New Jersey Real Estate Report

From the Wall Street Journal:

New Home Sales Plunge to ‘63 Levels

Sales of new single-family homes plunged last month, underscoring the fragility in the housing market.

Sales dropped 11.2% in January from a month earlier to a seasonally adjusted annual rate of 309,000, the Commerce Department said Wednesday. The decline brought sales to their lowest level since the government began tracking the numbers in 1963. Sales were 6.1% lower than in January 2009.

This gauge of new-home sales is particularly volatile because it is based on a very small sample size and carries a wide margin of error. Still, the sharp decline is an indication that the housing market remains feeble, despite improvements in the past year fueled by low mortgage rates, reduced home prices and a government tax credit for home buyers.

The tax credit, which was expanded and extended, is set to expire April 30. It could lead to an upturn in sales in the next couple of months as buyers rush to take advantage of it, analysts say.
…
The drop in sales in January triggered an increase in the backlog of unsold new homes on the market, pushing it up to the equivalent of what would normally be sold in 9.1 months versus eight months in December. And the abundance of homes on the market continued to bring prices down. The median sales price for new homes fell 2.4% to $203,500 in January, compared with a year ago.

Faltering demand in the housing market also led to a drop in mortgage applications for both new and existing homes. The Mortgage Bankers Association’s seasonally adjusted purchase index fell 7.3% for the week ended Feb. 19 from the prior week, the advocacy group that represents the real-estate finance industry said Wednesday. It is the index’s lowest level since 1997.

From the Philly Inquirer:

Affordable-housing changes pushed in New Jersey

A plan to eliminate the state Council on Affordable Housing and put towns in charge of their own housing obligations is necessary to streamline an unwieldy bureaucracy, supporters said yesterday.

But as a Senate committee began hearing testimony on the proposal, opponents said it would deliver a serious setback to efforts to increase the number of affordable homes in New Jersey.

The housing bill, which drew a large crowd to a hearing yesterday, would move many of the council’s powers to the state Planning Commission.

“So much money goes down the drain in terms of all these planning mechanisms that’s not going into affordable housing,” said Sen. Ray Lesniak (D., Union), who sponsored the bill with Sen. Christopher “Kip” Bateman (R., Somerset).
…
Affordable-housing activists held a news conference before the hearing to say the measure would roll back New Jersey’s affordable-housing policies by 35 years and exacerbate racial and socioeconomic segregation.

The council was created under the Fair Housing Act of 1985, after state Supreme Court rulings that each of New Jersey’s 566 municipalities has a constitutional obligation to provide a “fair share” of the region’s need for low- and moderate-income housing.

A 2008 revision to COAH’s Third Round rules established a need for an additional 115,000 affordable housing units to be built in New Jersey by 2018 and increased the ratio of how many such units need to be built for every market-rate unit and new job created.

Towns, which were required to submit plans on how they would comply with the increased obligations, widely contested the state’s accuracy in calculating the number of affordable housing units for which they were responsible. Dozens joined the New Jersey League of Municipalities in a still-unresolved legal challenge to the rules.
…
The bill also would allow the restoration of certain Regional Contribution Agreements (RCAs), which had allowed wealthier towns to pay poorer communities so they could transfer their affordable-housing obligations.
…
Nicole Plett, a member of the New Jersey Regional Coalition, spoke out against such agreements, saying they concentrate poverty in cities such as Trenton, Perth Amboy, and Camden, and continue to make New Jersey one of the most economically and racially segregated states.
…
Gov. Christie has said he wants to “gut” COAH, and the proposed legislation bears some similarities to recommendations made in a report last month by his transition team.

From the Star Ledger:

N.J. home sales may be adversely affected by FHA guidelines

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:

Builders Reassess the Market

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.

From the AP:

Meltdown 101: Housing starts show industry’s woes

Housing construction is crawling out of its very deep hole, but no one expects it to reach the heights hit before the housing bubble burst — at least not for a very long time.

The Commerce Department released its monthly report on housing starts Tuesday, saying they increased in September by a modest 0.5 percent to an annual rate of 590,000 new homes and apartments. Applications for new building permits, however, fell by 1.2 percent to an annual rate of 573,000 units.

Here are some questions and answers about the housing starts report and what it says about the state of housing and the overall economy.
…
Q: What has been happening to housing starts?

A: They have been on a wild roller-coaster ride.

