New Jersey Real Estate Report

The January S&P/Case Shiller Home Price Index is due out at 9am this morning. I’ll be on the road this morning, so check the comments for more details.

From Bloomberg:

Housing Prices in 20 U.S. Cities Probably Dropped in January

Home prices in 20 U.S. cities probably fell at the fastest year-over-year pace on record in January as demand plummeted and foreclosures rose, economists said ahead of a private report today.

The S&P/Case-Shiller index dropped 18.6 percent, according to the median forecast of 29 economists surveyed by Bloomberg News. A separate report will likely indicate consumers this month were still pessimistic about the economic outlook.

A glut of unsold properties may keep prices low even as policy efforts to unclog credit and aid borrowers begin to take hold and ease the housing slump, now in its fourth year. Shrinking wealth and a persistent lack of confidence in the economy may also temper a turnaround in consumer spending.

“It’ll be some time before we reach the nadir in home prices,” said Joseph Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “We’re starting to see some signs of stability in housing sales, but there’s a significant oversupply.”

S&P/Case-Shiller will report the 20-city home-price index at 9 a.m. Washington time. Estimates in the Bloomberg survey ranged from declines of 17.2 percent to 19 percent, after a drop of 18.5 percent in December. The gauge has fallen every month since January 2007. Year-over-year records started in 2001.

From Forbes:

Home Price Index On The Horizon

On Tuesday, investors will be bracing for the latest report on the January S&P/Case-Shiller Home Price Index. Analysts expect the decline in prices to slow somewhat, falling 18.3% in the latest report after dropping 18.5% in December.

 

From the Times of Trenton:

Trenton jobless numbers climbing

When Mayor Douglas Palmer saw the city’s latest unemployment figure, he literally couldn’t believe his eyes.

The unemployment rate hit 17.5 percent in January, soaring from 12 percent a year earlier. More than 3,000 residents entered the unemployment rolls in a city of 83,000, Palmer said.

“How could 3,000 people in Trenton lose their jobs?” he said. “The city only laid off 29 people. The state didn’t lay off anybody, the county didn’t lay off anybody, the schools haven’t laid anybody off yet.”

Trenton’s unemployment rate was the highest among New Jersey’s cities, ahead of Camden at 15.7 percent, Paterson at 15 percent and Newark at 12.5 percent.

Statewide, unemployment was at 7.3 percent in January and then jumped to 8.2 percent in February, just above the U.S. rate. The federal Bureau of Labor Statistics will release February figures for cities next week.
…
The figures also show county job losses in a range of private industries. The shrinking of fields like construction, retail and domestic work are likely having a disproportionate impact on lower-skilled Trenton residents, said James Hughes, dean of the Edward J. Bloustein School of Planning and Policy at Rutgers University.

“The demographic sectors hit hardest so far tend to be younger workers, particularly teenagers and those with lower skill levels and education levels,” he said.

“So as the economy contracts, a lot of the job losses could be impacting really more unskilled jobs,” 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.

Are you really sure New York City jobs are going to save New Jersey real estate?

From the Ledger:

N.Y.C. jobless rate hit 8.1 percent in February

New York’s unemployment rate jumped in February to its highest level since June 1993, rising to 7.8 percent from 7 percent in January, the state labor department said Thursday.

That compares with 4.6 percent in February 2008.

In New York City, the February rate was 8.1 percent –up from 6.9 percent in January and 4.4 percent a year earlier. Those are the highest numbers in the city since 2003.

Outside New York City, the rate stands at 7.6 percent, up from 4.8 percent last year and a 25-year high, said Peter Neenan, director of the Division of Research and Statistics.

“In the past six months, the state has lost almost 150,000 private sector jobs,” Neenan said.

The losses are fairly widespread and “the pace has definitely picked up in the last month,” said James Brown, the department’s New York City labor market analyst.

In addition to Wall Street and commercial banking job losses, “we’re also taking significant losses in what we call the ‘business and professional sector,’ which includes lawyers, accountants, architects, and temp work agencies,” said Brown.

