Bottoms up!

Posted on November 21, 2011 by grim

From the WSJ:

Housing Market May Be Nearing a Bottom

The housing market is starting to show a pulse.

For the first time in a long time, housing figures are coming in better than expected. The National Association of Home Builders’ sentiment index jumped three points this month to 20, its highest reading in over a year. Last week, the Commerce Department said building permits and construction of single-family homes rose in October. The Federal Reserve’s fourth-quarter loan survey showed a pickup in demand for mortgage loans.

Mission accomplished? Not quite. Construction is picking up but remains at historically depressed levels, and broader sales activity is still anemic. Indeed, the National Association of Realtors’ existing-home sales report, out Monday, is likely to show a second straight monthly decline in October to a seasonally adjusted annualized pace of about 4.8 million units. That would mean the sales rate has dropped by more than 10% so far this year.

Meanwhile, the foreclosure supply is ticking back up. After declining for three straight quarters, the percentage of loans on which foreclosure action has started rose in the third quarter, the Mortgage Bankers Association’s latest survey showed. This was partly due to remediation programs and the sunset of earlier foreclosure halts, the group said. The continued trickle of distressed properties is likely to keep downward pressure on home prices.
…
Bank of America Merrill Lynch economists expect the foreclosure process to speed up in nonjudicial states next year, with liquidations peaking in 2013. This is partly why they expect home prices to drop another 8% on average nationwide over the next 18 months before bottoming. This assumes a healthy pickup in sales; if customers shy away because of economic angst or tighter lending criteria, a rebound will take longer to materialize.

Still, six years after existing-home sales peaked, the market is at least edging toward a bottom. The biblical notion that seven years of famine follows seven years of feast may have something to it.

Posted in Economics, Housing Recovery, National Real Estate | 128 Comments

Under Pressure

Posted on November 20, 2011 by grim

Pressure pushing down on me
Pressing down on you
no man ask for
Under pressure – that burns a building down
Splits a family in two
Puts people on streets
It’s the terror of knowing
What this world is about
Watching some good friends
Screaming let me out
Pray tomorrow – gets me higher
Pressure on people – people on streets
(Under Pressure, Queen)

From the WSJ:

Homes Under Pressure

Those looking for signs of a recovery in New Jersey home values may need to take the long view, as more than 100,000 homeowners are dealing with foreclosures that are stalled in court and another 48,000 are way behind on mortgage payments.

The numbers were among the results of a national mortgage delinquency survey released this week that suggest a backlog of unresolved foreclosures in New Jersey could be a drag on home prices for years to come.

“Foreclosures place downward pressure on neighborhoods,” said Jeffrey G. Otteau, an appraiser and housing consultant. “Home prices are falling fastest in those urban and rural markets most affected by foreclosures.”

Sarah G. Laks, who runs a real estate and construction business, fought in court to head off a foreclosure auction on her five-bedroom home in Lakewood, NJ. She said the backlog of foreclosures was “hurting the building industry,” and she blamed the backlog on the difficulties in negotiating reduced payments with banks.

The delinquency survey, by the Mortgage Bankers Association, found that 8.1% of homes in New Jersey were in foreclosure in the third quarter.

It ranked second, after Florida, in the percentage of mortgages in foreclosure, surpassing Nevada, which was hard hit during the downturn. New York ranked fifth among all states, with 5.7% of homes in foreclosure, while Connecticut ranked ninth, with 4.8% reported in foreclosure. The figures are based on a survey of all homes with mortgages.

The high rankings were reported even though the region was spared the worst of the housing downturn, and has shown strong signs of stabilization: The shares of homeowners with newly delinquent mortgages were below average in the region, and a small fraction of those in Florida and Nevada.

The foreclosure figures were so high in the region because New York, New Jersey and Connecticut all require that foreclosures be handled through court proceedings. These in turn were delayed by complaints about robo-signing: bank employees signing documents without knowing they were accurate.

