Our growing ‘City of North Jersey’: How we got here and where we are going

It’s not surprising that Englewood chose to name its high school for Dwight Morrow, a city resident who was a U.S. senator, an ambassador to Mexico and a powerful Wall Street banker. However, Morrow’s most enduring influence might have come through a position that doesn’t even rate a mention in his Wikipedia entry.

Morrow served on the influential 10-member committee that fashioned the 1929 “Regional Plan of New York and Its Environs,” the first master plan for any city or region in the country. That multivolume agenda became a seminal blueprint for the growth of New York City and the entire metropolitan area, and, in the eyes of many, codified the strategy that perpetuated the city’s role of dominance on the world scene.

As it turned out, by virtually laying out the structure of roads that serves as the region’s circulatory system and projected path of development, it also helped to create something unanticipated. Call it the City of North Jersey, the place we live and work in now.
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The plan consisted of two parts: a highway system west of the Hudson and around New York City, and an economic transformation that turned New York City from an industrial-era engine comprising small manufacturers employing low-paid factory workers into a world-class city of concrete and glass office towers where banks, investment houses, insurance companies, real estate and legal firms did business and their mostly well-off workers lived.

These “clean” enterprises were the designated “highest and best uses” of the valuable real estate in Manhattan’s massive central business district. Spreading out from it in spokes and in concentric rings would be the highways — the plan paid scant attention to mass transit systems — that would filter factories and lower-priced residences through a megalopolis designed to serve Manhattan’s needs.

But a funny thing happened. North Jersey developed — in a big way, and pretty much according to the original highway design, tripling the population of the communities served by those highways since 1930.
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The highway grid in the plan looks much the way it appears today: A big peripheral highway, 287; highways sprouting from one existing Hudson River crossing (the Holland Tunnel) and five anticipated crossings (three eventually became reality), Routes 4, 46, 208, 3 and 280, 80 and 95; and four north-south highways, the New Jersey Turnpike, the Garden State Parkway, Routes 17 and 9. Highways that fed into the George Washington Bridge and the Tappan Zee Bridge connected to the eastern half of the larger peripheral system that moved vehicular traffic around New York City.
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North Jersey adopted its own version of “highest and best use.” Single-family housing soaked up blank spaces between the highway grid. Regional malls sprawled along the intersections. Midrise commercial buildings and hotels went up along the highways and in the Meadowlands. High-rise apartments came to Fort Lee, Hackensack and northern Hudson County.

Pretty soon, North Jersey had the looks of, well, a city. Not the dense, concrete-and-glass, high-rise prototype that identifies most of the world’s modern cities, but a hybrid that mixes those elements with the expansive, haphazard collection of housing, offices and malls typical of American suburbs.
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To be sure, many pressures beyond the agenda of the 1929 plan pushed the development of the City of North Jersey. Already in place in 1930 were the industrial cities of Hudson, Bergen and Passaic counties. It was an era when Garfield was Bergen’s largest municipality, and Fairview was bigger than Paramus.

White flight, tax policies that favored home ownership over renting, the GI Bill and the rise of the automobile as the nation’s preferred form of mass transportation also encouraged the move out of the big cities to the more rural towns of North Jersey.

With the population growth, other development followed: Malls to sell merchandise to a ready and growing public; corporate headquarters to capitalize on a labor force unwilling to travel long distances for jobs (with lower real estate costs to boot for businesses). Between 1981 and 1986, Bergen County absorbed 13 million square feet of new office space, more than the 14 buildings of the original Rockefeller Center, completed a half-century earlier.

Housing Data Disappoint … Again

So the latest housing number is kind of bad: 654,000 new units were started in March, 5.8 percent below the revised February numbers. Economists surveyed by Bloomberg were expecting something considerably higher. The median estimate of the 82 who ventured a guess was 705,000. Even the lowball forecast, 670,000, was too high. It’s the rare economic survey where the biggest bear isn’t bearish enough. Clearly we’ve been fooled by housing again: Just when it looked like he was getting out of bed, the perpetual sick man of the recovery rolls over with some phlegmy numbers.

