New Jersey Real Estate Report

From the Star Ledger:

Bad weather, bad economy bring down shore rentals

Is it the weather or the economy keeping Jersey Shore rentals vacant? Both have been dreary, but only one has a shot of turning around within 24 hours.

Homeowners hope the sun will finally show up for good and prompt the untanned masses to pick up their phones and look for last-minute deals — of which there are plenty.

“Some owners are saying, ‘I still have Fourth of July open,’ and that was never the case before,” said Maria Kirk, owner of shoresummerrentals.com which lists rentals. “Most of my owners are really happy, saying they’re really booked, but some have a couple weeks left, and they’re offering specials.”

With vacationers across America committing ever-later to travel arrangements, real estate agents and tourism officials say it’s still too early to tell whether the summer business season will be as washed out as the beach was in June. To try to fill in those few empty weeks, owners are willing to negotiate or are even starting out at lower rental rates.

Jimmy Brusca is offering a $100 discount off his weekly rate of $1,690 for a house in Lavallette to get that last week in August wrapped up.

“Usually we’re booked by March,” he said. “It’s already June.”

After a strong spring rental market, things have cooled off instead of heated up, said Barbara Shirvanian, the owner of Shore Homes in Monmouth Beach. She worries some properties have reached the point of no return.

“The leftovers won’t get rented,” she said. “It will be more difficult.”
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The doleful housing market has pushed would-be sellers to put their homes up for rent, agents say.

Shirvanian, of Shore Homes, said a mansion for sale in Monmouth Beach had sat on the market for a year while the asking price dropped from $3.4 million to $2.9 million. A deal fell apart in April, so Shirvanian rented furniture and got professionals from Hoboken in for the summer.

She shaved $10,000 off the $60,000 price the place could have pulled in, hoping the renters will want to become owners. “That’s the idea,” she said.

Jim Flynn says the property he’s owned in Long Beach Island since 1998 is off 30 percent from most summers, but he is optimistic.

“When the weather gets sunnier, which it probably will be this weekend, people will say, ‘Gee, I really want to get to the beach,’ ” Flynn said.

From the Star Ledger:

Shore deals: Recession has raised availability, lowered costs of summer rentals

Looking to rent a place at the Shore this summer? The economic slowdown means good choices are still available along New Jersey’s 127-mile oceanfront, and landlords are willing to negotiate on price.

“There are rentals available in almost every price range for almost any week of summer,” said Donn O’Brien of Ager Realty on Long Beach Island.

There was a time when most houses and condos would be rented by March, O’Brien said. But not this year — partly because of the economy and partly because cool, rainy weather during the spring meant summer wasn’t on people’s minds.

“Except for the three busiest weeks of the summer (in late July and early August), there still is a good selection,” said Linda Stefanik of Gertrude M. Stefanik Realtors in Seaside Park.

“I think people are concerned about making a commitment (to rent), not knowing if their job situation might change,” said Pam Maguire, an agent with Diane Turton Realtors in Lavallette. Those who are renting are often booking one week instead of the usual two, and they’ve become much more assertive about asking for a discount, real estate agents say. More often than not, they’re getting it.

“We’ve told the owners to negotiate, because why sit there with open weeks?” said Eric Birchler of Birchler Real Estate in Lavallette. Owners are listening, he added — even those with “beautiful houses that people never would give a discount on” in better times.

From the Press of Atlantic City:

Data show many shore foreclosures on second homes

Southern New Jersey hasn’t been spared from the wave of foreclosures in the U.S.

But the character of foreclosures might be a little different here compared with those elsewhere because a significant number of properties are second homes.

Anecdotal evidence suggests second homes make up a significant part of the foreclosures along the shore, where barrier islands are mostly covered with housing that’s not occupied year-round.

In a way, a foreclosure on second home is less distressing, since it usually means someone well-off is losing an investment, vacation or retirement property, rather than someone losing their primary residence. But there was no way to put a number on how many foreclosures might be in that non-primary market.
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Sure enough, RealtyTrac’s figures show an unusually large percentage of owner-absent properties among shore homes with a foreclosure filing.