In New Jersey, major banks suspended most mortgage filings last December, until banks could demonstrate that there were no irregularities in their foreclosure practices. The banks were permitted to resume mortgage activity in August and September, but an appellate court decision in August added new requirements and uncertainty for banks, further delaying many foreclosures, court officials said.

Posted in Economics, Housing Bubble, Housing Recovery, New Jersey Real Estate | 29 Comments

NJ Unemployment Falls to 9.1%, 2,500 net jobs created in October

Posted on November 18, 2011 by grim

From the Star Ledger:

NJ unemployment falls and jobs increase as state shares in slowly growing U.S. economy

New Jersey’s unemployment rate dropped to 9.1 percent last month as private businesses added 4,000 jobs, state officials announced today.

It was the third month in a row that the New Jersey unemployment rate dropped.

“Since January, seven of the nine monthly changes have been positive,” said Rutgers economics professor Joseph Seneca. “The increase since that time, 38,600 private sector jobs, puts the state on the best pace for private sector job growth since the late 1990s.”

Seneca said it was a good sign that in the October unemployment report, the unemployment rate fell and the workforce expanded.

That differed from previous months such as September when the unemployment rate dropped despite lost jobs, perhaps because some people stopped looking for work and weren’t counted for the rate.

Even September’s mixed report got a little rosier this week as the state announced that an estimated loss of 11,000 jobs that month had been revised downward to only 5,000 jobs lost after more information was gathered from employers.

“The pace is not gangbusters, but it’s positive,” said Seneca. “In October, the country added 104,000 private sector jobs. New Jersey added 4,000 of those. It’s participating in the national expansion.”

A continuing negative in New Jersey’s job market was the loss of 1,500 public sector jobs, and Seneca said that trend is likely to continue as the state and local governments grapple with fiscal constraints. (I beg to differ, the fact that we can show gains while reducing the size of goverment is a huge positive – jb)

From the APP:

NJ unemployment dips as state creates 4,000 private-sector jobs

New Jersey’s economy pumped 4,000 jobs into the private sector in October, even as public employment shrunk, the state reported Thursday.

A survey found the state’s unemployment rate fell to 9.1 percent from 9.2 percent in September, according to the New Jersey Department of Labor and Workforce Development.

“This is an encouraging report,” said Rutgers University economist Joseph Seneca. “It affirms that private-sector growth is continuing in New Jersey.”
…
It comes as New Jersey’s labor market has tried to gain traction after a devastating recession cost the state 269,000 jobs.

In October, private-sector employment increased by 4,000 jobs, while the public sector, which is still contracting, dropped 1,500 jobs, the state said, for a net gain of 2,500 jobs.

“The rebound in the job count in October, along with the drop in the unemployment rate, suggests that the state’s economy continues to move forward,” said Charles Steindel, chief economist for the New Jersey Department of Treasury, in a statement. “The pace of improvement is much less than we all desire, but we are going the right way.”

Posted in Economics, New Jersey Real Estate | 99 Comments

What to make of “hyperlocal” recoveries? Noise? Something more?

Posted on November 17, 2011 by grim

From US News:

Are Things Looking Up for the Housing Market?

For-sale home inventories are dropping nationally while median sales prices are rising, according to new data released Wednesday, a rare but encouraging sign of renewed optimism in America’s feeble housing market.

Inventories declined 3.48 percent from September to October, according to Realtor.com, and are down 20.77 percent from one year ago. Median list prices, which have remained essentially unchanged since June, were up 2.65 percent nationally year over year.

“These developments can be viewed as a positive sign that the market has stabilized and in some parts of the country, has begun to recover,” the report said. “Lower inventories combined with generally stable list prices can be seen as a positive sign that the overall market is holding its own.”
…
To be sure, there’s still plenty of variation across the country. After all, real estate is nothing if not hyper-local. Markets remain fragile, particularly those with high unemployment rates and large numbers of seriously delinquent borrowers, which threatens to add to an already gigantic shadow inventory.
…
Still, some markets have begun to rally and show nascent signs of recovery, even as others continue to struggle. Parts of Florida, some of the hardest hit by the housing market decline, have consistently posted improving list prices and reduced inventories. Indeed, median list prices remain well below their pre-crisis peaks. Florida held the top five spots for markets with the largest year-over-year median list price increases in October. The Fort Myers and Miami metro areas saw the largest year-over-year increases, posting 33 and 25 percent price upticks respectively.

