New York, Boston Prices Expected to Fall Further
By JUSTIN LAHART and CONOR DOUGHERTY
DECEMBER 31, 2008
Although New York has been at the epicenter of the financial crisis, housing prices in the city haven’t dropped nearly as fast as cities elsewhere. The same is true of the financial hubs of Boston and Charlotte, N.C.
But that doesn’t mean these cities are skirting the worst of the housing bust. Rather, markets where price declines have been slightest may be in worse shape, because prices still have further to fall before enough buyers step in to bring housing activity to normal. Meanwhile, heavy foreclosure activity in hard-hit areas like Phoenix, Las Vegas and San Diego are bringing prices into equilibrium. Those cities may be closer to a turnaround.
In October, single-family-home prices in the New York metropolitan area were down 12% from the all-time high they reached in 2006, according to the S&P/Case-Shiller home-price indexes. That is roughly half the decline registered by the 20-city index and well short of Phoenix’s 41% drop. A separate index of New York-area condo prices was down just 4% from its peak.
Part of the reason New York housing prices have held up is that lot of New Yorkers are holding on to their homes rather than selling for less than the Joneses got last year. Esty Lobovits, a 31-year-old lawyer in Manhattan, has been looking to buy an apartment since the summer but says she isn’t willing to pay what she considers to be inflated prices. Many apartments she has viewed are empty or filled only with staged furniture, and brokers are more aggressive, sometimes following up with her broker even if Ms. Lobovits hasn’t placed a bid.
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In the language of Wall Street, with asking prices not dropping to levels where bidders like Ms. Lobovits will pick them, the market isn’t “clearing.” The Federal Reserve Bank of New York noted in its “beige book” survey of regional conditions this month that many would-be buyers have opted to rent out their apartments rather than sell, driving rental prices lower — particularly in higher-end buildings.
While New York is probably an extreme example, its inertia is being repeated in many of the other housing markets that have yet to see sharp declines. Some owners with hefty mortgages can’t face selling their house for less than they owe, but also, many don’t want to sell at a steep discount to what a house down the street might have fetched two years ago.
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New York’s slower adjustment is a more typical housing-market decline, with a deteriorating economy grinding down values over time. The last time prices in the area fell, starting in 1988, it took three years before they hit their trough, at 15% lower.
This time, the price decline may be far more severe. While subprime mortgages didn’t play as big a direct role in the New York real-estate market as elsewhere, there were plenty of Wall Streeters who made their living off of packaging those loans into the complex securities and trading them. Even last year, with the housing market fraying, Wall Street pulled in record bonuses.
“Right now, people are still living on last year’s bonus,” says Barclays Capital economist Ethan Harris, who is based in New York. “You can sort of feel the local economy on the edge of a cliff.”
A closely watched index shows home prices dropped by the sharpest annual rate on record in October.
The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.
Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.
Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.
None of the 20 cities saw annual price gains in October — for the seventh consecutive month.
Home prices in 20 U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales.
The S&P/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in September. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.
The financial market meltdown that’s reverberated around the globe has prompted banks to curb lending, signaling the housing slump will persist for a fourth year in 2009. Falling property values have eroded household wealth, causing consumers to pare spending and deepening what is projected to be the longest recession in the postwar period.
“As 2008 comes to an end, the housing market is left in a weaker state than at the beginning of the year,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “Uncertainty remains high given the unprecedented nature of the recession.”
Economists forecast the 20-city index would fall 17.9 percent from a year earlier, according to the median of 21 estimates in a Bloomberg News survey. Projections ranged from declines of 17 percent to 18.4 percent.
Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in October, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas.
“The bear market continues,” David Blitzer, chairman of the index committee at S&P, said in a statement. The declines in Atlanta, Seattle and Portland surpassed 10 percent for the first time, he said.
Home prices in 20 major U.S. cities dropped 2.2% in October from the prior month and had fallen a record 18% from the previous year, according to the Case-Shiller price index published Tuesday by Standard & Poor’s.
Prices have fallen in all 20 cities compared with both the prior month and October 2007, and 14 of the 20 metro areas showed record rates of annual declines. Also, 14 of 20 areas sustianed declines of more than 10% on a year-over-year basis.
