From the Record:
In North Jersey foreclosures are up, home sales down
In a painful sign of the worsening real estate downturn, foreclosure actions in North Jersey nearly tripled in the first five months of 2008 over the same period in 2007, an analysis by The Record has found.
At the same time, the volume of housing sales has plummeted this year. And North Jersey home values, which held steady while many of the nation’s housing markets steeply declined in the last two years, have begun to crack.
Median home prices declined 2.3 percent in Bergen County and 8.2 percent in Passaic County in the first half of this year, compared with the same period in 2007, according to a Record analysis of public property records.
“If you bought your house less than five years ago, you’ve seen a decline in the price,” said Crystal Burns, an agent with Re/Max Advantage Plus in Teaneck.
Still, the region’s housing prices have held up better than the nation’s, where average prices have declined more than 15 percent, according to the Standard & Poor’s Case-Shiller index of 20 metropolitan areas.
But the rising foreclosure numbers are a sign of trouble. About 2,800 North Jersey residential properties — roughly one out of every 135 — were in some stage of the foreclosure process from January to May 2008, compared with about 1,000 — or one in 385 — a year earlier, according to The Record’s analysis of data from RealtyTrac, a California company that follows the market. Those numbers range from initial notices that a homeowner is in default on mortgage payments to a sheriff’s auction of the house to satisfy the debt.
And 335 actually lost their homes to foreclosure in the first five months of this year, a seven-fold jump from the January-May 2007 period. Most of those properties went back to the lenders.
…
Social service agencies are being flooded with calls from homeowners in distress.“Some people we can help, because there are some lenders that will negotiate,” said Phyllis Salowe-Kaye, head of NJ Citizen Action, which does housing counseling.
“But about half of the people who come in here can’t be helped,” she continued. “They don’t have the money to pay the current loan. They don’t have enough equity to refinance. And they don’t have a lender who’s agreeing to negotiate. Those people are eventually going to get foreclosed on.”
…
“We haven’t even hit the worst part of the problem,” said Salowe-Kaye.
…
Lisa Molnar of Skylands Appraisals in Ringwood said prospective buyers “are just terrified. They think, ‘Why would I buy a house if values are going to decline?”
Here are some comp killers from auctions in Sussex County….
901 Mt View
Paulinskill Lake
Stillwater, NJ
9 year old bi-level on half an acre.
Purchased 1/05 $300,000
Auctioned 8/08 $147,000
http://www.williamsauction.com/Property/ViewProperty.aspx?PropertyId=189681
22 Chamberlain St
Hopatcong, NJ
Old 2 bedroom renovated summer home on .29 acre.
Purchased 9/04 $165,000
Auctioned 8/08 $70,000
http://www.williamsauction.com/Property/ViewProperty.aspx?PropertyId=190458
Also, 119 acres commercial on Route 206 and Route 80 in Stanhope and Byram was auctioned for $150,000. There are multiple lot and block numbers on this. It’s farm assessed, so it means reduced property taxes as long as you get sell $500 worth of firewood every year.
If you do the math, it comes to $1260 per acre.
http://www.williamsauction.com/Property/ViewProperty.aspx?PropertyId=186296
Cashflow baby. It’s all that matters right now.
We went to three open houses in Ramsey today. I’m not even going to supply details because it’s too tragic and pathetic to even begin. And my wife and I let the realtors know they were pathetic. We shredded every sales mantra they tried to spew. Shredded…. like the teeth of a Great White Shark slicing through the flesh of a pup seal.
The proximity to NYC bullsh*t…. sliced to bits, the ‘Bergen County is insulated’ bullsh*t… hacked to death, the prestigous label…. bludgeoned to death. Make an offer two of them said, what do you got to lose. My wife and I smiled and looked at each other, said thank you and left.
Tick… tick… tick…. tick….
Gary,
I think the dam is starting to break in Summit. Lots of houses below 450k and the quality seems to be improving.
maybe in a year or 2 we can pick up a place for 325k.
There’s even a serious fixer upper for 299k.
i’ve got a ton of reading up to do. just got back from a 7 day internetless trip to boothbay, maine. in summary: many homes, yachts and even private islands are for sale. the streets, restaurants and water activity was eerily quiet for this time of year. 77 and sunny all week long.
If you’re not planning on buying, you shouldn’t be going to open houses just to attack realtors and gloat. Just leave the realtors and sellers alone. They don’t need your attitude.
gary Says:
August 24th, 2008 at 8:23 pm
We went to three open houses in Ramsey today. I’m not even going to supply details because it’s too tragic and pathetic to even begin. And my wife and I let the realtors know they were pathetic. We shredded every sales mantra they tried to spew. Shredded…. like the teeth of a Great White Shark slicing through the flesh of a pup seal.