On the flip side, markets at the epicenter of the original housing market implosion—Las Vegas and parts of California—continue to lag. In addition, markets such as Chicago and Detroit, which didn’t see the meteoric run-up in building and home prices, are now experiencing some of the most severe price declines. Home prices in those midwestern cities sunk almost 13 and 11 percent respectively.
…
While the housing market still has a lot of ground to make up, key indicators are beginning to point in the right direction, experts say. Regional variation will persist as some markets fare better and others lag due to external economic pressures and the continuing fallout from foreclosures, overbuilding, and homeowners with negative equity.

Posted in Economics, Housing Recovery, National Real Estate | 124 Comments

Bye bye middle class burbs

Posted on November 16, 2011 by grim

Sound familiar? Where have all the middle class neighborhoods gone? Seems like in Jersey, it’s becoming more and more common to have to either stretch far above one’s income to afford a nice neighborhood, or have to settle for something much much worse. The middle ground still exists, but it seems like you need to move further out to find it.

Will the trend continue? If so, welcome to bizzaro-world, where stretching for the unaffordable home is a more fiscally sound option. Buying the affordable home, which exists within a neighborhood falling into disrepair seems like a sure way to lose money long term, as resale values suffer as a result.

From the NY Times:

Middle-Class Areas Shrink as Income Gap Grows, New Report Finds

The portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a new study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent.

The study, conducted by Stanford University and scheduled for release on Wednesday by the Russell Sage Foundation and Brown University, uses census data to examine family income at the neighborhood level in the country’s 117 biggest metropolitan areas.

The findings show a changed map of prosperity in the United States over the past four decades, with larger patches of affluence and poverty and a shrinking middle.

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.

The study comes at a time of growing concern about inequality and an ever-louder partisan debate over whether it matters. It raises, but does not answer, the question of whether increased economic inequality, and the resulting income segregation, impedes social mobility.

Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.

But the shift is more than just changes in income. The study also found that there is more residential sorting by income, with the rich flocking together in new exurbs and gentrifying pockets where lower- and middle-income families cannot afford to live.

Posted in Economics, National Real Estate | 113 Comments

Who matters more? Rich or poor?

Posted on November 15, 2011 by grim

From Bloomberg:

NJ Taxes Cause Rich People to Move, Economist Says

New Jersey’s high taxes drive out wealthy residents, slowing the state’s recovery, said Charles Steindel, the state treasury department’s chief economist.

Property, income and estate taxes are the top reasons people leave, said Steindel, who released a study of federal tax data and a survey of financial advisers today at an economic forum in Trenton organized by the treasury department.

overnor Chris Christie, a first-term Republican, has twice vetoed measures sponsored by Democrats that would have raised income taxes on residents earning $1 million or more. Senate President Stephen Sweeney, the state’s highest-ranking Democratic lawmaker, said last week his party would push again for passage of a so-called millionaire’s tax.

“There is a relationship between state tax rates and where people move,” Steindel, a former senior vice president of the Federal Reserve Bank of New York, told reporters. “The higher tax-rate states generally lose more people every year.”

Steindel released the results of a survey of subscribers to the state’s online newsletter, which includes financial advisers to high-wealth clients. More than half of the respondents said their clients had recently left or expressed interest in leaving, Steindel said.

Three-fourths of those who expressed interest in leaving have annual incomes over $100,000, while 15 percent earn more than $1 million, according to the survey.
…
The survey by Christie’s administration is at odds with an August study by the Washington-based Center on Budget and Policy Priorities, which found that housing prices and job opportunities have more impact on migration patterns than tax rates. The group advocates more spending on government programs for the poor.

