Shaq rebuilding Newark

Posted on September 27, 2013 by grim

From the WSJ:

Star Comes Home to Build in Newark

Growing up here in the 1970s, Shaquille O’Neal’s family ushered him to two places to keep him off the streets: the local Boys and Girls Club and the nearby movie theater.

“Any place that I could be for two to three hours was always good,” said Mr. O’Neal, the former National Basketball Association star, in an interview.

An old theater on Springfield Avenue is now CityPlex12 Newark, after a $7 million renovation completed in 2012 by a joint venture between the retired basketball center and a prominent New Brunswick developer.

It’s one of several projects Mr. O’Neal and Boraie Development are working on in Newark and other New Jersey cities to bring commercial and housing development—including market-rate units—into some of the state’s more distressed areas.

It is a burgeoning partnership that has begun attracting notice, with Mr. O’Neal lending money and star power to a local developer with extensive political contacts and experience.

“Our team is focused right now on Jersey’s urban downtowns,” Mr. O’Neal said. “We don’t want to be all over the place. We want to do one great project at a time.”

Their latest project breaks ground on Friday, a $60 million rental complex that will be downtown Newark’s first new housing tower in 50 years. Mr. O’Neal will attend the ceremony, along with Newark Mayor Cory Booker, U.S. Sen. Robert Menendez and other officials.
…
Mr. O’Neal said he views his foray into development as giving back to the city of his youth. His partners view them as smart investments. “If you build the right product, the dollars are there,” Mr. Boraie said of building in New Jersey’s cities.
…
The new 169-unit housing tower will rise near the New Jersey Performing Arts Center. It will include a pool, a gym and a doorman, with rents starting at $1,400 for a studio. The site is the former headquarters of the Ballantine Brewing company, and its 19th-century façade will be preserved. The project is receiving tax breaks from Newark and the state.

Posted in New Development, New Jersey Real Estate | 54 Comments

Even the mortgage companies didn’t expect them to pay

Posted on September 26, 2013 by grim

From HousingWire:

FHFA watchdog sounds alarm on $4.6B loss

Mortgage giant Freddie Mac failed to refer nearly 58,000 foreclosed homeowners who owed $4.6 billion on their guaranteed loans, thereby neglecting its chance to seize properties from those who defaulted on mortgage payments, a government report alleges.

Furthermore, Freddie Mac eliminated any possibility of recovering deficiencies when the enterprise failed to refer a large number of foreclosed mortgages to the appropriate department for collections, the Office of Inspector General for the Federal Housing Finance Agency said.

Interestingly enough, most of these foreclosed mortgages were associated with properties in states where Freddie did not pursue deficiencies, but where Fannie Mae did — with some success.

“It’s a fairly small number in the scheme of things,” explained Cato Institute director of financial regulation studies Mark Calabria.

He added, “But I think it reinforces the current nature of mortgage finance policy, which is not to hold borrowers responsible. This isn’t just about Freddie, but it’s also about these borrowers sticking it to the taxpayer.”

Real estate investors and other borrowers that stopped repaying their loans while keeping current on their bills were among those not pursued, according to the report.

Posted in Economics, Foreclosures, National Real Estate, Risky Lending | 72 Comments

Up, up, and away!

Posted on September 25, 2013 by grim

From the WSJ:

U.S. Home Prices Climb at Fastest Clip in 7 Years

U.S. home prices rose by their fastest pace in more than seven years during July, according to an index released Tuesday, though more recent data suggest price gains could soon moderate.

Prices in 20 major U.S. cities increased 12.4% in July compared to the same month last year, according to the Standard & Poor’s/Case-Shiller index.

Home-price inflation accelerated sharply over the past year as more buyers have chased a shrinking supply of homes for sale. Fewer properties are selling out of foreclosure and until May, mortgage rates had hovered near record lows, letting buyers qualify for slightly more debt without increasing their monthly payment much.