But how disappointed should we be? Housing starts last month were still 10 percent higher than a year earlier. And building permits were strong, up 4.5 percent from February and 30 percent higher than they were a year earlier. Permits data tend to be the more dependable number anyway, compared with the choppy starts number that tends to get significantly revised. Of course, it’s a lot easier to file a building permit than to start building the thing.

So much of the recently nice housing data was apparently being goosed by the unseasonably warm temperatures over the last several months—which everyone knew. “I thought the weather would give us a bigger lift,” says Joe Lavorgna, chief U.S. economist at Deutsche Bank (DB), who forecast 725,000 housing starts in March.
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Among those colored not surprised is Barry Ritholtz, whose “Debunking the Housing Recovery” series has done just that, fairly thoroughly. Ritholtz’s continued housing bearishness can be summed up thusly: There are still too many unsold homes on the market, they’re still too expensive for first-time buyers, there are still lots more foreclosures coming down the pike, and renting is too good an option for too many people, compared with owning.
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Still, not everyone’s reading these numbers as bad.

Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce (CM), says the strong permits data refute the warm weather argument, and that construction will grow through the year. Shenfeld, who forecast 675,000 housing starts, believes housing will actually contribute to GDP this year, and that it might already be doing so, despite consecutive decreases in construction spending since December.

Still, even housing bulls are tepid in their enthusiasm. “This isn’t the big recovery in construction we’re waiting for. It’s merely a crawl off the bottom of low homebuilding levels,” says Shenfeld. “Still, the mini-bounce off the bottom has begun.”

Jersey Rejuvenation Story

About six years ago, Newark, N.J., seemed to be winning its long struggle to emerge from decades of urban decay, and one of the symbols of that was the opening of Eleven80, a market-rate rental property in a converted Art Deco office building.

The developer, Cogswell Realty, spent about $110 million to develop the 317-unit apartment tower with luxury finishes and a bowling alley in the building that originally opened in 1929. Most significantly, Cogswell was charging market rates of more than $2,000 a month for some units, prices unheard of in downtown Newark.
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But now the project has also taken on new symbolism as its defaulted mortgage has been sold. While sales of distressed real-estate debt are commonplace these days, this deal was significant because the seller was the Federal Reserve Bank of New York.

The Fed wound up owning the debt on Eleven80, along with about $6.4 billion in commercial real-estate loans, when it made a $28.8 billion loan to bail out Bear Stearns Cos. in 2008.

Since then, the Fed has been slowly and quietly reducing that stockpile, partly through loan sales. As of Dec. 31, the value of the commercial real-estate loan portfolio had been whittled down to $2.9 billion, according to public documents.

What is less clear is how well taxpayers have made out from the Fed’s efforts to sell off commercial real-estate loans. A spokeswoman for the Fed declined to comment on the disposal of toxic real-estate loans by Maiden Lane LLC, the Fed-controlled company that was established in 2008 to handle all of the Bear Stearns assets taken over by the Fed.

In the case of Eleven80, taxpayers didn’t make out well. Bear Stearns originally made a $54 million loan on the project, which Maiden Lane inherited. In the recent deal, Maiden Lane sold the debt for $35 million to KBS Strategic Opportunity REIT, a nontraded real-estate investment trust managed by KBS Capital Advisors LLC, of Newport Beach, Calif.

The Fed also moved slowly. A trustee began foreclosure proceedings in 2009, but three years later Cogswell still owns the asset. The foreclosure has been complicated in part by litigation related to a construction company seeking payments.

The Fed’s loss could have been worse. Investors’ demand for distressed commercial real-estate loans is rising, and buyers are now paying an average of 50 cents on the dollar, topping the 25 cents on the dollar that soured commercial real-estate debt was selling for when real-estate values hit their troughs, according to Harris Trifon, global head of commercial real-estate research at Deutsche Bank Securities Inc.

Home construction shows signs of life after long downturn

From new luxury homes in Saddle River to town houses in Garfield to rentals in Fort Lee, Elmwood Park, Hackensack and Wood-Ridge, North Jersey is seeing small signs of life in the deeply troubled housing construction industry.

After bumping along at near 40-year lows for several years, homebuilding is nowhere near a real recovery yet. But builders are feeling, if not exactly optimistic, a little less pessimistic. While national housing indicators — housing starts, new home sales and builders’ outlook — remain below the levels seen in a healthy market, they’ve risen from their recent lows. And the Standard & Poor’s home builders stock index is up about 70 percent from last fall.