For Case-Shiller’s original 10-city index, prices fell a record 19.1% in the previous 12 months.
“The bear market continues; home prices are back to their March 2004 levels,” said David Blitzer, chairman of the index committee at Standard & Poor’s.
The largest price drop for October was seen in Detroit, with a fall of 4.5% amid growing troubles for the Big Three automakers.
For the year, Phoenix chalked up the biggest drop — 32.7%.
Home prices continued to drop as the economic downturn deepened further in October, according to the S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, with home prices in the Sun Belt continuing to be hit hardest.
“The bear market continues; home prices are back to their March 2004 levels,” said David M. Blitzer, chairman of S&P’s index committee. He added that both composite indexes and 14 of the 20 metropolitan areas are reporting new record declines. As of October, the 10-city index is down 25% from its mid-2006 peak and the 20-city is down 23%, Mr. Blitzer said.
The indexes showed prices in 10 major metropolitan areas fell 19% in October from a year earlier and 3.6% from September. The drop marks the 10-city index’s 13th straight monthly report of a record decline.
In 20 major metropolitan areas, home prices dropped 18% from the prior year, also a record, and 2.2% from September.
Once again, none of the regions was able to stave off a decline from September to October.
It’s a bad sign when mild-mannered nonpartisan legislative analysts start measuring the depth of the state’s budget problems by how many decades back you have to look to find similar distress.
The answer, by the way, is three or four.
Then again, Gov. Jon S. Corzine says the economy is in “without doubt, the most serious recession” since the 1930s. That has created a big deficit in the current state budget and a massive one in the plan that must be adopted by the end of June.
Not to mention a throbbing political headache for Corzine and his Democratic colleagues in the Assembly in an election year that could test whether the voters’ recent interest in change goes in both political directions or applies to cuts in popular programs such as rebates.
“We have an economic emergency. … There is a real problem out among the people of this state and across the country with regard to economic conditions. And they’re not getting better,” Corzine said.
“Everyone has to adjust their thinking to the circumstances of the moment,” he said.
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The unemployment fund is nearly broke. The transportation fund lacks long-term funding, as does the open-space fund. New Jersey’s income tax relies heavily on the year-end bonuses Wall Street has slashed. Car sales are down more than 40 percent, a direct hit on a big sales-tax driver. Businesses are losing money. New Jersey is down 34,400 jobs in 2008.
“It’s about as bad as we’ve seen in several decades,” said Sen. Barbara Buono, D-Middlesex, the budget committee chairwoman. “Unemployment, foreclosure, bankruptcy — government is not immune to the fallout. Tax revenues support our budget.”
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Corzine might look to save money by freezing employee wages or forcing workers to take unpaid furloughs — if unions agree to such moves. Layoffs are also possible, although the governor said he wants to avoid that.
“I’d prefer to save jobs, but that means I need cooperation, because under the contract the only one of those you can execute independently are layoffs,” Corzine said. “I’d rather see people on payrolls with health insurance rather than accentuating a problem, but that may not be possible.”
I came across “Housing Inventories on the Rise” this morning and thought it sounded a bit familiar. Sure enough, the same story was published in the New York Times nearly 18 years ago, when the last real estate bubble burst. The scenarios are a little different, but while history doesn’t always repeat, it sure does rhyme. Real estate bubbles aren’t fairy tales, and home prices can fall, even in Hoboken. There is a reason these things take 20 years to repeat, because that is about the time it takes for the collective wisdom to forget about the last bubble. You know, doomed to repeat it and all.
THE New Jersey shore of the Hudson River, which emerged in the mid-80’s as a powerful new magnet for high-rise office development, is struggling with high vacancy rates, canceled projects and nagging doubts about the capacity of its roads, parking and public transportation.
No area better symbolized the 80’s real estate boom in the New York region. An 18-mile corridor of gritty piers, derelict warehouses and abandoned railroad yards, the New Jersey riverfront became a patchwork of huge development sites.
It also became the focus of a feisty battle for New York City tenants and the centerpiece of an urban renaissance so sweeping that some began calling the area the “Gold Coast” of New Jersey.
For now, the renaissance has slowed. With 15 million square feet of space — more than half of it built in the last five years — developers on the New Jersey shore are beset by the highest vacancy rates in the New York area.
