New Jersey Real Estate Report

I came across this article on my nightly news-check. Seems that a collapse is already under way on the other side of the world. Why should we be concerned? China has had a pretty strong economy over the past few years… a sign of things to come?

Once one of the hottest markets in the world, sales of homes have virtually halted in some areas of Shanghai, prompting developers to slash prices and real estate brokerages to close thousands of offices.

For the first time, homeowners here are learning what it means to have an upside-down mortgage — when the value of a home falls below the amount of debt on the property. Recent home buyers are suing to get their money back. Banks are fretting about a wave of default loans.

See more from this brief at:

Asia News in Brief

-Richie

Seems the economy is growing beyond expectations even with a decline in home sales. So what happened to real estate being the engine that was driving the economy? I guess everyone cashed out and is spending their profits elsewhere.

…Data from the National Association of Realtors showed sales of existing homes fell for a fifth consecutive month in January as the once-sizzling housing market cooled further.

Home sales down 2.8% in January

Even with the slowdown in sales, home prices held steady. The median price in January — half cost more, half less — was $211,000, unchanged from December.

Not here in NJ; we’re atleast double that price.

Sales of both existing and new homes set records for a fifth year in 2005, but analysts believe sales of existing homes will fall about 5% this year as rising interest rates cut into demand.

Both declines were bigger than expected and occurred even though the weather in January was the mildest in more than 100 years.

Yes, we have to blame someone for the slowdown, so let’s blame those interest rates. Obviously we can’t blame the weather in January because it was the mildest in 100 years.

-Richie

Just two weeks ago, an article was posted up regarding an article by David Bach about why home owners get rich and renters stay poor in this previous writing by Grim: Homeownership Propaganda Machine Running Full Steam Ahead.

This morning I came across some new words of wisdom from David; mainly How to Bubble-Proof Your Home.

After my last column on home ownership appeared, I got a ton of e-mails from excited and upset readers. Many suggested that it’s simply too late to buy real estate.

Well, I feel that it’s never too late. The secret to real estate is timing, location, and financing. So, this column tells you how to protect yourself against a real estate slowdown.

I would really love for any real estate expert to elaborate more on the “timing” piece. According to most experts who have a vested interest in real estate, the timing is always “now”. They never seem to mention that prices fluctuate and you should wait for a “lull” period.

If you talk to any seasoned financial investor, the strategy is “buy low, sell high”. According to every person who is a broker/realtor or writes a book on buying real estate, the strategy is “buy now”.

-Richie

I am guest blogging for Grim this week while he’s out of town. The housing starts number is out!

U.S. Economy: Sales of New Homes Decline, Inventory a Record

The total sales for for new homes is at a 1 year low, while inventory is at a record high..

Higher mortgage rates and home prices will push down sales and may contribute to a slowing of the economy in the second half, economists said. Home construction may not add to economic growth this year for the first time in more than a decade, leaving homebuilders less optimistic.

With this being said, and the Economy seen rebounding strongly in 2006 I find it hard to believe that the “low interest” rates will continue to be a driver for the industry.

And finally, to quote the end of the article:

Housing affordability fell to the lowest level in more than 14 years last quarter and may decline further in 2006 as mortgage rates and prices continue to rise, according to the Realtors.

-Richie

Welcome to the Carnival of New Jersey Bloggers #41

Ok, everyone is probably wondering just what the heck is going on. Well, I’m not even that sure, but this is the fourty first Carnival of New Jersey Bloggers, and welcome. What the Carnival aims to do is to give some exposure to other local blogs you might have not found otherwise. Each week a new blog will host the carnival by posting up a series of links provided by other NJ bloggers. I’m sure you all get the point.

Just Added
Let me give this one more shot.

Enlighten-New Jersey discusses Federal Spending.

On the sociopolitical front, Jay Lassiter of Lassiter Space takes a virtual trip to Dubai.

Gil at Virtual Memories provides us with an interesting perspective on the Genome.

Jersey Goddess Nordette (now turned real estate goddess?) provided this link. I’m not even going to try to characterize this one.

Roberto at DynamicBuzz put up a very good piece on eminent domain in NJ.

The Jersey Tomato saw Billy Joel at MSG.

Tequila Shots for the Soul writes a handful of open letters. Very funny, worth the stop.

Dossy talks about Willy Nelson’s new Cowboy Tune.

Debbie and Rich from “Down the Shore” invite you down for Pinball Fever.

Fun
Debbie Galant of Baristanet fame has a new novel out, Rattled, that looks to be getting some rave reviews. For those real-estate diehards, it’s got McMansions and dishonest real estate developers as well, so you won’t feel so left out.