They surged into the stratosphere during the housing boom in the middle of the decade as cheap credit propelled sales of both new and existing homes to record levels for five straight years. To meet demand, builders ramped up production, pushing construction starts to 2.07 million units in 2005, close to the all-time high for housing starts of 2.36 million new homes and apartments constructed in 1972.

Q: What happened after 2005?

A: Housing has been in a painful, prolonged slump. Housing starts hit an all-time low this past April of 479,000 units at an annual rate, 79 percent below the peak month during the boom years. Since April, however, housing construction has staged a modest rebound, rising in four of the past five months, including the 0.5 percent gain in September that was reported Tuesday.

Q: So is that good?

A: Well it is certainly better than the plunge in construction that occurred over the past 3 1/2 years. The downturn in housing, accompanied by rising mortgage defaults, helped trigger the worst financial meltdown since the Great Depression and pushed the country into its longest recession in seven decades.

A rebound in housing is needed to help support overall economic growth — both directly, through the money spent to build new homes, and indirectly, through the support increases in home sales provide to related industries such as appliance makers and furniture stores.

Q: What do economists expect will happen in coming months?

A: The September housing starts report gave some mixed signals. Housing starts did rise but the report showed that permits for new construction fell for the second month out of the past three. And analysts closely follow building permits as a good indication of future activity.

Analysts suspect that the September permit decline was a payback from a jump in applications earlier in the summer, as builders rushed to get projects started in time to take advantage of the government’s $8,000 tax credit for first-time homebuyers. That program is scheduled to end Nov. 30.

From the Record:

N.J. builders feel the pain

New Jersey builders used the words “brutal” and “unprecedented” repeatedly at a statewide trade show Tuesday to describe a housing market undermined by surging unemployment and tighter mortgage lending.

Attendance at the annual New Jersey Builders Association convention is off by a third amid a U.S. recession one economist described as the deepest since World War II. The event — which normally draws 15,000 builders, developers and subcontractors — has about 10,000 registered attendees.

Jeffrey G. Otteau, an economist with the Otteau Valuation Group, said New Jersey has a year’s worth of unsold housing inventory and prices typically fall whenever there is more than five months’ worth of inventory.

“We are not in a recovery,” said Otteau, who delivered the association’s economic outlook. “Home prices will continue to decline.”

Otteau’s presentation was marked by exclamations and quiet discussions among attendees.
…
Another speaker, Rutgers University economist Joseph Seneca, said the state will see a “new normal” in which consumers will spend less and save more, and fewer people will own homes. Fewer people will work in the finance industry, and they’ll make less, Seneca said.

“The bottom of the current economic debacle is close at hand,” he told the builders.

But he cautioned that the state is not there yet. This year will be a weak one, and the recovery will begin in 2010, he said. Problems in the financial sector and in several European countries are troubling, and the worst of commercial real estate problems have yet to come, he said.

Otteau said the New Jersey housing slowdown is being aggravated by the number of people leaving the state, which has the nation’s highest tax burden. He said New Jersey ranks third among U.S. states in population loss, and its housing market is unlikely to recover until the end of this year at the earliest.

Otteau estimated that housing prices have declined 36 percent from their peak and New Jersey prices have fallen 24 percent.
…
New Jersey issued 1,507 permits for new home construction in January and February, according to association data. That number represents 33 percent of the 4,543 permits issued for the same period of 2006.

“It’s brutal,” said John Kirkenir, co-manager of Alliance Homes in East Windsor. “We have three homes under construction right now and we feel fortunate to have three. Normally, we’d have 20.”

From the NY Times:

Dissecting the ‘Heart of Orange’

A GLOBAL economic crisis provides the perfect opportunity to rethink the design of an old city — be it Paris or Orange — said a French urbanist who has been engaged in doing that recently, both there and here.

“Cities have this time to consider intelligently what they are going to be in the future,” said the urbanist, Michel Cantal-Dupart, through an interpreter, as he conducted a walking tour on a rainy day in early April along the streets of Orange’s mostly dreary downtown section. “Then, when things improve,” he said, “the cities will know what to do.”

Mr. Cantal-Dupart recently served on a team of architects and planners commissioned by the French government to re-envision the master plan for Paris, which at the age of 2,000 faces special challenges in becoming a “sustainable” city of the future. The team’s proposals were unveiled in March.