“When the Manhattan market became soft, it really hurt the New Jersey waterfront,” said Peter Eppie, managing director of Edward S. Gordon Company of New Jersey, a commercial brokerage, based in Jersey City. In an analysis this month, it found office vacancies in New Jersey’s Hudson River cities running at more than 30 percent, nearly double those in Manhattan.
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For home builders and office developers alike, the immediate problem is something far from unique to the Hudson riverfront — the economics of a deep real estate recession. Since most of the office developers in the area have designed their buildings to appeal to banks, securities firms and other financial-services companies in Manhattan, they are now trying to sell to companies that are eliminating workers and shedding office space.
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Some proposed developments are being stalled by public opposition. In Hoboken, an on-again, off-again plan to develop idle riverfront land and piers that are owned by the city and leased to the Port Authority of New York and New Jersey was sent back to the drawing boards in October. The plan, involving a huge development of 1.3 million square feet of offices, hundreds of condominiums, a hotel and a marina, was defeated by only four votes in a municipal referendum. Now, Hoboken and Port Authority officials say they are preparing a plan for a smaller development.
ON the eve of a new year, it is becoming clear that the real estate market in Hudson County, the “Gold Coast” zone just across the river from Manhattan, will have to wait at least two years to celebrate a more prosperous era.
Once New Jersey’s hottest market for high-end condominiums — drawing streams of Manhattanites — Hudson now finds itself with 24.1 months’ worth of unsold inventory.
This is a much bigger backlog than exists in Brooklyn, which has a 13.8-month supply, and it exceeds unsold inventory levels in Queens; in Orange, Rockland and Westchester counties in New York; and in Fairfield County in Connecticut.
On Long Island, the unsold inventory is also swollen. It would take 20.9 months for all the houses and condos currently on the market there to find buyers, given the current pace of sales.
A new assessment of the region prepared by the Otteau Valuation Group presents a generally unlovely picture of residential sales markets:
Manhattan now has an 11.8-month supply of unsold inventory, said Jeffrey G. Otteau, whose Old Bridge, N.J., company analyzes contract sales figures and advises real estate brokers. “This is not terribly big,” he said, “but it is significantly bigger than a year ago — and much bigger than the days when multiple bidders were circling around every available unit on the market.”
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In Hudson County, home to Hoboken and Jersey City — an area known as “Wall Street West” — sales were 26 percent fewer in November than the month before, and 47 percent fewer than in November 2007.
Looking further ahead, Mr. Otteau has recently raised the issue of potential overbuilding in Hudson County — in addition to his contention that outer-ring suburbs already have a surfeit of single-family housing on large lots that will not appeal to buyers of the next decade.
One large developer in Hoboken, the Applied Development Company, stopped building anything other than rentals as of nearly two years ago, said its president, David Barry. “We saw the condo market getting ahead of itself, and becoming temporarily overbuilt, for sure,” he said.
This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, 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. Also a good place to post suggestions, requests for information, criticism, and praise.
For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] 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 year. The archives can be accessed by using the links found in the menus on the right hand side of the page.
2009 Real Estate Forecast: Troubles Spread Wealthier neighborhoods that avoided subprime borrowing will be hurt in the new year as the downturn weakens even healthy markets
2008 was the year that subprime borrowers and speculators got hurt by the real estate crisis. 2009 could be when everyone else gets hit.
Until now, the nation’s most serious home price declines have been in low-cost markets that were dominated by subprime mortgages, and in overbuilt markets such as Florida, California, and Las Vegas, where residential values are sliding fast toward pre-housing boom levels.
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That’s because the big story in 2009 could be that, with the deepening recession and mounting job losses, serious housing troubles could infect wealthier communities and markets that were just beginning to stabilize this summer before the bankruptcy of Lehman Brothers on Sept. 15 sparked the most serious financial turmoil in decades. In fact, according to online real estate research firm HousingPredictor.com, based in Destin, Fla., housing prices nationwide will fall 12.5% next year, compared with an estimated 11.1% this year.
Housing and mortgage problems pushed the nation into a recession that could now amplify, draw out, and expand the reach of the housing declines.
