“We think it is officially time to stop cheering for higher house prices.”

Posted on April 25, 2014 by grim

From HousingWire:

Housing will not save the U.S. economy

The horrible drop in new home sales that came in from the U.S. Census on Wednesday underlines the assertion of Princeton economist Atif Mian and the University of Chicago’s Amir Sufi.

That is, their assertion that the housing industry doesn’t have the depth or capacity to save the U.S. economy.

“Exactly a year ago from today, one of us wrote a short piece entitled ‘Will Housing Save the U.S. Economy?’ The conclusion was pessimistic,” the two say. “We need to temper our optimism on what a housing recovery can do…But we will not be returning to the boom years that preceded the Great Recession. The days when housing was the predominant force driving economic activity are gone…”

A year after their prediction, they seem to have hit the bulls-eye.

Dreadful new home sales data yesterday heightened concerns that house price growth will stall. but we are making a different point: the sensitivity of economic activity to rising house prices is much lower today than it was prior to the Great Recession. This is due to a number of factors, such as the rise in investor purchases and the fact that the households who would be most likely to spend out of housing wealth are no longer homeowners. In fact, rising rents may dampen economic activity.

Ironically, the fact that house price growth has not contributed much to overall economic activity over the past few years implies that the economic consequences of stalled house price growth may be small. Slower house price growth will lower new residential construction, but it has been pretty weak anyway. And cooling the rapid rise in rents may actually help boost spending on other goods. The bottom line is that the U.S. economy will have to look for an engine other than housing to drive growth going forward.
…
Their conclusion?

“We think it is officially time to stop cheering for higher house prices. They aren’t having much of an impact on the economy anyway, and the resulting higher rents are hurting many,” they say.

Posted in Economics, Housing Recovery, National Real Estate | 206 Comments

Maybe a house isn’t a great idea?

Posted on April 24, 2014 by grim

From the Washington Post:

Americans think owning a home is better for them than it is

Some people never learn: Polls show that Americans still view their homes as the best and safest place to invest their hard-earned cash.

Gallup asked Americans this month to choose the best “long-term investment.” Real estate was the most common pick, ahead of mutual funds, bonds and other options. Similarly, Fannie Mae’s National Housing Survey asked Americans to assess whether various kinds of assets amounted to a “safe investment with a lot of potential.” As has been the case since before the financial crisis, “buying a home” beat out all the alternatives.

The fact that Americans still financially fetishize homeownership baffles me. Never mind that so many people lost their shirts (among other possessions) in the recent housing bust. Over an even longer horizon, owning a home has not proved to be a terribly lucrative investment either. Don’t take my word for it; ask Robert Shiller, winner of the 2013 Nobel Prize in economics who previously became a household name for identifying the housing bubble.

“People forget that housing deteriorates over time. It goes out of style. There are new innovations that people want, different layouts of rooms,” he told me. “And technological progress keeps bringing the cost of construction down.” Meaning your worn, old-fashioned home is competing with new, relatively inexpensive ones.

Over the past century, housing prices have grown at a compound annual rate of just 0.3 percent once one adjusts for inflation, according to my calculations using Shiller’s historical housing data. Over the same period, the Standard & Poor’s 500-stock index has had comparable annual returns of about 6.5 percent.

Yet Americans still think it’s financially savvy to dump all their savings into a single, large, highly illiquid asset.

Perhaps Americans just want to invest in something tangible. Real estate is, after all, real: bricks, mortar, wood, tile. Other kinds of assets seem more abstract, almost imaginary, by comparison. You just have to trust your financial adviser, bank or never-ending, entire-rainforest-killing Vanguard mailings that your other investments actually exist.

Shiller suspects that selective memory may also play a role.

