New Jersey Real Estate Report

From the Star Ledger:

Economic Indicators point to an uneven housing recovery

As the New Jersey real estate market tries to get its footing back, more evidence was released this week showing the terrain is uneven.

New home building in the Northeast hit the skids last month, but at the same time fewer New Jersey homeowners received foreclosure notices, according to the latest state and federal statistics.

Construction of new homes in the region fell 18.8 percent in October to a seasonally adjusted annual rate of 56,000 from 69,000 in September — the biggest percentage drop in the country, according to the Commerce Department. That included a nearly 10 percent decline in single-family homes.

Meanwhile, for the first time this year, the number of residential foreclosure filings was actually lower than the same period in 2008, according to the state judiciary.

Lenders started 4,991 foreclosure proceedings against New Jersey homeowners in October, down from 5,262 during the same month last year.

The state is retreating from a foreclosure filings high in June, when 6,138 foreclosure notices were recorded.
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More than 2,600 New Jerseyans have received counseling through the state’s Foreclosure Mediation Program, Gov. Jon Corzine said earlier this fall. About 1,450 cases have been completed, and roughly half of the homeowners were able to stay in their homes.
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In New Jersey, foreclosure filings from September to October in Cumberland and Warren counties increased by the widest margins — 8.75 percent and 11.29 percent, respectively, while filings in Hunterdon and Passaic counties decreased the most — 32.1 percent and 27.5 percent, respectively.
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Unemployment is the main reason homeowners are falling behind, said Joseph Seneca, a professor of economics at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. While the economy is likely out of recession, the state’s unemployment rate is now only starting to retreat from a record 26-year-high of 9.8 percent. The state’s jobless rate for October was 9.7 percent.

“Looking forward, it’s hard to pull the trigger on any big purchases, such as homes,” Seneca said of the housing climate in the state.

From the Record:

Passaic County jobless rate hit 11.7% in Sept.

Passaic County’s unemployment rate of 11.7 percent in September was the highest in New Jersey, and the second highest in the New York area, federal figures released Monday show.

The county lagged only Bronx County, with a rate of 13.3 percent, the U.S. Department of Labor said. Bergen County’s rate of 8.4 percent was 15th highest in the New York area, and eighth in the state. The figures are not seasonally adjusted.

The rates in both Bergen and Passaic counties have increased over the past year by more than the 3.4 percentage point increase in the national rate of 9.5 percent in September. New Jersey’s unadjusted rate that month was 9.6 percent.

September Unemployment Rate 2008/2009
Passaic 6.8 / 11.7
Hudson 6.7 / 11.6
Essex 6.9 / 11.1
Bergen 4.6 / 8.4
Union 5.9 / 9.8
Warren 5.0 / 8.8
Monmouth 4.9 / 8.7
Sussex 4.8 / 8.5
Somerset 4.2 / 7.9
Morris 4.1 / 7.6
Hunterdon 3.8 / 6.9

From the Daily Record:

Getting together in the Chesters?

A bit of New Jersey history has a chance to be made in Chester Borough and Chester Township. If all goes according to plan, residents in both towns will vote next November on becoming one. Both tonws would have to approve for a merger to take place. Meetings of a consolidation committee began earlier this year and the next one is set for Nov. 24 at Chester Borough Hall.

New Jersey has 566 municipalities, all with their own set of professionals and employees. The thinking is that one way to reduce property taxes is to reduce government. Incoming governor Chris Christie correctly has spoken of the need for towns to share services and to explore consolidation. But he stops short of threatening to mandate consolidations, which is something Trenton has had little appetite to do.
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Some may wonder why merging two small towns would be considered historical, as opposed to a no-brainer. The answer is that this is New Jersey, a place where so-called home rule is prized. Some voters have an emotional attachment to their town that is hard to dislodge.

Recent proof of that comes from Sussex County. Voters in Wantage and Sussex Borough were asked in this month’s election if the towns should become one. Sussex voters said yes, but Wantage residents were overwhelmingly opposed.

From the APP:

Forum to give status on potential consolidation of six school districts

Possible scenarios of what might happen if the neighboring school districts of Green Brook, Long Hill, North Plainfield, Warren, Watchung and Watchung Hills Regional High School consolidated will be the focus of a public meeting here Thursday.

The forum will be hosted by the township and presided over by Trudy Doyle, who as executive county superintendent established an advisory committee to study the issue as part of a state directive for municipalities to look at cutting school costs.