Janet at The Art of Getting takes a look at the pop culture of teen stars.

Politics
Steven Hart over at the The Opinion Mill talks about a popular topic this week, politics, in particular a certain Wanker, John Dickerson.

Jeffery at The Contrarian gives us yet another perspective on the Port fiasco.

Real Estate
Real Estate Flipper Tom at Digital Breakfast has another installment in his series, 3 Alarm Fire!

Local
Ken takes a hard look at the New Jersey School Construction Corporation at his blog, Smadanek.

Sharon mulls over the Transportation Trust Fund at the Center of NJ Life.

Paul at NJ Fiscal Folly says the underfunded budget is much worse than advertised.

Jay from Lassiter Space covers the New Jersey Supreme Court hearing Gay Marriage

Music
Jim Testa at Jersey Beat rocks out with a piece on Steve Wynn

Debunking
Joe over at Joe’s Journal debunks some myths on Ethanol vehicles.

Money
Tom Evslin shows you how to get your hands on the big VC bucks over at Fractals of change. Brings back memories of the roarin’ 90’s, you know, when we spent millions on parties to celebrate the fact that we purchased a domain name. Business plan? What? Sorry, we were busy working on the menu and buying Porsches.

Weird
Lynne gets her piano tuned at Shamrocketship. I’m not sure what else to say about this one, yet for some reason I’m compelled to read.

Food
Ciao Pietro! Pietro at Mano a Vino Montclair takes you to Sicily. Unfortunately, it will leave you both hungry and thirsty.

Other
Noreen discusses sexist remarks at her blog, Roderma.

Matt at The Daily Doormat has a great little bit for husbands that want to keep their wives in-check. That was a joke, however as we speak my wife is modifying that contract to suit me.

Tata at Poor Impulse control has something going on with Cats and Jello. You know it’s really difficult to write a little something about every one of these.

Dimitri at Cobweb Studios shoots Eye Candy

Sorry if I missed anyone who sent me a link. Blogger seems to have an issue saving drafts and I lost quite a bit of work more than once.

Caveat Emptor!
Grim

Open Discussion for this weekend

Observations about your local areas, comments on news stories or the New Jersey housing bubble, Open House reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them.

For readers that have never commented, there is a small link on the bottom of each new message that reads “# Comments”. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past 6 months. The archives can be found at the bottom of the right hand menu and are categorized by month.

Caveat Emptor!
Grim

Welcome to another edition of Price Reduced!

For all the newcomers to this blog, Price Reduced! takes a look at a handful of significant price reductions across Northern NJ. The purpose of this exercise is to serve as proof that the Northern New Jersey real estate market has long since been overvalued and has started the long hard decline back to the mean. These listings are in no way an endorsement by myself, nor do I believe they are a bargain or a value. Even reduced, I still believe these homes are still grossly overpriced.

On to the list!

MLS# 2209268 - Newark, NJ
Previous Price $249,000
Current Price $200,000 (Price Reduced 19.7%)

MLS# 2111702 - Phillipsburg, NJ
Previous Price $159,900 (Reduced from $179,000)
Current Price $128,900 (Price Reduced 19.4%, 28% off OLP)

MLS# 22047298 - Glen Ridge, NJ
Previous Price $925,000
Current Price $749,000 (Price Reduced 19%)

MLS# 2246559 - Montville, NJ
Previous Price $569,500
Current Price $469,500 (Price Reduced 17.6%)

MLS# 2224896 - Montclair, NJ
Previous PRice $1,200,000 (Reduced from $1,700,000)
Current Price $1,000,000 (Price Reduced 16.7%, 41.2% off OLP)

MLS# 2216676 - Randolph, NJ
Previous Price $514,900 (Reduced from $529,000)
Current Price $449,900 (Price Reduced 12.6%, 15% off OLP)

MLS# 2232910 - Montclair, NJ
Previous Price $1,395,000
Current Price $1,219,000 (Price Reduced 12.6%)

MLS# 2246959 - Morristown, NJ
Previous Price $339,000
Current Price $300,000 (Price Reduced 11.5%)

MLS# 2241651 - Jefferson, NJ
Previous Price $425,000
Current Price $379,000 (Price Reduced 10.8%)

MLS# 2222831 - Harmony, NJ
Previous Price $279,9000
Current Price $249,900 (Price Reduced 10.7%)

MLS# 2233481 - Roselle, NJ
Previous Price $289,900 (Reduced from $299,000)
Current Price $259,900 (Price Reduced 10.4%, 13% off OLP)