“It’s the first time in four or five years that we’re generating job growth, which is always a driver of housing,” said Carl Goldberg of Roseland Property in Short Hills, which is building the Estuary, a 583-unit luxury rental building in Weehawken, among other projects.
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“New Jersey’s homebuilders are off to their best start since 2008,” said Patrick O’Keefe, an economist with J. H. Cohn in Roseland. Building permits rose almost 24 percent in January and February compared with the same period last year. If that pace continues, builders will construct more than 16,000 housing units in New Jersey this year, O’Keefe estimated. Though still only about half of the long-term averages, that’s an increase from recent levels in the 13,000 range, which were the lowest levels since World War II.

Multifamily units are expected to make up a record 55 percent of the state’s new construction this year, according to O’Keefe. And rentals are especially popular. With mortgages hard to come by, and people feeling skittish about home values and the employment market, fewer builders are constructing homes for sale.

“We stopped doing for-sale housing about three years ago,” said Andrew Abramson, chief executive of the Value Companies of Clifton, a 60-year-old builder and apartment owner. “We honestly got tired of beating our heads against the wall.”
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“The homeownership rate continues to drop,” said Ron Ladell of AvalonBay, a Northern Virginia-based company that has new apartment complexes recently finished or under construction in North Bergen, Wood-Ridge and Hackensack, and plans to start more projects in New Jersey later this year and next year. “Rentals are the place to be, let me tell you.”
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And BNE Real Estate Group of Livingston, which once planned to build condos on a Fort Lee site, is instead constructing a 12-story, 194-unit apartment building because of the strong market for rentals.

“The demand for rental housing has been growing at a quicker pace than the underlying economy,” Goldberg said. “The level of demand and kind of production you’re seeing on the rental side is not yet matched in the for-sale market. … There continues to be a real demand for high-quality housing adjacent to mass transit in our urban core.”
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Other builders are also betting on for-sale properties, especially in niche markets.

“It’s got to be the right product at the right price at the right site,” said Paul Schneier, Northeast division president for the Pulte Group, which is building 184 town houses in Garfield and 750 age-restricted condos at Wanaque Reserve in Wanaque.

“It’s a very unforgiving market,” Schneier said. “There’s no margin for error. You can’t just push prices higher to make up for your mistakes.”
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Toll Brothers, for example, said sales have been picking up at its high-end Hoboken developments, which include Maxwell Place, at the old Maxwell House coffee site on the Hudson River and the Hudson Tea redevelopment. nearby.

“Our buyers have kept their jobs. They still have cash. They’re looking around and realizing they can get mortgage loans for around 4 percent,” said John McCullough, assistant vice president at Toll Brothers City Living. “A lot of them have been sitting on the sidelines for a few years and have come to the feeling that this is the time to get on with their lives.”

Hovnanian Enterprises of Red Bank has seen sales pick up significantly at its 420-unit 77 Hudson high-rise in Jersey City, according to Randy Brosseau, metro area president. And sales are also improving at its 55-and-up communities in Woodland Park and Montvale, he said.
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Whatever the timetable for a housing recovery, builders and analysts say the nation is unlikely to see the kind of construction experienced in the mid-2000s boom, when new-home sales topped a million a year for several years.

“Everything in moderation,” said Witmondt of Woodmont Properties. “In the go-go days of the mid-2000s, the exuberance was too great, and everyone got ahead of themselves. Hopefully, we’ve all learned a lesson. When things get good, don’t floor the accelerator. Go nice and slow and steady.”

High Marks for Transit Hubs

WANT to know which New Jersey train stations have the most plentiful supply of parking spaces relative to town population? There’s a list for that. Or what about stations in the areas with the greatest number of jobs? There’s a list for that. Or transportation hubs with the densest populations? There’s a list for that as well.
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The timing of the study — which maps income, car ownership, employment, housing, commuter activity, downtown amenities and more — is propitious, given the many indicators that the population will continue to consolidate in urban and commuter town centers.

“It’s funny; the timing is working out so well,” said B. Timothy Evans, the research director at NJ Future, a nonprofit research organization that focuses on smart growth. After three years spent “putting this thing together,” he added, it is a stroke of luck that “the interest is exactly in this sector.”

