Otis Boone describes his housing problem as “a funny situation,” but stories like his have become common in Mercer County and around the country.
In August 2005 he and his wife moved out of Trenton and got a zero-down loan on a newly built home on Saratoga Avenue in Ewing Township. Boone, who worked in the shipping department at a train manufacturer, hurt his back the following year, went on disability and saw his income cut in half.
He couldn’t keep up with the mortgage payments of $1,900 per month, plus taxes and other expenses, as well as the prospect of even higher payments when his adjustable rate mortgage resets, he said.
Putting the place up for sale brought no offers, so last August the couple moved out of their home, which remains unoccupied, and moved into an apartment in Hamilton.
“At the time when I wasn’t making the payments, something like this never happened to me before,” said Boone, 59. “I wanted to get an apartment before my credit really got bad. I don’t know where I can get the money unless I get a miracle.”
As years of unrealistic subprime loans collide with job losses, personal misfortune and the slumping housing market, hundreds of Mercer County residents face similar crises. The number of county properties entering foreclosure hit a recent peak in January, and mortgage counselors who try to help people keep their homes say they see no end in sight.
The county had 180 foreclosure filings in January, according to records kept by County Clerk Paula Sollami-Covello. The number fell slightly to 167 in February and remained relatively high in March, with 145 filings received through Tuesday.
In March 2007 the county had a similarly high 176 filings, while the figures were lower through much of last year. Banks and mortgage companies file foreclosures when homeowners fall behind in their mortgage payments, but most do not result in people losing their homes.
Tracking the number of foreclosed homes is difficult because some of the filings include more than one property. But records maintained by private real estate companies, and the experience of counselors, confirm that owners keep falling behind on their payments at high rates.
“The numbers for us continue to rise,” said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, whose Trenton office has been overwhelmed with homeowners seeking help. “We’re at overcapacity and we see nothing letting up.”
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RealtyTrac, a California company that has its own system for tracking foreclosures, reported a recent high of 452 filings in September in Mercer County and 349 in October. Last month the company reported 216 foreclosures.
New Jersey as a whole had 5,598 foreclosures in February, the highest figure in at least a year, according to RealtyTrac.
The Morris County Sheriff’s Office reports that the number of houses put up for auction within the first two months of this year was 40 percent higher over the same period last year. And houses placed on the sheriff’s list are much more likely to be sold at auction this year than they were last year at the same time, with fewer homeowners able to get their homes off that list.
And while Morris County foreclosure filings increased at a slower rate than the state average, according to state court statistics, they have been going up dramatically within the past two years after remaining stable for a decade:
• There were 1,146 foreclosure filings in Morris last year, up 36 percent from the previous year, 69 percent from 2005, and 89 percent from 1997.
• Within the first two months of this year, 74 homes were scheduled to be auctioned at a Morris County sheriff’s sale compared with 53 homes within the first two months of 2007. Last year, 21 homes were sold over that time and 31 homes came off the list. This year, 39 homes were sold and 16 came off the list.
Housing counselors here, as elsewhere, report that they began getting calls from homeowners having trouble keeping up with their mortgages last summer, and that the volume became larger in December. They report hearing many of the same stories — buyers receiving mortgages too large for their incomes, often with no money down and with adjustable rates that kept going up and left them unable to make payments.
Maria Jacome, director of ACORN Housing in Newark, which counsels low- to moderate-income homebuyers across the state, said most of her clients with mortgage problems are from Essex and Hudson counties. But 10 percent of her clients come from affluent Morris County. Some housing experts say middle- and upper-income families sometimes are more likely to get bad deals on mortgages because low-income families often participate in workshops sponsored by affordable-housing groups.
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The National Association of Realtors reports that the median sales price of Morris homes for the fourth quarter of 2007 was $470,300. That’s an 8.7 percent decrease from the $515,300 median at the end of the previous year. Hudson was the only county reporting a steeper decline when comparing those periods.
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Call it reckless abandonment. Shelters and animal rescue organizations across the country are packed cage-to-cage with dogs and cats, even birds and reptiles, that have been ditched or dropped off as scores of foreclosed-upon homeowners relocate. It is a disturbing trend and a sign of the tough economic times that has prompted a number of organizations to form hotlines for pet foster homes and to implore pet owners — or what the industry calls “pet parents” — to seek help for their animals before they head off.