In Atlantic and Cape May counties, 36 percent of properties in foreclosure last month were owned by people living elsewhere.
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31 percent, and Ocean County, with 20 percent, fit the national pattern of about 30 percent of owners of foreclosed homes living elsewhere, RealtyTrac said.

Given the dominance of second homes, and the paucity of year-round rentals, my guess is that one-fifth to one-third of the foreclosures in Atlantic and Cape May counties are second homes.

RealtyTrac began delving into the number of foreclosures of rental properties because renters can be caught off guard and dispossessed by a foreclosure in many states, according to Daren Blomquist, spokesman for RealtyTrac.

“They could get an eviction without much notice. … They possibly could lose their security deposit,” Blomquist said. “They may have no knowledge of the foreclosure until they get a knock on the door.”

From the AP:

Troubled times could be boon for Shore tourism

Surging gasoline prices forced many New Jerseyans to rethink their vacation plans last summer, and stay closer to home.

This year, a tank of gas is far cheaper. But the slumping economy and soaring unemployment rate seems to be having the same effect as expensive fuel, with New Jerseyans continuing to opt for a family- and wallet-friendly vacation at the Jersey Shore.

Tourism officials and real estate agents say the troubling times are a boon for the Garden State’s tourism industry, noting that about 30 million people live within 300 miles of the Shore area.

“Many people won’t be on cruises or taking cross-country trips this year — they’re looking for places they can go on a tank of gas,” said Diane Wieland, tourism director for Cape May County.
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Real estate agents say prices for many summer rentals remain around the same levels as last year, and they’re confident that interest will grow as summer draws closer and the season gets going.

But they have noticed that many visitors who in the past would stay for a week or longer are now considering shorter trips — three or four days — as they deal with financial uncertainty.
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“It’s still early in the season, but we were right on target at the end of January with leases, and we were inundated with calls in February, so we’re looking good at this time,” said Jeff Gamble, president of the Ocean County Board of Real Estate Agents. “We feel confident that we’re going to be ahead come April.”

But real estate agents and others concede that how the season ultimately turns out — and whether would-be renters and travelers actually make the trek to the Shore — will rest mostly on the state of the economy.

David Weinstein, a spokesman for AAA Mid-Atlantic, says many of their members are not booking trips as far out as they did in the past and are more likely to leave only a deposit, rather that paying in full for a trip up front.

“This tells us that they’re waiting for good deals and that they’re trying to get as close to the departure date as possible, to alleviate any of the uncertainty that might exist if you book six months to a year out,” he said. “Many travelers just don’t know these days what their job or economic situation could be a half-year from now.”

From the Asbury Park Press:

The Shore’s economy is expected to slump in 2009

The Shore’s economy is expected to tumble again in 2009 as consumers, worried about falling home prices, reeling from investment losses and bracing for possible layoffs, rein in their spending.

It’s the consequence of the asset bubble created earlier this decade by consumers who, with easy access to credit, lived beyond their means. Now the bill is due. Consumers need to scale back, and the economy is suffering.

“The paradox facing the country is, how can a country that got itself into deep peril by borrowing and spending without limits now borrow and spend its way back to prosperity?” said James W. Hughes, a Rutgers University economist.

New Jersey’s economy, virtually stagnant earlier in the decade, was pulled under water by the national economy, a victim of the housing market whose mortgages were pooled together into securities and sold to investors.

Homeowners’ incomes didn’t keep pace with their home payments, and they began to default. Investment banks faced bankruptcy just two years after recording record profits. Stock market indexes lost upwards of 40 percent. Banks turned cautious, reducing lending and bringing economic activity to a near halt.

The result so far: New Jersey lost 34,400 jobs during the first 11 months of 2008 and the state’s private sector was on course to end the decade without any net growth, Hughes said.
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The forecast for 2009 is for more trouble ahead. Why?