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Take Manhattan, for example, where condo and co-op prices soared years after housing bubbles in most other major cities popped. New York City’s real estate market was bolstered by residents who were still earning sky-high Wall Street bonuses and by a weak dollar that attracted overseas bargain hunters.
Now that the dollar has strengthened, the economic woes have spread to potential New York home buyers across the globe, and thousands of New York financial professionals are collecting severance. Manhattan apartment prices, as a result, have dropped as much as 20% since the summer, said Jonathan Miller, president and chief executive officer of real estate appraisal firm Miller Samuel. Miller’s analysis is based on contracts signed in recent months, rather than actual closings.
“Mid-september was a milestone,” Miller said. “That’s where you saw a pronounced slowdown in transaction volume.”
HousingPredictor.com is projecting a 19.4% decline in Manhattan home prices in 2009. And Moody’s Economy.com is predicting that condo prices in New York City, Northern New Jersey, and Westchester County will fall 29% by the fourth quarter of next year.
“Nationally, we think this recession is going to be worse than anything we’ve seen in 40 years,” said Marisa DiNatale, senior economist for Moody’s Economy.com. “If the economy gets that bad, then you will start to see foreclosures in Manhattan as well.”
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Few areas across the country will likely escape the recession and the corresponding impact on the real estate market, housing experts say. Another wave of foreclosures could be triggered next year as a flood of Alt-A and option adjustable-rate mortgages, which were given to people with decent credit, begin to recast.
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“We’re in the middle of the game here,” said Joseph Seneca, professor of economics at Rutgers University in New Jersey. “There’s significant further unwinding to come…. We’re in a downward spiral with job losses that is reinforcing the weakness in the consumer markets, particularly in the largest investment the consumer makes, in his home.”
A real estate group says sales of existing homes plummeted far more than expected last month as buyers reeled from October’s big plunge on Wall Street. The median sales price fell by the largest amount on record.
The National Association of Realtors said Tuesday that sales of existing homes fell 8.6 percent to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.
Sales had been expected to fall to a pace of 4.9 million units. according to Thomson Reuters.
The median sales price plunged 13.2 percent in November to $181,300, from $208,000 a year ago. That was the lowest price since February 2004 and the biggest year-over-year drop on records going back to 1968.
Sales of previously owned homes in the U.S. fell more than forecast in November and prices dropped by the most on record, indicating the real estate slump will extend into a fourth year and worsen the recession.
Purchases declined 8.6 percent to an annual rate of 4.49 million, from a 4.91 million rate in October that was less than previously estimated, the National Association of Realtors said today in Washington. The median price dropped 13.2 percent from a year earlier, the biggest decline since records started in 1968. Separately, the Commerce Department reported today that new-home sales fell 2.9 percent last month.
Prices will plunge further as job losses sap demand, foreclosures add to the property glut and prospective buyers get turned away by mortgage lenders. The Federal Reserve this month cut its benchmark interest rate target to as low as zero and said it would take more steps to ease borrowing as the longest postwar recession looms.
“Foreclosures are prolonging the declines in home prices,” Jonathan Basile, an economist at Credit Suisse Holdings in New York, said before the report. “Increasing unemployment is a continued impediment to housing.”
Resales were forecast to fall to a 4.93 million annual rate from an originally reported 4.98 million in October, according to the median estimate of 63 economists in a Bloomberg News survey. Projections ranged from 3.98 million to 5.2 million.
Sales dropped 10.6 percent compared with a year earlier. Resales averaged 5.67 million in 2007 and before today’s report, fluctuated around a 4.96 million rate this year.
The number of previously-owned unsold homes on the market at the end of November represented 11.2 months’ worth at the current sales pace, up from 10.3 months’ at the end of the prior month.
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The median price of an existing home fell to $181,300, and the percentage drop from a year ago was “probably the largest price decline since the Great Depression,” although records don’t go back that far, said NAR Chief Economist Lawrence Yun.
Foreclosures and short sales accounted for 45 percent of last month’s home purchases, Yun said.