The center’s study, conducted by researchers at Stanford University, examined New Jersey’s 2004 tax increase on income exceeding $500,000. It found that migration among that group increased at a similar rate as those not subject to the tax.

“For two years we’ve treated millionaires with kid gloves and it has not worked,” Sweeney told reporters Nov. 10 in Trenton. “We’re going to fight with this governor when we know he’s wrong.”

Posted in Economics, New Jersey Real Estate | 120 Comments

White Elephant Returns to Jersey

Posted on November 14, 2011 by grim

From the Star Ledger:

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.

Posted in Economics, New Development, New Jersey Real Estate | 168 Comments

Lawyers and tanks and mold, oh my!

Posted on November 12, 2011 by grim

From the NY Times:

What Lies Beneath, and Behind

ON top of the obvious hurdles to getting a home sale finalized these days, some brokers say hidden environmental issues are more often showing up at the last minute: a new inspection turns up an underground oil tank no one knew was there; air quality monitoring suggests mold is growing behind basement wallboards; or perhaps the radon levels are high.

“Lately many of our transactions have been harder to make due to things you can’t see with the naked eye,” said Karen Eastman Bigos, a broker with the Towne Realty Group in Short Hills.

The reason stems in part from the rigors of a market in which every dollar of value is crucial to buyers. To meet their expectations, their lawyers are more demanding about having every possible test done to uncover hidden liabilities, she and other brokers said. (Lawyer reviews of contracts are required before any house closing in New Jersey.)

At the same time, there is less public money available for environmental cleanup. The state’s program to assist homeowners with the cost of oil tank removal ran out of money in May. New applications are still being taken, the state Department of Environmental Protection announced, but there is a backlog, and no new money was allocated this year.

Ms. Bigos said her agency had had a spate of recent issues with abandoned oil and gasoline tanks.

In some cases, “we have all the paperwork, the tank was closed and filled with sand by a licensed company, all by permit, all with inspections,” she said, “but lawyers want the tanks out of the ground anyway.”

In others, a previously undiscovered oil tank — sometimes a second one — has turned up on a corner of a lot where inspectors using metal detectors didn’t look before, Ms. Bigos said.

According to several tank removal specialists, standard practice used to be a scan encompassing only the area within 20 feet of a house. But in older communities with mansions set on huge lots — Llewellyn Park in West Orange, for instance — old gasoline tanks are often found buried near garages, said Christopher M. Tiso, the president of ATS Environmental in Sparta.
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Lawyers today usually urge buyers to insist that an oil tank be retested or removed — even if it has been properly certified as having been shut down cleanly. Ms. Bigos estimated that as many as 25 percent of “properly” abandoned tanks were discovered to have ground leaks when retested at the behest of buyers. Mr. Tiso said he believed it was more like 35 percent.

Mr. Tiso, whose company also works on septic-tank issues, says that even when a property is being sold as-is, or is a short sale or foreclosure listing, he recommends a full inspection. “If the property is owned by the bank, and there’s a problem that could wind up being really expensive to fix,” he said, “then it’s on the record that it is the bank’s responsibility.”

Posted in New Jersey Real Estate | 66 Comments

Do foreclosures even matter anymore?

Posted on November 10, 2011 by grim

From Bloomberg:

Foreclosure Filings in U.S. Rise 7% as Bank ‘Rain Delay’ Eases

U.S. foreclosure filings rose 7 percent in October to a seven-month high as lenders started to speed up action against delinquent borrowers after a yearlong review into documentation, according to RealtyTrac Inc.

A total of 230,678 properties received notices of default, auction or repossession, compared with 214,855 in September, the Irvine, California-based data seller said today in a report. One in every 563 U.S. households got a filing.

Notices plunged almost 31 percent from October 2010, when banks and loan servicers began slowing the process after complaints over the way they handled documents for defaults and home seizures. The monthly gain in filings signal that a “rain delay” in foreclosures may be easing, according to RealtyTrac Chief Executive Officer James J. Saccacio. The backlog has been partly to blame for a stalled U.S. housing recovery, he said.