— The housing sector has yet to stabilize. Home prices statewide on average have fallen about 20 percent from their peak in 2005, and they are expected to fall another 8 percentage points to bring them in line with workers’ incomes, said Jeffrey G. Otteau, president of the Otteau Valuation Group, an East Brunswick real-estate consulting firm.

The industry is expected to see another wave of homeowners whose mortgage rates spike, thus pushing their payments beyond what they can afford. Additionally, there is the problem of people who would like to buy a home, but put such dreams on hold because they worry they will be laid off.
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— Consumer spending has deteriorated. Shoppers in Eatontown said they were taking steps on their own to live more frugally. But many of them couldn’t spend with abandon, even if they wanted.

The reason: Homeowners earlier in the decade used the ever-rising values of their homes to go on a spending binge. They could refinance and take cash. They could get a home-equity loan to renovate their home, pay for college or even pay off their credit cards.

With home values on the decline, they can’t borrow as much, if at all. Home buyers, for example, who put 20 percent down to buy a home in 2005, would have little equity since home values have declined just as much.

The ripple effect is widespread. Consumers spend less. Corporate revenue declines. Companies lay off workers to remain profitable.

“An economy that’s 70 percent dependent on household consumption would like to see people spending more, but given the lack of savings, it’s a good thing that people are starting to save,” said Patrick J. O’Keefe, a director at J.H. Cohn, a
Roseland-based accounting firm.
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— Stores are closing and vacancies rising. The impact can already be seen in towns such as Red Bank, where some store owners have written farewell messages on their windows.

From the Asbury Park Press:

Sale prices of homes stabilizing at Shore

Home prices in the area that includes Monmouth and Ocean counties were essentially flat in the first quarter of 2008, declining by 0.6 percent from the same period the year before, the National Association of Realtors said Tuesday.

The median sale price for an existing single-family home in Monmouth, Ocean, Middlesex and Somerset counties was $361,200, down $2,300, from $363,500 in the same quarter in 2007, the association said. The median means that half the homes in the area sold for more and half sold for less.

Joel Naroff, chief economist for Commerce Bank, said the decline is “relatively modest, to say the least.”

Other areas of New Jersey saw steeper de-clines. For example, the median price in Essex, Hunterdon, Morris, and Union counties fell 3.4 percent. In Bergen, Hudson and Passaic counties, the median price fell 5.7 percent.

But there were some increases in New Jersey. In the Atlantic City area, the median price rose 4.8 percent. The market in the Trenton-Ewing area rose 1.6 percent.
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Little Silver resident Bruce Jennings has had his four-bedroom house at 175 Riverview Ave. on the market since December. He started by asking $489,000. He has reduced it several times to its current price: $449,000.

Prospective buyers have attended open houses, but, so far, no serious offers have come in, he said.

“There seems to be people going around, kicking the tires, but since the market has been declining, they are offering very, very low numbers to try to “steal’ one as opposed to coming in with comparable sales,” said Jennings, a senior loan officer at Allstate Mortgage in West Long Branch.

The economy may be one reason his home has not sold yet, he said. “My house would be perfect for a young couple, or young couple and a child, but they don’t want to take on the financial obligation of a house right now because they are afraid of the economy.”

From the Asbury Park Press:

Sea-level rise threatens bay shores, wetlands

A rising sea level. Greater coastal flooding. Threats to wetlands.

New Jersey’s future will include these and other key issues, according to experts interviewed before and after a new international report on climate change was released on Friday.

“Basically . . . the future doesn’t look good” because the coast is being submerged by rising water and eroded because no new sediment is coming in, said Norbert P. Psuty, a coastal expert at Rutgers University’s Institute of Marine and Coastal Sciences.

“We’re . . . in a very pre-carious situation” in many parts of the coast, said Psuty, director of Sandy Hook Cooperative Research Programs.

But people can adjust by elevating their homes, yards and streets and by replenishing beaches, including those on the bay side, said James G. Titus, project manager for sea-level rise at the U.S. Environmental Protection Agency since 1982.

“People can adapt” to a rising sea level, said Titus, who has vacationed on vulnerable Long Beach Island since 1955. “People can plan for it.”

