New Jersey Real Estate Report

John St, Ridgewood NJ

MLS# 2819679
Listed: 5/13/2008
List Price: $769,000
Reduced to: $745,000
Active

———————————–

Jerome Ave, Glen Rock NJ

MLS# 2723934
Listed: 5/13/2007
List Price: $549,000
Reduced to: $519,000
Withdrawn

MLS# 2809536
Listed: 3/9/2008
List Price: $500,000
Reduced to: $479,000
Active

———————————–

Harrington Street, Hillsdale NJ

MLS# 2723934
Listed: 6/11/2007
List Price: $689,000
Withdrawn

MLS# 2742492
Listed: 10/19/2007
List Price: $659,000
Reduced to: $639,000
Expired

MLS# 2817462
Listed: 4/29/2008
List Price: $638,500
Withdrawn

MLS# 2821719
Listed: 5/29/2008
List Price: $599,000
Active

———————————–

Woodland Cross, Westwood NJ

MLS# 2748135
Listed: 12/10/2007
List Price: $659,000
Reduced to: $630,000
Withdrawn

MLS# 2808782
Listed: 3/4/2008
List Price: $629,000
Sold: $570,000
Sale Date: 5/27/2008

———————————–

Haworth Ave, Haworth NJ

MLS# 2804108
Listed: 1/30/2008
List Price: $829,000
Reduced to: $769,000
Withdrawn

MLS# 2821495
Listed: 5/27/2008
List Price: $769,000
Active

From the Economist:

Through the floor
America’s house prices are falling even faster than during the Great Depression

From the Wall Street Journal:

Lessons From the Housing Bubble
By DAVID WESSEL
May 29, 2008

Before we replace angst about housing, mortgages and credit markets with anxiety about rising oil prices, consider what we’ve learned in the past several months. We had a housing bubble; that’s now obvious. But how did it happen? Why was its bursting so painful? Without answers, we can’t hope to reduce chances of a repeat.

Boil it down to the three R’s: rocket scientists, regulators, and ratings agencies.

The rocket scientists are the wizards of Wall Street who invented securities that supposedly dispersed risk widely but actually created much more leverage than proved wise.

There is a good case that the savings-and-loan mess of the 1980s was made in Washington, the inevitable result of government deposit insurance that led to tails-you-lose, heads-I-win banking. The current mess was made on Wall Street.

A bubble so large also required aggressive mortgage originators, imprudent home buyers and myopic investors. But it wouldn’t have been as bad if not for the paper factories that sliced up individual subprime mortgages and assembled the pieces into securities, each with its own acronym, that were deemed safer than the underlying loans. They behaved as if they were taking a little poison and diluting it in a big reservoir; instead, they poisoned the entire water supply.
…
“The idea of risk dispersion is nice in theory, but in practice it depends on who it gets dispersed to,” says Peter Fisher, a former Federal Reserve Bank of New York official now at money manager BlackRock Inc. “It turned out we weren’t dispersing it to strong hands who could hold it through the volatility. Rather, we were dispersing it to weak hands who couldn’t hold it, and ended up adding to the volatility.”

The cost of delinquency, default and falling house prices often was passed to entities (some linked to brand-name banks) that lacked the financial strength to weather a storm. As the entities couldn’t bear the burden for long, they had to sell mortgage-linked securities into a hostile, illiquid market, pushing down already depressed prices.

In a modern capitalist system, regulators provide guardrails to keep markets from driving the economy off a cliff. The regulators failed. Whether regulators should or could have restrained innovation on Wall Street or prohibited business deals between consenting, sophisticated adults is a tough question.

But regulators failed to protect unsophisticated consumers from mortgage loans that they simply couldn’t afford or didn’t understand; they’re now fixing that. And regulators misunderstood the risks that banks were taking and failed to stop lenders from lowering standards too far in their frenzy to attract business; fixing that will be tougher.

Among their many failings, the regulators allowed lenders to make a fundamental mistake: To lend not against the borrower’s cash flow and income, but instead to lend against the seemingly inexorable increase in the value of the collateral. Mortgages were made to people who couldn’t afford the payments because the lender (or investor) figured that if the borrower defaulted, the house would always be worth more than the loan.

“It is the hallmark of a credit bubble when lenders think that because collateral is going up in price they can ignore the borrower’s ability to pay,” says BlackRock’s Mr. Fisher. “Collateral should only be a backstop.” When lenders forget that, regulators must step in. “Lenders need someone to prevent them from competing their way to the bottom,” he says. Let’s put those words on a laminated card and hand it to every banking supervisor.
…
The flaws of rating agencies are a mélange of conflicts of interest, misleading grading systems that classified complex securities as if they were much like simple corporate bonds and a backward-looking approach that proved particularly useless. They were the enablers. They are atoning and changing their ways, as they should. Their business model will change; government oversight will be strengthened.