This month, he was asked to help to do something similar for 200-year-old Orange, at the behest of a nonprofit development corporation called Hands Inc. Harnessing federal, state and private grant money to rebuild troubled neighborhoods in Essex County, the group has been based here since the early 1980s.

Until now, it has relied mostly on a strategy of “finding the worst houses on the block, and turning them around one by one,” said Patrick Morrissy, the group’s executive director.

In fact, several days before the activity in Orange, Hands expanded on its primary strategy with the announcement of a nonprofit alliance to buy 47 abandoned and neglected houses in Essex County — all foreclosure properties owned by the former Washington Mutual Bank.

The houses are in Orange, West Orange, Newark and Irvington, all communities hit especially hard by foreclosures.

“We have to keep up this critical work,” Mr. Morrissy said, “because the current crisis is threatening the impact of all we have done in the last 25 years.”

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.

From the Trenton Times:

State may lift age-restrictions on some housing

As developers across the state hesitate to break ground on projects that looked more profitable in better economic times, experts say housing reserved for residents “55 and older” is in all-too abundant supply in New Jersey.

The glut has led state lawmakers to consider a bill that could allow developers to remove age limits on already-approved housing without starting the municipal approval process anew.

If the state tosses builders a lifeline and allows them to market the homes to a wider market, supporters of the proposed law say, 55-and-over projects that currently stand dormant could become active construction sites, creating much-needed jobs.

Yet in advance of a vote on the measure in the state Assembly today, some local officials are crying foul.

They say such age-restricted developments were often approved because of their relatively low impact on local schools and other taxpayer-funded government services. Remove the restrictions, they argue, and property owners will foot the bill.

In Hamilton, Mayor John Bencivengo drafted a letter last week pleading with state lawmakers to vote against the plan.

He said age restrictions on two Hamilton developments with a combined 431 housing units could be removed under the proposed law.

“This is absolutely ridiculous. We don’t have any more room in these schools,” Bencivengo said in an interview last week. “What’s the sense of having the planning board in the local town if this is what the state can do? The reason we approved this in the first place is because it was senior housing.”

Under the proposal, developers who already have approval for a 55-and-over community would have a two-year window during which they can apply to the local planning or zoning board for removal of the age restrictions.

From the Asbury Park Press:

Plug farm tax loopholes

A pair of bills being drafted by state Sen. Jennifer Beck, R-Monmouth, that would revise farmland assessment laws would help keep New Jersey’s agriculture industry productive while preventing wealthy landowners from exploiting the system’s tax loopholes.

But a couple of elements key to ensuring that farming survives — and unwarranted preferential tax treatment does not — must be addressed before the bills become law.

Beck, along with state Sen. Stephen M. Sweeney, D-Gloucester, has introduced a bill that would set standards for crop intensity and livestock capacity that would be used to qualify property for farmland assessment. That would help separate truly productive land from acreage with just enough bee hives or Christmas trees to generate the laughably low $500 in sales currently required to gain a farmland assessment.

Unfortunately, the Beck-Sweeney measure only raises the income threshold to $1,000. It should be closer to $10,000, which would protect legitimate working farmers while weeding out people taking advantage of the tax law.

A second bill Beck has yet to introduce would establish another level of tax benefits for those who want to preserve their land, but wouldn’t qualify for farmland assessment under the new productive-farm rules. For landowners willing to forfeit development rights on their property, the bill would provide a tax break that is lower than working farmers would receive, but higher than landowners who want to retain development rights.

Updated the S&P Case Shiller Home Price Index graphs with the November release data. These graphs show all indicies for the NY Metro Commutable Area. As the name implies, this price index covers regions that are within commutable distance to New York City and does include other states. New to the series is the condo index, which has been added to the graphs.

The aggregate index shows home prices in this region peaking in June of 2006. The total price decline to date in the aggregate index is 13.45%. The tiered price index gives us a bit more visibility into the price movement of different categories of homes.

Low Tier (Under $320407) - Peaked in October 2006 and is down 15.52% from peak

Mid Tier ($320407 - $476338) - Peaked in September 2006 and is down 14.76% from peak

High Tier (Over $476338) - Peaked in June 2006 and is down 9.72% from peak

Aggregate (Overall Market) - Peaked in June 2006 and is down 13.45% from peak

The first graph is the year over year change in the index.

(click to enlarge)

The second graph is straight index value.