The new Intergovernmental Panel on Climate Change summary report — “Climate Change 2007: The Physical Science Basis” — prompted a mixture of pessimism, pragmatism and optimism last week.
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Some officials in New Jersey have been planning for sea level rise and the threat of storms riding on higher water levels.

“It’s the frequency of storms that . . . we’re going to have to worry about in the future,” said Kenneth E. Pringle, Belmar mayor.

“With the sea level rising, it just becomes much more difficult to protect (the) community against the increased number of natural events that can cause property damage,” Pringle said.

Belmar officials have been working on protection efforts and emergency response plans, he said.

New Jersey’s relative sea level rose about 16 inches in the last century and is increasing at a rate that’s about twice the global average, Psuty said. About half of New Jersey’s increase is due to the land sinking.

“My analysis of the data suggests that there is actually an increasing rate of sea-level rise in the last few decades,” and that would result in a water level about 24 or 25 inches higher in the next century, he said.

Titus said the sea might rise three feet off New Jersey this century.

From the Press of Atlantic City:

Shore rentals heat up as home sales cool off

Fewer people may be buying a piece of the shore, but more are renting part of it.
Real estate businesses are reporting a surge in rentals even as home sales decline along the coast. An increase in rentals as high as 40 percent has been recorded by some real estate companies. Most are seeing a jump in the 10 to 15 percent range.

“We’re up about 10 percent from this time last year and up another 10 percent from the year before that,” said Frank Shoemaker, of Berger Realty on Asbury Avenue.

Shoemaker said the company did about 9,500 rentals last year and has a full-time rental department manned seven days a week.

It used to be that the same agents who sell homes did all the rentals. But now many firms are establishing separate rental departments in which the agents do only rentals and are extremely responsive to their clients’ needs.

Many firms are finding the rental business keeps them afloat as home sales lag. Rentals are up 15 percent for Farina & Boeshe Real Estate Co. in Sea Isle City, and David Farina said it has been a blessing.
“The strength of our rental business is an oasis any time you get a down market with sales,” Farina said.
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Better rental properties and improved services could be part of the upswing. There could also simply be more vacationers renting as shore hotels, motels, bed & breakfasts and other accommodations get replaced with condominiums. Some say the most recent upswing may be as simple as warm weather at the start of this winter.

From the Hub:

A tale of two towns
BY SUE MORGAN

Though he is not Charles Dickens, borough resident Andrew Mencinsky has authored a proposal to merge his hometown and its neighbor across the river.

To Mencinsky, the result could bring the best of times to both towns and help alleviate taxing conditions that have created the worst of times in New Jersey.

In Sea Bright, Mencinsky pitched his idea to officials, including Mayor Jo-Ann Kalaka-Adams, during the Borough Council’s Oct. 17 meeting.

The leaders of both municipalities need to “put ego, [and] party politics aside and examine what could be a model for the rest of the state to follow,” Mencinsky read from his letter.
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“Rumson has never considered merging with another town,” Ekdahl said. “At this point, this is probably not something we would consider.”

Citing suggestions from Gov. Jon S. Corzine that municipalities share services or merge their boundaries, Mencinsky stated his case before officials in the two towns.

“New Jersey has over 500 municipalities which are taxing its residents out of the state,” Mencinsky wrote in his letter, which he has copied to Corzine.

“Let Rumson absorb Sea Bright and let the savings begin,” he wrote.

From the Press of Atlantic City:

Wildwood developers look to sky
By MICHAEL MILLER

Lately, when developers size up land for new construction in the city, they risk getting cricks in their necks.

That’s because the most ambitious new projects proposed here are high-rise hotels.

The Nouveau Wave, the Oceanic, the Starlight, the Pearl and the Waypoint Beach Club have won city approvals. Several others are in the planning stages.

And on Saturday, a Princeton developer unveiled designs for a $225 million, 25-story hotel called Wildwood Beach Hotel and Resort — or simply the W.B.