“People remember home prices from long ago better than they remember other prices,” he says. “Ask anybody, ‘What did you pay for your home?,’ and they’ll remember even if it was 50 years ago. It will be some ridiculous number like $30,000. They then compare it to today’s prices, and it makes a big impression, and they forget there has been so much inflation since then.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 146 Comments

Existing Home Sales disappoint again in March

Posted on April 23, 2014 by grim

From MarketWatch:

Sales of existing homes slowest since July 2012

The sales pace of existing homes ticked down in March to the slowest rate since July 2012, showing weakness in the early spring sales season, though underlying trends signal a firming in market fundamentals, economists said Tuesday.

The National Association of Realtors reported that the annual sales pace of existing homes declined 0.2% last month to a seasonally adjusted annual 4.59 million. But March’s result beat a consensus among economists polled by MarketWatch, who had expected a sales rate of 4.55 million, compared with a pace of 4.6 million in February.

For context, there was an average monthly sales pace of more than 6 million existing homes over the five years leading up to a 2005 bubble peak.

Sales rates have trended down since the summer on falling affordability as inventory remained low, and there’s been concern about tepid spring-sales results. Some buyers have been put off by rapidly rising prices. According to NAR, the median sales price of used homes hit $198,500 in March, up 7.9% from the year-earlier period. Elsewhere Tuesday, a federal housing regulator reported that home prices in February were up almost 7% from the year-earlier period.

Unusually rough weather in recent months likely also curbed some demand, though regional sales results for March show gains in the Northeast and Midwest, according to NAR. New mortgage rules for borrowers and lenders are likely also curbing some deals, analysts say.

“At least part of the net weakening likely reflects weather effects, although, even without weather effects, sales have clearly slowed since early last year,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a research note.

In addition, banks have high hurdles for borrowers to obtain a mortgage, conditions that are particularly tough for would-be first-time buyers and younger families. Some economists worry that as institutional investors scale back their purchases, with foreclosures and ultra-cheap deals thinning out, first-time buyers won’t fill the gap .

Over the last several business days, economists at both Fannie Mae and Freddie Mac, the federally controlled mortgage-finance giants, cut their forecasts for the housing market’s performance in 2014. Fannie reduced its outlook for new-home construction, while Freddie lowered its view for home sales.
…
Despite home-sales weakness in the first quarter of this year, economists don’t think 2014 will be a wipeout.

“Although the string of negative readings suggests the recovery has stalled, the underlying details are more supportive,” Wells Fargo Securities economists wrote in a research note.
…
“Negative housing momentum, which was exacerbated by severe weather conditions during the winter months, may be starting to fade…We expect positive underlying fundamentals to begin reasserting themselves, helping to drive a rebound in housing market activity over the coming months,” Gennadiy Goldberg, U.S. strategist at TD Securities, wrote in a research note.
…
First-time buyers’ share of existing-home sales rose to 30% last month, up from 28% in February. The long-term average is closer to 40%.

Distressed properties’ share of existing-home sales fell to 14% in March from 16% in February.

Posted in Economics, Housing Recovery, National Real Estate | 140 Comments

More on the NJ foreclosure crisis

Posted on April 22, 2014 by grim

From NJ Spotlight:

EXPLAINER: JUST HOW BAD IS NEW JERSEY’S FORECLOSURE CRISIS?

The Garden State has the country’s highest percentage of foreclosures among mortgaged homes — and that’s just the beginning

Early this year, banking and real-estate analysts concluded that New Jersey had achieved a dubious distinction, passing Florida to become the state with the highest percentage of foreclosure among mortgaged homes, 6.2 percent as calculated by CoreLogic, a leader in real-estate analytics. (That percentage was actually an improvement from a year earlier.)

Meanwhile, Florida’s rate dropped to 6 percent from 10.1 percent in 2012, and housing markets around the country are recovering far faster from the Great Recession.

New Jersey also took another unfortunate first place, passing New York for the average length of time to complete a foreclosure, at 1,103 days or just over three years, according to CoreLogic.

No end in sight: New foreclosures increased nationwide in January, before dropping again in February, according to RealtyTrac. But in New Jersey they kept rising, up another 126 percent, the firm found. Actual bank repossessions were up 90 percent from a year ago.