Gwen Thornton, a field representative from the New Jersey School Boards Association, will provide an overview of the cost-cutting initiative and an update.

From the Star Ledger:

Sussex Borough and Wantage: A tough sell on N.J. town mergers

In a leafy corner of the state, far from the epicenter of a nasty gubernatorial election, voters from the Sussex County towns of Sussex Borough and Wantage quietly mulled a merger of the two municipalities. And on Tuesday, by nearly a 3-to-1 margin, they said, “No thanks.”

The consolidation seemed to make sense: The towns already share three regional schools, a construction department and a court system and, served by the State Police, wouldn’t have to quibble over police. Plus, the towns had assets (land and utilities) to share. In an unsettling economy, when cutting property taxes is the driving political issue, this one seemed like a rural no-brainer.

“If it wasn’t going to happen here, I wonder if it’s going to happen anywhere,” said Sal Lagattuta, one of the proponents.

According to the Consolidation Study Commission report, the towns — if they merged — could have saved $585,000 in the first year. Future savings could have been greater with even more cost-cutting. That’s a nice chunk of change, but it wasn’t enough to persuade residents to erase a border — especially those in Sussex Borough, population 2,000.
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The average municipal tax bill in Wantage — home to 11,000 — would have shrunk only $57, business administrator James Doherty said. The average savings in Sussex Borough would have been approximately $400. Still not enough, it seems.

From the National Association of Realtors:

Metropolitan Area Existing-Home Prices and State Existing-Home Sales

Metropolitan Area / Q3 Year over Year Price Decline
Allentown-Bethlehem-Easton, PA-NJ / Down 6.1%
Atlantic City, NJ / Down 10.4%
New York-Northern New Jersey-Long Island, NY-NJ-PA / Down 14.1%
New York-Wayne-White Plains, NY-NJ / Down 13.9%
NY: Edison, NJ -/ Down 8.9%
NY: Nassau-Suffolk, NY / Down 9.2%
NY: Newark-Union, NJ-PA / Down 14.8%
Trenton-Ewing, NJ / Down 15.0%

From the Courier News:

Central Jersey home prices dropped 8.9 percent in third quarter

Prices of existing homes in the region fell 8.9 percent during the third quarter, a Realtors’ group reported Tuesday, in a sign that the housing market has yet to emerge from its three-year-old slump.

The report would appear to be good news for buyers, who can take advantage of lower prices, rock-bottom mortgage rates and giant tax credits. But experts said the slow job market is taking a toll.

“There are a lot of things that play on the consumer’s mind right now, things they worry about that they never worried about before,” said Jim Brown, senior vice president of Kastle Mortgage Corp. in Freehold. “And it all has to do with jobs.”

The National Association of Realtors reported that the median price of a home in Monmouth, Ocean, Middlesex and Somerset counties was $343,800 during the third quarter, down from $377,300 the same quarter a year ago. Prices have fallen 17.2 percent since their third-quarter peak in 2006.

From the Record:

Home prices seen stabilizing

hile home prices continued their decline in the third quarter of 2009, several North Jersey real estate agents said Tuesday that they see signs that values are stabilizing.

The National Association of Realtors said Tuesday that home prices in the New York metropolitan area, which includes North Jersey, declined 13.9 percent, to a median of $449,700, from the third quarter of 2008 to the third quarter of 2009. But prices were up from the first half of the year, hinting that home prices may be leveling off.

“Prices have definitely stabilized,” said Tom Steimle, an agent with A.W. Van Winkle in Rutherford. He predicted that mortgage rates around 5 percent and the extension and expansion of the $8,000 federal homebuyers’ tax credit will continue to draw buyers into the market, keeping prices steady into the spring.

“Some towns are not experiencing the decline that others are,” said Gary Silberstein, a Coldwell Banker agent in Ridgewood. “If there’s a strong school system, New York City transportation and a town center, the prices are holding more steadily due to high demand.”

From the Press of Atlantic City:

N.J. homes sales jump 11 percent in quarter, while Atlantic County prices fall 10 percent from year ago

U.S. home sales surged 11 percent in the third quarter - and 18 percent in New Jersey - as first-time home buyers seeking the $8,000 government subsidy rushed into the market.

Prices rose compared to the prior quarter but remained down 11 percent from a year ago for the U.S. and 10 percent lower for Atlantic County, according to the National Association of Realtors survey released Tuesday.

Home sales in New Jersey were 8 percent higher than a year ago, while U.S. sales were up 6 percent from the year before.

