant properties in foreclosure and permits them to levy fines of up to $2,500 a day for violations that have not been remedied within 30 days of receiving notice.

The new law also allows towns to mandate that banks and other lenders name an in-state representative or entity that would be responsible for the upkeep and maintenance of properties in foreclosure.

Sponsors of the law said it was intended to give towns teeth to address vacant homes that create blight and attract crime.

“Vacant properties are neighborhood eyesores that attract pests and criminal activity and drag down property values,” Assembly Speaker Vincent Prieto, D-32nd of Secaucus, said in a statement. “Municipalities will now be able to take action against creditors who create nuisance situations for neighborhoods and municipalities by failing to maintain vacant properties that are set for foreclosure.”

Philly doing any better? Nah.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 157 Comments

From the Philly Inquirer:

Regional home sales up, but still lag

The real estate market in the eight-county Philadelphia region thawed its way out of a disappointing winter and into a sunnier spring in 2014′s second quarter, but sales still lagged the same period of a more hopeful 2013.

Using data from the Trend Multiple Listing Service, the Berkshire Hathaway Home Services Fox & Roach HomExpert Market Report shows second-quarter sales regionwide running 6.6 percent below the same period in 2013 – 14,795 vs. 15,844.

Year over year, prices were basically flat, the report indicates, with the average price just 0.3 percent higher than in March to June 2013 – $264,842 compared with $264,000.

Median price – half the homes sold for more, half for less – was just 0.5 percent higher, $221,000 in this year’s second quarter vs. $220,000 last year.

Joseph Scott McArdle, a BHHS Fox & Roach agent who focuses on the Chester County market, said the second quarter was “filled with ‘make up for lost time.’ ”

“When the weather finally cooperated, [buyers] seemed to come out in droves,” McArdle said. Among the things he noticed during the second quarter was that “for the first time in seven years, buyers no longer have the fear of continued falling prices.”

Apparently reflecting a more realistic approach by sellers, asking price improved vs. sale price in the second quarter. On average, the data show, sale price was 92 percent to 97 percent of asking price, depending on the number of homes on the market and traditional factors such as location and school district.

The second quarter’s for-sale inventory, 42,014 houses, was about 600 fewer than in the same period last year, the data show – well below normal numbers for the peak spring selling season.

But continuing short supply – which local agents called a major stumbling block to the market’s recovery – resulted in dramatically quicker sales. Average days on market were down 34.5 percent, to 76 days this year from 116 in 2013′s second quarter.

“The recovery, such as it is, remains a highly local phenomenon,” said economist Kevin C. Gillen, senior research consultant at the University of Pennsylvania’s Fels Institute of Government who tracks the area housing market.

“Some segments are racing forward at breakneck speed, while others have been stuck in neutral for several years,” Gillen said. “Until price appreciation and sales activity become more geographically and demographically widespread, we cannot claim the region’s housing market is in full recovery.”

In the second quarter, sales fell in every county but Camden (up 0.6 percent) and Gloucester (up a more solid 4.3 percent), the data show.

Since when is Cliffside Park and Wood-Ridge not Suburbia?

Posted in Housing Recovery, New Development, New Jersey Real Estate | 110 Comments

From the Record:

As housing rebounds, construction pace picks up at 2 developments

In a sign of the housing industry’s rebound, two large North Jersey redevelopment projects — in Wood-Ridge and Cliffside Park — are picking up momentum after being stalled during the real estate downturn.

The steel framework is going up at the Towne Center project in Cliffside Park, and developers Fred Daibes and James Demetrakis of Edgewater now expect the project to open around September 2015.

And at the Wesmont Station redevelopment, on part of the old Curtiss-Wright factory site in Wood-Ridge, Pulte Homes has begun work on a section of 217 town houses, while nearby, land is being cleared for 104 affordable apartments.

The Wood-Ridge and Cliffside Park redevelopments are moving forward at a time when home building — especially multifamily building — is on the rise again in New Jersey, after falling to post-World War II lows in the wake of the recession and housing bust. This year, New Jersey home construction approvals are running at their strongest pace since 2006, about 29 percent ahead of last year’s level.

“You’re seeing a convergence of long-term trends toward more multifamily, transit-oriented residential development and the housing market emerging from the deep recession that the industry was in,” said Christopher Jones, vice president for research at the Regional Plan Association.

“There’s a pent-up demand for housing, and builders are getting into position to meet this demand,” said Ralph Zucker, head of Somerset Development, the master developer at Wesmont Station.