(click to enlarge)

It is still too early to be calling for any kind of bottom in the region. Unlike other regions that show home price declines beginning to slow, the declines appear to be accelerating in our region. In fact, the most recent data point is the steepest decline since the last cycle. The rate of decline peaked at 8.9% in March of 1991. See below:

S&P CS NY Commutable Year over Year Price Change
Jan 07 -0.34%
Feb 07 -0.91%
Mar 07 -0.91%
Apr 07 -1.56%
May 07 -2.35%
Jun 07 -2.94%
Jul 07 -3.20%
Aug 07 -3.35%
Sep 07 -3.60%
Oct 07 -4.09%
Nov 07 -4.61%
Dec 07 -5.48%
Jan 08 -5.80%
Feb 08 -6.70%
Mar 08 -7.48%
Apr 08 -7.98%
May 08 -7.74%
Jun 08 -7.04%
Jul 08 -7.03%
Aug 08 -6.60%
Sep 08 -7.13%
Oct 08 -7.65%
Nov 08 -8.59%

From the WSJ:

Builders Predict More Housing Pain
REAL ESTATE JANUARY 21, 2009
By JIM CARLTON

The worst U.S. housing downturn since World War II is likely to deepen further this year, with no broad recovery until at least 2010, according to a consensus of building-industry economists.

Single-family-housing starts, which fell 40% to 617,000 in 2007, are expected to drop to about 441,000 this year — the lowest since records have been kept — according to the economic outlook of the National Association of Home Builders released Tuesday at the International Builders Show here. That would be a nearly 75% drop from the industry’s highwater mark of 1.7 million single-family starts in 2005.

Economists from Freddie Mac, the government-backed lending agency, mortgage insurer PMI Group Inc. and the Portland Cement Association trade group also predicted this year would be worse than 2008 in terms of starts and overall housing activity.

One of the big problems for the industry, economists said, is a huge overhang of unsold homes brought on in large part by extensive job losses. The inventory of new homes on the market now stands at 11.5 months, more than double the level normally required to encourage builders to begin building again, said Ed Sullivan, chief economist for the cement group.

Adding to the woes, he and other economists said, is the likelihood that foreclosures will keep rising — putting even more homes on the market — as unemployment continues to rise this year. Frank Nothaft, chief economist for Freddie Mac, predicted the U.S. unemployment rate will jump to 8.7% by the fourth quarter of 2009 from 7.2% as of December.

Economists said lending remains so tight that many consumers won’t be able to take advantage of declining housing prices and mortgage rates. “There’s not much good to say,” David Berson, PMI’s chief economist, said at a news conference with Mr. Nothaft and NAHB Chief Economist David Crowe.

The Portland Cement Association held a separate news conference Tuesday at which its chief economist sounded even more pessimistic about prospects for a recovery. “I see another full two years almost before a significant gain,” said Mr. Sullivan, who was one of the first industry economists to predict the current downturn.

From the Federal Reserve:

January Beige Book - Second District–New York

Construction and Real Estate

Housing markets in the District have been mixed but generally weak since the last report. A New Jersey industry contact reports that the market for new homes continues to weaken, reflecting an ongoing overhang of inventory, but notes some leveling off in the resale market–both in terms of volume and prices. However, the more high-priced areas nearest to New York City are still characterized as especially weak. In particular, one contact specializing in the higher end of the market reports that sales activity has slowed considerably–with buyers increasingly reluctant, many sellers are taking their homes off the market. Home prices at are estimated to be down roughly 20 percent from their peak levels of a couple years ago.

New York State Realtors report that home sales continued to weaken in November, falling nearly 24 percent from a year earlier and that median selling prices posted double-digit percentage declines in and around New York City but were mixed across upstate New York. There appears to have been substantial deterioration in Manhattan’s housing market, based on reports from both a major appraisal firm and a large real estate brokerage. Co-op and condo sales fell roughly 9 percent from a year earlier in the fourth quarter, led by a 25 percent drop in sales of existing apartments (re-sales). In contrast, closings of newly-constructed units surged 35 percent from a year earlier, but these largely comprised contracts negotiated in late 2007 and early 2008. Based on current contracts, overall apartment prices fell by 20 percent or more from the third to the fourth quarter and the number of transactions fell sharply. Manhattan’s apartment rental market has also weakened substantially, with asking rents reported to be down across the board in November, and 2 to 6 percent lower than in June; moreover, an industry report maintains that the reported decline in asking rents likely understates the true weakness in the market, with a growing number of landlords offering concessions. The inventory of available rental units reportedly increased 17 percent between September and November, with a particularly large rise in the number of high-end listings.