Those trends continue. State court records show that through April 15, lenders filed 15,150 new foreclosure cases in New Jersey this year, the sort of number seen only in the depths of the recession. In Atlantic City, foreclosures are up 254 percent from a year ago.

A long wait: In New Jersey, even a completed foreclosure is no guarantee that a house will come back on the market and be reoccupied anytime soon. According to RealtyTrac, it takes 830 days to sell a home in foreclosure here, though that is slightly less than in New York and well behind Massachusetts’ average of 1,299 days.

Zombie foreclosures: New Jersey courts closed 12,639 foreclosure cases by entering default judgments against the borrowers in 2013. But CoreLogic found only 5,888 homes actually went to sheriff’s sale in that time. The borrowers or tenants might still occupy some foreclosed properties, but many stand vacant, “zombie foreclosures.” Even after obtaining foreclosure judgments, banks do not have to maintain a property until taking possession at a sheriff’s sale.

Those empty homes serve as a drag on the market, keeping down prices that collapsed during the recession and leaving many borrowers “underwater,” owing more on their mortgages than the properties are currently worth.

RealtyTrac sees that situation, though still drastic, getting better in much of the country. But again, not in New Jersey. In the first quarter, the number ticked upward here to almost a quarter-million mortgages, 19 percent of the total.

Posted in Demographics, Economics, Foreclosures, New Jersey Real Estate | 133 Comments

Is Spring the time to sell?

Posted on April 21, 2014 by grim

From the Washington Post:

The Nation’s Housing: Is spring the time to list a home?

It’s common knowledge verging on holy writ in real estate: Spring is the absolute best time of the year to sell a house.

Right?

But is there hard statistical evidence that listing your house in April, May or June — flowers blooming, birds chirping, lawns greened up after a tough winter — actually nets you a higher price or a shorter time from listing to sale?

Yes, but it’s not as clear cut as you might imagine. There are important nuances in the data. Reviews of realty industry and academic studies suggest that while sales totals generally are highest in May and June, they are actually reflecting listings, contracts and buyer searches that occur earlier in the year.

A study of 1.1 million home listings between 2011 and 2013 in 19 major markets by the national realty brokerage firm Redfin found that, contrary to popular impressions, houses put on the market in winter — defined as Dec. 21 through March 21 — had a 9 percentage point greater probability of selling within 180 days and at a smaller discount to the initial list price than houses put on the market during the spring months (March 22-June 21). The advantage jumped to 10 percentage points over summer listings (June 22-Sept. 20.) Winter listers ultimately sold for prices 1.2 percentage points higher than homes listed during any other season.

Though there were geographic differences, researchers found that even in areas with harsh winters, there were statistical advantages for listers. In Chicago there was a 13 percentage point advantage in selling time for listings initiated in the late December through mid-March period compared with listings in the summer.
In Boston, the advantage was 14 percentage points. In Los Angeles and San Diego, even with their relatively mild winters, the advantage was still evident — 9 points and 11 points, respectively. In Seattle, it was 12 points.
…
A study conducted by online real estate site Trulia in 2012 found that while prices on closed sales peak in May and total sales peak in June, there are significant differences geographically. Prices tend to peak in the Southern states in March and April, according to Trulia, with the exception of Florida, where the high point comes in May. California, Virginia, Oklahoma, Pennsylvania, New York, New Jersey and Massachusetts prices also hit their statistical peak in May. But it’s later — between June and August — in Oregon, Illinois, Connecticut, Washington and West Virginia.

Posted in Demographics, Economics, National Real Estate | 103 Comments

NJ job market struggling, unemployment rises to 7.2%

Posted on April 18, 2014 by grim

From the Record:

NJ lost 1,300 jobs in March; unemployment rate ticks up

The loss of 1,300 jobs in March puts New Jersey down 1,900 jobs for the year, as even traditionally strong sectors such as health and leisure lost ground.