The New Jersey Association of Realtors said the increase was caused by the federal government’s $8,000 first-time homebuyer tax credit, which had been set to expire at the end of November but was extended and expanded through April 30.

“The jump in third quarter activity in New Jersey as a whole can largely be attributed to the summer and early-fall rush of first-time home buyers aiming to close in time to obtain the $8,000 tax credit,” Jarrod C. Grasso, association executive vice president, said in a statement.

From the AP:

Median home prices fell nationwide in 3Q

A real estate group says home prices fell in eight out of every 10 U.S. cities in the third quarter of this year as heavily discounted distressed sales made up 30 percent of all deals.

But home sales continued their climb, with quarterly sales outpacing the second quarter and the previous year’s figures, the National Association of Realtors said Tuesday.

The median sales prices of existing homes declined in 123 out of 153 metropolitan areas compared with the same period a year ago. Prices rose in the other 30 cities.

The national median price clocked in at $177,900, or 11 percent below the third quarter last year.

From NJBIZ:

Fearing a commercial real estate crisis

Distress among commercial real estate mortgages in New Jersey is intensifying, with more properties in the state going back to the lenders. Some industry insiders say a crisis may be in the works if the economy continues to falter.

“You’re certainly seeing an increasing rate of foreclosures, and of lenders taking back properties,” said David Bernhaut, executive vice president at the East Rutherford office of Cushman & Wakefield, a commercial real estate brokerage. “It’s distress that everybody feels and senses.”

New Jersey currently has nearly $3.6 billion of distressed commercial assets, according to Real Capital Analytics, a New York-based research and consulting firm. Distressed assets include those in foreclosure or bankruptcy, have been restructured or modified, or have been taken back by the lender through foreclosure.

Many properties acquired between 2005 and 2007 — when prices were at their highest — were overleveraged, Bernhaut said. “What you’re seeing now is difficulty in refinancing assets.” The commercial mortgage-backed securities market — a major source of commercial real estate financing during those years — is no longer active, because of the large losses the holders of these securities have suffered, while “lenders have gotten much more conservative, so they won’t lend the type of proceeds necessary to pay off existing mortgages,” he said.
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eal estate investment activity in New Jersey peaked from 2005 to 2006, and with most commercial real estate loans having five-year terms, the majority of those mortgages are due to mature between 2010 and 2012, he said.

Delinquencies made up 3.7 percent of commercial mortgages in New Jersey during the second quarter of 2009, up from 1.6 percent in the same period a year ago, according to Foresight Analytics, an Oakland, Calif.-based research firm. An estimated $7.4 billion of commercial mortgages are expected to mature between 2009 and 2011 in New Jersey, which ranks 13th in the nation in terms of the dollar amount of commercial mortgage maturities during the two-year period, the firm said.

Foreclosures and deeds in lieu of foreclosure have affected more than 15 buildings in New Jersey in 2009, and will become more and more prevalent during the second half of 2010 and 2011, as more commercial real estate debt matures, said David Simson, vice chairman and chief operating officer of New Jersey operations for commercial real estate services firm Newmark Knight Frank.

For properties purchased in the last five to six years, “the debt structure associated with those buildings may very well exceed the current market value of those buildings,” meaning the owners have no equity, to offer concession packages to prospective tenants, nor can they pay service providers, he said.
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Edward Mermelstein, co-founder and managing principal of Edward A. Mermelstein & Associates, a New York law firm that works on deals in New Jersey, said lenders are putting themselves at risk as the gap between a loan’s face value and market value continues to widen.

“How long can you extend loans as property values continue to come down?” he said. “Many of these regional lenders are going to have no place to go except out of business.”

From the Star Ledger NJ Voices Blog:

Sussex Borough and Wantage: A tough sell on N.J. town mergers

In a leafy corner of the state, far from the epicenter of a nasty gubernatorial election, voters from the Sussex County towns of Sussex Borough and Wantage quietly mulled a merger of the two municipalities. And on Tuesday, by nearly a 3-to-1 margin, they said, “No thanks.”

The consolidation seemed to make sense: The towns already share three regional schools, a construction department and a court system and, served by the State Police, wouldn’t have to quibble over police. Plus, the towns had assets (land and utilities) to share. In an unsettling economy, when cutting property taxes is the driving political issue, this one seemed like a rural no-brainer.

“If it wasn’t going to happen here, I wonder if it’s going to happen anywhere,” said Sal Lagattuta, one of the proponents.