MLS# 2241723 - Madison, NJ
Previous Price $1,549,900
Current PRice $1,395,000 (Price Reduced 10%)

Something new this week is the “Short List”

Town/From Price/To Price/Reduction
South Orange Village/$1,525,000/$1,375,0009.84%
Montville/$1,549,500/$1,399,000/9.71%
Bernardsville/$989,000/$899,0009.10%
Madison/$639,999$585,0008.59%
Essex Fells/$1,525,000/$1,399,900/8.20%
Kinnelon/$599,000$549,900/8.20%
Morristown/$325,000/$299,000/8.00%
Chatham/$975,000/$899,000/7.79%
Mendham/$1,395,000/$1,295,000/7.17%
Scotch Plains/$1,250,000/$1,165,000/6.80%
Berkeley Heights/$460,000/$429,000/6.74%
Rutherford/$900,000/$839,900/6.68%
Glen Ridge/$749,000/$699,000/6.68%
Upper Saddle River/$1,169,000/$1,095,000/6.33%

691 homes were Price Reduced! this week, the average reduction was 3.79%, and the total dollar amount of the reductions came in at a bit over $13,300,000.

Caveat Emptor!
Grim

Morristown Green development approved

The Morristown Planning Board gave the green light last night to a residential-retail development that will dramatically change the downtown streetscape facing the historic Green.

With Epstein’s and adjacent properties reduced to rubble, some 246 luxury condominium and apartment units will be built along with 72,000 square feet of retail space split up among ground-floor shops in three new buildings.

Transit village eyed for J&J tract

The Johnson & Johnson property on Route 1 is full of empty warehouses and barren parking lots, but what North Brunswick officials see is potential commerical growth.
…
Last night, in the first of many planned public meetings, the property’s buyer tried to convince officials and residents that housing should be built on the sprawling 220-acre tract. Municipal officials, however, seemed unreceptive.
…
Even a real-estate agent at the meeting seemed against new housing.

“We’re all scared to death of housing from that concept,” Realtor and township resident Pete Maimone said. “There’s absolutely no need for it. We have sufficient housing already.”

Kearny resident feels New Jersey’s ‘affordability crisis’

Since moving to New Jersey from her native Puerto Rico two decades ago, Delia Andaluz has lived in some rough spots. She started in Newark’s housing projects, then worked her way through a series of run-down apartments in the city’s North Ward. Last summer, the 36-year-old single mother of two decided it was time to buy a house.

Andaluz eventually managed to purchase a three-family house in Kearny, but her inexperience in the daunting world of real estate left her with a $4,000 monthly mortgage. Despite rent checks from tenants and help from her fiancé, she is struggling to make ends meet on her $38,000 salary as a counselor at a local nonprofit organization.

County purchases 14 acres of open space in Clark

The Union County Board of Chosen Freeholders announced last week that the county has preserved 14 acres of open space in Clark. County officials say the move will prevent the land from being developed into a residential subdivision site of 30 single-family houses.

The freeholder board voted Feb. 16 to authorize the county’s purchase of the property from the Hazelwood Cemetery for $6.25 million through the Open Space, Recreation and Historic Preservation Trust Fund.

Mortgage brokerage pulls vanishing act

They drove brand new luxury cars and were rarely seen without their staple accessories: cigarettes and cellphone earpieces.

But the men behind AMG Mortgage suddenly vanished one weekend in early November, just two months after moving into a Palisades Park office building. They left behind furniture, paintings, even half-empty coffee cups.
…
The FBI has said AMG helped Korean-Americans in North Jersey secure as much as $100 million in fraudulent loans. With AMG’s assistance, a homeowner would collect multiple loans on a single property, fooling each bank into thinking it was the only home equity lender, the FBI said.

At the corner of Grinn and Barret

Paul Eisenstein barely made it home for Thanksgiving last year. On his way from Pleasant Ridge, Mich., to his mom’s place in New York City, a street sign made him laugh so hard he nearly veered off the highway: Fangboner Road.
…
Eisenstein’s personal contest favorite is New Jersey’s Shades of Death Road, which runs through Allamuchy in Warren County. Although there are several theories on the name’s origin, the contestants submitted their own belief — that the Lenni-Lenape people who once occupied the area suffered from malaria and tuberculosis, and were slaughtered at the hands of an Iroquois tribe.

The National Association of Homebuilders (NAHB) & Wells Fargo released their year end 2005 affordability study.