The state lost 600 government jobs and 700 private jobs in March, the second monthly fall in a row for the private sector, according to the monthly employment report released Thursday by the New Jersey Department of Labor and Workforce Development.

Unemployment, which stood at 7.1 percent in January and February, rose to 7.2 percent in March – above the national rate of 6.7 percent, the department reported.

Adding to the bad news, revised numbers for February showed that employment in the state fell by 1,100 more jobs than first reported, losing 4,800 instead of the previously announced 3,700 jobs.

“I think we sum up the report by saying that New Jersey’s labor market is going nowhere slowly,” said Patrick O’Keefe, director of economic research at the accounting firm CohnReznick. “Nothing stands out as a reason to be optimistic about where we are going.”

The 1,900 jobs so far this year is particularly weak compared to the 18,800 jobs added in the same period in 2013. New Jersey has recovered just 93,000, or 36 percent, of the 258,000 jobs lost in the recession and its aftermath.

In comparison, New York has recovered all of the 330,000 jobs it lost in the period and added about 164,000. Connecticut has regained about half of the 119,100 jobs lost. As of March the U.S. had recovered all the private sector jobs it lost.

The only New Jersey sectors with significant advances in the first quarter were construction, trade, transportation and utilities, and professional and business services.

Manufacturing lost 2,100, and leisure and hospitality, normally one of the state’s strongest sectors, lost 6,500 jobs. All of the losses came in the accommodation and food services sub-sector, which includes, hotels and restaurants.

And while educational and health services, in recent years the state’s strongest sector, added 300 jobs, the health and social assistance sub-sector lost 2,600 jobs.

“It seems like somebody has hit the economic pause button,” said economist James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “The first three months of the year, have been pretty flat. I don’t think anybody really knows why. I am puzzled by it, because national growth has been okay.” So far this year the U.S. has added about 530,000 jobs.

Posted in Demographics, Economics, Employment | 67 Comments

Realty Transfer Tax to be eliminated? Yeah right.

Posted on April 17, 2014 by grim

From the Star Ledger:

In response to Christie, Republican senator plans to introduce bill to end NJ’s realty transfer fees

One day after Gov. Chris Christie said he would abolish reality transfer fees in New Jersey if given the chance, a fellow Republican responded with a bill seeking to do just that.

State Sen. Diane Allen (R-Burlington) said today she will soon introduce legislation that would repeal the fees that residents have to pay when selling a home here.

“When you sell your home in New Jersey, you’re getting whacked by this arbitrary tax, and that’s wrong,” Allen said. “This initiative will help struggling homeowners, including those who might be facing short sales or foreclosures. It will save property owners across this state a burden of thousands of dollars, which particularly hurts those who have lost equity in their homes due to the economic recession.”

Allen plans to introduce the bill April 28.

The fees are the seventh-largest source of tax revenue for New Jersey. State officials have projected that they will produce $287 million in the current state budget and $325 million in the spending plan that takes effect in July.

At a town hall in Franklin Township in Somerset County on Tuesday, a retired state trooper told Christie that he was hit with a $5,435 realty transfer fee when he recently sold his house.

Christie responded by saying if the state Legislature sent him a bill eliminating the fees, he would be happy to sign it.

“A realty transfer fee? From my perspective, it makes no sense,” the governor said. “It’s awful. It should be done away with.”

Posted in New Jersey Real Estate, Politics, Property Taxes | 90 Comments

Ain’t your daddys real estate market

Posted on April 16, 2014 by grim

From HousingWire:

5 brilliant insights in the CoreLogic April MarketPulse

1) Rise of short-terms

In 2006, 86.2% of all refinance originations were 30-year terms. In 2013, the share of refinance originations with a new 30-year term dropped to 60.1%.