The two projects reflect builders’ interest in North Jersey; Bergen and Hudson counties have accounted for about 30 percent of the home building in the state this year. And multifamily projects like these two currently make up about 60 percent of the construction activity in the state — an unprecedented share at least since World War II.

“It’s a fundamental and dramatic change in the housing market,” said James Hughes, a Rutgers economist. After “the great suburbanization trend from 1950 to 2000,” he said, “the geography of housing development is changing.”

“Living far out in the suburbia and exurbia is giving way to moving back toward the center of the region,” Hughes said.

Millennials, in particular, want a more urban lifestyle, closer to mass transit, Jones and Hughes said.

“They have been raised in the suburbs, and they were happy with that; it was a safe environment,” said Hughes. “But that’s not where they want to live. They don’t want to be stuck in a plain vanilla suburb.”

The slow grind

Posted in Economics, Employment, Foreclosures, New Jersey Real Estate | 30 Comments

From the APP:

NJ’s housing market wades through foreclosures

Waiting for New Jersey’s housing market to pick up some speed? You might want to grab a chair.

A report released Friday provided a mixed bag for the Shore’s home owners – fewer sales, but higher prices in July.

The New Jersey Association of Realtors reported that sales of single-family homes in Monmouth County fell 9.7 percent in July from the same month a year ago. The median price of $420,000 was up 4.7 percent during that time.

Sales in Ocean County fell 15.9 percent. The median price of $275,000 was up 4.2 percent, the Realtors group said.

“As the market sits right now, both buyers and sellers are in a good position,” said Cindy Marsh-Tichy, the association’s president, noting that low interest rates remain low (helping buyers) and prices are rising (helping sellers).

But the prospect for a sharp recovery are dim, mainly because New Jersey has the nation’s highest share of mortgages that either are in foreclosure or are headed that way.

Patrick J. O’Keefe, director of economic research for CohnReznick, found 11.6 percent of mortgages statewide were either in foreclosure or at least 90 days overdue in the second quarter. By comparison, 4.8 percent of percent of mortgages nationwide were in the same category.

NJ unemployment falls, but still lags the nation

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 107 Comments


New Jersey adds 5,700 jobs in July; unemployment rate drops to 6.5 percent

New Jersey employment increased by 5,700 jobs in July, as unemployment fell to 6.5 percent, according to U.S. Bureau of Labor Statistics data.

July estimates found that private-sector employment grew by 8,500 jobs, while public-sector employment fell by 2,800 jobs. It was the fifth month in a row that private-sector employment grew, the BLS reported.

Overall, New Jersey employment measured 3.95 million jobs, the BLS found.

“Since March, private payrolls have grown at a rate nearly equal to the rapid pace seen in the early months of 2012 and 2013,” Charles Steindel, chief economist for the New Jersey Department of the Treasury, said in a prepared statement. “These gains show that we are putting last winter into the rear view mirror. Meanwhile, the unemployment rate continues to fall and resident employment continues to increase.”

New Jersey has gained 149,400 jobs since February 2010, “which was the recessionary low point for private sector employment jobs in New Jersey,” according to the BLS.

However, New Jersey Public Policy President Gordon MacInnes pointed out that there was a caveat to the gains.

“While New Jersey’s unemployment rate has been declining and the state has been seeing modest job increases for the past few months, that does not mean all is well with the state’s economy,” he said in a statement. “New Jersey has now recovered just 47 percent of the jobs it lost in the recession, less than half than the nation as a whole, which has recovered 108 percent.”

Go long bulldozers

Posted in Demographics, Economics, Employment, Foreclosures, New Jersey Real Estate | 99 Comments

From NJ Spotlight:


Capital city’s plight made worse by safety concerns, loss of jobs and departure of businesses, overall weakness of New Jersey’s economy

If New Jersey’s political leaders want to study the state’s battered housing market, all they have to do is look out their windows in Trenton.

As most of the nation continues to recover from the Great Recession, real-estate data and analysis firms report housing sales are slowing and foreclosures increasing in the Garden State. But the situation is particularly dire in the state’s capital city.

Around the nation, foreclosures have declined to their lowest level since before the housing bubble burst in 2007, according to RealtyTrac of Irvine, CA, whose data is used by the real-estate industry and government agencies.