But investors who relied on the rating agencies — particularly supposedly sophisticated pension funds and other institutions — are at fault, too. Rating firms became a crutch for investors who simply didn’t want to spend the time and money required to be prudent investors at a time when low interest rates had everyone reaching for higher returns without contemplating the higher risks.

A little “back to basics” in banking and investing would go a substantial way toward avoiding a repeat of the Panic of ‘08.

Enjoy!

Notes:
OFHEO HPI and Purchase Only Index are both quarterly state-level series.
S&P Case Shiller Index is a monthly series and is based on the NYC Commutable Metro Area. This index includes areas outside of New Jersey.
NAR/NJAR Index is a quarterly state-level series based on MLS data.
OFHEO and HPI Indicies are based on repeat sales, NAR/NJAR is a simple median.

S&P Case Shiller Tier Rankings are as follows:
Low: Under $327733
Middle: $327733 - $469975
High: Over $469975
(as of March 2008)

Source data can be found here:

NJ Home Price Tracker Spreadsheet (XLS)

Hat tip to Pretorius for aggregating the bulk of this data and providing the concept. I’ll be adding the OFHEO MSA level data in the next day or two.

From Bloomberg:

S&P/Case-Shiller U.S. Home-Price Index Falls 14.4%

Home prices in 20 U.S. metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.

The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.

“Many households are putting their home-buying plans on hold, given the expectations that the house price corrections will persist,” Celia Chen, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The housing downturn remains in full swing.”

Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the 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 variations.

From Bloomberg:

New-Home Sales in the U.S. Rose 3.3% to 526,000 Pace

New-home sales in the U.S. unexpectedly rose in April after readings for the prior month were revised down, signaling a worsening housing slump is still a threat to the economy.

Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington. A separate report today showed home prices dropped in the first quarter by the most in at least 20 years.

Concern about declining home values and stricter loan rules are limiting demand and foreclosures are throwing even more properties on the market. Federal Reserve policy makers view the prospect of larger decreases in house prices and the effect that would have on financial institutions as a “key source” of risk to growth.

“There’s certainly more room for declines in home sales,” Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “People will be reluctant to buy, lenders will be reluctant to lend. We don’t think a leveling out in the housing market is coming anytime soon.”

Now Open, Part II!

Prior weekend thread closed due to comment overflow

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.

From the Press of Atlantic City:

Real estate agents debate local statistics

The latest positive numbers for home sales and prices have divided real estate agents, ordinarily a group uniformly upbeat about the housing market.

Some doubt the numbers, even though they’re from their own association, and say it’s making it tougher to get home sellers to reduce their prices to more realistic levels.

Kevin Dawe, a real estate agent with Balsley Losco Real Estate in Northfield, said last week’s report that the median home price in the Atlantic City area rose 4.8 percent in the first quarter didn’t match what he’s been seeing.

In particular, Dawe said the figures from the National Association of Realtors, and other information gathered from state and local Realtor groups, seemed to disagree with what the Multiple Listing Service showed.

“As we talk to our sellers about the declining market we are actually facing and the fact that they have to be aggressive in pricing their homes if they expect to find a buyer, the statistics in your article are baffling and impact our credibility with customers,” Dawe said.
…
Bruce E. Breunig Jr., broker at Century 21 Alliance in Margate, admitted that “we Realtors remain part of the problem. We blame the media for fueling the downturn and try to counterbalance it with our own positive spin.”

Breunig had a theory as to why the NAR survey shows rising prices locally that real estate agents aren’t seeing.

The Realtor survey tracks median home prices, the price at which half of all sales were for more, half for less.

The subprime mortgage crisis and subsequent credit crunch have made it far more difficult for low-end buyers to get a mortgage, he said, which has reduced the number of low-end sales. The homes that sell are then disproportionately from the upper half of the market, artificially raising the median price.

From Reuters:

Housing Crunch: Return of the Big Downpayment

As U.S. banks mop up the mess from billions of dollars of bad home loans, buyers are finding the days of cheap money are over and, in many cases, tougher versions of old lending rules now apply.

People of modest means have seen the American dream of home ownership move further out of reach. Even affluent buyers, who took advantage the last decade’s low interest rates and looser lending standards to move up to more expensive homes or to buy investment properties, are seeing their options evaporate.

