From the Star Ledger:
Measures intended to protect government-backed loans from widespread defaults and foreclosures could have an adverse effect on the state’s housing sales, according to industry experts.
Earlier this month, the Federal Housing Authority announced increased minimum down payments for borrowers with low credit scores and higher mortgage insurance premiums for those that take on the loans.
The restrictions will take effect in the spring and early summer.
The latest moves are part of a strategy outlined last year to shore up the FHA’s loan portfolio, which is increasingly under pressure from defaults and delinquencies.
“Now most of our transactions are FHA, so the word on the street is that there are all of these changes,” said Jonathan Kessler, president of the Hunterdon Somerset Association of Realtors. “FHA loans have often been the only means for some buyers to purchase property.”
He said changes made to the government-backed program could hurt deals.
Indeed, last year, the FHA endorsed roughly 59,000 loans in the state — about 55 percent more than in 2008.
These new stricter guidelines, however, are a necessity, said Peggy Yanuzzelli, president of the Middlesex County Association of Realtors.
“Some agents may look at it as a decrease in buyers, with no money and lower credit scores,” she said. “But for the future economy, this has to be done.”
From the NY Times:
THE number of new-housing permits issued statewide in 2009 did not even reach 12,000. The last year the tally was that low: 1945, when New Jersey was still mostly cow and corn country.
If the housing crisis was finally over and the overall economy was headed toward recovery, it would still take at least two years for housing starts to recoup, according to market analysts.
“Traditionally, after past recessions, housing starts have doubled within two years,” said Jeffrey G. Otteau, whose Otteau Valuation Group provides advice on state real estate trends. “Because of the severity of this recession, though, there may be lingering wounds.”
Yet even in the face of these sobering numbers, several builders of multifamily projects have forged ahead — some actually building, others planning on it as soon as weather permits.
Their reasons are varied, based on interviews with developers of several large projects. Some asserted that their condominium developments held special appeal despite the general slowdown in sales; others said they had used the “down time” of the economic crisis to reconfigure plans and now felt that they understood the changes in buyers’ requirements.