The interest he cited is being evinced first and foremost by home shoppers. Real estate sales are consistently strongest in towns along New Jersey’s main commuter corridors; the economic downturn has not altered that. The latest survey on home prices conducted by the Otteau Valuation Group found that towns along the rail lines with New York City commutes of less than 50 minutes saw real estate values increase by 3.6 percent from 2010 to 2011, as compared with rural New Jersey, the weakest sector, which saw an 8.7 percent drop in home values.

The future, too, looks bright for the commuter corridor, according to another Otteau survey, which found that building permits in rail towns reached 49 percent of the total permits issued from 2009 to 2010, having grown from 24 percent in the 1990s.

Developers seeking to capitalize on this interest in transit hubs have for the last several years seen their enthusiasm and ambitious plans well rewarded by the state. Public financing for transit-oriented developments, once largely directed at municipalities, is today going directly to developers, in the form of tax credits.

New Jersey’s Transit Hub Tax Credit Program has provided nearly $1 billion in tax credits over the last three years to developers and business owners who have initiated sizable projects in nine cities deemed “distressed” and in need of investment.

Bestowed by the state’s Economic Development Authority, the tax credits are available to companies investing more than $50 million in projects within half a mile of one of the designated cities’ transit stations, and generating more than 250 full-time jobs. Commercial enterprises can receive up to 100 percent tax credit on their capital investment, paid out over 10 years, while residential projects can receive up to 35 percent tax credit on the investment, up from the former cap of 20 percent.

McMansions swell the real eastate market as homebuyers think small

Ten years ago, when their grandchildren were young and visiting often, Frank and Rosemary Santoloci bought a brand new five-bedroom, four-bathroom home on four acres in Sparta.

There was ample room to play indoors, swim in the pool and and spend time outdoors.

But now the boys have gown up and don’t come over as frequently, so last spring, the couple put their home on the market. The house sold within four months — after they cut the price.

The Santolocis are among the lucky ones.

There is a glut of these McMansions on the market in the suburbs throughout New Jersey, real estate agents and analysts said.

Certain homebuyers once prized these large houses, tucked away on a few acres of land and featuring half a dozen bedrooms, grand entranceways, and three-car garages.

But in the face of the economic collapse, declines in personal wealth, a tight housing market, and a shift of what prospective homeowners want, all that has changed.

Major demographic changes could also make the market shrink even further in the next five years, as baby boomers retire and look to downsize. The generation behind them is smaller and has less money and a desire to live closer to urban centers.

“We definitely have an oversupply of inventory for the so-called McMansions,” said Mary Pat Spekhardt, a real estate agent with Coldwell Banker in Sparta who worked with the Santolocis.

“Houses are staying on the market double the time that they used to, and everyone is frustrated,” she said. “We can’t make buyers, though, that’s the problem. We market, market, market the house and make the house stand out, but the buyers are few and far between.”

In New Jersey, it would take 14.6 months to sell the current inventory of houses listed between $600,000 and $1 million, according to real estate analyst Jeffrey Otteau, president of Otteau Valuation Group. The only houses that are selling are those with unique features, like an inground pool or a media room in the basement, agents said.

And the issue is only going to get worse.

A Bright Spot in the Condo Market

EVEN here — in a city that has been one of New Jersey’s most fertile breeding grounds for condominiums — construction has been virtually at a standstill since construction financing dried up several years ago.

“Nobody seems willing to take a chance on putting up anything but rentals anymore,” an exasperated Hudson County developer said last month.

But Martin Brady, the vice president for sales at the Marketing Directors, a company that markets both condominium and rental buildings in Manhattan and New Jersey, said the appetite for condos was growing stronger in Hudson County because developers had adjusted to more “value-conscious” buyers.

“The right product — efficiently sized, well priced, with amenities and finishes that are beautiful but not over-the-top — is well received,” Mr. Brady said.