Gone are the days when almost anyone could get a loan with a down payment of less than the traditional 20 percent.

“The clock is rolled back about 20 years,” said Lou Barnes, co-owner of Colorado-based Boulder West Financial Services and publisher of Mortgage Credit News.

Such obstacles to obtaining a mortgage are among the actors keeping the depressed U.S. housing market from recovering, which in turn is having a dampening effect on the broader economy.

“You definitely need more money to buy a house than you did a few years ago,” said Guy Cecala, publisher of Inside Mortgage Finance. “The days of putting no money down are gone.”
…
These days, lenders are balking at anything other than “plain vanilla” loans to would-be buyers with stellar credit histories, significant downpayments and income that can be verified with government tax forms.
…
For example, interest rates on jumbo mortgages — or loans above $417,000 — remain higher than for other loans, despite a relatively low rate of default.

“The market is so skittish right now. (Lenders have) been so burned by their inability to understand the risk of subprime loans that they’re translating that to the rest of the market,”
Cecala said.

From the Press of Atlantic City:

Something funny in economy

Here’s a new economic indicator: The more jokes about economists, the worse the outlook.
James Hughes repeatedly lightened his speech Tuesday to the Mid-Atlantic Multifamily Conference & Expo, but those were the only bright spots in his dismal picture of the state’s future.

Hughes, a leading New Jersey economist and dean of Rutgers University’s Bloustein School, at least had some good news for his apartments-industry hosts: With the homeownership rate falling, more people will need to rent their apartments.

With five straight months of private sector job losses already, the U.S. economy will only muster a long, shallow recovery stretching into 2009, he said.

The now-tightened mortgage market will continue to dampen the housing industry, and the real estate price decline will be “a multiyear phenomenon,” Hughes said.
…
New Jersey went through the last expansion without the employment growth typical of the good times, about 74,000 new jobs a year, he said.

Instead, from 2004 through 2006, the state averaged just 23,000 new jobs per year. Last year, New Jersey added just 3,700 jobs and erased all of those in the first quarter of this year, Hughes said.

Through the 1980s and ’90s, the Garden State was the powerhouse of the Northeast, he said.

“We’re no longer the economic locomotive of the Northeast. We’ve slipped to the caboose,” he told the opening session of the N.J. Apartments Association’s conference, which runs through today at Trump Taj Mahal Casino Resort.

For the assembled apartment developers, owners and managers, at least, the state’s drop in home ownership - from 70 percent in 2005 to 68.3 last year and soon into the low 65s - is welcome news.

A fifth of the state’s population is foreign-born, which also contributes to demand for apartment rentals, he said.

And the potential for more multifamily housing is boosted by its good transit systems and nation-leading population density (higher even than in Japan and India), he said.

From the Wall Street Journal:

Where Home Prices Are Holding Up
By JEFF D. OPDYKE
May 20, 2008; Page D1

Downtown: It’s been among the safest places to hide from the housing downturn.

Much has been made of the way the nation’s real-estate bust is affecting some American cities far more than others. But even within a single metro area, changes in housing prices can show wild variations.

And in big cities, prices in the central cores often fare the best. Far-flung suburbs — where home building exploded in recent years — have more typically gotten hammered. In between is a patchwork of established suburbs and city neighborhoods peripheral to downtown that can be all over the map in terms of price declines — or even increases.
…
For today’s buyers, all this means that shopping for housing bargains is increasingly complicated. The best deals may be where prices have slid the most, but such areas could easily fall a good bit more before hitting bottom. Meanwhile, you’ll get few bargains if you buy a home in San Francisco or Manhattan or downtown Boston. Of course, if the housing crisis broadens, the central core areas also could see price drops.
…
While New York’s commuter market — which includes suburban New York, New Jersey and Connecticut — is down about 8% from its peak in mid-2006, much of Manhattan continues humming along. Neighborhoods such as SoHo, the Lower East Side, Greenwich Village, Chelsea, Murray Hill, the Upper West Side and Harlem are all up in the past year, according to DataQuick’s Zip Code analysis.

Bidding wars still happen. Toni Haber, an executive vice president at Prudential Douglas Elliman, a New York City real-estate firm, says 60 people waited in line recently at an open house to view a three-bedroom apartment in Greenwich Village. The owner had four competing offers within the week, and agreed to sell for about $2.5 million — $300,000 over the asking price.

Part of the city’s strength comes from the fact that few buyers were investing in properties to flip them. Moreover, many apartment buildings in New York aren’t condominiums but co-ops, which impose financial demands on potential buyers far more rigorous than banks do — which helps keep the number of foreclosures down. In addition, foreign investors have been exploiting the weak dollar by grabbing Manhattan real estate.

