Since when is Cliffside Park and Wood-Ridge not Suburbia?

Posted on August 17, 2014 by grim

From the Record:

As housing rebounds, construction pace picks up at 2 developments

In a sign of the housing industry’s rebound, two large North Jersey redevelopment projects — in Wood-Ridge and Cliffside Park — are picking up momentum after being stalled during the real estate downturn.

The steel framework is going up at the Towne Center project in Cliffside Park, and developers Fred Daibes and James Demetrakis of Edgewater now expect the project to open around September 2015.

And at the Wesmont Station redevelopment, on part of the old Curtiss-Wright factory site in Wood-Ridge, Pulte Homes has begun work on a section of 217 town houses, while nearby, land is being cleared for 104 affordable apartments.

The Wood-Ridge and Cliffside Park redevelopments are moving forward at a time when home building — especially multifamily building — is on the rise again in New Jersey, after falling to post-World War II lows in the wake of the recession and housing bust. This year, New Jersey home construction approvals are running at their strongest pace since 2006, about 29 percent ahead of last year’s level.

“You’re seeing a convergence of long-term trends toward more multifamily, transit-oriented residential development and the housing market emerging from the deep recession that the industry was in,” said Christopher Jones, vice president for research at the Regional Plan Association.

“There’s a pent-up demand for housing, and builders are getting into position to meet this demand,” said Ralph Zucker, head of Somerset Development, the master developer at Wesmont Station.

The two projects reflect builders’ interest in North Jersey; Bergen and Hudson counties have accounted for about 30 percent of the home building in the state this year. And multifamily projects like these two currently make up about 60 percent of the construction activity in the state — an unprecedented share at least since World War II.

“It’s a fundamental and dramatic change in the housing market,” said James Hughes, a Rutgers economist. After “the great suburbanization trend from 1950 to 2000,” he said, “the geography of housing development is changing.”

“Living far out in the suburbia and exurbia is giving way to moving back toward the center of the region,” Hughes said.
…
Millennials, in particular, want a more urban lifestyle, closer to mass transit, Jones and Hughes said.

“They have been raised in the suburbs, and they were happy with that; it was a safe environment,” said Hughes. “But that’s not where they want to live. They don’t want to be stuck in a plain vanilla suburb.”

Posted in Housing Recovery, New Development, New Jersey Real Estate | 110 Comments

The slow grind

Posted on August 16, 2014 by grim

From the APP:

NJ’s housing market wades through foreclosures

Waiting for New Jersey’s housing market to pick up some speed? You might want to grab a chair.

A report released Friday provided a mixed bag for the Shore’s home owners – fewer sales, but higher prices in July.

The New Jersey Association of Realtors reported that sales of single-family homes in Monmouth County fell 9.7 percent in July from the same month a year ago. The median price of $420,000 was up 4.7 percent during that time.

Sales in Ocean County fell 15.9 percent. The median price of $275,000 was up 4.2 percent, the Realtors group said.

“As the market sits right now, both buyers and sellers are in a good position,” said Cindy Marsh-Tichy, the association’s president, noting that low interest rates remain low (helping buyers) and prices are rising (helping sellers).

But the prospect for a sharp recovery are dim, mainly because New Jersey has the nation’s highest share of mortgages that either are in foreclosure or are headed that way.

Patrick J. O’Keefe, director of economic research for CohnReznick, found 11.6 percent of mortgages statewide were either in foreclosure or at least 90 days overdue in the second quarter. By comparison, 4.8 percent of percent of mortgages nationwide were in the same category.

Posted in Economics, Employment, Foreclosures, New Jersey Real Estate | 30 Comments

NJ unemployment falls, but still lags the nation

Posted on August 15, 2014 by grim

From NJBIZ:

New Jersey adds 5,700 jobs in July; unemployment rate drops to 6.5 percent

New Jersey employment increased by 5,700 jobs in July, as unemployment fell to 6.5 percent, according to U.S. Bureau of Labor Statistics data.

July estimates found that private-sector employment grew by 8,500 jobs, while public-sector employment fell by 2,800 jobs. It was the fifth month in a row that private-sector employment grew, the BLS reported.

