January Otteau Report

Posted on March 1, 2013 by grim

From the Otteau Group:

NJ Contract-Sales Activity Starts Off Strong in 2013

Following 2 consecutive months of single digit gains, home purchase activity in New Jersey soared in January with a 23% y-o-y increase in signed purchase-contracts. The smaller gains in November and December were attributable to after-effects of Hurricane Sandy. What makes this rise especially impressive is that it occurred so early in the year, signaling an early start to the seasonal Spring surge in home purchase demand. Considering that purchase-contracts recorded a 31% y-o-y increase in January-2012, demand has increased by an astounding 61% over the past 2 years.

Shifting to the supply side of the equation, unsold inventory began the year at its lowest level since the housing crisis began in 2006.Unsold Inventory in the state has declined by 19% since January of last year, equating to 11,000 fewer homes on the market. The current level of Unsold Inventory equates to 8.1 months of sales (non-seasonally adjusted) compared to 12.3 months one year ago. Expect the home purchase market to continue to strengthen despite the cloud of sequestration that is currently hanging over Washington. That mortgage interest rates have drifted slightly higher recently is likely to accelerate this trend as buyers rush to take advantage of lower rates.

Further evidence of the housing rebound comes from rising home prices. After lagging the rest of the nation, home prices in New Jersey increased in the 4th quarter of 2012 by 2.91%. This follows steady improvement in the home purchase market over the past 18 months, and marks the first home price increase in the state since the 4th quarter of 2010.

A separate analysis in Northern New Jersey has indicated that home prices have held up better in northern New Jersey towns with train station service to Manhattan. Since peaking in 2006, the decline in commuter towns like Glen Rock and Ridgewood has been about half as much compared to other drivable-suburban places. This dynamic is consistent with a European model for housing demand wherein transportation efficiencies are of increasing importance.

Posted in Housing Recovery, New Jersey Real Estate | 75 Comments

January Pending Sales up 9.5% year-over-year

Posted on February 27, 2013 by grim

From Bloomberg:

Pending Sales of U.S. Existing Homes Rise More Than Forecast

Contracts to purchase previously owned U.S. homes climbed more than forecast in January, a sign the industry will keep strengthening this year.

The index of pending home resales increased 4.5 percent to 105.9, the highest level since April 2010, after a revised 1.9 percent drop the prior month, a report from the National Association of Realtors showed today in Washington. The median forecast in a Bloomberg survey called for a 1.9 percent advance.
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“Things are getting better in housing,” Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. JPMorgan was the second-best forecaster of pending home sales over the past two years, according to data compiled by Bloomberg. “Low mortgage rates, an improving economy and an improving job market are helping demand. With home prices rising, most people who’d waited for prices to bottom will want to buy now.”

From HousingWire:

Pending home sales hit two-year high: NAR

Pending home sales rose in January and continued a 21-month trend of growing from year ago levels, the National Association of Realtors said.

The company’s latest pending home sales index suggests the housing recovery is gaining momentum.

The January NAR Pending Home Sales Index hit its highest reading since April 2010 when the index reached 110.9. Aside from spikes induced by homebuyer tax credits in 2010, the last index high before 2010 occurred in February 2007 when NAR’s index reached 107.9, the association said.

The NAR pending home sales index – which measure contract signings on homes – increased 4.5% to 105.9 in January, compared to a score of 101.3 in December. That index score is also still 9.5% above January 2012 when the index hovered at 96.7.

The data reflects only signed contracts, not actual property closings.

Inventory is the key to this year’s housing market, said Lawrence Yun, NAR’s chief economist.

Posted in Economics, Housing Recovery, National Real Estate | 100 Comments

Deeper look into local home prices

Posted on February 27, 2013 by grim

From the WSJ:

Housing Signals Mixed

While buyers have been fighting over expensive Manhattan apartments and prices rose across the rest of the country, single-family home prices were drifting lower across the New York metropolitan area, according to new data reported by Standard & Poor’s Case-Shiller index.

The index differed significantly from more-upbeat local reports in both New York and New Jersey toward the end of last year. The other reports showed considerable signs of strength and an improvement in median sale prices, amid declining inventory in both states.

Analysts attributed the contrasting results to differences in methodology and timing, as well as a faster pace of foreclosures in New York and New Jersey, at a time when they are slowing elsewhere in the country. Sales delayed by superstorm Sandy may have also had an impact.