This doo-wop themed hotel across from the Wildwoods Convention Center will boast 190 beachfront condos and another 150 hotel rooms. The hotel will have its own spa, restaurants, indoor shopping and an indoor water park featuring a sandy beach and wave pool.

The hotel’s facade resembles a giant drink tumbler bordered by lava lamps in a one-of-a-kind style befitting the city’s attachment to all things doo-wop.
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Wildwood changed its zoning laws just 18 months ago to accommodate new high-rise hotels. Previously, the city allowed a top height of just 128 feet or 12 stories. The tallest building in the city is Sandman Towers, which stands 13 stories tall.

From the Asbury Park Press:

A SLOWDOWN BY THE SEA?
BY DAVID P. WILLIS

A boom in townhouse and condominium construction has been a vital part of oceanfront redevelopment in the city, but the market here is not immune from the slowdown affecting the rest of the real estate industry.

Attracted by Pier Village, the oceanfront Victorian-style complex of shops and restaurants, builders rushed to put up 225 townhouses and 530 owner-occupied condominiums and rental units in the past five years, according to city Planning Director Carl Turner.

“That construction (along the ocean) was in reaction to the renaissance of Long Branch, coupled with an overheated . . . residential real estate market and the beachfront locations,” said Jeffrey G. Otteau, president of Otteau Valuation Group Inc. in East Brunswick.

Those units helped to meet a demand for condos and townhouses in Long Branch, a market that was underserved, Otteau said.

Now there are signs that the city’s real estate market is slowing down. As of Oct. 1, there was a 12-month supply of condos and townhouses on the market, compared with a nine-month supply a year ago, Otteau said. That’s an indication that it is taking longer for sellers to find buyers.

“Today, because of the large increase in home prices for many of those properties, coupled with the deterioration of the overall housing market, what we’re finding is that demand there is less because the prices are relatively high for year-round residents as far as condominiums go, and the vacation market has gone dormant for now,” Otteau said.

Some real estate agents say it is not clear what will happen.

From the Courier Post Online:

Deadline passes for Mart deal

The Camden County Improvement Authority has been unable to seal a redevelopment deal with a national developer for 10 months to transform the nearly vacant Pennsauken Mart site into a neighborhood of 700 homes and shops.

Today, the authority, which owns the former Mart site, is expected to give developer Beazer Homes a 30-day extension, county spokesman Ken Shuttleworth said.

Beazer’s latest deadline expired Wednesday.

Now that the economy has pitched real estate into a down market, county officials are hoping this third and last bit of wiggle room will produce a bankable partnership. Talks will continue, even though it has been reported that developers across the country are paying penalties to leave projects that no longer make economic sense in the current climate.

The authority acquired the Mart two years ago through eminent domain and displaced about 100 merchants in January when it closed the 50-year-old emporium.
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“The county has been paying interest on $35 million in bond anticipation notes for three years. It took away 500 jobs and years worth of property tax to Pennsauken. And what did we get? A weed-choked parking lot and a deep hole of debt. If the authority’s board members put together a lose-lose deal like this in the private sector, they’d be fired in a minute,” Hanley said.

In August, the authority paid nearly $1.5 million in interest on the notes. With interest rates on the rise, next year it expects to pay $2 million.
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To date, the authority has spent $25.7 million on the project, including $652,157 in legal fees, said James Blanda, the Authority’s CFO.

The improvement authority’s goal has been to sell the 35-acre site, at the intersection of routes 73, 90 and 130 to Atlanta-based Beazer for $20 million. It chose Beazer over three competitors because the developer promised a mix of condos and town houses, valued at $200 million. The winning plan also called for a performance theater, artisan studios and a man-made lake.

In May, Jeffrey Swartz, the authority’s executive director, said the unresolved issues were the cost of the land, the number of low and moderate-income housing units, financing for a possible 150-to-200-room hotel and a construction timetable.

Beazer also expects the county to deliver the land cleared, buildable and free of all environmental liabilities.