Overall, New Jersey employment measured 3.95 million jobs, the BLS found.

“Since March, private payrolls have grown at a rate nearly equal to the rapid pace seen in the early months of 2012 and 2013,” Charles Steindel, chief economist for the New Jersey Department of the Treasury, said in a prepared statement. “These gains show that we are putting last winter into the rear view mirror. Meanwhile, the unemployment rate continues to fall and resident employment continues to increase.”

New Jersey has gained 149,400 jobs since February 2010, “which was the recessionary low point for private sector employment jobs in New Jersey,” according to the BLS.

However, New Jersey Public Policy President Gordon MacInnes pointed out that there was a caveat to the gains.

“While New Jersey’s unemployment rate has been declining and the state has been seeing modest job increases for the past few months, that does not mean all is well with the state’s economy,” he said in a statement. “New Jersey has now recovered just 47 percent of the jobs it lost in the recession, less than half than the nation as a whole, which has recovered 108 percent.”

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 109 Comments

Go long bulldozers

Posted on August 14, 2014 by grim

From NJ Spotlight:

HOUSING MARKET’S STATEWIDE WOES ARE REFLECTED, MAGNIFIED IN TRENTON

Capital city’s plight made worse by safety concerns, loss of jobs and departure of businesses, overall weakness of New Jersey’s economy

If New Jersey’s political leaders want to study the state’s battered housing market, all they have to do is look out their windows in Trenton.

As most of the nation continues to recover from the Great Recession, real-estate data and analysis firms report housing sales are slowing and foreclosures increasing in the Garden State. But the situation is particularly dire in the state’s capital city.

Around the nation, foreclosures have declined to their lowest level since before the housing bubble burst in 2007, according to RealtyTrac of Irvine, CA, whose data is used by the real-estate industry and government agencies.

But in New Jersey, state court records show 31,500 new foreclosures cases have been filed as of Aug. 1, on track to be at least the third-highest annual total in state history. Sheriff’s sales have hit a four-year peak, and bank repossessions almost doubled in May.

Some towns are doing better, but only with modest recent gains, New Jersey sale prices are still down 22.2 percent from the pre-recession peak, according to CoreLogic, another Irvine, CA, analytics firm. That is worse than all but four other states, the firm found.

Trenton could be the poster child for New Jersey’s mix of economic weakness, a troubled housing market and ineffectual political responses.

The 2,473 foreclosure homes in Trenton represent 21.5 percent of the city’s homeowner properties as reported by the U.S. Census as of 2012.

Even a relatively obscure statistic reflects significant trouble. RealtyTrac’s latest numbers show more than twice as many homes in the state capital area are in foreclosure, or have already been seized by banks, than the total number the firm currently lists for sale.
…
“Think of New York City and its comeback,” Hughes said. “A lot of it has to do with reduction in crime and perception of safety — Trenton is the exact opposite.

“All the Italian restaurants are gone — people told them they didn’t feel safe coming at night — and much of that community has moved to Ewing or Lawrence,” Hughes said.

Even on RealtyTrac, some raw numbers appear even more calamitous in a few other communities, such as Paterson or Newark. But housing sales are up in both those cities on a year-over-year basis, which is preferred by analysts because it avoids seasonal fluctuations. In both cities, median prices are about $150,000-$160,000 and even bank-owned homes average $107,000-$110,000, a smaller gap than the New Jersey average.

In Trenton, the data show sales are down 26 percent from a year ago. So far this year, 19 percent of homes sold in the city have been at sheriff’s sale, by banks after foreclosing, or short sales, in which borrowers are able to walk away from “underwater” mortgages that saddled them with more debt than the current value of the properties. Last year’s figure was 9.9 percent.
…
Trenton’s median home price is only a bit less than those of Newark and Paterson, but it is heavily weighed down by those 2,473 foreclosure properties. Even before the new surge in foreclosures, Trenton’s homeownership rate for the five-year period ending then was 40.5 percent, compared to 66.2 percent for New Jersey as a whole, according to the Census.