From First American CoreLogic:

Double-Digit, Year-over-year Home Price Declines Continued in January

National resale housing prices fell 11.6 percent in January from a year ago. Home prices have declined by at least 10 percent on a year-over-year basis for 11 consecutive months and February preview data indicates the trend will continue.

The number of metropolitan markets experiencing price declines was, by far, the highest level tracked by the LoanPerformance HPI. As of January 2009, more than 700, or nearly three-quarters, of all metropolitan markets were experiencing home price depreciation, up from 254 markets experiencing depreciation in December 2007 and 394 in June 2008.
…
LoanPerformance HPI Largest CBSAs Ranking:
CBSA 12 Month HPI Change %
Edison-New Brunswick NJ -9.34%
New York-White Plains-Wayne NY-NJ -8.46%
…
LoanPerformance HPI State and National Ranking:
STATE 12 Month HPI Change %
National -11.61%
New Jersey -9.31%

From the Jersey Journal:

MAYOR CAN’T HANDLE TRUTH IN ADVERTISING

Mayor Dave Roberts pulled out the political big guns yesterday to take down a billboard that offended him.

Jersey City real estate firm Metropolitan & Waterfront Residential Brokerage paid for the billboard outside the Hoboken PATH station that read: “Cut your Hoboken property taxes 47%. We’ll help you leave.”

The sign, which was up for only a day, referenced Hoboken’s state takeover and subsequent massive tax hike. The overall property tax rate for Hoboken property owners increased 47 percent for the fiscal year that ends June 30. The municipal tax rate rose 84 percent.

After hearing from Roberts and others, Jaime LeFrak - a principal of the LeFrak Organization and a Jersey City waterfront developer who has a one-third interest in Metropolitan & Waterfront - ordered the billboard removed, a process he said would take about a week.

But Roberts was not about to wait that long.

The mayor called NJ Transit “several” times yesterday and the agency removed the billboard from its property last night.

“It’s outrageous they’re trying to use this as a marketing tool, which is totally inappropriate. Now we have a developer from Jersey City mocking our situation?” said Roberts.
…
“I received friendly requests from other people who kindly asked us to think of a different advertising campaign and we obliged,” said LeFrak.

“We don’t legally have to take it down, but we’re nice guys and if someone asks you in nice way to do something as a friend we’ll do it.”

Roberts said he and LeFrak had a heated exchange.

“I would not tolerate it if a Hoboken developer started printing the murder rate in Jersey City - that kind of advertising would be despicable,” said the mayor.

From the AP:

Northeast posts 20 pct February home sales drop

Home sales in the Northeast tumbled nearly 20 percent in February from last year, the worst region in the country, as the recession and layoffs made buyers cautious, the National Association of Realtors said Monday.

The median sales price in the Northeast fell under 5 percent year-over-year to $251,200.

Nationally, sales of existing homes fell 10.3 percent in February from a year ago, without adjusting for seasonal factors. The U.S. median sales price slid almost 16 percent to $165,400.
…
Home sales in seven major Northeast cities recorded double-digit declines in February, while median prices continue to fall across the region, according to The Associated Press-Re/Max Monthly Housing Report, also released Monday.

The report analyzed sales transactions in nine Northeast metropolitan statistical areas filed by all real estate agents, regardless of company affiliation.

Pittsburgh sales fell the most in the region, plunging nearly 44 percent in February from the year before. The median price there, however, only dipped 1.4 percent to $109,450, the best showing in the Northeast. Inventory fell by more than 23 percent year-over-year.
…
The pink slips on Wall Street haven’t discouraged buyers from shopping around, said John Allegro, a real estate agent with ERA Caputo Realty in New Hyde Park, N.Y.

“Open house attendance is up. Activity has perked up a little,” he said.

But few are pulling the trigger yet, according to AP-Re/Max’s data. Home sales in the suburban counties surrounding New York City - Suffolk, Nassau and Westchester counties - look like the stock market. Sales were off by 33 percent in February and the median price fell more than 13 percent to $370,000. The supply of unsold homes also grew by nearly 5 percent, the only area in the Northeast to show an increase.