Rising mortgage rates, which are up nearly a percentage point since May, could ultimately test buyers’ willingness to pay more. That may have accelerated some purchases from buyers who had initially planned to buy later this year, but it has made other buyers more hesitant.
…
Tuesday’s report hinted at a possible slowdown in the rate at which prices are going up. While all 20 cities tracked by the Case-Shiller index gained in July, the pace at which prices rose slowed in 15 cities.

“The slowing in monthly gains is not a nail in the recovery’s coffin,” said Bill Banfield, director of capital markets at Quicken Loans. “In fact it shows a normalizing of the market and that this growth can be sustained.”

Home prices rose 1.8% in July from June. While that was slower than the month-over-month increases in the previous three months, prices tend to rise fastest in the spring, and they typically peak in June. July’s gain was still the largest for that month since the Case-Shiller index began its count in 2000.

Posted in Housing Recovery, National Real Estate | 87 Comments

Case Shiller Day!

Posted on September 24, 2013 by grim

From MarketWatch:

Spotlight on the economy: Can the good times in housing continue?

The Federal Reserve was so spooked by the backup in mortgage rates that it postponed tapering its bond-buying program. But what about prospective home buyers?

Data released Tuesday will shed more light on that topic, with home price gauges from S&P/Case-Shiller and the Federal Housing Finance Agency both due at 9 a.m. Eastern and both covering July. The two series have slightly different methodologies — in June, prices were up 12.1% on the Case-Shiller gauge and up 7.7% on the FHFA gauge from the same period of 2012. But prices should, at least for now, remain resilient, economists say.

Posted in Economics, Housing Recovery, National Real Estate | 127 Comments

Property Taxes Under Christie? Not So Good

Posted on September 23, 2013 by grim

From the Star Ledger:

Property tax burden up 13 percent under Christie, AP analysis shows

The net household property tax burden in New Jersey rose 13 percent during Gov. Chris Christie’s first three years in office — a number that reflects both his success in reining in local government spending and his inability to restore a relief program that was gutted by his predecessor during the Great Recession, an Associated Press analysis of tax data has found.

The growth is only slightly lower than it was in the last three years of Democrat Jon Corzine’s time as governor, when the net tax bill went up 15 percent.

But it reflects a different approach: Christie, a Republican, has gone further to force local governments to keep costs down — and give them help doing it. Corzine also tried to control local government costs but did much of his work on trying to control taxes by expanding a rebate program, which he then cut.
…
The AP’s analysis found that the average net property tax obligation in 2012 was 31 percent higher than in 2007. For those cut from the program altogether, the increase has been even greater.

The Christie administration says focusing on those numbers minimize the governor’s property tax relief accomplishments.

The governor signed a law capping property tax growth at 2 percent per year — and with fewer exceptions than Corzine’s 4 percent cap.

To ease spending pressures on towns, he also achieved a major breakthrough when he got a Democrat-run Legislature to go along with an overhaul of pension and health insurance for one of the party’s main constituencies, public-sector employees.

His administration says that action will save local governments $900 million over its first three years and will save increasing amounts each year.

The governor did agree last year to plan for an income tax reduction based on the amount of residents’ property taxes, a variation on the rebate and credit programs. But the Legislature balked, saying the state couldn’t afford it. Christie, meanwhile, has rejected Democrats’ calls to increase income taxes on high-wage earners to pay for property tax relief for people who make less.

Christie is continuing to push for a version of the tax cut and for more controls on local spending, including not letting government employees get paid for unused sick time when they leave and offering incentives for communities to share more services.

Posted in Economics, New Jersey Real Estate, Property Taxes | 82 Comments

NJ loses jobs – Unemployment rate falls

Posted on September 20, 2013 by grim

From the APP:

NJ unemployment rate falls to 8.5 percent; NJ loses 1,500 jobs

New Jersey’s unemployment rate fell from 8.6 percent to 8.5 percent in August, but the state lost 1,500 jobs, led by a big drop in professional and business services, the state Department of Labor and Workforce Development said.