Those foreclosed homes that are being resold in Trenton are going for an average of just $40,000, according to RealtyTrac, and their prices have remained below $50,000 for at least seven months, less than a third of market price.

“That is a very large disparity,” said RealtyTrac Vice President Daren Blomquist, and unusual for its persistence without normal monthly market fluctuations.

Many Trenton homes fit the pattern of places like Detroit, “older properties, smaller properties, close to the city center that are less desirable,” he said. But the large overhang of foreclosed and threatened properties extends into neighboring Ewing, which has 808 of those but just 364 current RealtyTrac sale listings.

Posted in Demographics, Economics, Employment, Foreclosures, New Jersey Real Estate | 100 Comments

No bargains for new buyers

Posted on August 12, 2014 by grim

From Bloomberg:

First-Time Buyers Shut Out of Expanding U.S. Home Supply

The four-bedroom house that Ilia Nielsen-Dembe purchased in west Denver earlier this year wasn’t her top choice. The first-time buyer had to settle on a home in a neighborhood with a high crime rate after losing out on bids for five properties in more desirable areas.

“I definitely sacrificed in terms of location,” said Nielsen-Dembe, 33, who lives with her husband and two daughters in the house she bought in April for $184,500. “I had to cross streets that were not ideal in order to get a house.”

While the supply of U.S. homes for sale is at an almost two-year high and price gains are moderating, buyers such as Nielsen-Dembe wouldn’t know it. An inventory crunch for entry-level houses has only worsened during the past year as discounted foreclosures become scarce and cash-paying investors snap up affordable listings to convert to rentals. Properties at the lower end of the market are also the most likely to have underwater mortgages, keeping would-be sellers from moving.

“There is inventory coming on line, albeit slowly,” said Nela Richardson, chief economist for Redfin, a Seattle-based brokerage. “The problem is it’s not equally distributed. There is more turnover at the higher end. At the more affordable end of the spectrum, people are stuck.”

The number of U.S. homes for sale in the bottom third of the market — below $198,000 — fell 17 percent in June compared with a year earlier, according to a Redfin analysis of 31 large U.S. metropolitan areas. The supply was up 3 percent in the middle market and jumped 15 percent at the top, the data show.
…
Average list prices on the low-end jumped 15 percent in June from a year earlier, and increased 13 percent in the middle and 9 percent at the top, according to Redfin’s analysis of large metro areas.

“If you see prices increasing for reasons other than fundamentals, it’s not good for affordability,” Hui Shan, a housing analyst with New York-based Goldman Sachs Group Inc., said. “A lot of it has to do with investors coming into the market and buying properties. Those are not related to local residents’ incomes going up.”
…
Some properties aren’t available because homebuyers are taking advantage of the strong rental market and leasing out their previous homes.

Others who want to list their houses can’t. Owners of inexpensive houses are three times more likely than those with costly homes to owe more than their property is worth, according to Zillow (Z) Inc. About a third of mortgaged homes in the bottom price tier were in negative equity in the first quarter, compared with 18 percent in the middle and 11 percent at the top, Zillow data show.
…
First-time purchasers accounted for 28 percent of all sales of previously owned homes in June, down from about 40 percent historically, according to NAR.
…
The supply of cheaper new homes “isn’t there because young people are still up against these financial barriers,” Crowe said. “The builders are responding to the customer that is active in the market. It will be at least two years before there is a measurable change in the share of sales going to first-time homebuyers.”
…
Nielsen-Dembe, a nursing assistant who took on two full-time jobs to qualify for her mortgage, said she wanted to buy because she was tired of the relatively high costs of renting. She expected getting financing to be her biggest challenge.

Instead, she struggled with finding a single-family home in her price range. It took six months because of heated competition. Three of the houses she bid on went instead to cash buyers.

She found sellers who needed a flexible buyer because the house they were moving to wasn’t going to be ready for two months.

“I was willing to wait however long they needed,” she said.