Nearby in Passaic, N.J., home to many Manhattan commuters, February sales fell 23 percent, while prices dropped nearly 13 percent from a year ago to $311,000.

From Bloomberg:

U.S. Economy: Home Resales Unexpectedly Increased in February

Sales of previously owned homes in the U.S. unexpectedly increased in February as record foreclosures pushed down prices and lured first-time buyers into the market.

Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.
…
Economists forecast resales would fall to a 4.45 million annual rate, according to the median of 65 projections in a Bloomberg News survey. Estimates ranged from 4.26 million to 4.75 million. Sales were down 4.6 percent compared with a year earlier.

First-time buyers accounted for about half of all sales last month, led by growing demand for lower-priced properties, said the realtors group’s chief economist Lawrence Yun. That’s contributing to the drop in values, he said.

The median price of an existing home decreased to $165,400 from $195,800 in February a year earlier, the group said.

Lower prices have drummed up enough demand in some of the most distressed areas of the country to allow values to stabilize. In California, median listing prices rose last month for the first time in three years, Yun said.

“Part of the market-clearing process is that distressed properties must be sold, so the fact that this is occurring is good,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, said in a note to clients. “Still, it certainly depresses prices, and there are plenty more foreclosed — or soon to be foreclosed — homes in the pipeline.” He said values will therefore keep falling.
…
The number of unsold homes on the market at the end of February represented 9.7 months’ worth at the current sales pace, the same as in January. The group has said a five to six months supply is usually consistent with a balanced market.

Resales of single-family homes increased 4.4 percent to an annual rate of 4.23 million. Sales of condos and co-ops climbed 11.4 percent to a 490,000 rate.

All four regions showed an increase in sales last month, led by a 15.6 percent gain in the Northeast.

From the AP:

February existing home sales rise by 5.1 percent

Sales of previously occupied homes jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.
…
Prices, however, are expected to keep falling well into the year. Tens of thousands of homes reman tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.

“The four-letter word in the housing market is ‘jobs,’” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “If you’re worried about having a job tomorrow, you’re not likely to buy a home now.”

The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
…
The median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record and prices are now off 28 percent from their peak in July 2006.

From the Record:

Where’s the bottom?

Mounting economic woes worsened conditions in North Jersey’s stumbling housing market at the end of 2008, sending prices down another 8 percent and the number of sales down to levels not seen in nearly 20 years.

Amid a deepening recession and a banking crisis that squeezed the flow of mortgage money, the median price for a single-family home in Bergen and Passaic counties slipped to $390,000 in the fourth quarter, from $425,000 in the same period of 2007.

The drop marked the biggest year-over-year decline in the two-county region since the market began to stall in 2007.

The economic problems followed a yearlong buyer-seller standoff that staved off major price erosion as sellers held out for peak prices and refused buyers’ attempts to negotiate downward. But with economic conditions declining in late 2008, price drops accelerated and the market cooled so much that fewer than 2,000 homes sold in the two counties from October through December.

“It was bad as I’ve seen it in my 33 years in the business,” said Richard Stabile, president of ReMax Real Estate Associates in Woodcliff Lake. “It was the perfect storm for real estate.”

As Marlyn Friedberg of Friedberg Properties in northeast Bergen County said: “The market died. People went into hiding.”
…
An analysis by The Record of data obtained from county and state agencies found that:

* The median price for single-family homes in Bergen County sank from $455,000 in the fourth quarter of 2007 to $425,000 in the fourth quarter of 2008. In Passaic County, the decline was steeper, from a median of $370,000 to $335,000.

* Since the all-time peaks of $495,000 in Bergen County and $390,000 in Passaic County, medians in the two counties both are down 14 percent. While substantial, those drops are nowhere near the dips of 30 percent or more felt in other parts of the country.