The unemployment rate is now at its lowest level since March 2009, the department reported. But the unemployment rate fell even as the state lost jobs because a greater number of workers — more than 12,000 from July to August — gave up looking for work and left the labor force.

In the past 12 months, the state has gained 60,300 jobs, the department reported.
…
Industries that gained included education and health services (+2,800), leisure and hospitality (+2,100), trade, transportation and utilities (+1,900), manufacturing (+600) and other services (+200). Job losses came in professional and business services (-5,900), financial services (-2,400), information (-700) and construction (-100).

Public sector employment was unchanged in August. Gains at the state (+600) and federal (+100) levels were counterbalanced by a drop in local government employment (-700).

“The state has had strong job gains over the last year and a major decline in unemployment with the rate dropping steadily. . Considering we’re looking at the lowest unemployment rate since March 2009 and we saw vigorous job growth last fall, we are hopeful we will see a repeat,” said Charles Steindel, chief economist for the state Treasury Department.

Posted in Economics, New Jersey Real Estate | 106 Comments

August Existing Home Sales

Posted on September 19, 2013 by grim

From Bloomberg:

Existing-Home Sales Probably Declined

Purchases of previously-owned homes probably fell in August as mortgage rates at a two-year high began to slow the progress in U.S. residential real estate, economists said before a report this week.

Contract closings fell 2.6 percent to a 5.25 million annualized rate from the highest level since November 2009, according to the median forecast of 62 economists in a Bloomberg survey ahead of National Association of Realtors data due on Sept. 19. Another report is projected to show home construction starts rose in August, reflecting orders in the months preceding the run-up in interest rates.

Rising borrowing costs may temper the pace of the housing rebound that’s been a mainstay of the economy. Federal Reserve policy makers meeting this week will decide whether the expansion and labor market have improved enough to warrant scaling back purchases of government and mortgage securities.

“The recent jump in mortgage costs will moderate the pace of the housing recovery but not derail it,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “The Fed is likely to go ahead with tapering. Borrowing costs could ease a bit between now and year-end as the market digests the idea that the Fed’s decision is not a tremendously negative event.”

Posted in Economics, Housing Recovery, National Real Estate | 73 Comments

Finally an end to the MLS?

Posted on September 18, 2013 by grim

From Inman News:

An innovative real estate business model, or threat to the MLS?

For technology companies, multiple listing services are the holy grail of the real estate listing information that underlies many of their products. MLSs are also gatekeepers, often deciding who gets access to which types of listing data.

But the reality is that the gate is full of holes, and industry experts do not agree on what that means for the future of the industry.

“There is a gap in policy and enforcement here that is permitting businesses to enter the IDX and the MLS world without really being in the real estate business, in the business of buying and selling homes,” said Brian Boero, partner and co-founder of real estate marketing, design and consulting firm 1000watt.

“The reaction to this — or the lack of reaction to this — is going to be worth watching because it kind of gets to this core question of ‘What is a real estate brokerage in two years, in five years?’ That’s really what is at the heart of this.”

In many markets, paper brokerages seem to be flying under the industry’s radar, an Inman News investigation has found. They do so with the help of licensed real estate brokers who, in some cases, serve as the broker of record for multiple companies.

Companies that have employed the paper brokerage model, or aspects of it — including RealEstate.com operator Market Leader, and Emeryville, Calif.-based ZipRealty Inc. — say they are driving innovation by finding new ways to deliver real estate information to consumers and connect them with agents.

But Inman News has learned that many MLSs are struggling to interpret whether their rules, which typically follow policies established by the National Association of Realtors, allow them to provide listings to websites operated by companies that aren’t actually representing buyers and sellers in their market.

At the crux of the issue is deciding who qualifies as an “MLS participant,” and how to treat those who don’t meet the definition.

A NAR policy stipulating that individual brokers and real estate firms must “offer or accept cooperation and compensation to and from other participants” to be considered MLS participants is aimed at excluding brokers who don’t list or sell properties from joining the MLS.