“There are a lot of people who are just walking away and leaving their pets behind, which breaks everyone’s heart,” said Windgassen, the president of Anthem Pets, a nonprofit animal welfare organization in her community.
The number of abandoned pure-bred dogs in her neighborhood alone has jumped 10-fold just since Christmas. “It just boggles my mind,” she said. “It’s cutting across all income levels and age levels.”
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There are no national statistics on pet abandonment or on the number of pets found in vacant properties. But Stephanie Shain, director or outreach for the Humane Society of the United States, said shelters are reporting full capacity and rescue organizations tell of sharper increases in the numbers of animals coming in.
“The economic times are making everyone pull their belts in a little tighter and people are having trouble taking care of their pets or keeping them if they’ve lost their home,” she said. As consumers face foreclosures they often move first to rental apartments or homes that won’t allow pets. They’re also likely to give their pets up if they find themselves imposing on a family member for housing.
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Vivian Kiggins, executive director of the Liberty Humane Society in New Jersey, said her center has an extraordinarily large number of mature cats in need of adoption now. That’s atypical of most early springs that are relatively quiet until the “kitten season” kicks in.
“We should be at a low point right now, but we’re packed with adult cats,” she said, noting that it could be a reflection of the economy.
“We’ve had people say they can’t afford their pets and we do everything in our power to make sure that they can keep them with free-food programs and low-cost veterinarian appointment opportunities,” she said.
Grammy winner Mary J. Blige plunked down $12.3 million in cash for a Saddle River, N.J., mansion, the Daily News has learned.
“She fell in love with this one,” a source said of Blige, who checked out several houses in the swanky area before settling on the 18,250-square-foot dream pad.
Thanks to the sagging housing market, the 37-year-old best-selling singer got a relative bargain.
The house originally went on the market last year for $17 million and was reduced this year to $13.9 million, the source said.
The deepening housing slump brought U.S. growth to a near standstill in the fourth quarter and has now probably tipped the world’s biggest economy into a recession, economists said ahead of a government report today.
Gross domestic product advanced at a 0.6 percent annual rate in the last three months of 2007, matching the weakest pace in five years, according to the median projection of economists surveyed by Bloomberg News. The economy grew at a 4.9 percent pace in last year’s third quarter.
So far this year, consumer spending has stalled, and business investment and commercial construction have joined home building in decline. The Federal Reserve’s interest-rate reductions and the government’s rebate checks won’t influence the economy soon enough to sustain the six-year expansion.
“We’re getting a picture of the economy that looks like what you would expect for a recession,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York.
The Commerce Department is scheduled to release the GDP report at 8:30 a.m. in Washington. The 70 estimates in the Bloomberg News survey ranged from no growth to 1 percent. The figures are the second revision of data first issued in January and will, for the first time, include estimates on corporate profits.
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“The consumer is under extreme stress,” AutoNation Inc. Chief Executive Officer Michael Jackson said in a Bloomberg Television interview on March 19. AutoNation is the largest publicly traded U.S. car dealer.
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“The weakness coming from consumer and business spending will be ugly,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis.
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More and more economists are forecasting a recession. Martin Feldstein, the Harvard economics professor who heads the research group that determines when downturns begin, said this month that a contraction had already begun.
Assembly lawmakers on Tuesday said the state should weigh allowing cities and towns to impose their own taxes as more woes were predicted for New Jersey’s troubled state finances.
The Legislature’s budget official predicted the state will collect $289 million less in taxes next fiscal year than Gov. Jon S. Corzine has estimated as economic activity slows in the coming months.
“It should be clear that most of the risk in this forecast is on the downside, and it is easy to imagine plausible economic scenarios in which the outcome is considerably more dire,” David Rosen, the legislative budget and finance officer, told Assembly lawmakers.
Corzine’s $33 billion budget already calls for cutting spending by $2.7 billion to try to right finances plagued by high debt and taxes.
A $289 million shortfall would require either additional cuts or increased taxes, but Corzine has said he currently doesn’t support tax increases. He has also said he wouldn’t be surprised if less revenue came in than was estimated.