One area of weakness: the Financial District in Lower Manhattan, where median prices are down, in part because of an abundance of new construction in the area.

Those areas of Brooklyn that are close to Manhattan are also holding up well. On the periphery, places like Jamaica, Queens; parts of the Bronx; and nearby New Jersey towns such as Jersey City and Hoboken are off between 3% and 14%.

Farther out, popular commuter towns like Summit and New Providence, N.J., are down at much as 16%. Pockets of suburban strength do exist, though. High-end suburbs in New York’s Westchester County such as Chappaqua are up over the past year.

From the APP:

Pennacchio: Block “gentlemen farmers” from property tax break

U.S. Senate candidate Joseph Pennacchio Monday criticized Republican opponent Dick Zimmer for making use of a property tax break by selling hay from his Hunterdon County home.

Pennacchio pledged to write new laws in the state Senate banning “gentlemen farmers” from the Jersey landscape.

“Here is a guy who is asking to represent the people of New Jersey, yet he takes advantage of them to have them subsidize his estate. That’s unfair, ridiculous and selfish,” said Pennacchio, a Republican state senator from Morris County, at a Statehouse news conference.

Zimmer, a Washington lobbyist who maintains homes in the capital and in Delaware Township, receives a tax break on most of his 24.5-acre Hunterdon County property under a 1964 state law intended to help struggling farmers and preserve farms and open space.

Zimmer’s home is on one acre, assessed at $353,900, on which he paid $7,212 in property taxes last year. His other 23.55 acres are assessed at $8,300, and on that property he paid $169 in taxes in 2007.
…
The state legislation promised by Pennacchio would mandate anyone getting the tax break live in New Jersey and increase the minimum amount of money gained from the land — needed to become eligible for the break — from $500 a year to $1,250.

From the Record:

Houses owned by banks may be bargains

Vincent and Kerri Bagnaturo had been looking to trade up to a bigger place in Ridgewood for almost two years when they came upon the house they felt was the right fit for them.

It was a spacious 4-bedroom, 3-bath house with a large family room, on a 200-foot deep property in the sought-after Willard School neighborhood.

The home also was an REO. Short for real-estate-owned, REO means a home has been through foreclosure, has failed to be sold at auction and has been repossessed by the bank holding the mortgage. Banks wants to get these properties off their books, and get them sold.
…
In New Jersey, REOs are more prevalent — and generally more of a mess — in urban neighborhoods hit by the subprime crisis.

“The homes in Essex County, Newark, Jersey City, Paterson can be the worst,” said Derek Eisenberg, who specializes in REO appraisals for banks through his company, Continental Real Estate Services. “I’ve had to ask for a police escort to go into crack houses where the plumbing’s been ripped out, the windows have been ripped out, the properties became vacant and got looted.”

But he’s also appraised REOs in much nicer locales, such as Saddle River and Alpine.

The Bagnaturos first saw their home — a bank-owned property in Ridgewood — late last fall, right after it came on the market.

“It was listed at $1.89 million,” Vincent Bagnaturo said. “Way out of our price range.”

The Bagnaturos made a bid of under $1 million in November. The bank countered by lowering the price $80,000.

“We just sat tight,” Bagnaturo said. “They [the bank] sat tight and we sat tight. My assumption is that, over the course of time, they realized they were well overpriced.”

At the end of January, the bank lowered the asking price to $1.4 million. The Bagnaturos bid again, and, after a series of negotiations, won the house for $1,050,000.
…
The last big surge of bank-owned properties on the market was in the early 1990s during the savings and loan crisis, Eisenberg said.

Real estate agent Mole bought an REO herself in the early ’90s.

“In those days, foreclosed houses never made it to the Realtors or to the Multiple Listing Service,” Mole said.

“You had to watch the sheriff’s auctions or you had to know somebody at the bank. I knew the guy at the bank. I had gotten divorced and my salary was low at the time. I said [to the banker], ‘Would you give me a mortgage?’ He said, ‘I’ll not only give you a mortgage, I’ll sell you a house.’ He got me into a beautiful house that I was able to buy for much less than its assessed value.”
…
REO specialist Stajek believes North Jersey will see even greater numbers of REOs for sale in the near future.

“The country as a whole has not yet seen what is going to happen with REOs,” Stajek said. “Inventory is going to double. In Bergen County, we’ve just barely scratched the surface.”

Now Open, Part II!

Prior weekend thread closed due to comment overflow

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.