Toll Brothers’ new 1450 Washington building here — a 156-unit building named for its street address — may be a case in point. Toll, which has a history of successes in Hoboken, started construction in August 2010, when sales pace for condos was generally at its weakest.
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“We’ve already sold a third of the units,” said Benjamin D. Jogodnik, a senior vice president of the Toll Brothers City Living division, recently, “and we don’t have a formal sales office open yet.” (A sales office is set to open on Nov. 10 at the nearly complete building, called 1450 Washington, which is its address.)

There are signed contracts for 45 units, and deposits in advance of signings on another 8.The condo, expected to open for occupancy in March, is part of Toll Brothers’ waterfront complex in northeastern Hoboken. It stands across the street from the Hudson Tea building, a onetime factory that was a rental until Toll converted it to condos in 2006, and just east of Harborside Lofts, another factory building converted to condos, in 2007.

Hudson Tea and Harborside Lofts were priced near the top of the scale at the time they were created. At Harborside Lofts, which is now entirely sold, studios started at $450,000 and penthouses ranged up to $2.5 million.
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“Since then the economy has shifted — obviously,” Mr. Jogodnik said. “We studied the market very carefully before designing a product that would appeal to the group in the widest section of the pyramid of today’s buyers.”

In neighboring Jersey City, said Mr. Brady of Marketing Directors, 47 contracts have been signed since July at a new building at Liberty Harbor, the community being developed by Peter Mocco in slow phases on a 28-acre site adjacent to the historic Paulus Hook and Van Voorst neighborhoods.

The Liberty Harbor units are “efficiently designed, 650 to 700 square feet, with hardwood floors, granite counters, stainless steel appliances, priced from the high $200,000s to the low-to-mid $300,000s,” Mr. Brady said.

When condo construction virtually ceased in Hoboken, Mr. Brady said, finished condos slowly continued to sell — even at the priciest level. The 38 condos on upper floors of the W Hoboken Hotel originally sold out quickly in 2008 when asking prices were set at $1.7 million. A number of those sales then fell apart, and about a dozen units were put back on the market.
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As for 1450 Washington, prices for studios start in the low $300,000s; one-bedrooms in the high $300,000s; two-bedrooms in the low $600,00s; three-bedrooms with a minimum of 1,500 square feet in the mid-$900,00s. On higher floors in the two-tiered building, prices are somewhat higher.

U.S. Homes in Foreclosure Average 611 Days Late on Payments

U.S. homeowners facing foreclosure were a record 611 days late paying their mortgages on average as legal disputes delayed bank repossessions, Lender Processing Services Inc. said today.

That was up from an average 599 days in July and 478 days in August 2010 for homes that had received a notice of foreclosure and weren’t sold or repossessed by banks, according to the Jacksonville, Florida-based real estate data company.

“You’ve got this bunching up in the later stages of the process,” Herb Blecher, senior vice president for analytics at Lender Processing Services, said in a telephone interview. “The bottlenecks are still there.”

The time to resolve mortgage delinquencies has grown from a year ago, when banks delayed filings after claims of “robo- signing,” or pushing through documents that weren’t verified, spurred investigations by attorneys general in all 50 states.

Foreclosures take longest in so-called judicial states, which require court approval to seize properties, led by New York, where the average home was in the process for 767 days. It was followed by Florida with 757 days, New Jersey with 708, Hawaii with 681 and Washington, D.C., with 676, Lender Procession said. The shortest averages were in Wyoming at 398 days, Nebraska at 407, Alaska at 411, Idaho at 416 and Arizona at 418.

An Apple Tree Grows in Suburbia

Used to be, developers built high-end suburban communities around golf greens.

The hot amenity now? Salad greens.

In a movement propelled by environmental concern, nostalgia for a simpler life and a dollop of marketing savvy, developers are increasingly laying out their cul-de-sacs around organic farms, cattle ranches, vineyards and other agricultural ventures. They’re betting that buyers will pay a premium for views of heirloom tomatoes—and that the farms can provide a steady stream of revenue, while cutting the cost of landscaping upkeep.

Forget multimillion-dollar recreation centers—”our amenities are watching the cows graze and the leaves change,” says Joe Barnes, development principal for Bundoran Farm, a 2,300-acre development set amid apple orchards and cattle pastures outside Charlottesville, Va.