The Case-Shiller index found that home prices across the region fell by just over 0.5% in the 12 months through December compared with a year earlier. Prices rose in all of the other 19 metropolitan areas tracked by the index during the same period, signaling a stronger national housing market.
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Sales in the New York region fared better than much of the country during the downturn, but the area has performed worse in recent months, according to the Case-Shiller report. It showed local prices sliding each month since August, for a total decline of 2.7%.

Yet despite the ups and downs of the last decade, prices were up 43% in the New York metropolitan area since 2001, compared with 30% for the 20-city index as a whole during that period.

A few weeks ago, Jeffrey G. Otteau, an appraiser and founder of Otteau Valuation Group, reported that strong job growth had led to a “steady improvement in the home purchase market” in New Jersey over the last 18 months. He said median prices were up 2.9% in the fourth quarter, compared with the same quarter in 2011.

In an interview, Mr. Otteau said that monthly measurements of home prices “are unstable to begin with.” He said that Sandy had triggered a decline in sales both along the damaged shorelines and in many nearby communities as well.

Now, he said, the foreclosure process is accelerating as well, and distress sales often depress housing prices. New Jersey ranks second after Florida for largest percentage of mortgaged homes in the foreclosure process. It had 7% in foreclosure in December. New York ranked third with 5.8%, according to CoreLogic.

Last month, Douglas Elliman reported median sale prices were up 3.2% on Long Island, excluding the Hamptons, in the fourth quarter compared with the same quarter a year earlier, but prices were down from the third quarter.

Jonathan Miller, an appraiser and president of Miller Samuel Inc., who prepared the Elliman report, said that the Case-Shiller data tended to lag behind data available within a local market.

The Case-Shiller index is calculated from changes in prices on individual homes as they are resold during a moving three-month period. Craig Lazzara, a senior director at S&P Dow Jones Indices, said the index includes foreclosure sales conducted on the open market.

He attributed the weak local housing market to New York’s dependence on the financial sector, where the recovery in “its hometown” industry has been slow.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 98 Comments

Case Shiller Day!

Posted on February 26, 2013 by grim

Due out at 9!

From the WSJ:

Shiller’s Bottom Line: Risk Lingers in Housing.

WSJ: Did we finally hit a floor in home prices last year?

Mr. Shiller: The trend in home prices seems to be up now. It has been going up. That’s upward momentum, which by my general rule of forecasting has been good for the future. I’ve been tentative about that. It may well be the turning point.

But I’m not sure about that. I’m more worried than most people that it could be a short-lived turnaround. It could be like the 2009-10 upturn where we saw home prices rising right after President Obama took office and right after the home-buyer tax credit was instituted. In that upturn there were some cities that did quite spectacularly. And then that fizzled. I’m not too sure that this one will extrapolate either.

WSJ: Why are you more worried than most people?

Mr. Shiller: Part of the reason the indexes have gone up is because the foreclosure boom has receded. Foreclosed homes sell at a lower price, and the share of those sales has been falling. People might be deceived by this by looking at the indexes. The question is whether the gains will be sustained.

There isn’t any sign of the real enthusiasm we saw during the last bubble. The question is whether this could be the very vague beginning of a new boom? I guess it could. I just don’t know. Then there are issues with what the government does to support housing. They’re doing everything they can. They say they’re going to stop some day. When will people start worrying about that?

WSJ: There are some people who look at the double-digit annual price increases in Phoenix and elsewhere and wonder whether we’re seeing new “mini-bubbles.” Is that a concern you share?

Mr. Shiller: Home prices are back down to a reasonable level. Why should they go up a lot? It means you have to have a succession of eager buyers that would bid them up. Historically major bubbles tend to occur at widely separate intervals. Once it bursts, usually, historically, people are fed up for a long time.

WSJ: Could it be possible that prices are rising by double digits in these places simply because they fell below their long-term relationship with incomes and rents, and are now bouncing back off of that?

Mr. Shiller: Phoenix overshot. Prices got too low. In real terms it was down well over 50%, maybe close to 60%. Now it’s bumped up. It doesn’t look out of line either way now.

WSJ: What do you make of the investor activity in the market right now? A lot of these buyers are all cash buyers—no leverage—buying on rental return. Are you worried about any return of speculative purchases?

Mr. Shiller: In a housing debacle, I’m sure some houses are underpriced, and there is probably a profit opportunity for some people who are going to choose carefully. I’m not surprised that this is going on. There seems to be a shift in public tastes for the time being at least for rental. So this business doesn’t surprise me. It seems to be an appropriate response.