From the Star Ledger:

SAYING GOODBYE TO SUMMER RENTALS
BY MARYANN SPOTO

It’s been a familiar sight in Belmar for years: rental houses jammed on summer weekends with twentysomethings, whooping it up, playing drinking games on the front lawns.

Slowly, however, that rowdy, honky-tonk image of Belmar is fading, say borough officials. Thanks mostly to what had been a strong housing market, many of the owners of those “animal houses” chose to cash in on their investment properties.

“The rise in property values … has already started to change the character of our community,” said Mayor Kenneth Pringle. “Certainly the old Belmar that was personified by bars and rowdy rentals is continuing to decline.”

A big part of that makeover will be a redevelopment of the borough’s tired downtown.

The $500 million project, Belmar Seaport Village, will mix well-known retailers with traditional mom-and-pop businesses and add up to 400 townhouses and condominiums. Located between the railroad tracks and Main Street, bounded by 11th Avenue and Shark River Inlet, the development will create 250,000 square feet of retail space in three-story, Victorian-style structures. By the time it is completed in seven to 10 years, two-thirds of the existing downtown, now lined primarily with one- and two-story box buildings, will be new or renovated.

The idea is to reinvigorate downtown business by increasing year-round population.

When Pringle took office in 1990, Belmar had more than 1,200 summer rentals. Now there are fewer than 300 in this 1-square-mile community, which is surrounded by water on three sides. In the process, the old blue-collar family vibe has been replaced by people who use their Shore properties as second homes.

Along with the decline in rentals, Belmar has seen a decrease in population — from an estimated 7,000 in the 1980s to fewer than 6,000.

From the Press of Atlantic City:

Going, going, gone ? Is the real estate boom
By RICHARD DEGENER

Buyers have been scarce lately as the once-booming shore real estate market has cooled, so sellers are resorting to some interesting tactics.

Offering a Ford Mustang with a new condo or a furniture allowance are a few tactics being employed, but another seemingly new one is actually a very old one: It’s the good old-fashioned shore home auction.

They used to hold them in tents, bringing buyers in from the big cities by train. Sometimes shore real-estate developers would hold parades on the boardwalk to drum up customers.

The Pennsylvania-based Traiman Auction Company held its first one in Ocean City in 1925. Its latest one is set for this Sunday at the Wildwood Convention Center, where 13 Wildwood Crest properties will be auctioned, although all sales are subject to the seller’s approval.

Doug Clemens, the chairman and CEO of the company, said auction interest rises when properties aren’t moving.

“They just have an overbuilt situation that has to be corrected in the next couple years. Sellers are looking for alternatives. A tremendous amount of real estate has come on the market and a number of auctions are coming. Ours is the first,” Clemens said.

Builders are complaining about a lack of buyers right now. It could be from too much new construction, but rising interest rates are not helping. Some also argue shore real estate is overpriced.

From the Asbury Park Press:

Fort’s impending closure spurs worries
By Joseph Sapia

It is not expected to close for another five years, but filling the void that will be when Fort Monmouth closes was on people’s minds at an economic development summit here Friday.

In addition to losing the 5,000 jobs directly tied to the base, the closing of the base also affects businesses that rely on the fort for survival, said Robert Lucky, chairman of the Fort Monmouth Economic Revitalization Planning Authority.

“I need the help of the public,” said Lucky, a summit speaker. “I need to know how to bring businesses in there (when the fort closes).”

About 170 people attended the event at Branches, which was sponsored by the county to develop strategies for stimulating economic development.

Because of the negative impact of the Fort Monmouth closure, the Sept. 11, 2001, terrorist attacks, more restrictive laws and environmental regulations, county officials have to work to make sure jobs are available, said Anna C. Little, a member of the Monmouth County Board of Freeholders.

“Many of the forces changing the economic landscape in Monmouth County give very little to no warning,” said Little, the summit moderator. “In the case of Fort Monmouth, we are fortunate to have some advance warning.

“As we react to forces already affecting our economy, it makes sense to take the eventual closure of Fort Monmouth into consideration, too, and create a sustainable economic development plan for the county.”