Posted in General, National Real Estate | 40 Comments

Housing market taking a breather

Posted on September 16, 2013 by grim

From the WSJ:

Home-Sales Frenzy Eases

After a yearlong rally, the U.S. housing market is showing signs of cooling as higher prices and interest rates, a slowdown in investor purchases and shortages of homes for sale weigh on one of the economy’s brightest sectors.

While few economists and industry watchers believe the housing recovery will stall, there is growing evidence that the exuberance that prompted bidding wars and led to double-digit price gains is easing. Redfin, an online real-estate brokerage, said its agents had multiple bids on 61% of its homes in August, down from 76% in March.

“It’s clear there will be some moderation in demand,” said Lawrence Yun, chief economist for the National Association of Realtors. He noted that the use of electronic “lockboxes” used by listing agents, an indicator of foot traffic at homes on the market, showed a “measurable decline” during August.

Another measure of home-buyer traffic maintained by Credit Suisse showed traffic fell in August to its lowest level since December 2011.

Some closely watched measures of housing activity, including sales of previously owned homes, may not yet capture the full extent of any slowdown, in part because they measure sales that went under contract earlier in the summer when activity was still robust. The Realtors group is set to report Thursday on existing home sales for August, which will show completed sales of homes that went into contracts one to two months earlier.

The consensus of economists surveyed last week by Dow Jones Newswires estimates that the pace of sales fell to a 5.24 million seasonally adjusted annual rate in August, down about 3% from July but ahead of last year’s 4.84 million.
…
Some agents say the biggest problem in the market is “seller greed”—that is, sellers pricing their homes too high, said Jim Klinge, a real-estate agent in Carlsbad, Calif. Faced with rising rates, buyers aren’t going for higher prices. “They don’t realize our 12- to 18-month full-tilt boogie is over,” he said.

Posted in Economics, Housing Recovery, National Real Estate | 81 Comments

LI market showing strong gains

Posted on September 15, 2013 by grim

From Newsday:

Long Island’s supply of homes for sale is at its lowest level in at least two years, by one measure.

It would take just under five-and-a-half months to sell all 6,988 homes listed in Nassau County at the current pace of sales, according to a Newsday analysis of data supplied by the Multiple Listing Service of Long Island. In Suffolk County, it would take almost eight months to sell all 10,271 homes at the current pace of sales.

By contrast, a year ago there was an almost eight-month supply in Nassau and a nearly 11-month supply in Suffolk County.
…
The median sales price rose by 8.7 percent in Suffolk County, to $347,750, and in Nassau County the median sales price rose by 2.3 percent, to $445,000, the listing service reported Friday. The number of home sales rose by 16 percent last month compared to August 2012.

August marked the sixth straight month of year-over-year home sales and price increases in Suffolk County. Nassau County has seen five straight months of annual home sales gains, and three months of upticks in prices.

Posted in Economics, Housing Bubble, National Real Estate | 25 Comments

“All else equal, higher mortgage rates do depress housing demand.”

Posted on September 13, 2013 by grim

From Forbes:

When Will Rising Mortgage Rates Hurt The Housing Market?

The Longer-Term Impact of Sustained Rate Increases

Even if the immediate impact of mortgage rate spikes is small – aside from the huge effect on refinancing – shouldn’t sustained rate increases should depress housing activity? Again, recent history tells a more complicated story. Since 1999, mortgage purchase applications and all measures of sales activity – NAR pending home sales, NAR existing home sales, and Census new home sales – have actually been higher when mortgage rates were higher. Sales prices were also the same level or higher (depending on the sales price index) when mortgage rates were higher compared to periods of lower rates. Of all the measures of housing activity, only refinancing applications were lower during periods of higher mortgage rates.

Here’s the missing piece of the puzzle: over the past decade and a half, mortgage rates have been higher when the economy was doing better. Since 1999, the correlation between the monthly unemployment rate – a good, if imperfect, measure of how the economy is doing overall – and the 30-year fixed rate was -0.8, making it a very strong relationship.