Posted in Demographics, Economics, National Real Estate | 244 Comments

Brooklyn by the sea

Posted on August 10, 2014 by grim

From the Star Ledger:

Progress in Asbury Park, developers shift focus from oceanfront to downtown

About 10 years ago, waves of ritzy, new multifamily buildings along Asbury Park’s oceanfront were expected to breathe life into a city in need of repair. Properties near the ocean made way for the four-story Wesley Grove development, the eight-story North Beach condominiums and a colossal project called “Esperanza,” a complex about 10 stories tall with more than 200 units.

Esperanza even caught the eye of Hall and Oates musician, Joseph Oates, another Rock and Roll Hall of Famer to buy into a city that’s got Bruce Springsteen written all over it.

But these projects were too much and too soon for a city struggling to recover from 1970s race riots, crime and political corruption. North Beach had trouble filling its condos, and the $100 million Esperanza, which means “hope” in Spanish, never lived up to its name. The developer filed for bankruptcy in 2011 and all that remains are the bare bones of its foundation — an oceanfront eyesore.

City hall officials, developers and realtors now think smaller projects away from the oceanfront and near the downtown area are the best way to revive a city that was once an entertainment mecca for the Jersey Shore. They want to draw an atypical type of Shore resident.

“There aren’t any other towns like Asbury Park,” said Patrick Schiavino, a realtor and long-time Asbury Park property investor. “We’re not a sleepy Shore town. We’re kind of like Brooklyn by the sea.”

Schiavino said a lot of people moving to Asbury Park are retired couples from the New York City area who want to be by the water, but also want to be a part of a vibrant arts and culture scene. He said the city tends to attract artists, musicians and the LGBT community.

He admits Asbury Park is not for everyone. Families with children are not likely to be drawn there, he said, because the school system is “problematic,” and there aren’t many neighborhoods where children can “go out and play in the streets.”
Developers are focusing on the downtown area, taking advantage of existing structures and turning them into mixed residential and commercial units.

Sackman Enterprises, a Manhattan-based real estate management and development company, has restored the historic Steinbach building with 63 apartment units, as well as several other buildings in the area, said Carter Sackman, president.

Three months ago, Sackman purchased the Kinmouth building on Mattison Ave., which the historic Savoy theater occupies, for just under $2.5 million. Along with restoring the 20,000-square-foot theater, which has been vacant for decades, the company plans to utilize 4,500 square feet for retail space and 18,000 square feet of the upper four floors for 48 studio apartments.

Sackman said the company has budgeted $8 million for improvements and the apartments would probably start at $850 per month once they are ready to be rented.

The movement away from oceanfront development toward downtown areas reflects a trend, according to Roland Anglin, the director of the Joseph C. Cornwall Center for Metropolitan Studies at Rutgers-Newark.

“The last real housing crunch has really changed the way that people view housing,” Anglin said. “We won’t be seeing large-scale towers on the ocean because the demand is not there.”

He said downtown development is an “urbanist’s dream.”

Posted in New Development, Shore Real Estate | 68 Comments

HELOC resets not so scary

Posted on August 9, 2014 by grim

From the NYT:

Dealing With Home-Equity Resets

New research from TransUnion, a credit information service, suggests that the payment shock expected to hit millions of consumers with home equity lines over the next few years may not pose as much of a risk to lenders as feared.

The home equity lines of credit, known as Helocs, were originated before the housing market collapse when home values were still climbing. According to TransUnion, of the $474 billion in Heloc balances held by nearly 16 million consumers as of the end of 2013, nearly half of the loans were originated from 2005 to 2007, the peak year.

Many of these lines have a 10-year draw period, when borrowers may tap their credit and only make interest payments on the balance. As the draw periods come to an end starting next year, borrowers will have to begin paying both interest and principal on the outstanding balances. The TransUnion study estimates that more than half of the loans have balances of $100,000 or more.

Continue reading the main story
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Times Topic: Mortgages
“The fear has been that this will push a lot of people beyond the limits of their liquidity,” said Ezra Becker, the vice president for research and consulting at TransUnion.

But the agency’s research suggests that fewer than 20 percent of balances are at significant risk of default. The total volume is likely between $50 billion and $79 billion.

“There’s clearly risk in the market,” Mr. Becker said. “But we’re not faced with an unknowable or immeasurable or nebulous fear.”