With plummeting prices, resales of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million, the National Association of Realtors reported Tuesday. Resales are down 10.6% in the past year. Economists surveyed by MarketWatch had expected sales to fall to an annual rate of 4.9 million. In the past year the median sales price fell 13.2% — the largest decline since data collection began in 1968 and likely since the Great Depression — to $181,300. The inventory of unsold homes on the market rose 0.1% to 4.2 million, an 11.2 month supply at the current sales pace. NAR attributed November’s poor results to the weak stock market, job losses and low consumer confidence.
U.S. new home sales fell to their lowest level in over 17 years in November, the Commerce Department estimated Tuesday. New home sales fell 2.9% to a seasonally adjusted annual rate of 407,000. This is the lowest level since 401,000 in January 1991. New home sales are 35.3% below their level in November 2007. The drop was slightly above the 400,000 pace expected by economists surveyed by MarketWatch. New-home sales in October were revised to a 419,000 level compared with the previous estimate of 433,000. The months’ supply of homes on the market fell slightly to 11.5 months in November from 11.8 months in October. Median sales prices have fallen 11.5% in the past year to $220,400.
ales of newly built single-family homes slowed in November to the weakest levels since 1991, according to Commerce Department data on Tuesday that offered fresh evidence of housing market distress.
The seasonally adjusted annual sales pace of 407,000 was down 2.9 percent from October and was the lowest rate since January, 1991.
Economists polled by Reuters had forecast sales would notch a 420,000 rate compared with a downwardly revised 419,000 in October, previously reported as 433,000.
The median sales price rose to $220,400 from $214,600 in October. The median marks the half-way point, with half of all houses sold above that level and half below.
OK pompous prognosticators, dust off those crystal balls and lets hear ‘em!
Ground Rules
Predictions provided should either be for June 30th, 2009 or December 31th, 2009, please specify.
Provide justification for your forecast, where applicable (unless you are just making it up, if so, state that).
You may provide any caveats and/or assumptions that your forecast is based on.
You need not provide a forecast for all categories below.
Where applicable, forecasts are judged against the surveys/reports listed.
Real Estate
National Existing Home Sales - NAR
Median Existing Home Price - NAR
Median Existing Home Price - S&P Case Shiller HPI
Median Existing Home Price - OFHEO HPI
New Jersey Existing Home Sales - NAR/NJAR
Median Existing Home Price - NAR/NJAR
Median Existing Home Price - S&P Case Shiller HPI
Median Existing Home Price - OFHEO HPI
National New Home Sales - NAHB
Median New Home Price - NAHB
Commodities
Oil
Gold
Equities
United States
International Developed Markets
Emerging Markets
Mortgage Financing
30-Year Fixed - Freddie Mac PMMS
15-Year Fixed - Freddie Mac PMMS
5/1-Year ARM - Freddie Mac PMMS
Macroeconomic
10y Treasury
Fed Funds Rate
National Unemployment Rate
New Jersey Unemployment Rate
Oddball
Anything else you’d like to make a prediction about.
AKA: Why you should ignore your Realtor and everything the National Association of Realtors Says
David Lereah was the Chief Economist for the National Association of Realtors (NAR) up until April 2007, the time period otherwise known as the “Bubble”. His outrageously bullish forecasts earned him the name: Baghdad Bob of real estate.
His continually rosy forecasts, in the face of a rapidly deteriorating market even led some to start blogs to keep track of his spin, the David Lereah Watch was probably the most famous of these.
Criticism wasn’t coming from bloggers alone, mass media journalists routinely took aim at Lereah, and even his successor Larry Yun, one of the most scathing appeared in Slate:
As the housing decline began to take center stage, NAR forecasts were an important market event. This spurred investment research firm Investech Research to publish this gem:
Our own RentingInNJ came up with his own compilation, which spurred the wildly popular (one of the most widely linked and traffic’ed NJREblog posts ever):
1. “There’s no question there is a strong demand for housing from a growing population.” - David Lereah, NAR Chief Economist
2. “For the foreseeable future, the demand for homes will continue to outstrip supply” - Al Mansell, NAR President
3. “We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream.” - David Lereah, NAR Chief Economist
Which leads up to the January 2009 issue of Money Magazine, where Lereah admits what we’ve already known:
As chief economist for the National Association of Realtors, David Lereah was famously optimistic. Now a private consultant, he’s abandoned what he calls the “positive spin.”