The proximity to NYC bullsh*t…. sliced to bits, the ‘Bergen County is insulated’ bullsh*t… hacked to death, the prestigous label…. bludgeoned to death. Make an offer two of them said, what do you got to lose. My wife and I smiled and looked at each other, said thank you and left.
Tick… tick… tick…. tick….
Yeah, that’s pretty classless, Gary.
“Median home prices declined 2.3 percent in Bergen County”
2% is a rounding error. Where’s the gloom and doom??
reinvestor X,
You’re right, they realtors and sellers don’t need my attitude… and obviously they don’t need my money either. But, of course, it was ok when times were great and they treated the buyers like a hunk of sh*t, right dude?
reinvestor, did you watch that SNL skit that was linked in the other weekend comments section?
id be curious to hear your thoughts on it. just the premise, not the acting, the show, etc.
http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php
It does appear from the outside as morbidly strange behavior to spend such a beautiful day visiting open houses that one doesn’t want and or can’t afford – what am I missing?
OK – this will probably not work. However, using Yahoo! Maps, I will attempt to show you one of the most attractive places I’ve seen in all of NYC commutable Monmouth County. Right across the bridge from Rumson on the north side of the Navesink. It has many names, but I think Locust is the correct one. It is technically Middletown, but essentially an extension of Rumson. Not zoned for Rumson-Fair Haven.
From here, all three high-speed ferry terminals are less than a 10 minute drive, so you can be in the financial district in under an hour. However, I really cannot include the WFC in that. It is really the Wall, Water, Bowling Green area jobs that are ideal commutes from here.
http://maps.yahoo.com/;_ylc=X3oDMTExNmIycG51BF9TAzI3MTYxNDkEc2VjA2ZwLWJ1dHRvbgRzbGsDbGluaw–#mvt=m&lat=40.394676&lon=-74.026289&zoom=15&q1=locust%20nj
WSJ
Tropicana Decides to Put
Casino on Auction Block
By RACHEL FEINTZEIG
August 25, 2008
Tropicana Entertainment LLC has decided to put one of its riverboat casinos on the auction block after delaying for months a proposed $220 million sale.
The company is seeking approval from the U.S. Bankruptcy Court in Wilmington, Del., to remarket the Evansville, Ind., Casino Aztar, which it has been trying to sell since late 2007.
Tropicana in March agreed to sell the casino to Reno, Nev., hotel and casino operator Eldorado Resorts LLC for $220 million, but filed for bankruptcy protection before the sale could close. The future of the casino has been in limbo ever since. Eldorado earlier this month asked a judge to force Tropicana to decide whether it wanted to sell the assets.
In the end, it didn’t take the order of a judge to get Tropicana to set its sights formally on selling the casino. The company Friday asked for permission to put the asset on the auction block, with the hope of generating a higher bid than Eldorado’s March offer.
“The whole profile of the company is dramatically different than when we entered into that agreement,” Tropicana Chief Executive Scott Butera said in an interview Friday. “We’ve tried to correct a lot of the things that weren’t working.”
The biggest change for the company has been the ousting of owner William J. Yung III last month under a settlement with creditors. Mr. Yung was found unfit to run Tropicana’s Atlantic City, N.J., casino in December, prompting the state to strip the company of its gaming license.
With a new management team in place, Mr. Butera is hoping that would-be buyers of the Indiana casino will view the company in a more attractive light.
Mr. Butera confirmed that Tropicana’s financial advisers from investment bank Lazard Freres & Co. are beginning to reach out to potential buyers. If another bidder beats Eldorado’s $220 million offer, the Nevada company will receive $6.6 million in breakup fees plus up to $500,000 in expense reimbursements.
The bankruptcy court is set to consider the auction request Sept. 16. Tropicana wants to hold the auction the week of Nov. 10, followed by a Nov. 18 sale hearing. Mr. Butera wouldn’t indicate the price the company is hoping to reach for the casino, but he said Tropicana is considering keeping the casino if the auction results are disappointing.
“I think if we’re not able to get a value we think is fair then we would be prepared to” maintain ownership of the casino, he said. “At this point, our commitment is to see if we can try to get a fair value for the property.”
I think Gary is simply looking at open houses to gauge the market. I don’t see what’s wrong with that. I know that Gary can, in fact, afford these places, but he’s sickened by the list prices. You guys need to relax.