“Sloppy paperwork, government intervention, a slow economy and lack of confidence is a giant concoction lengthening the process,” Saccacio said in a telephone interview.

He estimated that the U.S. housing market needs as long as 40 months to clear a glut of distressed homes that includes properties with negative equity. Almost 29 percent of Americans with a mortgage owe more than their property is worth, Zillow Inc. said this week.
…
Default notices increased 10 percent in October from September and rose to an 11-month high in so-called judicial states, where most bank delays had been occurring because the courts oversee foreclosures. Default filings jumped 28 percent in Florida, 50 percent in Pennsylvania and 61 percent in Indiana from September, according to RealtyTrac.

Total default notices were down 23 percent on a year-over- year basis.

U.S. auction notices climbed 8 percent from September, including a 22 percent increase in judicial states. They rose 57 percent in Florida, 43 percent in Minnesota and 38 percent in Illinois. Total scheduled auctions were down 38 percent from October 2010.

Home seizures jumped 4 percent from the previous month, while falling 27 percent from a year earlier. They climbed sequentially by 40 percent in Michigan, 45 percent in Oregon, 48 percent in New Jersey and 73 percent in Indiana, according to RealtyTrac.

Posted in Foreclosures, Housing Bubble, Housing Recovery, National Real Estate | 223 Comments

Princetons to merge – A new trend for NJ?

Posted on November 9, 2011 by grim

From Bloomberg:

Two Princeton Towns in New Jersey Vote in Favor of Consolidation

Voters in the two New Jersey towns that share the Princeton name with the Ivy League university approved a ballot measure to merge.

The proposal to combine the 1.9-square-mile Princeton Borough, which includes the downtown shopping and dining area, and the surrounding 16.6-square-mile Princeton Township passed in the township with 3,542 in favor and 604 against, and in the borough with 1,238 for and 828 against, according to unofficial results posted on Mercer County’s website.

Governor Chris Christie, a first-term Republican, endorsed the plan, offering to pay 20 percent of the total $1.7 million cost. The towns had rejected at least three earlier consolidation attempts, most recently in 1996.

Christie, who took office in 2010, is urging New Jersey’s 566 municipalities to combine operations to help stem growth in property-tax bills, the highest in the U.S. Governors in Ohio and Pennsylvania are asking local officials to do the same. Property-tax collections, the main income source for municipalities, dropped 1.2 percent, to $88.5 billion, in the second quarter from a year earlier, the third-straight decline, the U.S. Census Bureau reported in September.
…
The borough, with about 12,300 residents, has a median home value of $619,700 and household income of $106,551. The township, with about 16,300 people, has a median home value of $760,900 and household income is $105,662, according to data from the municipalities.
…
A group called Preserve Our Historic Borough argued that a forecast $3.1 million in annual savings was overestimated by at least $1 million. Unite Princeton disagreed, saying the towns were aligned culturally and economically, and would never realize such savings on their own.

Princeton borough has $51 million of debt outstanding, while the township has $56.1 million, according to data compiled by Bloomberg. Standard & Poor’s rates the borough AA+, the second-highest grade, and the township its top AAA.

The two towns share more than a dozen services including animal control, solid waste and fire. They have their own police departments, each with 30 sworn personnel. In both cases, police is the largest cost, $3.5 million in the borough and $3.8 million in the township, according to the center’s report. Their 2010 budgets combined totaled $65.1 million.

Posted in Economics, New Jersey Real Estate, Politics | 190 Comments

Any equity left to cash out?

Posted on November 8, 2011 by grim

From HousingWire:

Freddie Mac cash-out levels hit 16-year low

Monday, November 7th, 2011, 3:34 pm

About 82% of homeowners who refinanced in the third quarter either decreased or maintained their principal balance, up from 77% in the previous quarter according to Freddie Mac.

Cash-out borrowers, those who increased their balance by at least 5%, made up 18% of all refinancings in the third quarter, a significant decline from the average of 46% between 1985 and 2010.