Furthermore, every measure of housing activity (except refinancing activity) improved when the overall economy did better. That means that a stronger economy is associated with BOTH higher mortgage rates AND more sales, higher home prices, and more home-purchase mortgage applications. That’s why these measures of housing activity go up when mortgage rates are higher.

If we statistically remove the effect of changes in the overall economy (by including the unemployment rate as a control in a simple statistical regression), then we see exactly what we’d expect: mortgage applications, sales, and home prices are all lower when mortgage rates are higher. In other words: all else equal, higher mortgage rates do depress housing demand.

Posted in Economics, Housing Recovery, Mortgages | 101 Comments

Foreclosure crisis over?

Posted on September 12, 2013 by grim

From CNN/Money:

Foreclosure crisis is drawing to a close

Our long national foreclosure nightmare may be over.

The number of new foreclosure filings in August hit its lowest level in nearly eight years, according to RealtyTrac, an online marketer of foreclosed properties.

Soaring home prices and a big decline in underwater borrowers — those who owe more on their mortgage loans than their homes are worth — have helped drive the trend.

August’s initial foreclosure filings fell 44% to 55,575, just below the 56,063 that were recorded in October 2005. The foreclosure crunch began in summer 2006, at about the same time that housing prices hit their peak.

“This is a strong indicator that the crisis is over,” said Daren Blomquist, vice president at RealtyTrac. “The foreclosure floodwaters have receded in most parts of the country, although lenders and communities continue to clean up the damage left behind,” he added.

The mopping-up process continues, however. In August, for example, the number of homes repossessed by lenders rose 6%, compared with July, to 39,277. But that still represents a drop of 25% year-over-year, and is more than 60% below the peak of repossessions in September, 2010.

Posted in Foreclosures, Housing Recovery, National Real Estate | 95 Comments

Bye Bye Saarinen, Hello Starbucks

Posted on September 11, 2013 by grim

From the NY Times:

Future Takes Shape for Bell Labs Site

Decades before the first smartphone, researchers at Bell Labs in central New Jersey developed the technology that ushered in the digital age.

Now, the building that is as magnificent in its design as the discoveries that were made here will have another chapter in its storied life.

Late last month, Somerset Development bought the mirrored glass building, completed in 1962, and its pastoral grounds from Alcatel-Lucent for $27 million after the Township of Holmdel approved an ambitious redevelopment proposal that includes plans for a health care center, residences, a hotel and retail space.

While the sale ends a protracted debate over the fate of the vacant structure, set on 473 acres in a wealthy rural community, filling 1.9 million square feet of space may prove difficult. New Jersey is saturated with aging office parks like this one, where geese roam an empty ring road and old signs still eerily point to vacant parking lots overgrown with weeds.
…
The work once done in Bell Labs helped to foster this new era. James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers, pointed to the advancements that have allowed employees to work remotely. “When the iPhone came out and then the iPad, workers became untethered,” Mr. Hughes said. “They don’t need the office workplace umbilical cord anymore.”

Somerset has enlisted an architect, Alexander Gorlin, to help overcome that hurdle by lining the building’s striking five-story, quarter-mile-long atrium with urban amenities, so that an office worker on an upper floor can walk downstairs to a coffee shop, restaurant or bank. But the building needs a critical mass of commercial tenants to support that retail presence.

“It’s a very difficult building for adaptive reuse,” said Suzanne Macnow, a broker for CBRE. “It’s set up with this gigantic center area, like the Mall of America in Minneapolis. It doesn’t make sense to me.”

The building was designed by the Finnish-American architect Eero Saarinen, who also designed the Gateway Arch in St. Louis and the T.W.A. building at Kennedy Airport.
…
Signs of decay at the mammoth building are quite visible — plastic buckets catch water leaking from the glass roof under which scientists developed satellite communications. In 2007, Preservation New Jersey listed the building as one of the state’s top 10 most endangered historical properties.

“Personally, I find it difficult to drive by it and see it abandoned. I worked there. My friends worked there,” said Janet Jackel, a physicist who worked at Bell Labs. “You see it as representing the American forward-looking attitudes of the last century, and that’s all been abandoned.”