But in New Jersey, state court records show 31,500 new foreclosures cases have been filed as of Aug. 1, on track to be at least the third-highest annual total in state history. Sheriff’s sales have hit a four-year peak, and bank repossessions almost doubled in May.

Some towns are doing better, but only with modest recent gains, New Jersey sale prices are still down 22.2 percent from the pre-recession peak, according to CoreLogic, another Irvine, CA, analytics firm. That is worse than all but four other states, the firm found.

Trenton could be the poster child for New Jersey’s mix of economic weakness, a troubled housing market and ineffectual political responses.

The 2,473 foreclosure homes in Trenton represent 21.5 percent of the city’s homeowner properties as reported by the U.S. Census as of 2012.

Even a relatively obscure statistic reflects significant trouble. RealtyTrac’s latest numbers show more than twice as many homes in the state capital area are in foreclosure, or have already been seized by banks, than the total number the firm currently lists for sale.

“Think of New York City and its comeback,” Hughes said. “A lot of it has to do with reduction in crime and perception of safety — Trenton is the exact opposite.

“All the Italian restaurants are gone — people told them they didn’t feel safe coming at night — and much of that community has moved to Ewing or Lawrence,” Hughes said.

Even on RealtyTrac, some raw numbers appear even more calamitous in a few other communities, such as Paterson or Newark. But housing sales are up in both those cities on a year-over-year basis, which is preferred by analysts because it avoids seasonal fluctuations. In both cities, median prices are about $150,000-$160,000 and even bank-owned homes average $107,000-$110,000, a smaller gap than the New Jersey average.

In Trenton, the data show sales are down 26 percent from a year ago. So far this year, 19 percent of homes sold in the city have been at sheriff’s sale, by banks after foreclosing, or short sales, in which borrowers are able to walk away from “underwater” mortgages that saddled them with more debt than the current value of the properties. Last year’s figure was 9.9 percent.

Trenton’s median home price is only a bit less than those of Newark and Paterson, but it is heavily weighed down by those 2,473 foreclosure properties. Even before the new surge in foreclosures, Trenton’s homeownership rate for the five-year period ending then was 40.5 percent, compared to 66.2 percent for New Jersey as a whole, according to the Census.

Those foreclosed homes that are being resold in Trenton are going for an average of just $40,000, according to RealtyTrac, and their prices have remained below $50,000 for at least seven months, less than a third of market price.

“That is a very large disparity,” said RealtyTrac Vice President Daren Blomquist, and unusual for its persistence without normal monthly market fluctuations.

Many Trenton homes fit the pattern of places like Detroit, “older properties, smaller properties, close to the city center that are less desirable,” he said. But the large overhang of foreclosed and threatened properties extends into neighboring Ewing, which has 808 of those but just 364 current RealtyTrac sale listings.

No bargains for new buyers

Posted in Demographics, Economics, National Real Estate | 240 Comments

From Bloomberg:

First-Time Buyers Shut Out of Expanding U.S. Home Supply

The four-bedroom house that Ilia Nielsen-Dembe purchased in west Denver earlier this year wasn’t her top choice. The first-time buyer had to settle on a home in a neighborhood with a high crime rate after losing out on bids for five properties in more desirable areas.

“I definitely sacrificed in terms of location,” said Nielsen-Dembe, 33, who lives with her husband and two daughters in the house she bought in April for $184,500. “I had to cross streets that were not ideal in order to get a house.”

While the supply of U.S. homes for sale is at an almost two-year high and price gains are moderating, buyers such as Nielsen-Dembe wouldn’t know it. An inventory crunch for entry-level houses has only worsened during the past year as discounted foreclosures become scarce and cash-paying investors snap up affordable listings to convert to rentals. Properties at the lower end of the market are also the most likely to have underwater mortgages, keeping would-be sellers from moving.

“There is inventory coming on line, albeit slowly,” said Nela Richardson, chief economist for Redfin, a Seattle-based brokerage. “The problem is it’s not equally distributed. There is more turnover at the higher end. At the more affordable end of the spectrum, people are stuck.”

The number of U.S. homes for sale in the bottom third of the market — below $198,000 — fell 17 percent in June compared with a year earlier, according to a Redfin analysis of 31 large U.S. metropolitan areas. The supply was up 3 percent in the middle market and jumped 15 percent at the top, the data show.

Average list prices on the low-end jumped 15 percent in June from a year earlier, and increased 13 percent in the middle and 9 percent at the top, according to Redfin’s analysis of large metro areas.