Chi
This is down the road form me. This is the Locust section of Middleton, also I believe referred to as the Navesink section.
We take the dog hiking in Hartshorn woods a lot, it has incredible ocean views from the wooded areas.
A quick trip across the bridge to Barnacle Bills for a stiff cocktail and the best burger in Monmouth Co.
The ferry commute is indeed sweet, but it’s about $700/month. A lot of folks who live down here and work on Wall St get the compnay to pay all or part of ferry pass, so it makes it competitive w/ NJT.
I actually find it hard to believe that this area, along w/ Atl Highlands, has really never grown into a NYC commuter town. I guess the worry that the ferry service will go belly up (as predicted each year) keeps people from settling.
gary Says:
August 24th, 2008 at 9:44 pm
reinvestor X,
You’re right, they realtors and sellers don’t need my attitude… and obviously they don’t need my money either. But, of course, it was ok when times were great and they treated the buyers like a hunk of sh*t, right dude?
Put a shock in it. Noone was treated like shlt during the boom. The buyers were crawling all over sellers and bidding. No one forced them to do that. If you feel like you got dumped on, then take it out on the buyers who outbidded you. Don’t go around picking with realtors and sellers who had nothing to do with your decision to forego getting a damn house.
Guess what? I didn’t watch it because I can’t stand Steve Martin.
Laughing all the way Says:
August 24th, 2008 at 9:51 pm
reinvestor, did you watch that SNL skit that was linked in the other weekend comments section?
id be curious to hear your thoughts on it. just the premise, not the acting, the show, etc.
http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php
You don’t have the right to say shlt to me until you remove my damn number and my X from your handle. I’ve tried to hold my tongue on this, but this has been going on too damn long.
Sybarite101 X Says:
August 24th, 2008 at 10:13 pm
I think Gary is simply looking at open houses to gauge the market. I don’t see what’s wrong with that. I know that Gary can, in fact, afford these places, but he’s sickened by the list prices. You guys need to relax.
I have been shopping in Chatham Twp for almost 2 yrs now. Anything not on a busy street under 1.5 mill goes for 97-101 pct of asking price. Why is Chatham so special?
JBJB Says:
August 24th, 2008 at 10:22 pm
Do you shop at the Whole Foods? Basically, it has hollowed out, because all the hoi polloi doesn’t shop there anymore. However, it is celebrity/trustafarian central. I keep seeing these unbelievably worked out (althletic, not meat-head) people with these full arm artistic tatooes. Normally, I would just scoff that the person is just a POS base-head, but you look at the clothes and physique, and it is obvious that these people either ain’t needin’ workin’ or are pulling down serious coin in some other way. The other day I say a guy who I swore was Al Pacino, but then I saw some article in a local paper, and I’m sure it was actually Peter Chris of KISS.
Red Bank is a decently good place. I work there are it’s nice to park in the morning, and not use the car until I go home. I probably never give it enough credit, it always ends up being a notch to notch + 1/2 better than I expect. In a way it feels very much like a better executed Hoboken with less yuppie-factor, but more wealth, however, too heavy a dollop of Joisey….the hotties style is ashley dupre….believe me, it ain’t bad, but it’s LA not NYC……
Tard (6)-
For any agent insane enough to sit overpriced open houses in this market (and if the house is held open, it is, indeed, overpriced), the treatment they receive from Gary should be the high point of their week.
Sure beats sitting floor time, going on caravan and sales meetings about nothing.
Frank (8),
2% is a rounding error. Where’s the gloom and doom??
Actually I’m showing 3.2% from last year, 4.5%from peak.
I’m also showing sales tranding DOWN 30%.
tranding= trending
Down 30% compared to LAST year.
So, when sales when plummet, what happens to prices?
Ok, that might be too much for you. Instead of talking about the future let’s keep it simple.
These numbers aren’t adjusted for inflation. If you factor inflation from 2005 to … oh wait, you have a problem understanding inflation too.
And if I recall you said you work on the street?
Sweeping?
Anyway, there doesn’t need to be “gloom and doom” for housing to die (which it is doing). The economy can turn around tomorrow (which it won’t) and housing will still be slowly dying.
So, if you don’t already have your house on the market you better get it up now and don’t bother pricing it beyond ’05 prices if you really want to sell it.
Re: 19, Chatham Twp.
First time poster, long time reader. Good board.
On Chatham, prices have definitely come down. It may feel like there is a certain level of stickiness but for the most part prime properties (residential street, well maintained and updated, good topography, and in the current purchase price ‘sweet spot’ of 1.0m+/-) are around 2005 or so levels. Less prime properties have moved through that date to earlier levels.