The redevelopment plan, which would cost well over $100 million, could transform the former Bell Labs building into a commercial center for Holmdel, a community of about 17,000 people. With no downtown, most of the town’s retail properties now sit along busy Route 35.

Posted in Economics, New Development, New Jersey Real Estate | 109 Comments

Few think it’s a good time to sell a house

Posted on September 10, 2013 by grim

From the WSJ:

Fannie Mae: Consumer Confidence in Housing Slackens a Bit

Consumer confidence in the housing recovery has leveled off, likely connected to concerns that the Federal Reserve will cut back on asset purchases, according to new data from mortgage-finance company Fannie Mae (FNMA).

Americans, already pessimistic regarding their personal finances and the economy, demonstrated declining optimism in August across key housing-market measures. Those saying it would be a good time to sell a house declined four percentage points to 36% from July, and those saying it’s a good time to buy a house decreased three percentage points to 71%.

According to the survey, the share of consumers who believe home prices will go up in the next year rose two percentage points to 55%.

“The spike in mortgage rates associated with the possibility that the Fed will begin to wind down its asset purchase program later this month has dampened the improving trend in consumer sentiment regarding housing witnessed in our survey since the start of this year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The average 12-month home price change expectation decreased slightly to 3.5%, Fannie Mae said. The percentage of respondents who think mortgage rates will go up decreased two percentage points to 60% from last month’s survey high.

The average 12-month rental price expectation fell slightly to 4.1%.

The share of respondents who said they would buy if they were going to move increased slightly to 65%, while the share who said the economy is on the right track fell three percentage points from July to 37%.

The percentage of respondents who expect their personal financial situation to get better over the next year edged up one percentage point to 44%. The number of respondents who said their household income is significantly higher than it was a year ago fell three percentage points to 23%.

Posted in Economics, Housing Recovery, National Real Estate | 103 Comments

Struggling to get by in Jersey

Posted on September 9, 2013 by grim

From the Record:

Report: 25 percent of N.J. families are poor

Poverty levels in New Jersey are bad and getting worse, as a quarter of the state’s households now struggle to afford housing, food, medical care and other necessities, according to a new report by a leading poverty research group.

The study, released today by the Legal Services of New Jersey Poverty Research Institute, says that in one of the nation’s wealthiest states, 2.1 million people live in households that have a hard time meeting their basic needs. That number grew by about 359,000 during and after the Great Recession and now comprises 24.7 percent of New Jersey residents.

Hardest hit is Passaic County, where 37 percent of the residents are poor, followed by Cumberland, Essex and Hudson counties, while Bergen County’s rate stands at 18 percent. Even in Morris, Hunterdon and Somerset and other wealthy counties in northern New Jersey, 10 to 14 percent of the residents are poor, according to the report, which is based largely on 2011 data from the U.S. Census Bureau.

The number of households having a hard time staying afloat financially highlights the underside of a state where the median household income ranked third in the country in 2011.

“The numbers are very troubling,” said Melville Miller, president of the legal services agency. “It’s very bleak. That awfulness needs the attention of society, writ large.”

The institute defined poverty as living on incomes less than twice the official poverty line. The 173-page report, the seventh annual study by the institute, goes into great detail about how the official poverty rate masks actual financial woes in New Jersey because it fails to account for the higher cost of living in a state where median home prices are twice the national average and rents are 30 percent higher.

Officially, a family of four with an income below $23,550 is considered to be in poverty, with the same figure applying throughout the country. But the report contends that New Jersey households remain poor until their incomes are at least double the official levels.

The poverty rate by the official measure stands at 10.4 percent, less than half the rate as defined by the institute.

While more people struggle to get by, the report cites major obstacles to reversing the trend, including continued high unemployment, wages that fail to keep up with inflation, a loss of middle-class jobs, a lack of low-priced housing and inadequate government aid for the poor. It notes that Superstorm Sandy made things worse by disproportionately damaging housing where lower-income households lived.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 92 Comments