According to the Consolidation Study Commission report, the towns — if they merged — could have saved $585,000 in the first year. Future savings could have been greater with even more cost-cutting. That’s a nice chunk of change, but it wasn’t enough to persuade residents to erase a border — especially those in Sussex Borough, population 2,000.

“We were going to be swallowed up,” said Sussex Borough councilwoman Katherine Little, who was against the merger. “Bigger government isn’t better government. Tiny towns are pretty frugal.”

The average municipal tax bill in Wantage — home to 11,000 — would have shrunk only $57, business administrator James Doherty said. The average savings in Sussex Borough would have been approximately $400. Still not enough, it seems.

And maybe that’s the problem with regionalization: To many, it’s not worth the hassle. There are 566 pieces to New Jersey’s jigsaw puzzle, and consolidating some makes long-term fiscal, historical and geographic sense. Gov.-elect Chris Christie is coming around to that realization.

But in most instances, mergers won’t save enough money to persuade taxpayers to change the names of their hometowns or their way of life. Taxpayers need to look at the long-term benefits — more control over development and, if not tax reduction, at least stabilization. Sooner or later, Trenton probably will step in.

From the Philly Inquirer:

N.J. has been hit hard by the recession

From 2004 through the end of 2007, the go-go years of the national real estate bubble, New Jersey’s private-sector job growth was just 2 percent, less than a third of the national growth of 6.5 percent.
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And since the recession started in December 2007, New Jersey has lost jobs at a faster pace than New York and Pennsylvania, though not as fast as the nation as a whole, according to U.S. Department of Labor data.

Even worse, Rutgers Economic Advisory Service predicted that New Jersey will need until 2016, three years longer than the rest of the nation, to get back to the level of employment of 2007.

Joseph J. Seneca, a professor of economics at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy and coauthor of a 2006 report warning that New Jersey faced “its most uncertain economic future since the Great Depression,” said there was an optimistic angle on the worst financial and economic crisis since the 1930s.

The state’s huge problems give Christie the opportunity to “turn the page on the decade that has seen New Jersey’s business climate deteriorate significantly” because of high taxes - business and personal - and generally high costs, Seneca said.

Even in the good economic times earlier this decade, Seneca said, New Jersey raised its income tax, sales tax, cigarette tax, and realty-transfer tax, while property taxes remained painfully high.

Those moves helped New Jersey edge past New York to claim the highest state and local tax burden in the nation for the last three years, according to the nonprofit Tax Foundation in Washington. Pennsylvania ranked 11th last year.
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Diffley said New Jersey had significant strengths, such as a talented workforce and a great location. However, Diffley and other economists said, the state has been hobbled by the decline of telecommunications and pharmaceuticals, which were growth drivers historically.

In 1990, 20 percent of the nation’s pharmaceutical jobs were in New Jersey. It now has 13 percent of them. From 2007 to 2008, the state lost 10 percent of its jobs in the high-paying industry.

Now a wave of pharmaceutical consolidations involving New Jersey firms, including Pfizer Inc.’s purchase of Wyeth in Madison and Merck & Co. Inc.’s purchase of Schering-Plough Corp., headquartered in Kenilworth, is likely to cost the state even more of those jobs.
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Despite the serious problems, Seneca said the recession could be an opening for New Jersey and other Northeastern states that have been losing population and jobs to the fast-growing Southeast and Southwest.

“There’s an opportunity now to be competitive again, because the high-flying states have been brought low,” Seneca said.

From the NY Times:

Broader Measure of Unemployment Stands at 17.5%

For all the pain caused by the Great Recession, the job market still was not in as bad shape as it had been during the depths of the early 1980s recession — until now.

With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1percent, in December 1982.

This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as millions of part-time workers who want to be working full time.

The official jobless rate — 10.2 percent in October, up from 9.8 percent in September — remains lower than the early 1980s peak of 10.8 percent.

The rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.

From the WSJ Developments Blog:

It’s (Almost) Official: Home Buyer Tax Credit Extended, Expanded

Congress voted on Thursday to extend the tax credit and President Obama plans on signing it into law Friday morning. The $8,000 credit will apply to all contracts, for homes up to $800,000, entered into before April 30, 2010, and closed by June 30. It creates a new $6,500 credit for property owners who have lived in their home for at least five consecutive years.

Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples, from $75,000 and $150,000, respectively. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

From the NY Times:

A Bad Way to Spend Money

Congress threw good money after bad this week when it voted to extend and expand a wasteful home buyer’s tax credit set to expire at the end of the month.