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But Greenwald said lawmakers should look at how other states let municipalities charge their own taxes.
New Jersey local governments raise nearly all their revenue from property taxes, which average $6,800 per property owner in New Jersey, twice the national average.
But New York, for instance, allows local governments to add their own sales taxes. Many states and cities allow local income taxes. Some have a personal property tax on cars, trucks, motorcycles and other vehicles.
“We ought to look at that, too,” said Assemblywoman Joan Quigley, D-Hudson.
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Corzine said letting municipalities impose their own taxes “makes sense and could potentially go a long way to relieving some of the pressure that exists with property taxes,” but was uncertain amid economic worries.
“I’m not particularly inclined to think that having new taxes at a time of economic recession is a good idea, so I’d be a little hesitant about the immediate imposition,” Corzine said.
Americans are bracing for rising unemployment and shrinking salaries, a gloomy outlook that could translate into a serious cutback in consumer spending, the primary engine of the economy.
A private survey of about 2,500 households found that Americans feel worse now about the economy’s prospects than at any time since 1973, when Americans struggled with soaring oil prices and runaway inflation.
Fears often prove overblown, of course, and this particular survey, which was released on Tuesday by the Conference Board, has a spotty track record as an indicator. But expectations can often be self-fulfilling: worried consumers are less likely to make the big purchases that help keep the economy humming.
“It signals a great deal of concern and anxiety and uncertainty among consumers,” Bernard Baumohl of the Economic Outlook Group, a research firm in Princeton, N.J., said of the survey.
“Add that to the fact that the job market has weakened dramatically, and incomes haven’t been rising very much — certainly below the pace of inflation — and you really have the ingredients of a significant cutback of consumer spending,” he said.
With home prices falling at record rates, Americans are also finding it more difficult to draw on their home equity, further depressing their spending power. A separate report on Tuesday said the value of single-family homes in major metropolitan areas plummeted 10.7 percent in January from a year earlier, the steepest annual decline since the 1990s housing slump.
“Consumer-led recessions are among the most difficult to turn around in an economy,” Mr. Baumohl said. “Particularly this one, because of the fact that many households feel a lot poorer than they did a year ago, primarily because of the collapse in the value of their homes.”
Sales of goods and services make up more than two-thirds of gross domestic product, so a significant spending slowdown can speed the onset of a recession or make a downturn even worse.
And the gloom among consumers appeared widespread. A quarter of those surveyed said that businesses conditions would worsen in the next six months, and nearly a third said the economy would have fewer jobs. Fewer Americans plan to purchase big-ticket items like refrigerators, vehicles and television sets, and more than half said that jobs were currently “not so plentiful.”
Home prices in 20 U.S. metropolitan areas fell in January by the most on record, a sign the housing recession is deepening, a private survey showed today.
The S&P/Case-Shiller home-price index dropped 10.7 percent from January 2007, after a 9 percent decrease in December. The gauge has fallen for 13 consecutive months.
Price declines will continue as foreclosures add to a glut of unsold properties, and stricter lending rules make it harder to get financing. Declining values leave homeowners feeling less wealthy and with less home equity to borrow against, undermining consumer spending and pushing the economy closer to a recession.
“As long as inventories are high, home prices will fall,” Michelle Meyer, economist at Lehman Brothers Holdings Inc. in New York, said before the report. “Foreclosures will add to inventories and crowd out regular sales, further depressing home prices.”
The home price index was forecast to decline 10.5 percent, according to the median estimate of 18 economists surveyed by Bloomberg News. Projections ranged from declines of 9.5 percent to 11 percent.
January home prices fell 2.4 percent from a month earlier, following a 2.1 percent decline the prior month, the Case- Shiller report showed. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month to month.
Prices of existing single-family homes slumped in January, with 16 of the 20 regions measured posting record annual declines, according to the Standard & Poor’s/Case Shiller national home price index reported on Tuesday.
The composite month-over-month index of 20 metropolitan areas fell 2.4 percent to 180.65 in January from December, bringing the measure down 10.7 percent from a year earlier.
S&P said its composite month-over-month index of 10 metropolitan areas declined 2.3 percent in January to 196.06, for an 11.4 percent year-over-year drop.