Office markets in the District were mixed in the fourth quarter. Manhattan’s office vacancy rate climbed to its highest level in two years, while asking rents fell 8 percent from the third quarter and were down 5 percent from a year earlier. An industry contact notes marked weakening in December, in particular. However, office markets in the outlying areas were steady: Vacancy rates in northern New Jersey, Westchester and Fairfield County (CT) were little changed at high levels, while Long Island’s rate fell to a two-year low; asking rents were little changed from a year ago in all these areas. Office markets in upstate New York metro areas were steady to somewhat stronger in the fourth quarter, with vacancy rates down slightly and rents up modestly overall.

From the AP:

Home prices post 18 percent annual drop in October

A closely watched index shows home prices dropped by the sharpest annual rate on record in October.

The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.

Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.

Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006.

None of the 20 cities saw annual price gains in October — for the seventh consecutive month.

From Bloomberg:

October Home Prices in 20 U.S. Cities Fall 18% From Year Ago

Home prices in 20 U.S. cities declined at the fastest rate on record, depressed by mounting foreclosures and slumping sales.

The S&P/Case-Shiller index declined 18 percent in the 12 months to October, more than forecast, after dropping 17.4 percent in September. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

The financial market meltdown that’s reverberated around the globe has prompted banks to curb lending, signaling the housing slump will persist for a fourth year in 2009. Falling property values have eroded household wealth, causing consumers to pare spending and deepening what is projected to be the longest recession in the postwar period.

“As 2008 comes to an end, the housing market is left in a weaker state than at the beginning of the year,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “Uncertainty remains high given the unprecedented nature of the recession.”

Economists forecast the 20-city index would fall 17.9 percent from a year earlier, according to the median of 21 estimates in a Bloomberg News survey. Projections ranged from declines of 17 percent to 18.4 percent.

Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in October, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas.

“The bear market continues,” David Blitzer, chairman of the index committee at S&P, said in a statement. The declines in Atlanta, Seattle and Portland surpassed 10 percent for the first time, he said.

From MarketWatch:

Home prices off record 18% in past year, Case-Shiller says

Home prices in 20 major U.S. cities dropped 2.2% in October from the prior month and had fallen a record 18% from the previous year, according to the Case-Shiller price index published Tuesday by Standard & Poor’s.

Prices have fallen in all 20 cities compared with both the prior month and October 2007, and 14 of the 20 metro areas showed record rates of annual declines. Also, 14 of 20 areas sustianed declines of more than 10% on a year-over-year basis.

For Case-Shiller’s original 10-city index, prices fell a record 19.1% in the previous 12 months.

“The bear market continues; home prices are back to their March 2004 levels,” said David Blitzer, chairman of the index committee at Standard & Poor’s.

The largest price drop for October was seen in Detroit, with a fall of 4.5% amid growing troubles for the Big Three automakers.
For the year, Phoenix chalked up the biggest drop — 32.7%.

From the Wall Street Journal:

Case-Shiller Index Shows Sharpest Home-Price Declines in Sun Belt

Home prices continued to drop as the economic downturn deepened further in October, according to the S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, with home prices in the Sun Belt continuing to be hit hardest.

“The bear market continues; home prices are back to their March 2004 levels,” said David M. Blitzer, chairman of S&P’s index committee. He added that both composite indexes and 14 of the 20 metropolitan areas are reporting new record declines. As of October, the 10-city index is down 25% from its mid-2006 peak and the 20-city is down 23%, Mr. Blitzer said.

The indexes showed prices in 10 major metropolitan areas fell 19% in October from a year earlier and 3.6% from September. The drop marks the 10-city index’s 13th straight monthly report of a record decline.

In 20 major metropolitan areas, home prices dropped 18% from the prior year, also a record, and 2.2% from September.

Once again, none of the regions was able to stave off a decline from September to October.