Q: Were you wrong to be so bullish?
A: I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right inline with most forecasts. The difference was that I put a positive spin on it It was easy to do during boom times, harder when times weren’t good. I never thought the whole national real estate market would burst.
Q: The NAR’s latest forecast calls for a slight increase in home prices next year. Thoughts?
A: My views are quite different now. I’m pretty bearish and have been for the past year and a half. Home prices will continue to drop. I think we’ll see a very modest recovery in sales activity in 2009. But we’ve still got excess inventories, a bad economy and a credit crunch that will push prices down further, another 5% to 10% more. It’ll take a long time to get back to the peak prices we saw in many markets.
Q: Any regrets?
A: I would not have done anything different. But I was a public spokesman writing about housing having a good future. I was wrong. I have to take responsibility for that.
Preliminary November sales and inventory data for Northern New Jersey (GSMLS) is in. Please note that this data is subject to revision.
The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 500, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.
(click to enlarge)
The second graph is another view at the sales data for the full year. Please note that this graph does cross at zero.
(click to enlarge)
The third graph displays only November sales, 2000 to 2008 YOY.
(click to enlarge)
The fourth graph displays an overlay of Sales and Inventory from 2003 to 2007.
(click to enlarge)
The fifth graph displays the year over year change in inventory on a month by month basis.
(click to enlarge)
The sixth graph displays the year over year change in sales on a month by month basis.
(click to enlarge)
The last graph displays the absorption rate (not seasonally adjusted), in months:
New Jersey employers shed jobs for the fourth consecutive month in November while the state’s unemployment rate moved higher. Employment was lower by 6,200 over the month. The state’s unemployment rate rose by 0.1 percentage point to 6.1 percent but remained below the U.S. rate of 6.7 percent, the highest rate in 15 years. November’s rate represents the highest statewide unemployment rate since August 1996.
Over the first 11 months of 2008, employment in New Jersey has followed the national trend, falling by 34,400 jobs (-0.84%), a slightly smaller percentage decrease than the nationwide job loss of 1,911,000 (-1.38%) over the same period.
According to preliminary estimates from the New Jersey Department of Labor and Workforce Development’s monthly survey of employers, nonfarm wage and salary employment in the Garden State fell by 6,200 in November to a total of 4,048,200. Losses occurred in both the private (-5,700 jobs) and the public (-500) sectors of New Jersey’s economy. Based on more complete reporting, the previously-released October employment estimate was revised lower by 1,000 to reflect a September-to-October loss of 7,000 jobs.
“The November data underscore how deeply the national recession is hitting our labor market,” said Labor Commissioner David J. Socolow. “Governor Corzine is taking action to help speed the recovery and protect the most vulnerable, including providing funding for foreclosure prevention assistance; creating an Invest NJ program to give businesses incentives to make capital investments and create jobs; providing $22.5 million for food, energy and legal aid assistance for individuals and families struggling to make ends meet; and investing $500 million in state-managed cash funds and pension funds in New Jersey banks to allow these banks to make more loans available to New Jersey businesses,” Socolow said.
Over-the-month losses were recorded in eight of eleven industry supersectors. The largest employment loss occurred in professional and business services which contracted by 1,900 jobs. All three industry components of the supersector registered job losses, led by professional, scientific and technical services (-1,200), followed by management of companies (-500) and administrative support/waste management/remediation services (-200). Also moving considerably lower was employment in manufacturing (-1,600) as both the durable (-900) and nondurable (-700) goods segments suffered job loss.
Other supersectors recording job loss included information (-900), financial activities (-900), construction (-500), and trade, transportation and utilities (-200). The only industry to record appreciable gains in November was education and health services which added 300 jobs. Hiring in the health care and social assistance (+500) category was responsible for the increase.
Over the month, the unadjusted workweek for manufacturing workers increased by 0.3 hours to 41.3 hours, average hourly earnings rose by $0.14 to $18.10 and weekly earnings were up by $11.17 to $747.53. Compared with November of last year, the unadjusted workweek for manufacturing workers was down by 0.5 hours, average hourly earnings rose by $0.65 and weekly earnings were higher by $18.12.