“If you see prices increasing for reasons other than fundamentals, it’s not good for affordability,” Hui Shan, a housing analyst with New York-based Goldman Sachs Group Inc., said. “A lot of it has to do with investors coming into the market and buying properties. Those are not related to local residents’ incomes going up.”

Some properties aren’t available because homebuyers are taking advantage of the strong rental market and leasing out their previous homes.

Others who want to list their houses can’t. Owners of inexpensive houses are three times more likely than those with costly homes to owe more than their property is worth, according to Zillow (Z) Inc. About a third of mortgaged homes in the bottom price tier were in negative equity in the first quarter, compared with 18 percent in the middle and 11 percent at the top, Zillow data show.

First-time purchasers accounted for 28 percent of all sales of previously owned homes in June, down from about 40 percent historically, according to NAR.

The supply of cheaper new homes “isn’t there because young people are still up against these financial barriers,” Crowe said. “The builders are responding to the customer that is active in the market. It will be at least two years before there is a measurable change in the share of sales going to first-time homebuyers.”

Nielsen-Dembe, a nursing assistant who took on two full-time jobs to qualify for her mortgage, said she wanted to buy because she was tired of the relatively high costs of renting. She expected getting financing to be her biggest challenge.

Instead, she struggled with finding a single-family home in her price range. It took six months because of heated competition. Three of the houses she bid on went instead to cash buyers.

She found sellers who needed a flexible buyer because the house they were moving to wasn’t going to be ready for two months.

“I was willing to wait however long they needed,” she said.

Brooklyn by the sea

Posted in New Development, Shore Real Estate | 68 Comments

From the Star Ledger:

Progress in Asbury Park, developers shift focus from oceanfront to downtown

About 10 years ago, waves of ritzy, new multifamily buildings along Asbury Park’s oceanfront were expected to breathe life into a city in need of repair. Properties near the ocean made way for the four-story Wesley Grove development, the eight-story North Beach condominiums and a colossal project called “Esperanza,” a complex about 10 stories tall with more than 200 units.

Esperanza even caught the eye of Hall and Oates musician, Joseph Oates, another Rock and Roll Hall of Famer to buy into a city that’s got Bruce Springsteen written all over it.

But these projects were too much and too soon for a city struggling to recover from 1970s race riots, crime and political corruption. North Beach had trouble filling its condos, and the $100 million Esperanza, which means “hope” in Spanish, never lived up to its name. The developer filed for bankruptcy in 2011 and all that remains are the bare bones of its foundation — an oceanfront eyesore.

City hall officials, developers and realtors now think smaller projects away from the oceanfront and near the downtown area are the best way to revive a city that was once an entertainment mecca for the Jersey Shore. They want to draw an atypical type of Shore resident.

“There aren’t any other towns like Asbury Park,” said Patrick Schiavino, a realtor and long-time Asbury Park property investor. “We’re not a sleepy Shore town. We’re kind of like Brooklyn by the sea.”

Schiavino said a lot of people moving to Asbury Park are retired couples from the New York City area who want to be by the water, but also want to be a part of a vibrant arts and culture scene. He said the city tends to attract artists, musicians and the LGBT community.

He admits Asbury Park is not for everyone. Families with children are not likely to be drawn there, he said, because the school system is “problematic,” and there aren’t many neighborhoods where children can “go out and play in the streets.”
Developers are focusing on the downtown area, taking advantage of existing structures and turning them into mixed residential and commercial units.

Sackman Enterprises, a Manhattan-based real estate management and development company, has restored the historic Steinbach building with 63 apartment units, as well as several other buildings in the area, said Carter Sackman, president.

Three months ago, Sackman purchased the Kinmouth building on Mattison Ave., which the historic Savoy theater occupies, for just under $2.5 million. Along with restoring the 20,000-square-foot theater, which has been vacant for decades, the company plans to utilize 4,500 square feet for retail space and 18,000 square feet of the upper four floors for 48 studio apartments.

Sackman said the company has budgeted $8 million for improvements and the apartments would probably start at $850 per month once they are ready to be rented.

The movement away from oceanfront development toward downtown areas reflects a trend, according to Roland Anglin, the director of the Joseph C. Cornwall Center for Metropolitan Studies at Rutgers-Newark.

“The last real housing crunch has really changed the way that people view housing,” Anglin said. “We won’t be seeing large-scale towers on the ocean because the demand is not there.”

He said downtown development is an “urbanist’s dream.”