Concerned about the potential for another wave of defaults, the Office of the Comptroller of the Currency, which regulates banks, has been urging lenders to quantify their level of risk and reach out to borrowers ahead of time. Regulators are encouraging lenders to extend workout or modification programs to borrowers where feasible.

The most recent risk report from the comptroller says that active risk management by the nine largest regulated banks is beginning to reduce their Heloc exposure. For example, at just over $40 billion, the banks’ Heloc end-of-draw volume estimated for 2015 is roughly $10 billion less than estimated back in 2011.

“While improving, substantial challenges remain, and the O.C.C. will continue to monitor exposure levels and lender efforts to mitigate the risks,” the report said.

Posted in Economics, Mortgages, Risky Lending | 30 Comments

Wastin’ away again in Foreclosureville

Posted on August 8, 2014 by grim

From the Record:

NJ, the foreclosure state

The rate of new foreclosures fell in New Jersey in the second quarter but was still the highest in the nation, followed by Maryland and Florida, a new Mortgage Bankers Association report said.

Loans in New Jersey on which foreclosures were started in the April-June period amounted to 0.9 percent of total outstanding loans in the state, down from 1.06 percent during the first quarter.

Meanwhile, New Jersey loans in any stage of the foreclosure process remained at the high level of 8.10 percent of total loans as of June 30, barely changed from the first quarter. That also was the highest percentage in the country, and more than three times the national rate of 2.49 percent. Florida had the second-highest rate and New York was third.

Reasons for New Jersey’s high levels of foreclosures include its comparatively sluggish recovery from the recession, the winding down of assistance programs that kept foreclosures at bay, and a slow judicial process, according to industry observers.

Elevated unemployment rates, particularly in New Jersey’s larger cities, and a recent decline in government funding for programs that have helped people avoid foreclosure, have resulted in many more homeowners falling behind this year on loan payments, said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, which provides counseling for cash-strapped homeowners. In addition, some homeowners who have had their loans modified at lower interest rates have still been unable to keep up and are back in default, she said.

“Put it all together and the statistics are not shocking to me,” Salowe-Kaye said.
…
Like New Jersey, the states that have the second- and third-highest rates of loans in foreclosure, Florida and New York, handle lenders’ foreclosure filings in state courts instead of administrative processes, and the judicial foreclosure processes tend to take longer, sometimes years. Only two of the 15 states with the highest percentages of loans in foreclosure, Nevada and Rhode Island, handle foreclosures administratively. The states with the lowest loans-in-foreclosure percentages were Wyoming, North Dakota and Nebraska, respectively. Of these, only North Dakota is a judicial foreclosure state.

“New York and New Jersey have the longest judicial time frames in the country,” said Robert E. Kafafian, chief executive officer of The Kafafian Group, a bank consultant in Parsippany.

RealtyTrac, a California company that tracks the foreclosure market, reported earlier this year that New Jersey’s foreclosure process takes an average of about 1,100 days, or more than three years. A state moratorium on foreclosures, in response to lender abuses, stalled the process and created a backlog of cases in 2010 and 2011.

Posted in Foreclosures, New Jersey Real Estate | 129 Comments

More froth than a 5 dollar latte

Posted on August 7, 2014 by grim

From the Washington Post:

Millennials should be buying a home right now

Millennials, what are you waiting for? You should be buying a home right now. That’s the conclusion of a pair of recent studies that looked at homeownership.

Zillow, the online real estate Web site, considered how rising interest rates and home price appreciation would affect a buyers’ ability to purchase a home. Even though interest rates have been hovering at yearly lows, most observers expect them to begin rising soon. Home values have been steadily climbing for some time.

Assuming that home values stayed constant and that a home buyer would put 20 percent down and take out a 30-year fixed-rate mortgage, Zillow found that a D.C. area buyer who waits one year to purchase a home would probably pay an additional $186 per month.

According to Erin Lantz, vice president of mortgages at Zillow, the rule of thumb is that a one percentage point increase in mortgage rates decreases affordability by 10 percent.