Indianapolis Recaptures Title Of Most-Affordable Major Housing Market At Year-End 2005

At the bottom of the affordability scale was Los Angeles-Long Beach-Glendale, Calif., where just 2.3 percent of homes sold in the fourth quarter were affordable to families earning the area’s median household income of $54,500. The median price of all homes sold in that area was an even $500,000. And as usual, the bottom of the affordability scale was dominated by large California cities, including Santa Ana-Anaheim-Irvine, San Diego-Carlsbad-San Marcos, and Stockton. New York-White Plains-Wayne, N.Y.-N.J. rounded out the list of the five least-affordable major housing markets.

The complete list by affordability rank (in Excel format) can be found here.

Caveat Emptor!
Grim

More Hughes and Seneca today in the Ledger:

Jersey faces stagnation if it can’t handle growth

New Jersey, with 1,173 people per square mile, is the mostly densely populated state. Thus future population growth, without adequate infrastructure, portends increased crowding, costs and congestion. Or perhaps not.

There is a distinct possibility that population growth will not be of the magnitude forecast. In fact, there are signs that it won’t.

Annual population growth in the state recently has slowed significantly. In fact, it has fallen steadily year by year from 71,000 people in 2002 to 33,000 in 2005. Net immigration from abroad into New Jersey has been declining, while net migration from New Jersey to the rest of the country has been increasing. In 2002, nearly 24,000 more people moved out of the state to the rest of the country than moved into the state from the rest of the country.

Never before has New Jersey faced a period of such limited infrastructure capacity additions. It is now time for a sustained public policy discussion about the crucial issues of infrastructure needs, population growth and our economic future.

Caveat Emptor!
Grim

Thanks to the Jersey Shore Real Estate Bubble Blog for tipping me off on this one:

Make tax cards available to all

Sen. Ronald Rice, D-Essex, a real estate broker, is pushing a bill that would exempt property record cards, maintained by local tax assessors, from the definition of a government record. That means the public would no longer be able to access the cards through an Open Public Records Act request. Yet Rice’s bill would give real estate professionals, such as himself, open access.

Rice’s bill would let homeowners access their own cards, which contain information such as assessed value, ownership, lot size and number of rooms. But homeowners who wanted to review the cards of other homes in their neighborhoods, which is commonly done to support tax appeals, would be blocked from doing so.

I urge everyone to pick up the phone immediately and call Senator Ronald Rice to express your utter disgust for this self-serving legislation. He can be reached at: (973) 371-5665.

If you want to make a difference, pick up the phone, start making calls, do whatever you need to do to make your feelings known, but don’t let this pass.

Caveat Emptor!
Grim

GSMLS
Single Family, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)
2/15 - 12,376
2/22 - 12,597 (1.8% Increase, ~14% since January 1st)

NJMLS
Single Family, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)
2/15 - 5,960
2/22 - 6,078 (2% Increase, ~13% since January 1st)

MLSGuide
Single Family, Condo, Coop
(Hudson County)
2/15 - 2,054
2/22 - 2,078 (1.2% Increase ~20% since January 1st)

Inventory stats will be posted every week, prior to noon on Wednesday. The numbers will include all 3 of the Northern NJ MLS systems, GSMLS, NJMLS, and the Hudson MLS. If someone would like to provide me with numbers from the FSBO systems, I’ll gladly include them as well. These numbers do not include multifamily homes, only SFH, Condos and Coops. Realize that this does make an impact in certain areas of North Jersey with high densities of multifamily (Hudson, Passaic, etc).

Regular readers know that I keep tabs on a number of local journalists that I’ve tagged as being industry cheerleaders. These journalists routinely write puff-pieces praising real estate and urging people to buy without regard to caution. One of these cheerleaders is journalist Warren Boroson.

Here is his most current piece:

Author: Home prices set to fall

There I was, bopping through the aisles at a Barnes & Noble, when what do I see?

But if he’s right, he will have made a self-fulfilling prophecy. If everyone who reads his book does what he advocates, the real-estate market will indeed be in serious trouble.

————–

Now, after you’ve read the article (or the highlights I’ve posted here). Take a look at this piece:

Is it time to cash in on your home?

Who else might want to seize the opportunity to take profits? Anyone with more house than they really need. Warren and Rebecca Boroson bought their Glen Rock, N.J., home 29 years ago for $69,900 and raised their two sons there. But now, says Warren, “our children are grown and out of the house. We had four bedrooms, which is three more to mess up than we needed.” Last year the Borosons sold for $579,000 and moved to a high-rise apartment in Hackensack, N.J., with a doorman and a swimming pool. [a rental]

“We sold mainly to lock in the profit,” Warren says. “It was a little faster than we’d planned. But if you’re planning to sell in a few years, you might as well do it now while you’re sure the market is still good.”