The new program, which will continue through the spring, is being portrayed as a rescue plan for the ailing housing market. But this costly giveaway to the real estate and mortgage industry will spend far more in taxpayers’ dollars than it can ever deliver in economic benefit. As happened with the cash-for-clunkers program in the automobile industry, the program will make housing look momentarily betterbut is unlikely to contribute to long-term recovery.
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The bill that passed both houses of Congress this week extends the program through April 2010 and grants the full tax credit to couples who earn up to $225,000. The expanded program introduces a $6,500 tax credit for people who already own homes but want to buy new ones.

From the Philly Inquirer:

Bad home-building loans plague banks

As financial regulators shift their sights to the mounting problems with commercial real estate loans, many Philadelphia-area banks remain bogged down in bad loans for residential construction.

Led by construction loans, the overall percentage of problem loans - those seriously behind in payment - at the 15 largest publicly traded banks here soared to nearly 3 percent Sept. 30 from 0.89 percent a year earlier.

That increase added $1.1 billion to the loans banks will have to collect through restructuring, foreclosure, or other measures - unless the improving economy allows the borrowers to recover enough to pay their debts.
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Bankers, meanwhile, even those with the strongest loan portfolios in the region, see continued problems.

“I think every bank is going to be thinking very carefully about bolstering their reserves because you just don’t know what is out there,” said Kent Lufkin, president of TF Financial Corp., of Newtown, the parent of Third Federal Savings Bank, which had the lowest rate of nonperforming assets among the area banks.

Lufkin said Third Federal stayed out of trouble during the real estate boom because it did not change its conservative lending practices. “That’s helped us today to have a lower percentage of nonperforming assets,” he said.

By contrast, Abington Bancorp Inc., of Jenkintown, followed a suburban builder with which it had previous experience into the Philadelphia condo market during the real estate boom. The move came after the company raised $71 million in a 2004 stock offering and contributed to Abington’s possession of the highest rate of nonperforming assets in the region, 5.03 percent, according to data from Bloomberg News.

“It’s our construction-loan portfolio that’s in bad shape,” said Robert White, the lender’s chief executive officer. Indeed, the delinquency rate on its residential construction loans, including loans at least 30 days past due, was 35.2 percent on Sept. 30, according to a report by Stern, Agee & Leach Inc., a research firm in Portland, Maine.
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The average past-due rate on construction loans at 15 Pennsylvania and New Jersey banks Kelley tracks climbed to 15.5 percent in September from 12.1 percent in June. The figure for commercial real estate climbed to 2.9 percent from 2.6 percent.

With loan defaults still rising two years after the subprime-mortgage crisis began, all business loans - not just for commercial real estate - are getting careful attention.

From the Record:

Hard-to-move condos go quickly at auction

In one afternoon, the developer of an East Rutherford condo complex sold 26 units in his 32-unit complex.

Sales of the two-bedroom, two-bath homes in the new Courtland Arms building had suffered in the slumped housing market, so Rolando Cribeiro, president of CP Building Enterprises Corp., agreed to an auction.

On Sunday, suggested starting bids of $150,000 for condos that had originally listed for nearly $500,000 drew a standing-room-only crowd at the Hilton in Hasbrouck Heights.

Manhattan-based auctioneer Sheldon Good & Co. was enlisted to sell off 26 units, eight at the highest price, and the rest sold “on reserve,” where the seller has three days to reject bids not high enough.

But Sunday the homes were selling so well — many fetching prices in the $280,000 range — that CP Building sold them all on the spot.

“The prices were there,” said Cribeiro. “It would have taken 18 months, and to get it accomplished in four hours has been fascinating.”

A first-time home buyer, Ho-Ho-Kus native Stacey Weinberg, 27, drew cheers from the crowd when she finally outbid others for a condo at $284,000 after being forced to pass on previous units that sold above her price range.

“It’s stressful,” said Weinberg, a Manhattan resident who bought one of the luxury units for herself and her husband, Morgan. “It’s to get the best deal, so I guess, what are you going to do?”

From Bloomberg:

New Jersey Won’t Recover Job Losses Until 2019, Rutgers Finds

New Jersey, its jobless rate at a 32-year high, won’t exceed its pre-recession employment for a decade, Rutgers University economists predict.

The state will begin recovering in 2011, yet will require until 2019 to surpass by 118,000 jobs the 2007 employment peak, said Rutgers economist Nancy Mantell, director of the Rutgers Economic Advisory Service, said.