Overview:

S&P/Case-Shiller Home Price Indices Overview

Data:

S&P/Case-Shiller Home Price Indices Data

I came across “Housing Inventories on the Rise” this morning and thought it sounded a bit familiar. Sure enough, the same story was published in the New York Times nearly 18 years ago, when the last real estate bubble burst. The scenarios are a little different, but while history doesn’t always repeat, it sure does rhyme. Real estate bubbles aren’t fairy tales, and home prices can fall, even in Hoboken. There is a reason these things take 20 years to repeat, because that is about the time it takes for the collective wisdom to forget about the last bubble. You know, doomed to repeat it and all.

From the New York Times:
Jersey’s ‘Gold Coast’ Losing Its Glitter
By THOMAS J. LUECK
Published: March 24, 1991 <--- Look at the date

THE New Jersey shore of the Hudson River, which emerged in the mid-80’s as a powerful new magnet for high-rise office development, is struggling with high vacancy rates, canceled projects and nagging doubts about the capacity of its roads, parking and public transportation.

No area better symbolized the 80’s real estate boom in the New York region. An 18-mile corridor of gritty piers, derelict warehouses and abandoned railroad yards, the New Jersey riverfront became a patchwork of huge development sites.

It also became the focus of a feisty battle for New York City tenants and the centerpiece of an urban renaissance so sweeping that some began calling the area the “Gold Coast” of New Jersey.

For now, the renaissance has slowed. With 15 million square feet of space — more than half of it built in the last five years — developers on the New Jersey shore are beset by the highest vacancy rates in the New York area.

“When the Manhattan market became soft, it really hurt the New Jersey waterfront,” said Peter Eppie, managing director of Edward S. Gordon Company of New Jersey, a commercial brokerage, based in Jersey City. In an analysis this month, it found office vacancies in New Jersey’s Hudson River cities running at more than 30 percent, nearly double those in Manhattan.
…
For home builders and office developers alike, the immediate problem is something far from unique to the Hudson riverfront — the economics of a deep real estate recession. Since most of the office developers in the area have designed their buildings to appeal to banks, securities firms and other financial-services companies in Manhattan, they are now trying to sell to companies that are eliminating workers and shedding office space.
…
Some proposed developments are being stalled by public opposition. In Hoboken, an on-again, off-again plan to develop idle riverfront land and piers that are owned by the city and leased to the Port Authority of New York and New Jersey was sent back to the drawing boards in October. The plan, involving a huge development of 1.3 million square feet of offices, hundreds of condominiums, a hotel and a marina, was defeated by only four votes in a municipal referendum. Now, Hoboken and Port Authority officials say they are preparing a plan for a smaller development.

From the New York Times:
Housing Inventories on the Rise
By ANTOINETTE MARTIN
Published: December 26, 2008

ON the eve of a new year, it is becoming clear that the real estate market in Hudson County, the “Gold Coast” zone just across the river from Manhattan, will have to wait at least two years to celebrate a more prosperous era.

Once New Jersey’s hottest market for high-end condominiums — drawing streams of Manhattanites — Hudson now finds itself with 24.1 months’ worth of unsold inventory.

This is a much bigger backlog than exists in Brooklyn, which has a 13.8-month supply, and it exceeds unsold inventory levels in Queens; in Orange, Rockland and Westchester counties in New York; and in Fairfield County in Connecticut.

On Long Island, the unsold inventory is also swollen. It would take 20.9 months for all the houses and condos currently on the market there to find buyers, given the current pace of sales.

A new assessment of the region prepared by the Otteau Valuation Group presents a generally unlovely picture of residential sales markets:

Manhattan now has an 11.8-month supply of unsold inventory, said Jeffrey G. Otteau, whose Old Bridge, N.J., company analyzes contract sales figures and advises real estate brokers. “This is not terribly big,” he said, “but it is significantly bigger than a year ago — and much bigger than the days when multiple bidders were circling around every available unit on the market.”
…
In Hudson County, home to Hoboken and Jersey City — an area known as “Wall Street West” — sales were 26 percent fewer in November than the month before, and 47 percent fewer than in November 2007.

Looking further ahead, Mr. Otteau has recently raised the issue of potential overbuilding in Hudson County — in addition to his contention that outer-ring suburbs already have a surfeit of single-family housing on large lots that will not appeal to buyers of the next decade.

One large developer in Hoboken, the Applied Development Company, stopped building anything other than rentals as of nearly two years ago, said its president, David Barry. “We saw the condo market getting ahead of itself, and becoming temporarily overbuilt, for sure,” he said.