* An estimated 1,600 to 1,700 homes sold in Bergen and Passaic counties from October through December. That is down nearly two-thirds since the all-time fourth-quarter high of 4,713 in 2004 and the first time since 1990 that fewer than 2,000 homes sold in any fourth-quarter period. The Record used past years’ trends to reach this estimate; the available data did not include all sales through the end of 2008 because of a lag in deed recordings.

* The downturn not only cut into potential profits for people who bought before the real estate boom of the 2000s, but it forced losses onto sellers who bought when prices were at their highest. Among the 185 homes that sold during the peak of the real estate boom and sold again in 2008, two-thirds lost value.
…
In many towns, sales were so few that median prices could not be meaningfully calculated. But among towns with at least 30 sales in the quarter, the combination of economic forces hit hardest in such places as Clifton, Fort Lee and Ridgewood, where prices were down 20 percent to 24 percent from their peaks.

At the other end of the scale, medians in Paramus, Ringwood and West Milford were off less than 10 percent.
…
Jeffrey Otteau, an East Brunswick appraiser who tracks the market statewide, predicted a 9 percent total drop in New Jersey prices in 2009.

Preliminary February 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 February sales, 2000 to 2009 YOY.

(click to enlarge)

The fourth graph displays an overlay of Sales and Inventory from 2003 to 2009.

(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:

(click to enlarge)

Bonus Graphs!

February Sales By County (log scale):

(click to enlarge)

From the AP:

N.J. has 24 cities with double-digit jobless rates

The number of larger New Jersey cities and towns with double-digit unemployment rates rose to 24 in January from 11 the prior month.

That’s according to data released Thursday by the federal Bureau of Labor Statistics on the 97 New Jersey communities with more than 25,000 residents.

Newark’s unemployment rate climbed to a five-year high of 12.5 percent in January, from 11.3 percent in December. That compares with 9 percent for New Jersey’s largest city during the same period a year ago.

It’s Newark’s highest jobless rate since January of 2004, when 12.6 percent of the city’s work force was idle.

Six New Jersey cities had unemployment rates higher than that in January, led by Trenton at 17.5 percent.

From Bloomberg:

Lost Bonuses Mean Manhattan Home Prices to Drop Most Since ‘80

Manhattan apartment sales declined 23 percent last year as the Dow Jones Industrial Average fell the most since the Great Depression. Now co-operative and condominium prices are dropping as Wall Street firms cut the bonuses that contributed to the property market boom of the past decade.

A 50 percent reduction in bonuses would push down prices by about 24 percent from their peak through mid-2010, said Sam Chandan, chief economist at property research firm Real Estate Economics LLC in New York. That would mark the biggest slide since 1980 when appraiser Miller Samuel Inc. started tracking Manhattan prices.

“This will probably be the worst price correction the city has seen,” said Marisa Di Natale, senior economist at Moody’s Economy.com in West Chester, Pennsylvania.
…
“If bonuses next year are expected at or below the current level, then prices will slide,” Miller Samuel President Jonathan Miller said.

Sales of Manhattan condominiums and co-ops priced at $10 million or more fell 60 percent in the fourth quarter from a year earlier, the New York City’s Independent Budget Office said. Transactions involving Manhattan apartments valued at $1 million or more dropped 21 percent in the same period.
…
Apartment prices have dropped 15 percent in Manhattan and may fall another 11 percent to a median of about $820,000 in the next 12 months, said Chandan of Real Estate Economics. If bonuses are eliminated, prices would slump by another 20 percent to 24 percent to a median of $730,000, he said.

“If there’s a shock to income in the city or a shock to employment, that changes the demand side in the short term and prices adjust to that,” Chandan said.

From the Record:

N.J. homes prices still falling

New Jersey home prices are dropping by an average of about 1 percent a month, and will likely not stabilize before the fourth quarter, appraiser Jeffrey Otteau said today. He predicted a 9 percent decline in prices for 2009 overall.

“Because of job losses, housing will continue to contract,” Otteau told a hotel ballroom full of real estate agents in East Hanover, at his twice-yearly seminar on home prices.