To be sure, the shaky economy has taken a toll on some of these developments, including Bundoran Farms, where the developers are moving ahead with new financial backers after a co-owner of the acreage went into foreclosure. Still, Bundoran’s developers say they have sold 19 lots, which run from about $250,000 to more than $1 million, in the past 10 months. And new communities centered on agricultural development are in various stages of planning and construction in cities from coast to coast, including South Burlington, Vt., Hayes, Va., Boise, Idaho, and Stockton, Calif.

“Agriculture is the new golf,” says Ed McMahon, a senior resident fellow at the Urban Land Institute, a nonprofit group focused on land-use planning.
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There are three basic models for incorporating agriculture into suburbia. The most straightforward is to set aside land for a farm, orchard or vineyard within the community. Such ventures may be run by an independent contractor who leases the land, or by salaried farmers who work for the developer. A second model creates community gardens—tilled, irrigated and ready for planting—throughout the development. Residents can claim a plot and get their hands dirty. Or new-home buyers might be might be offered a choice of irrigation systems and planter boxes that would allow them to turn their own yards into mini-farms. A final model involves creating edible landscaping throughout common spaces—fruit and nut trees, berry bushes, cabbage and lettuce—and allowing residents to pick whatever they can use. Many of the new developments incorporate more than one of these visions.

The trend has its roots in the growing distaste for prototypical suburban sprawl: mile after mile of look-alike homes broken up by the occasional park. The sustainability movement, with its emphasis on conservation, preservation and local food production, has helped, too. Then there’s the fact that the U.S. already has thousands of golf-course communities, so developers looking to set their subdivisions apart need a new marketing hook.

“We’re not trying to be suburbia,” says Harold Smethills, a principal of Sterling Ranch, a planned development southwest of Denver that will feature a 4-H livestock ranch and hundreds of acres of community gardens.

So again, what is affordability? Are we talking about an economic issue here or a moral one (right to the American Dream)?

From the Record:

Big homes, big lots making N.J. even more unaffordable

New Jersey’s problem with suburban sprawl is getting worse, according to a new report.

Development of big homes on big lots and zoning that favors businesses have made it tougher for lower-income residents to afford to live in higher-income suburban towns today than it was in 1970, a study by Rowan University found.

All this occurs despite the long effort to push towns to add affordable housing and adhere to “smart growth” initiatives and zoning rules, the report says.

“Municipalities are making it almost impossible to build apartments and town houses that are affordable to middle-class New Jerseyans,” said Adam Gordon, spokesman for Fair Share Housing Center, which paid for the study. “Middle-class families cannot afford a 3-acre home.”
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The report says development of large suburban lots holding just one or two homes an acre dominated the state since 1986, while the construction of more affordable apartments, town houses and smaller single-family developments tapered.

Before 1986, 58 percent of residential development was in cities and already built-up suburbs. Since then, two-thirds occurred in rural and less compact areas, the report says.

The report also says municipalities have focused on industrial and commercial development, which pays tax dividends, rather than multi-unit apartments and town houses that bring in more school-age children.

“Municipalities want as few households as possible on any given piece of land,” said Tim Evans, research director for New Jersey Future, a non-partisan research group that helped produce the report.

Purchases of New Homes in U.S. Probably Held Near Record Low

Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.

New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.

The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.

“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.

The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.
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Douglas Yearley Jr., chief executive officer at Toll Brothers Inc., the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”

New Home Sales Up From Record Low

Sales of new homes increased in March from a record low a month earlier, a small boost for a struggling part of the U.S. economy.

Sales grew 11.1% on a monthly basis to a seasonally adjusted annual rate of 300,000 in March, the Commerce Department said Monday. Results for the previous two months were revised upward, but February remained the worst month on the government’s records, which go back to 1963.

Economists cautioned against concluding that the new-homes market is on the rebound.

“Even with this improvement, the data on new home sales has remained in a very depressed range,” over the past year, wrote J.P. Morgan economist Daniel Silver. While sales of previously occupied homes have shown modest improvement over the past year, the market for new homes is faring far worse, he noted.

“It is not hard to have a large percentage increase in sales when you are coming off the lowest level since records started being kept,” wrote Joel Naroff, president of Naroff Economic Advisors, in a note to clients. “We need to more than double the March sales pace to reach decent sales levels.”