It may seem to be hanging tougher mostly because of supply/demand and the fact that for many Chatham is a ‘destination’ town. There actually aren’t that many properties for sale and people move there with the intention of staying, not trading up and out. Also, as I look around some neighborhoods, if we are talking 1m+ dollar properties, I suspect most of the buyers recently would qualify on a 3.0x income to mortgage test but more importantly didn’t need to – they came to the table with a good slug of equity. I know many of the higher end sales at market peak – numbers in excess of 2.5m-3.0m – were mostly cash deals with the buyers taking the 1.0m fed max deductible mortgage just for the tax break. It will be a very long time before these owners see those numbers again but it doesn’t matter that much because they have no intention of moving soon and the home is a portion of total net worth, not the majority of it. Basically, the complexion of the town has really changed since even a decade ago and I don’t think there are that many forced sellers.
“foreclosure actions in North Jersey nearly tripled in the first five months of 2008 over the same period in 2007”
ha.. ha..
Wall St. is really quiet these days and NNJ is going to be a ghost town.
but hey.. your govt loves you, now pay that proprty tax you dumb sap!!
SAS
“However, it is celebrity/trustafarian central.”
Funny you mention that, I was in line at Whole Foods about 2 months ago and the teenage checkout girl started gushing over something. I looked behind me in the line and saw this sturdy lady that I assumed was an athlete (she was wearing a track suit). My wife than tells me it was Queen Latiffa, guess she lives in Rumson.
“too heavy a dollop of Joisey”
Especially this time of year, most of the bennies will clear out soon though.
“believe me, it ain’t bad, but it’s LA not NYC”
Well, no. I am not sure why any place would want to be like LA, and of course there is nothing like NYC.
What worries me is the 2.3% number in Bergen County. I’m not sure how they came up with that.
I’ve seen houses listed for quite a bit less than their 2006 prices and what banks are willing to let go at auction is significantly less.
I have a fewwling from my quick look that the homes that are being sold are more expensive and that’s skewing the numbers. It’s not that the median house price hasn’t fallen, it’s that lower priced homes aren’t selling. The article seems to confirm that.
Anyone with MLS access able to do some more digging?
Can paulson and friends hold back the next implosion until after november???
Charting stressed banks
It is routine to weight the risk of a major bank defaulting by looking at the relevant CDS prices.
But here’s an alternative measure increasingly used by asset managers – the spread between the yield on Tier 1 paper and “lower” Tier 2 securities.
SEE CHART:
http://ftalphaville.ft.com/blog/2008/08/22/15308/charting-stressed-banks/
Long article, follow the link.
It’s more than Fannie and Freddie
http://www.frontlinethoughts.com/
A few weeks ago when I was in Maine, I met Chris Whalen. Chris is the managing director of a service called Institutional Risk Analytics, whose primary business is analyzing the health of banks and financial institutions.
What they have done is come up with various metrics which compare how well-capitalized a bank is, how much risk it is taking, and what kind of losses (or profits) it can expect. It is a one of a kind firm, and the data gives Chris a very special perspective on the US banking system.
And what he sees is not pretty. There is a crisis brewing. He expects 100 banks to fail between now and July of 2009. Most of them will be small, but there will be a few large banks. The total assets of those banks he estimates to be $850 billion (not a typo!). Those are the assets the FDIC is going to have to cover when they take over the banks….
The FDIC has about $50 billion. These reserves have been built up over the years from deposit insurance paid by banks that are part of the program. They are going to need an estimated $20 billion just to cover the failure of Indy Mac. The FDIC will have to cover only a small percentage of the $850 billion, as some of those assets will surely be good.
But if they have to cover 10%, then the FDIC would need another $50 billion. Does that sound like a lot? Chris thinks a more conservative number for planning purposes would be 20-25% potential losses, and you hope it does not get there…..
Sober-minded analysis from the IMF suggests that the total write-offs by all banks may be $1 trillion. Dr. Nouriel Roubini is much more alarmed and puts the potential losses at closer to $2 trillion. That means that banks over time are going to have to increase their loan loss provisions, hitting both earnings and capital. And that means they will have to raise more investment capital and equity at a time when their stock prices are low.
It is a vicious spiral. Banks have less capital, so they are able to lend less to the very businesses that need the money; and without said money the businesses will be less capable of paying their current loans, which means that banks have less capital. Rinse and repeat.
CAN YOU SAY DEFLATION??? such a spiral is a perfect example of deflation triggered and driven by credit contraction. This is essentially what caused the “Great Depression” of the 30’s. A freezing of the credit system.