From Bloomberg:

House Punting: The Cost of Waiting to Buy in Hot Markets

When shopping for a big purchase, the line that “it never hurts to wait” often makes sense. But that’s only because by looking around more, you might find a better deal. Which is why, with interest rates expected to rise over the next few years and home-buying demand still heathy, following that advice could be costly in today’s real estate market.


To put a price tag on the possible cost of waiting to buy a home, real estate information website Zillow Inc. assumed that the rate on a 30-year fixed-rate mortgage would rise 1 percentage point. It calculated how that higher rate — which would be about 5.1 percent — would affect a buyer’s monthly mortgage payments. Zillow applied that rate to the median home price in 35 metropolitan areas, assuming a 20 percent down payment and a 30-year fixed-rate mortgage. 

(More assumptions that went into the calculations are here.)

The one-year waiting costs ranged from a minor $65 a month in St. Louis to a major $710 a month in San Jose, California. 



Posted in Economics, Housing Bubble | 131 Comments

The casinos formerly named Trump

Posted on August 6, 2014 by grim

From the APP:

Trump sues to get name off casinos

Donald Trump has a message for the two Atlantic City casinos that still bear his name, five years after he gave up anything to do with running them: You’re fired.

The real estate mogul and reality TV star, who presided over a casino empire in the glory days of Atlantic City, filed a lawsuit on Tuesday demanding that his name be stripped from the remaining two.

He told The Associated Press he sued Trump Entertainment Resorts, a descendant of a corporate entity he once controlled, because it has allowed its two Atlantic City casinos, the Trump Plaza and the Trump Taj Mahal, to fall into disrepair, tarnishing his personal brand and confusing customers.

“I want it off both of them,” Trump said in an interview Tuesday evening. “I’ve been away from Atlantic City for many years. People think we operate (the company), and we don’t. It’s not us. It’s not me.”

It was the latest manifestation of Atlantic City’s struggles: One casino closed in January, two others are slated to do so by next month and another is up for a bankruptcy auction on Thursday and will shut down if a buyer doesn’t materialize.

Trump’s lawsuit, filed in state Superior Court in Atlantic County, seeks a court order directing Trump Entertainment Resorts to immediately cure what it terms a breach of Trump’s licensing agreement with the company or remove his name from the casinos and the company itself.

“Since Mr. Trump left Atlantic City many years ago, the license entities have allowed the casino properties to fall into an utter state of disrepair and have otherwise failed to operate and manage the casino properties in accordance with the high standards of quality and luxury required under the license agreement,” Trump wrote in his lawsuit, filed in the name of Trump AC Casino Marks LLC. “The Trump name … has become synonymous with the highest levels of quality, luxury, prestige and success.”

Posted in Shore Real Estate | 161 Comments

Building up, but no new jobs

Posted on August 5, 2014 by grim

From the Record:

Home building is up, but construction hiring hasn’t followed

While home building is on the rise in New Jersey, construction hiring in the state has actually declined over the past year. But that may change in the months ahead, as multi-family projects pick up momentum.

“We’re still anticipating increased hiring in the construction trades in the second half of the year,” said Patrick O’Keefe, an economist with CohnReznick, an accounting firm with an office in Roseland. “It’s a little bit puzzling that we haven’t seen it already.”

According to the Associated General Contractors of America, a trade group, New Jersey had the steepest drop in construction jobs in the nation in the 12 months ended in June, losing 11,200 jobs, or 8 percent of the total. The job loss came at a time when home construction approvals have been running almost 29 percent ahead of last year’s pace, as the industry continues to climb out of its deepest trough since World War II.

Multi-family construction, especially in Bergen and Hudson counties, has powered the housing recovery, accounting for 61 percent of the activity in the state. That’s a big change from New Jersey’s historic development patterns, which were long dominated by single-family construction. There’s a growing demand for rentals, since many households can’t qualify for mortgages because of flat incomes and still-tight lending standards. And many households, especially in the Millennial generation, prefer the flexibility and pedestrian-friendly lifestyle found in urban rentals.

O’Keefe said the stronger performance of the multi-family sector may be one reason why construction hiring has lagged behind housing approvals. In single-family construction, he said, a builder gets a permit and puts construction workers on the job almost immediately. But a multi-family project requires more site work and is built in stages, which could stretch out hiring, he said.