Because of this trend, the share of shorter-term mortgages has been rising. In 2013, 15-year loan terms accounted for 27.3% of all refinance mortgage originations, up from 26.7% in 2012 and boosted from 8.8% in 2007.
…
2) Return of the HELOCs

As borrowers regain their equity and interest rates continue to increase over the next few ?years, the incentive to stay in one’s existing home and finance home improvements though home equity lines of credit will likely increase relative to purchasing a new home or refinancing with cash out. This is good news for the home improvement industry and mortgage lenders who focus on home equity lending, as both will benefit from the resurgent consumer demand.

3) Short sales down

Although home price appreciation and other factors have contributed to the decline in short sales, the expiration of the Mortgage Forgiveness Debt Relief Act could be having an impact. Since the act expired on Dec. 31, 2013, CoreLogic data shows that borrowers are likely thinking twice about pursuing a short sale without the tax exemption.

4) No, it was not the cold (mostly)
…
Although colder weather is a substantiated factor, clearly, the monthly change in housing starts is not entirely attributable to the colder-than-average temperatures.

Past severe winters that have affected housing starts negatively were followed by a rebound after temperatures began to rise again. This analysis indicates there should be a rebound again this spring, but it will not be sufficient to counteract the current weakness in the market, which can’t be blamed on the weather.

5) Construction employment

According to a Bureau of Labor Statistics report released in early March, nationwide construction employment increased 2.6% year over year in February and has been increasing on a year-over-year basis since June 2011. Although these year-over-year increases look tepid, they are strong when compared to the period of double-digit decreases in construction employment from January 2009 to March 2010.

Posted in Demographics, Economics, National Real Estate | 95 Comments

Will the market slow in 2014?

Posted on April 15, 2014 by grim

From HousingWire:

Here’s why the rest of 2014 will be rough for housing

The next couple of quarters may be rough going for the housing and finance industry.

Housing prices and mortgage activity will stay highly sensitive to the Federal Reserve interest rate policy and guidance because of a weak job market, affordability challenges and the declining pool of first-time homebuyers.

Worse still, home price appreciation may level off and even dip into negative territory by the third quarter of 2014.

“Housing price appreciation (is) already on the decline, with only six cities in the Case-Shiller index showing strength in recent indexing – Dallas, Las Vegas, Miami, San Francisco, Tampa, and Washington,” says Tom Showalter, chief analytics officer at Digital Risk, which handles $8 billion in loan volume monthly. “Moreover, while home prices have increased, at least 25% of all homes are still under water.”

December home sales showed that 40% of sales were all cash – suggesting strong investor participation. Originations are also at a 14-year low.

“As investors leave market, there is little evidence that typical retail buyer will take up the slack,” Showalter said.
…
These issues have been compounded by the fact that “many banks and lenders are exiting mortgage lending as application rates hit ten year lows, complemented by increasing regulatory burdens and penalties, and increasing capital requirements. New Basel III regs now require 5% capital ratios for mortgage lending, a requirement that is largely punitive,” Showalter said. “The ultimate causes have nothing to do with the weather. Rather the issues are weak job market, flat consumer income and excessive regulation.”

Posted in Economics, Housing Recovery, National Real Estate | 115 Comments

Commercial investors positive on Jersey market

Posted on April 14, 2014 by grim

From the Record:

Investors return for North Jersey real estate

A few months ago, a Hoboken multifamily building, The Artisan, sold for a record $569,000 per “door,” or apartment. The acquirer, a real estate investment management company, forked over $33.6 million overall for that nearly 60-unit asset.

Within weeks, two Edgewater apartment complexes, including the luxurious St. Moritz, were purchased for a total of $168.3 million by separate buyers, a large Massachusetts insurer and a giant Israeli investment firm.

After the tough years when buyers were reluctant to come to the table, investors are opening their checkbooks to buy multifamily residential, industrial and office real estate in North Jersey. The capital markets are looking more kindly on Bergen County and the Hudson River Gold Coast, drawn by the region’s lower prices compared with soaring markets in Manhattan and Brooklyn, the improving economy overall, low interest rates for financing, and the bargains available for Garden State properties versus what the cost would be to build such structures now.