Cash-out — or home equity converted to cash — levels also hit a 16-year low at $5.3 billion, down from $6.3 billion in the second quarter and from the peak of $83.7 billion in the second quarter 2006. (Holy Cow! From $83.7 billion in a single quarter to $5.3 today, what a change. -jb)

“Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings,” said Frank Nothaft, Freddie Mac vice president and chief economist.

The median interest-rate reduction was about 1.2 percentage points for a 30-year fixed-rate mortgage. Over the first year of the refinance loan life, these borrowers will save about $2,500 in interest payments on a $200,000 loan, Nothaft said.

Posted in Economics, Mortgages, National Real Estate | 163 Comments

Lenders slow to foreclose after the green light to go ahead

Posted on November 6, 2011 by grim

From the Record:

Legal issues slow foreclosures

In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Posted in Foreclosures, Housing Bubble, Housing Recovery, New Jersey Real Estate | 103 Comments

Recovery being led by gold coast condos?

Posted on November 4, 2011 by grim

From the NY Times:

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.
…
“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.
…
“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.
…
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.

Posted in Housing Recovery, New Development, New Jersey Real Estate | 202 Comments

Both economists and meteorologists predicting long winter

Posted on November 3, 2011 by grim

From HousingWire:

Clear Capital: Home prices begin their descent

October home prices fell 2.8% from a year earlier, the 13th straight month of such declines, according to Clear Capital.

Home prices increased 0.6% from the previous three months, which flattened out from the 3.5% in gain the month before.

Alex Villacorta, director of research and analytics at Clear Capital, said homebuyer demand is expected to decay even more in the coming months as the flow of distressed inventory continues.

“October home price gains have leveled out, confirming what our data has pointed to over the last several months,” Villacorta said. “Short term gains have been nearly eliminated while longer term performance measures point to mostly negative territory through the turn of the year.”

Three of the four U.S. regions posted home price gains, but they were well off their summer growth. Prices increased the most over the past three months in the Midwest at 2.6% and fell 1% out West.
…
“We can expect another long winter as the housing market will truly be put to the test against these downward forces,” Villacorta said.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 94 Comments

Mob extorts subprime lender, not sure who the crook is

Posted on November 2, 2011 by grim

From the Post:

Mortgage firm is Mafia Inc: feds

It was a hostile corporate takeover — Mafia-style.

The son of jailed former Lucchese boss Nicodemo “Little Nicky’’ Scarfo used the trusted mob technique of extortion to gain control of a cash-rich mortgage company — and then loot it for millions, according to federal prosecutors in New Jersey.

“The [mob’s] criminal activities have evolved from the back alleys to the boardrooms,” said Michael Ward, FBI agent-in-charge in Newark, said of the stunning scheme.

Nicodemo “Junior’’ Scarfo, 46, and 12 others, including an accountant and five lawyers — one, David Adler, from tony Chappaqua, NY — were nailed in the scheme involving Irving, Texas-based FirstPlus Financial Group, authorities said.
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Instead of targeting a more typical Mafia staple such as a restaurant or illegal-gambling racket, the mobster offspring and his cronies zeroed in on FPFG, which had been raking in millions from its subprime-mortgage business at the height of the real-estate boom, the feds said.
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“They saw the potential, they saw this small company that was cash-rich, looking to do a restructuring,” one law-enforcement source told The Post. “They saw an opportunity to exploit. It was wrong place, wrong time” for the firm.

The group began threatening the board of directors — and their families — to get them to vote their way, or else.
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In another instance, when Pelullo was trying to get enough directors to vote his way, he allegedly screamed at an associate: “I don’t care if [any voting members] are in a funeral parlor, I don’t care if they’re in a f–kin’ hospital respirator, we’ll send somebody there.

“I want their vote, I want their signature, and I want it done by the close of the day today.”

The scheme netted $ 12 million by bleeding FPFG dry. The money was laundered by manipulating mergers of sham shell companies they owned and engaging in phony consulting contracts, prosecutors alleged.

Posted in Humor, National Real Estate, Risky Lending | 92 Comments