Economists surveyed by Dow Jones Newswires had predicted the March sales rate would rise 14.8% to an annual rate of 287,000. Sales, however, were down 21.9% from March 2010.

Coming off the worst year for new home sales on record in 2010, the housing market continues to struggle to recover from a painful bust.

With demand soft, prices have been weak. The median sales price for a new home sold last month was $213,800, up 2.9% from $207,700 a month earlier, but down 4.9% from the same month last year.

From Reuters:

U.S. new home sales up, market still seen weak

Sales of new U.S. homes
rose in March and the number of properties on the market was
its lowest since the 1960s, but further gains will be hampered
by stiff competition from a glut of previously owned houses.

Single-family home sales rose 11.1 percent to a seasonally
adjusted 300,000 unit annual rate, the Commerce Department said
on Monday, up from 270,000 in February. Economists had expected
a 280,000-unit pace.

Despite last month’s rise, new home sales are just bouncing
along the bottom.

The market for new homes is being squeezed by competition
from previously owned homes and a deluge of foreclosed
properties, even though inventories in March fell to 183,000
units — the lowest since August 1967.

“The rebound in new home sales was encouraging, but the
March sales pace merely brings us back to the underlying trend
and indicates that housing continues to bounce around
historical lows,” said Omair Sharif, an economist at RBS in
Stamford Connecticut.

From Time:

New Home Sales: Slightly Better Than Horrible

It is interesting what registers as good news these days in the housing market.

People are making a big deal out of today’s new homes sales number as perhaps finally the sign that the housing sector is rebounding. On Monday, the Census reported that new housing sales rose 11% in March. This was greeted as generally good news. Nationwide, 29,000 new homes were sold and it puts the market on pace to clear 300,000 homes in 2011. It’s the first month that new home sales have jumped, and they were up in the double digits. So this is good news, no? Not really.

The March numbers were up from February. But February’s sales pace of 270,000 was the lowest on record since the Census began tracking the number in 1961. So beating that number is a little clearing the first round in whatever is the opposite of limbo. What’s more, on a year over year basis, March sales were actually down 22% from a year ago. And that might be the more important number. Despite the fact that the Census says it seasonally adjusts the number, new housing sales seem to always jump in March, perhaps because of the better weather. Perhaps because people are often looking to move in during the summer. New home sales even jumped in March in 2008, which was an all-round horrible year for housing and the economy. Based on that, last month’s jump, which was smaller that others, isn’t that meaningful.

U.S. New-Home Sales Unexpectedly Decline to Record-Low 250,000 Annual Pace

Purchases of new U.S. homes unexpectedly declined in February to the slowest pace on record and prices dropped to the lowest level since December 2003, adding to evidence the industry is floundering.

Sales decreased 16.9 percent to a 250,000 annual pace, figures from the Commerce Department showed today in Washington. Economists surveyed by Bloomberg News projected a gain to a 290,000 rate, according to the median estimate. The median price fell 8.9 percent from the same month in 2010.

Builders are struggling to compete with existing homes as foreclosures add to the overhang of unsold properties and drive down values. The figures underscore the Federal Reserve’s view that the housing market “continues to be depressed” even as the rest of the economy improves.

“We’ve got this tug of war going on where we’ve got this very weak housing sector and a manufacturing sector that’s doing fine,” said Brian Jones, an economist at Societe Generale in New York, whose 240,000 forecast was the lowest in the Bloomberg survey. “The new and existing home sales numbers were abysmal. You could say that part of it was attributable to unusually harsh weather.”

From MarketWatch:

Dismal home-sales data tell us nothing new

Financial markets overreacted to the news Wednesday that U.S. sales of new homes fell about 17% in February to a seasonally adjusted annual rate of 250,000, a record low and quite a bit worse than the 290,000 rate expected by the MarketWatch survey of top forecasters.

As of 11 a.m., an hour after the new-homes sales report was released, U.S. stock markets were down about 0.6%, while U.S. Treasury yields dropped. It wasn’t a huge move, but more than the economic data deserved.

The housing numbers from the Commerce Department are notoriously unreliable on a month-to-month basis and should not be used as the sole reason for any investment decision.

In February, the standard error on the monthly data was 19.1%. That means government statisticians are 90% confident that the real level of home sales in February was somewhere between 192,000 and 312,000. Sales might even have risen in February, for all we know.