“There’s a lot of capital out there,” said Andrew Merin, vice chairman of the Metropolitan Area Capital Markets Group of Cushman & Wakefield of New Jersey Inc. in East Rutherford.

Buyers range from the traditional, risk-averse institutional investors such as public and private real estate investment trusts, pension funds and insurance companies looking to buy trophy Class A properties to regional players making deals.

It’s a far different scenario than during the Great Recession, when few banks were lending and one of the few properties selling in North Jersey were distressed office buildings. The hottest sectors today are multifamily — witness Hoboken and Edgewater — and industrial, area real estate executives said.

“The activity is certainly stronger than it’s been in the past couple of years,” said Joe Garibaldi, managing director of real estate firm JLL’s Capital Markets Group in East Rutherford. “Fundamentals have stabilized or are improving, depending [on] which sector you’re looking at. … The good news is that on every deal that we have in the market, there’s numerous buyers that are showing up.”

Posted in Economics, Housing Recovery, New Development, New Jersey Real Estate | 78 Comments

Foreclosures down (but not here)

Posted on April 10, 2014 by grim

From HousingWire:

Foreclosure activity at lowest level since 2Q 2007

There were 117,485 foreclosure filings in March 2014, which is up 4% from February but still down 23% compared to March 2013, according to RealtyTrac’s “U.S. Foreclosure Market Report.”

RealtyTrac’s report on foreclosures — that includes default notices, scheduled auctions and bank repossessions — covers the month of March and the first quarter of 2014.

March was the 42nd consecutive month where U.S. foreclosure activity decreased from a year ago, helping to drop first quarter foreclosure activity to the lowest level since the second quarter of 2007.

“Now that the foreclosure deluge has dried up, banks are turning their attention back to properties that have been sitting in foreclosure limbo for some time,” said Daren Blomquist, vice president at RealtyTrac. “This is most evident in judicial foreclosure states that were more likely to have impediments in the foreclosure process, but there are also signs of this catch-up trend happening in some non-judicial states like California, where an increasing number of judicial foreclosure filings boosted foreclosure starts in the first quarter.”

The monthly increase in foreclosure activity was driven by a 7% month-over-month increase in foreclosure starts — the initial public notice starting the foreclosure process — and a 6% monthly increase in scheduled foreclosure auctions.

Homeowners saw lenders repossess 28,840 properties in March, down 5% from the previous month and down 34% year-over-year to the lowest level since July 2007 — an 80-month low.

About 341,670 properties had a foreclosure notice in the first quarter, down 3% from the previous quarter and down 23% from a year ago.
…
Despite the decrease in overall foreclosure activity in the first quarter, 29 states posted annual increases in scheduled foreclosure auctions, including Utah (up 226%), Oregon (up 177%), Connecticut (up 131%), New Jersey (up 79%), Delaware (up 49%), New York (up 47%), Maryland (up 46%), Massachusetts (up 37%), Nevada (up 21%) and Florida (up 21%).

Meanwhile foreclosure starts in the first quarter increased from a year ago in 19 states, including New Jersey (up 83%), Maryland (up 43%), Indiana (up 38%), Delaware (up 24%), Connecticut (up 13%), and California (up 10%).

Posted in Economics, Foreclosures, New Jersey Real Estate | 198 Comments

Optimism is in the air

Posted on April 8, 2014 by grim

From HousingWire:

American optimism trends higher as home buying season starts

As the market enters the spring homebuying season, more homeowners are beginning to think now is a good time to sell a home, in addition to it being easier to get a mortgage, a government agency said.

According the latest Fannie Mae National Housing Survey, the share of respondents who say it is a good time to sell a home escalated to 38% in March, up from 26% for the same period a year ago.

Meanwhile, 52% of people believe it is easy to get a mortgage today, compared to 47% a year ago, matching the all-time survey high.