Warren writes a financial column for the Morris County, N.J., Daily Record that is syndicated nationwide. With an eye on retirement (he’s 69), he invested his cashed-out home equity in a laddered portfolio of bonds.

—–

I have a bit of concern with one small piece of the article, I’m not sure if it’s just the way I’m reading it, but it comes off as a slam against the book’s author, John Talbot.

By the way, the author is someone named John R. Talbott. He is identified on the book’s back cover as a best-selling author (he wrote another book, called “The Coming Crash in the Housing Market”), was a visiting scholar at UCLA’s School of Management and was an investment banker at Goldman Sachs.

Whether he has any real-estate experience, whether he graduated from college and whether he has any advanced degrees is not disclosed.

This really seems like a below-the-belt slam against Mr. Talbot. A quick search on the web finds the following bios:

John R. Talbott is an economic consultant who has authored academic papers on economic growth and development and made presentations on the subject to the governments of Russia, Jordan, and Qatar. A visiting scholar at the Anderson School at UCLA, Talbott is also a former vice president in the investment banking division of Goldman, Sachs, and Company.

Here are two of John Talbot’s academic papers:

The End of Class Warfare: An Examiniation of Income Disparity
Political and Economic Freedoms and Prosperity

Not sure why a journalist would make such a rash assumption about someone’s education and background and not just do a little leg work to find the real facts. I suppose that if you can’t argue the facts, resorting to insult is the next best thing…

Caveat Emptor!
Grim

This one was posted up at Bubblemeter:

Take a good look at that, and no, it’s not a joke. That’s NAR Chief Economist David Lereah’s new book. Well, I don’t believe it’s entirely new, I believe it’s a retitle, recover, and update of “Are You Missing the Real Estate Boom? : The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them”, released last year.

The new book, “Why the Real Estate Boom Will Not Bust - And How You Can Profit from It : How to Build Wealth in Today’s Expanding Real Estate Market” is scheduled to be released this month, it can be found here.

Take a good look at the reviews section, there are some real gems there:

“For me, this was more comic relief than any scholarly analysis. The author has a vest[ed] interest in the bubble not bursting, and he’s selling his soul with this book to prove it. “

“The key to making money in real estate - and keeping it - is to get aboard a rising real estate trend early, not late. While it is true that real estate is a good long-term investment, what Lereah ignores is the cycle nature of real estate. In other words, if you buy an overvalued house late in the market cycle - and you are over leveraged and illiquid like most Americans are today - you may not be around for the long-term.” - Robert Campbell Author of Timing the Real Estate Market

” Huckster Drums Up Business”

“And where was this book say 10 years ago BEFORE real estate became the darling investment it is today? Seems Mr. Lereah is a tad late in the game. It’s easy to say everything will continue to be wonderful when everything has been so wonderful for so long. The biggest mistake people make is automatically assuming, like the Realtor in Florida below, that just because things have been a certain way in the recent past that they will continue to be that way indefinitely into the future. “

Caveat Emptor!
Grim

The minutes from the January Fed meeting were released at 2:00pm this afternoon. The full text can be found here:

Minutes of the Federal Open Market Committee

Highlights:

“Although the stance of policy seemed close to where it needed to be given the current outlook, some further policy firming might be needed to keep inflation pressures contained and the risks to price stability and sustainable economic growth roughly in balance. In the view of some members, the possibility of additional policy moves was reinforced by readings on core inflation and inflation expectations that were somewhat higher than was desirable over the long run. However, all members agreed that the future path for the funds rate would depend increasingly on economic developments and could no longer be prejudged with the previous degree of confidence. “

“Real personal consumption expenditures appeared to have increased only modestly in the fourth quarter, as spending on motor vehicles was restrained following a surge in the summer in response to manufacturers’ price incentives. Outside of motor vehicles, consumption was brisk, supported by job growth, increases in personal income, and the decline in energy prices. Consumption was also likely supported by further gains in home values and equity prices that raised the ratio of household wealth to disposable income relative to that seen earlier in 2005. Consumer sentiment measured by surveys moved up in December and, judging by the preliminary reading of the Michigan Survey, edged up further in January.

Activity in the housing market appeared to continue at high levels, although there were some indications of slowing. Single-family housing starts decreased markedly in December; however, this decline may have been due in part to unusually cold and wet weather in some areas of the country. Multifamily housing starts increased in December. Sales of new and existing homes remained at elevated levels but slowed somewhat toward the end of the year. Moreover, the stock of homes for sale increased to the upper end of ranges seen in recent years. Recent data on mortgage applications and survey measures of homebuying attitudes also pointed to some cooling in the housing market. “

Caveat Emptor!
Grim