Another factor in New Jersey’s slow construction job market is that nonresidential building has been sluggish, both in the state and nationwide, according to Ken Simonson, chief economist of the contractors’ group. Public projects, such as highway and school construction, have been constrained by tight federal and state budgets.

And little new office and retail space is being constructed.

Posted in Economics, Employment, Housing Recovery, New Development | 137 Comments

Sandy changes the shore a second time

Posted on August 4, 2014 by grim

From the Record:

As shore properties are sold after Sandy, beach towns change

Superstorm Sandy sent 18 inches of water rushing in to Bob Zirkel’s Ortley Beach home, causing thousands of dollars in damage.

But bad as the storm was for Ortley Beach — one of the hardest-hit areas on the Shore — it also opened up an opportunity for Zirkel, a construction superintendent who lives in Rockaway. Just seven months after the storm, he spent $250,000 to trade up, buying a badly damaged house near the ocean. Now he’s building his family’s new beach getaway on the site, on the border of Ortley Beach and Lavallette.

“I got an incredible bargain,” Zirkel, 53, said of the property, which was assessed at more than $600,000 as recently as 2011.

Almost two years after Sandy devastated parts of the Shore, damaged properties are changing hands, as some owners decide they can’t afford to rebuild, and buyers look for a place to create their own summer memories. Many badly damaged properties have been torn down, leaving empty lots — which had been a rare commodity at the beach.

“There’s a lot going on. The market is really rebounding,” said Eric Birchler of Birchler Real Estate, which has offices in Ortley Beach and other towns on the narrow barrier island that stretches from Point Pleasant Beach to Island Beach State Park. “They’re buying the dirt and they’re knocking the house down, and they’re building their beach house.”
…
In Ortley Beach, prices have moved up from the bargain-basement levels seen in the year after the October 2012 storm. But they’re still down significantly — depending on whom you ask, by 20 percent or so.
…
“You didn’t have to be really wealthy to live here in Ortley Beach,” said Tim O’Shea, a real estate agent with Birchler, who has an Ortley Beach house that was badly damaged and is still being repaired. “A lot of homes passed down through the generations. If you scraped together $3,500 to $4,000 in taxes, you could come down on Memorial Day and stay till Labor Day.”

But many of these homeowners didn’t have flood insurance, and once the storm hit, they were faced with enormous costs to repair and, in many cases, elevate the homes. Elevating a home costs from $80,000 to $100,000, once all the expenses are factored in, said Lee Childers of Childers Sotheby’s International Realty, which has six offices in Ocean County, most on the barrier island. The federal flood insurance program reimburses a maximum of $30,000 for elevating a home.

And there’s no government disaster aid for owners of second homes.

As a result, for many owners, “there was really no way out but to sell, probably at a price below what they’d get if they’d been able to hold on,” said Peter Reinhart of the Kislak Institute for Real Estate at Monmouth University.
…
Childers said that property values haven’t dropped far enough, post-Sandy, to make a speculative investment worth the risk. In fact, he has built spec homes himself in the past, but he’s not tempted now.

“I would be doing it if there was money to be made,” he said.
…
Reinhart said the steepest real estate discounts are in the past. “The really good deals were scarfed up in the first six months after the storm,” he said.
…
Even farther north, in the middle-income Monmouth County towns of Highland and Union Beach, small, damaged houses can be bought for less than $100,000. Many of these listings on the Monmouth County Multiple Listing Service carry warnings like these: “Value is in the land. House is sold as-is. Home damaged by Sandy.”

“This is your opportunity to help restore the Shore,” says one listing for a storm-damaged, $99,000 Cape Cod in Highlands.

The rebuilding is likely to change the character of some towns, as affordable cottages are replaced by taller, more expensive homes.

“The fabric of the Shore is going to change, because many blue-collar families have been unable to hold onto their properties,” Reinhart said.

Posted in Economics, Housing Recovery, New Development, Shore Real Estate | 86 Comments

Oh boy, this won’t end well

Posted on August 3, 2014 by grim

From Housingwire:

New York now allows shared appreciation mortgage modifications

Underwater homeowners in New York state are now eligible for an additional form of mortgage modification intended to help more of them keep their homes, in a development quietly passed in the state.