What did the sales report tell us that we didn’t already know? Very little. We know home building and home sales are extremely weak. Home builders are depressed. So are many home owners, who owe more than their house is worth. Home prices have been falling modestly since the government’s main effort to prop up the market ended last fall with the expiration of the home buyer subsidy.

It’s possible that the awful sales data show that housing is weakening further, but the other evidence from other sources don’t confirm that. Home builders actually are a little more upbeat than they have been.

Many analysts believe housing has more or less hit bottom and hasn’t come back to any significant degree.

Based on the history of such bubbles, it’s likely to take years before home construction, home sales and home prices recover fully. Nothing reported on Wednesday changes that prognosis.

Christie’s Atlantic City Revival Seeks Halt to 30% Casino Plunge

New Jersey Governor Chris Christie is bucking voter skepticism and pushing ahead with his plan to revive the Atlantic City gambling resort, where casino revenue has plunged the most since the first one opened in 1978.

Christie, a first-term Republican, took control of the tourism district in the 48-block-long coastal city of 40,000 last month and relieved the 11 casinos there of some regulations. He redirected gaming fees to clean up and promote the area, and provided tax breaks to help restart construction of the $2.5 billion Revel casino that stalled in 2009.

The intervention may come too late, even with Revel opening in 2012, said Dennis Forst, a gaming analyst at KeyBanc Capital Markets. Gambling revenue in Atlantic City, the second-largest U.S. casino market, is down 30 percent from 2006. Older betting parlors may close as Sands Casino Resort in Pennsylvania, Dover Downs in Delaware and other rivals draw gamblers from Philadelphia and New York, he said.

“Outside competition is only going to increase,” he said during an interview in New York. “Atlantic City had 30 years to work this out, to make themselves indestructible, and they’ve wasted all of those years,” said Forst, who has covered the industry for 40 years. He received top rankings of analyst polls in the Wall Street Journal and Institutional Investor and Forbes magazines, according to KeyBanc.
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New Jersey is seeking to halt a drop in the 8 percent tax on casino revenue that funds programs for seniors and the disabled. The industry gives another 1.25 percent of revenue to the Casino Reinvestment Development Authority, which helped fund $1.8 billion of projects since 1984, including airport expansion and housing for casino workers.

Atlantic City’s gambling houses employed 33,272 as of last month, down from more than 45,000 in 2004, according to state data. The 8 percent gaming tax netted the state $260.9 million in 2010, down from more than $400 million in 2006.

A Thaw in the Condo Market

LAST month a few strong blips indicated a quickening pulse on the New Jersey condominium market. Or maybe just a pulse.

There were 15 sales in four weeks at one building in Jersey City, 6 at another, 5 at a Hoboken building where sales had been lagging — even a premarketing sale at a town house development in Livingston.

Portents of a spring revival? Or a mere minitrend that will melt with the last of the snow?

“Ha! That’s the $64 million question, now isn’t it?” said Dean Geibel, the chief executive of Metro Homes, who described February as the best month in two years for his two buildings — Gulls Cove in Jersey City and Metro Stop in Hoboken.

“This is not an uptick in prices,” Mr. Geibel added. “But the increase in sales is still huge, because it has been so slow for so long. It raises the question, ‘Is there going to be a traditional spring market with a widespread uptick?’ ”
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Why would the sales heat up in February? Ms. Ferrara suggested that one reason might be concern over mortgage rates’ climb beyond 5 percent, and over their potential to rise significantly, and fast, when the economy improves. About 60 percent of recent buyers at Crystal Point are employed in finance, she said, and therefore probably likely to keep a close watch on trends.

Also, she added, a tight rental market in New Jersey is probably a factor. The statewide vacancy rate is at a low 6 to 7 percent, according to market analysts; price breaks and other incentives have largely been abandoned; and monthly rates are starting to rise.

“In the rent-versus-buy scenario,” Ms. Ferrara said, “when people take tax benefits of ownership into account, we are now seeing some urgency of people deciding to buy.”
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Meanwhile, condominium prices remain depressed. Over the last year, the average price in Jersey City dipped by 13 percent, to $467,297, according to a Marketing Directors analysis.