Governor Corzine will announce new spending cuts early next month, his response to a recession-fueled budget deficit that is now $459 million and likely heading to well over $1 billion.
Thanks to another bleak report on state revenues released Tuesday, Corzine said the budget deficit — and a series of new spending cuts — could total more than the $1.2 billion he predicted just last month.
“We need to find at least $1.2 billion and, as I have talked about, if we are in error, it will probably be larger numbers as we go forward if we sustain the kind of declines in revenue that we’ve been seeing the last two months,” Corzine said Tuesday in Trenton.
November’s revenue report indicates state tax collections came in about $200 million below the projections included in the $33 billion spending plan Corzine and the state Legislature approved this summer. Revenue collections in October also came up short, by $211 million.
In all, state revenue collections are $459 million behind original budget estimates for the first five months of the fiscal year that began on July 1.
“They are very indicative of a weakening economy,” Corzine said.
About $400 million has already been cut in response to the declining revenue and the governor has asked department heads to find another $600 million. He said those cuts and at least $200 million more will be detailed in January.
“We will be out very early in the New Year with the specifics on this,” he said. “We’ve had an ongoing serious scrub of every element of our budgetary options.”
“We’re making adjustments in spending as we speak,” he said.
The total revenue shortfall of $459 million marks a 4.2 percent gap between the $10.57 billion that was collected and what was projected for the first five months of the fiscal year.
The state’s three major revenue sources — the corporate, income and sales taxes — are all seeing deficits between 2 percent and 5 percent.
“These revenue numbers paint a sobering picture of how the deepening economic downturn is impacting New Jersey jobs, businesses, personal income and consumer spending,” state Treasurer David Rousseau said.
Kudos to Deborah Smith over at the Jersey Bites Blog for putting the “Blogging Out Hunger” campaign together. Deborah managed to get more than 100 blogs to spread this very important message.
Economy Leaves Americans with Empty Plates
More than 35 million Americans, including 12 million children, either live with or are on the verge of hunger. In New Jersey alone, an estimated 250,000 new clients will be seeking sustenance this year from the state’s food banks. But recently, as requests for food assistance have risen, food donations are on the decline, leaving food bank shelves almost empty and hungry families waiting for something to eat.
The situation is dire, no more so than at the Community FoodBank of New Jersey (CFBNJ), the largest food bank in the state, where requests for food have gone up 30 percent, but donations are down by 25 percent. Warehouse shelves that are typically stocked with food are bare and supplies have gotten so low that, for the first time in its 25 year history, the food bank is developing a rationing mechanism.
As the state’s key distributor of food to local banks – serving more than 500,000 people a year and providing assistance to nearly 1,700 non-profits in the state – the stability of replenishment of the CFBNJ is essential to ensuring that individuals in need have access to food.
If everyone could just do a little, it would help those in need a lot. To help, people can:
1. Make a monetary contribution: Visit www.njfoodbank.org.
2. Donate food: Drop off a bag of food at your local food pantry.
3. Organize a food drive: We can help explain the logistics of starting a food drive. Just call 908-355-FOOD.
4. Help “Check Out Hunger:” Look for the “Check Out Hunger” coupons at your local supermarket and donate. No donation is too small!
New Jersey’s courts are feeling the pressure of the ongoing recession with mortgage foreclosures soaring and credit-card debt lawsuits on the rise as well.
The state court system in October posted a record number of mortgage foreclosure filings for one month with more than 5,000 new cases, New Jersey Supreme Court Chief Justice Stuart Rabner said Thursday.
“Each of these cases involves the potential for someone losing their home,” Rabner said.
In all, 46,130 foreclosures were filed in a 12-month period that ended September 2008. There were a total of 31,667 mortgage foreclosure filings, about 46 percent fewer, during the previous 12-month period.
In response, the court system has started a new program that provides mediation in an effort to get lenders and borrowers to come up with ways to prevent owner-occupied foreclosures. Mediation is now mandatory when a foreclosure is contested by the homeowner.
The courts must remain neutral in foreclosure cases, but Rabner said both the lender and the borrower have an incentive to participate in mediation sessions and reach an agreement.
“We’re encouraging people to participate at any step of the process even up until the time of the sheriff’s sale,” he said.