Americans are also beginning to feel more confident about their financial situation, with the percentage of people who expect their financial situation to worsen during the next 12 months dropping from 21% in 2013 to 12% in March.

On top of this, the share of people who say their personal financial situation improved during the past year reached an all-time survey high of 40%.

“The housing recovery continues to proceed in fits and starts. Rising mortgage rates and a lack of supply have dampened housing market momentum,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

“However, we see several positive signs going into this year’s spring home buying season, compared with last year. For example, consumers are less pessimistic about their personal finances, and more optimistic about the current selling environment and their ability to get a mortgage,” Duncan said.
…
In addition, the percentage of respondents who say home prices will increase in the next 12 months declined slightly to 48%, while the amount of people who say home prices will go down dropped to 5%: an all-time survey low.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 205 Comments

Winter chill hits NJ market

Posted on April 7, 2014 by grim

From the Record:

Chilly forecast for North Jersey home sales

This spring — traditionally the busiest time in the housing market — buyers may find they’ve got fewer choices than they’d like, because the inventory of homes on the market is down, compared with last year. In Bergen County, the number of single-family homes for sale dropped 25 percent in January and February, and in Passaic County, about 15 percent.

One big reason is that many sellers have held off because of the unusually harsh winter weather, and they’re likely to list their properties soon, which may bring a surge of properties to the market.

But other homeowners — especially those who bought during the housing boom — still can’t sell without taking a loss, and those properties are likely to stay off the market, shrinking the potential pool of available homes.

“There are still sellers waiting for the market to improve in order for them to get out,” said Jeff Adler, a Keller Williams agent in Ridgewood.

“A lot of sellers have been taken aback by the amount of decline from the peak to where the market is now,” agreed Jorge Ledesma, a Re/Max agent in Teaneck. “It’s a bitter pill to swallow when you see so much equity in your home, and through no fault of your own, you see it go away.”

Home prices in the region are still, on average, about 20 percent below their 2006 peaks, so owners who bought during the housing boom may well be “underwater” — that is, owing more on the mortgage than their home is worth. Others may not be underwater but still have 2006 prices stuck in their heads as the “real” value of their home, and are reluctant to sell for less.

As home prices rise, more of these homeowners will be willing and able to sell, observers say. With prices up statewide an estimated 4.3 percent last year, many homeowners are already moving out of the underwater category, said Jeffrey Otteau, an East Brunswick appraiser who follows home prices statewide.
…
The bad weather was a factor in many sellers’ decision to delay listing their homes, real estate agents say. Ledesma said he knows of sellers who held off because they couldn’t do exterior painting and other “curb appeal” chores during the bitter cold. Other sellers didn’t like the idea of buyers tracking snow into the home.
…
“If you’re going to sell, you want to put your best foot forward,” Funabashi said.

“Normally our spring market starts in March, but it’s really late this year because of the weather,” said Ellen Horowytz, an agent with Prominent Properties Sotheby’s International Realty in Franklin Lakes. “People have been waiting; they’re saying, let’s wait till things start to bloom a little bit.” She expects a surge of listings soon.

The laws of supply and demand would suggest that tight inventory should push prices up, and agents report that attractive properties are drawing multiple bids and higher prices.

But buyers and appraisers seem to have limits on how high prices can go, they said.

“It still has to be priced right,” Horowytz said. “Buyers are very savvy out there. Everybody does their due diligence.”
…
Some homeowners who are not underwater, but are holding out for a higher price, may have to wait a while. Otteau estimates that average prices in New Jersey — outside of the most desirable towns — won’t return to their housing-boom peaks until 2022. And if prices go up, sellers will have to pay more for their next house.

“A lot of people come to us and say, ‘We’ve got to wait till we get X dollars for our house,’ but if you wait, the next house you get will go up by the same percentage,” Aiosa said.