WSJ: For somebody with a stable job, who plans to live somewhere for more than a few years, is this a good time to buy a house?

Mr. Shiller: I think it’s OK, especially because mortgage rates are so low. This isn’t a time to get a flexible-rate mortgage! Get a 30-year, fixed rate mortgage. Rates are so low. They have gone up a little, but they’re still very low. That’s a real opportunity. Prices are not particularly low, but they’re not particularly high.

WSJ: What’s your outlook for home prices?

Mr. Shiller: It’s especially hard to say. We could be looking at a 1-2% increase a year for the next five years. That’s a reasonable scenario—1-2% a year, and it might go up more than that. I don’t know. My main message is that it’s a market with risk in it. We don’t know the future. That’s the most important message to convey.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 126 Comments

No inventory because folks just don’t feel like selling?

Posted on February 25, 2013 by grim

From the WSJ:

Unlocking of Housing Market Gets Going

The house party may just be getting started.

The recovery in housing that began taking hold last year caught most economists by surprise. Even though the overall economy made only middling progress, even though there was still a mess of homeowners underwater on their mortgages and even though banks remained reticent about lending to would-bebuyers, sales and prices picked up.

The welter of housing reports slated forthis week—January new-home sales and December home-price indexes are due on Tuesday, January pending home sales come Wednesday, and January construction spending is out Friday—should reflect further improvement in the sector.
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Yet just because housing has gotten better doesn’t mean there isn’t a lot of room for improvement. Take Tuesday’s new-home sales report from the Commerce Department. Economists polled by Dow Jones Newswires estimate a seasonally adjusted 380,000 homes were sold last month, at an annual rate. That would be better than December’s 369,000 or the year-earlier level of 339,000, but stillabout half of the average level of the 1990s.

One problem for housing is that a lot of people, despite wanting to move, have stayed put because they couldn’t stomach the low price their old house would fetch. That has put a freeze on the market, leading real-estate agents around the country to complain about a lack of inventory.

The recent move higher in prices—economists estimate that the Standard & Poor’s/Case-Shiller 20-city index on Tuesday will show a 6.6% increase in December from a year earlier— should shake some of those homeowners off the fence, says Thomas Lawler, an independent housing economist in Leesburg, Va. The busy spring-selling season that will soon get under way should witness the first significant year-over-year increase in prices since 2006.

Posted in Economics, Housing Recovery, National Real Estate | 89 Comments

Where’s the wealth?

Posted on February 22, 2013 by grim

From NJ Spotlight

5 New Jersey counties rank among nation’s wealthiest, Census data shows

While some New Jerseyans still have not fully recovered financially from the recession, the state remains home to some of the wealthiest counties in the nation.

Data from the U.S. Census Bureau also shows that five New Jersey counties — Hunterdon, Somerset, Morris, Bergen, and Monmouth — have some of the largest concentrations of wealth in the United States, as defined by the percentage of households with an income of $200,000 or more. Four of five New Jersey counties also are among the ranks of those with the highest median household income.

Surprisingly, those two measures of wealth do not always overlap, at least not in New Jersey.

For instance, Sussex County made it into the ranks of the 25 wealthiest, at number 24, when measured by median household income. But it ranks 54th in the percentage of wealthy households.

Then again, Hunterdon and Somerset counties rank in the top 10 in both measures. With a median household income of just under $100,000, Hunterdon was the fourth-wealthiest county in the nation in 2011. The top three are all Virginia suburbs of Washington, D.C.: Loudon, Fairfax and Arlington counties. Those counties also were the three with the largest proportion of households having $200,000 or more in annual income. Hunterdon, where 16.5 percent of nearly 47,000 households were that wealthy, ranked fifth.
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While all New Jersey counties have higher-than-average concentrations of wealth, the latest census data shows that many have not fully recovered from the effects of the recession, which technically stretched from December 2007 through June 2009. The inflation-adjusted median household income in 11 counties was lower in 2011 than at the start of the recession five years earlier. Atlantic County saw the biggest drop, of nearly 9 percent, to just under $51,000. Median income is around 4 percent lower than peak 2008 levels of more than $100,000 in both Hunterdon and Somerset counties.

Hudson County, however, saw its median income rise nearly 10 percent since 2007, to almost $57,000 in 2011.