On July 9, the New York Department of Financial Services adopted regulations that allow for shared appreciation mortgage modifications under certain circumstances. The new regulations were announced in the state’s register and went into effect that day.

The regulations, Section 6-f of New York banking law, state that if a borrower is at the risk of foreclosure due to owing more on their home than it is currently worth, a a lender or mortgage holder may reduce the principal amount of a loan to help the borrower stay in their home.

According to a letter from the DFS sent to New York lenders, the lender or mortgage holder would then be entitled to share in any appreciation of the market value of the property between the effective date of the reduction in the principal amount of the mortgage loan and the date when the property is sold or transferred.

But there are stipulations on the amount of return that the lender can receive under the agreement. The lender is limited to a return whichever of the following amounts is lower:

The amount of the reduction in principal, plus interest on such amount calculated from the date of the shared appreciation agreement to the date of payment based on a rate that is applicable to the modified mortgage loan

50% of the amount of appreciation in value

“Currently, a number of New York homeowners owe more on their mortgage loans than their homes are worth. Meanwhile, foreclosures have soared in recent years. While mortgage modifications have helped many homeowners keep their homes, many other struggling homeowners do not qualify,” Daniel Burstein, executive deputy superintendent of the DFS’s real estate finance division, said in the letter to bankers.

Posted in Foreclosures, Mortgages, Risky Lending | 28 Comments

Did Trump win it?

Posted on August 1, 2014 by grim

From the Star Ledger:

Atlantic City home owned by Trump holdout sold at auction

An Atlantic City-area real estate figure has bought at auction a property that earned its owner near-folk hero status for resisting decades of overtures from developers including Donald Trump.

Joshua Olshin of AuctionAdvisors says Vera Coking’s modest three-story boardinghouse sold Thursday afternoon for $530,000 plus 10 percent commission. Olshin says that bidding was active and that the winner wishes to remain anonymous.

Coking is 86 and has moved to California to be near family. She rebuffed repeated offers from Trump and an attempted state takeover of her property.

Trump said earlier this week he had once offered Coking millions of dollars and housing for life if she would sell.

Thursday’s bidding started at $199,000, priced to sell in Atlantic City’s now-depressed real estate market.

Posted in Lowball, Shore Real Estate | 78 Comments

I don’t usually talk about San Francisco, but when I do…

Posted on July 31, 2014 by grim

From Curbed SF:

Bubble Watch: Top-Tier Home Prices Surge Past 2007 Levels

Earlier this year, prices for the Bay Area’s most expensive homes hit and surpassed the previous highs of the 2007 housing bubble. Now, according to Standard & Poor’s Case-Shiller Index, which just tallied the numbers from this spring, top-tier homes have soared past that mark to reach record levels, rising 7 percentage points above what they were during the last bubble. The Case-Shiller considers high-priced homes to be those that sell for more than $840,000, which puts them into the top third of house sales among the five-county region covered by the index. But we probably don’t need to remind you that in the warped universe of the San Francisco market, Case-Shiller’s top tier is just below average. As you recall, this spring the median house sale price in the city reached $1.1 million—putting much of San Francisco in the top tier.

The priciest homes had a significantly smaller bubble and crash than the ones in the lower tiers, which are still in the midst of recovering from the 2007 nosedive. The bottom third of home prices have risen a jaw-dropping 79 percent in the past two years, but that still puts them 28 percent below their past peak values. The middle tier has risen 51 percent, putting it 12 percent beneath its top.

The housing market recovery began in earnest back in 2012, and the Case-Shiller shows that high-tier home prices have risen 43 percent since that time. This meteoric rise is even steeper than those of previous bubbles, like the dotcom bubble of 1996–2001, when prices rose 100 percent in five years, and the 2002–2008 housing bubble, when prices went up 54 percent over six years. Based on the pattern of past cycles, there’s no question that we are back in a bubble, but how long will this one last?

Posted in Economics, Housing Bubble | 127 Comments