This year’s projected decline will follow a 2008 drop that Otteau estimated at 8 percent statewide. The Standard & Poor’s Case-Shiller index recently said the 2008 drop was 9.2 percent in the New York metropolitan area, which includes North Jersey.

While many potential buyers are waiting for home prices to fall further, Otteau said if they wait too long they may lose the benefit of low mortgage rates, which recently have hovered around 5 percent. If interest rates rise just one percentage point, he said, that raises monthly payments as much as a 9 percent increase in home prices.

“Starting next year, interest rates will begin to rise,” Otteau predicted.

Otteau said home prices may start rising in spring 2010 as the economy recovers, but will increase slowly — around 3 percent a year — in the first few years of the housing market’s rebound. As a result, New Jersey home prices will not return to the peaks reached in 2005 until 2020, he predicted.

Otteau also said:

* Demand for smaller, less expensive homes will outstrip demand for large luxury homes in the coming years, as baby boomers retire and downsize, and their children become first-time buyers with limited incomes.

* New Jersey continues to lose residents to other states that offer a lower cost of living.

* Hudson County, which was one of the strongest housing markets in the state a year ago, is now one of the weakest, because job cuts on Wall Street mean fewer people are looking for homes across the Hudson River.

From Inman:

Fannie, Freddie REO inventory swells

Fannie Mae and Freddie Mac boosted loan modifications by 76 percent in the last three months of 2008, but nearly doubled their inventories of real estate-owned properties over the course of the year as the companies eschewed short sales and seized properties faster than they could sell them.
…
During the last three months of 2008, loan modifications were approved for 23,777 loans owned or guaranteed by Fannie and Freddie, a 76 percent increase from the previous three months.

But over the course of the year, the mortgage giants repossessed about eight homes for every short sale they conducted.

Fannie and Freddie’s loan servicers agreed to 16,718 short sales in 2008, while the companies repossessed 145,183 homes, their annual reports showed.

By the end of the year, the companies were saddled with real estate-owned (REO) inventory of 92,884 homes — nearly twice the 48,123 properties on hand at the end of 2007.

Although Fannie Mae was able to sell 64,843 repossessed homes in 2008, it acquired 94,652 through foreclosure, leaving it with REO inventory of 63,538 homes at year end — an increase of 152 percent from the end of 2006.

Freddie Mac sold 35,579 homes in 2008, but repossessed 50,531. The company’s REO inventory ballooned from 14,394 homes at the beginning of the year to 29,346 homes by year end — a 334 percent increase from the end of 2006.

From the WSJ Developments Blog:

Hard Times for Hovnanian’s Jersey City Condo

During the boom, home builder Hovnanian Enterprises Inc. launched its biggest tower, a 48-story condo showpiece in Jersey City, N.J., offering Big Apple views just feet from the Hudson River. Now it’s set to debut in an environment gone bust.

The address remains prime, but nearby Wall Street’s continued turmoil is feeding the region’s unemployment, affecting many purchasers and depressing sales and prices. Foreigners, long a key buying group, are battling what has become a worldwide economic crisis.

That could mean unsold units, an elevated cancellation rate and fights over deposits at Hovnanian’s 77 Hudson project, expected to start closings in the late spring/ early summer.

Even interested buyers with good credit may get tripped up: The building isn’t eligible for loans guaranteed by government-backed mortgage agencies Fannie Mae or Freddie Mac. Fannie now requires at least 70% of units to be presold. Hovnanian says it is offering competitive rates through various partnerships.

The builder “is backed into a corner here,” said Vicki Bryan, senior high-yield analyst at Gimme Credit. “They’re trying to get [buyers] to the table, I guarantee you, every way they can.”
…
But that was the old New York. In the last six months, Hudson County’s property values have experienced a depreciation rate nearly twice the nation’s, according to the Clear Capital Home Data Index. Real estate Web site Zillow.com says Jersey City’s condo values fell nearly 7% in the fourth quarter compared with a year earlier. From their bubble peak in 2007’s second quarter, values have taken an 11% hit.