“The country, in contrast, will begin job expansion three years earlier, at the beginning of 2013,” Mantell said in a statement yesterday. “By 2019, it will have 7.7 percent more jobs than at the previous peak.”

New Jersey, the most densely populated U.S. state, entered the recession in January 2008, one month after the nation as a whole, and has lost 161,300 jobs, or 4 percent, of its employment base, Mantell said.

During the first year of the economic crisis, the state shed jobs at a rate comparable to the national figure. In 2009, the pace slowed to 1.8 percent, compared with 2.9 percent nationally.

The New Jersey jobless rate was 9.8 percent in September, up from 4.5 in December 2007, according to state Department of Labor and Workforce Development figures. The national rate is also 9.8 percent. New Jersey currently has 3.9 million non-farm jobs, according to state figures. In December 2007 it had a record-high 4.1 million, the state labor department reported.
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The nonpartisan Office of Legislative Services projects the state will confront a deficit of as much as $8 billion next year as rising unemployment and damped consumer spending depress tax receipts. The revenue gap is more than 25 percent of the $29 billion budget enacted in June by Governor Jon Corzine.

Tax and fee collections for the quarter ended Sept. 30 fell $190 million, or 3.1 percent, below estimates, Treasurer David Rousseau said. Corzine ordered $200 million in cuts and directed his cabinet members to identify another $200 million in reductions.

From the Star Ledger:

Lack of guests leads Borgata to close rooms in Water Club Hotel

The Borgata Hotel Casino & Spa in Atlantic City is taking hundreds of rooms at its Water Club hotel out of service on Tuesdays through Thursdays because of low demand.

The casino also shuttered most of the posh year-old hotel’s 800 rooms on those days last March. They were reopened when bookings picked up over the summer.
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The lower demand comes as Atlantic City’s casinos have struggled with a weak economy and increased gambling competition in Pennsylvania and New York.

From the APP:

Time winding down for home buyers

With its expiration just over a month away, a push is on to extend the first-time home buyers’ tax credit, which boosted the beleaguered housing market in the midst of a recession.
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There are competing ideas out there to extend — and even expand — the tax credit, which gives up to $8,000 to first-time buyers who close on a home by Nov. 30.

In a press conference on Monday at the New Jersey Association of Realtors in Edison, U.S. Rep. Leonard Lance, R-N.J., said his bill would open the tax credit to all people buying a primary residence, regardless of past home ownership or income. He would increase the credit to $15,000 and extend the program through Dec. 1, 2010.

“We do not want the American dream to expire,” Lance said. “We want to make sure as many Americans as possible have home ownership.”

Lawmakers are under pressure from real estate agents and others in the housing industry to extend the credit.

The timing is critical, Lance said.
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In the Senate, Senate leaders are negotiating to extend the credit and gradually reduce it through 2010, Democratic Sen. Bill Nelson of Florida said Monday.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the home buyers’ extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

Another proposal by Sen. Christopher Dodd, D-Conn., Senate banking committee chairman, and Georgia Republican Sen. Johnny Isakson would extend the credit through next June and expand it to couples earning $300,000 or less, up from the current program’s $150,000 maximum income eligibility for married couples.

The current program comes with costs. Congress allocated $13.6 billion for the home buyers’ credit. As of July 17, 2009, more than 1.1 million tax returns claiming more than $8 billion in credits have been processed.

From Minyanville:

Where the Housing Market Goes From Here

Subsidizing renters with gobs of greenbacks if they buy a house turns out to be a pretty popular program.

Thanks to the tax credit for first-time home buyers, as well as cheaper home prices and lower mortgage rates, existing home sales increased by 9.4% to a 5.57 million annual rate in September, the National Association of Realtors said Friday.

Sales had been forecast to rise to an annual rate of 5.35 million, according to economists surveyed by Thomson Reuters.

First-time home buyers, many of whom certainly owe you and every other taxpayer a thank-you card, rushed in to take advantage of the program.

The question, though, is what happens after the program expires in November?

Patrick Newport, US economist at IHS Global Insight, notes that the government’s home-buyer tax credit, like Cash for Clunkers, simply shifts sales from one period to another, but it doesn’t do much to heal the housing market.

“The report might, on the surface, look to be really good,” Newport tells us. “But, if you think about it more carefully, it’s really not great news. We are just trading off good news now for bad news in 2010.”