“Whatever you gain by waiting on the house you’re selling, you’re going to give back on the house you’re buying,” Otteau agreed.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 106 Comments

Jersey Shore – GTL? Nah. TBTF.

Posted on April 5, 2014 by grim

From the NYT:

Back to the Jersey Shore

With beaches replenished, boardwalks rebuilt and stores reopened, the Jersey Shore is gearing up for a summer busy enough to make last year’s anemic one a distant memory.

As renters rush to book their summer houses and buyers snatch up newly vacant land, a different Jersey Shore is taking shape one and a half years after Hurricane Sandy, one in which the small working-class bungalows that once defined communities like Ortley Beach are being replaced with spacious dream homes intended to entice wealthy vacationers.

Warnings of climate change and rising sea levels have done little to deter buyers who see opportunity in disaster. For some, the storm-tossed shore is a blank canvas, awaiting new construction that could redefine the look and feel of the coastline. Others, in the market for a safer bet on the beach, are zeroing in on areas that emerged relatively unscathed. In short, Hurricane Sandy hit the reset button on the Jersey Shore.

“At the end of the day, we’re going to be in a better spot,” said Eric J. Birchler, the owner of Birchler Realtors, which sells properties in Ortley Beach and Lavallette, two of the hardest hit areas. “You just stepped the entire gentrification of Ortley Beach forward five years because everything had to be rebuilt.”

Soon after Hurricane Sandy destroyed the vacation house and seasonal business of Chris Marino and Joanne de França-Marino in Lavallette, the couple began putting their lives back together. At first they planned to rebuild their 2,500-square-foot house across the street from the bay. But then they saw a listing for a nearby 12,000-square-foot parcel on a cove with 180 feet of bulkhead on the bay.

Before the storm, the property had been listed for $1.898 million. But the Marinos bought it in March for $999,000. They plan to tear down the existing 1,600-square-foot brick house and invest about $1 million in a 4,200-square-foot, two-and a-half-story replacement. Outside will be a gazebo and an in-ground pool.

“It’s a phenomenal buying opportunity,” said Mr. Marino, whose family has been summering on the Jersey Shore for generations. “It’s one of the largest bulkheads on the whole island.”

As for the home the storm destroyed, the couple will replace it with a five-bedroom house with 2,800 square feet that they plan to sell for about $900,000. Ms. de França-Marino hopes to reopen her home décor store, the Beach Home, at a new location in Lavallette in time for the Memorial Day rush.

Posted in Housing Recovery, New Development, Shore Real Estate | 72 Comments

Shadows no longer looming over market

Posted on April 4, 2014 by grim

From Investors Business Daily:

Housing Recovery Boosted By Drop In Shadow Inventory

The housing market got more evidence that it’s on the road to recovery Thursday with new data showing a sharp decline in “shadow inventory,” or seriously delinquent homes that have not yet been listed for sale.

According to a report from CoreLogic (CLGX), 1.7 million homes in January were still lurking in the wings as “shadow inventory” vs. 2.2 million in the same month a year earlier, a decline of nearly 23%.

The value of January’s shadow inventory was down $70 billion from a year ago to $254 billion, the report said.

Meanwhile, the number of homes in some stage of foreclosure was down 35% nationwide in February vs. a year earlier, to 752,000 from 1.2 million.

Completed foreclosures, or the number of homes lost to foreclosure, fell 15% in February from last year’s same month to 43,000. Since September 2008, when the financial crisis began, 4.9 million homes have been lost to foreclosure.

“Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories,” stated Mark Fleming, CoreLogic’s chief economist.

Such distressed, pending-supply inventory, when it hits the market, typically sells at substantial discount, often dragging down values nearby.

Every state, Fleming said, showed “double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory.”

The stock of seriously delinquent homes and the foreclosure rate “are back to levels last seen in the final quarter of 2008,” added Anand Nallathambi, CoreLogic’s CEO.

Posted in Foreclosures, Housing Recovery, Mortgages, National Real Estate | 74 Comments