From the AP:

Existing home sales sink by 8.6 percent in November, as prices plunge a record 13.2 percent

A real estate group says sales of existing homes plummeted far more than expected last month as buyers reeled from October’s big plunge on Wall Street. The median sales price fell by the largest amount on record.

The National Association of Realtors said Tuesday that sales of existing homes fell 8.6 percent to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.

Sales had been expected to fall to a pace of 4.9 million units. according to Thomson Reuters.

The median sales price plunged 13.2 percent in November to $181,300, from $208,000 a year ago. That was the lowest price since February 2004 and the biggest year-over-year drop on records going back to 1968.

From Bloomberg:

U.S. Existing Home Sales Fall 8.6% in November to 4.49 Mln Rate

Sales of previously owned homes in the U.S. fell more than forecast in November and prices dropped by the most on record, indicating the real estate slump will extend into a fourth year and worsen the recession.

Purchases declined 8.6 percent to an annual rate of 4.49 million, from a 4.91 million rate in October that was less than previously estimated, the National Association of Realtors said today in Washington. The median price dropped 13.2 percent from a year earlier, the biggest decline since records started in 1968. Separately, the Commerce Department reported today that new-home sales fell 2.9 percent last month.

Prices will plunge further as job losses sap demand, foreclosures add to the property glut and prospective buyers get turned away by mortgage lenders. The Federal Reserve this month cut its benchmark interest rate target to as low as zero and said it would take more steps to ease borrowing as the longest postwar recession looms.

“Foreclosures are prolonging the declines in home prices,” Jonathan Basile, an economist at Credit Suisse Holdings in New York, said before the report. “Increasing unemployment is a continued impediment to housing.”

Resales were forecast to fall to a 4.93 million annual rate from an originally reported 4.98 million in October, according to the median estimate of 63 economists in a Bloomberg News survey. Projections ranged from 3.98 million to 5.2 million.

Sales dropped 10.6 percent compared with a year earlier. Resales averaged 5.67 million in 2007 and before today’s report, fluctuated around a 4.96 million rate this year.

The number of previously-owned unsold homes on the market at the end of November represented 11.2 months’ worth at the current sales pace, up from 10.3 months’ at the end of the prior month.
…
The median price of an existing home fell to $181,300, and the percentage drop from a year ago was “probably the largest price decline since the Great Depression,” although records don’t go back that far, said NAR Chief Economist Lawrence Yun.

Foreclosures and short sales accounted for 45 percent of last month’s home purchases, Yun said.

From MarketWatch:

U.S. Nov. existing home sales fall 8.6% to 4.49 mln units

With plummeting prices, resales of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million, the National Association of Realtors reported Tuesday. Resales are down 10.6% in the past year. Economists surveyed by MarketWatch had expected sales to fall to an annual rate of 4.9 million. In the past year the median sales price fell 13.2% — the largest decline since data collection began in 1968 and likely since the Great Depression — to $181,300. The inventory of unsold homes on the market rose 0.1% to 4.2 million, an 11.2 month supply at the current sales pace. NAR attributed November’s poor results to the weak stock market, job losses and low consumer confidence.

From MarketWatch:

U.S Nov. new home sales down 2.9% to 407,000

U.S. new home sales fell to their lowest level in over 17 years in November, the Commerce Department estimated Tuesday. New home sales fell 2.9% to a seasonally adjusted annual rate of 407,000. This is the lowest level since 401,000 in January 1991. New home sales are 35.3% below their level in November 2007. The drop was slightly above the 400,000 pace expected by economists surveyed by MarketWatch. New-home sales in October were revised to a 419,000 level compared with the previous estimate of 433,000. The months’ supply of homes on the market fell slightly to 11.5 months in November from 11.8 months in October. Median sales prices have fallen 11.5% in the past year to $220,400.

From Reuters:

November home sales fall 2.9 percent

ales of newly built single-family homes slowed in November to the weakest levels since 1991, according to Commerce Department data on Tuesday that offered fresh evidence of housing market distress.

The seasonally adjusted annual sales pace of 407,000 was down 2.9 percent from October and was the lowest rate since January, 1991.

Economists polled by Reuters had forecast sales would notch a 420,000 rate compared with a downwardly revised 419,000 in October, previously reported as 433,000.

The median sales price rose to $220,400 from $214,600 in October. The median marks the half-way point, with half of all houses sold above that level and half below.