Posted in Demographics, Economics, New Jersey Real Estate | 65 Comments

Words from the past: “Seller’s Market”

Posted on February 22, 2013 by grim

From the WSJ:

Housing: It’s Becoming a Seller’s Market

The National Association of Realtors said on Thursday what home buyers in many parts of the United States have known for months: it’s becoming a seller’s market.

The number of homes listed for sale in January fell by 4.9%, leaving 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market. By contrast, there were 2.91 million homes on the market two years ago at this time.

After adjusting for seasonal factors, home sales rose by just 0.4% in January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one year ago.

The upshot is that there’s a growing pool of buyers chasing a shrinking supply of homes. If the trend holds, prices will keep going up. At the current pace of sales, it would take just 4.2 months to sell the current supply of homes available for sale, down from a 6.2 months’ supply one year ago.

While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.

From Bloomberg:

Previously Owned U.S. Home Sales Climb to 4.92 Million

Sales of previously owned homes increased in January and an index of leading indicators climbed for a second month as the rebound in housing helped to broaden the U.S. expansion.

Purchases of existing houses rose 0.4 percent to a 4.92 million annual rate, figures from the National Association of Realtors showed today in Washington.
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Improving home sales combined with dwindling inventory spurred the biggest advance in property values since 2005, helping mend household finances. The gain in housing, the industry that was at the center of the financial crisis, may help consumers overcome an increase in the payroll tax and rising gasoline prices that pose a risk to spending.

“The economy has legs,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a unit of the largest U.S. mortgage lender. “A lot of people are much more confident. Housing has picked up, and I think it’s sustainable.”
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The number of previously owned homes on the market fell 4.9 percent to 1.74 million, the fewest since December 1999, today’s report from the Realtors’ group showed. At the current sales pace, it would take 4.2 months to sell those houses, the fewest since April 2005.

“Inventory has increasingly become the story of the housing market,” Lawrence Yun, NAR chief economist, said in a news conference as the figures were released. “We do expect some relief in inventories as the spring season comes around.” He also said that “only the homebuilders can truly relieve the inventory” shortage.

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

January Existing Home Sales

Posted on February 21, 2013 by grim

From Bloomberg:

Sales of Previously Owned U.S. Homes Probably Eased in January

Sales of previously owned U.S. homes probably eased in January, reflecting a pause in momentum for the industry coming off its best year since 2007, economists said before a report today.

Purchases fell 0.8 percent to a 4.9 million annualized rate last month from December’s 4.94 million, according to the median forecast of 79 economists surveyed by Bloomberg. Other data may show consumer prices were contained in January and a measure of the economic outlook for the next three to six months climbed.

A sustained pickup in housing will depend on faster progress in the labor market, fewer foreclosures and easier access to credit. Near record-low mortgage costs and the prospect of firming prices may induce buyers to return to the market at a time the available supply of homes is shrinking, posing a potential restraint on sales.

“Housing is still very much in recovery,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “It could be a lot faster. We do need to see job gains continuing. Banks are a little more willing to lend, but it’s still a very gradual process.”

The Realtors’ report is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.7 million to 5.1 million.

Posted in Employment, Housing Recovery, National Real Estate | 150 Comments

Jersey Comeback? Not in AC.

Posted on February 20, 2013 by grim

From Bloomberg:

Christie-Backed Revel Atlantic City Plans Bankruptcy

Revel AC Inc., the casino owner that New Jersey Governor Chris Christie bet on to revive Atlantic City, plans to file for a prepackaged bankruptcy that will reduce its debt burden by more than $1 billion.
Certain Revel lenders will provide about $250 million in debtor-in-possession financing, including $45 million of new loans, the company said yesterday in a statement. No taxpayer money will be used to finance the restructuring, Revel said.

Revel, Atlantic City’s first new casino since 2003, opened in April at a cost of $2.6 billion with the help of Christie, who helped restart the project after Morgan Stanley abandoned construction. An attempt to bring higher-end customers to the seaside city, Revel has struggled to attract business, suffering an added setback when Hurricane Sandy forced its closure for five days starting Oct. 28. New Jersey, faced with regional competition, saw its total gambling revenue fall 8 percent to $3 billion in 2012, the sixth year of declines.
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Revel had the second-lowest gambling revenue among the market’s 12 resorts in January, according to New Jersey Division of Gaming Enforcement data compiled by Bloomberg Industries analysts.

The company’s $900 million term loan due in 2017 traded at 38 cents on the dollar yesterday, according to prices compiled by Bloomberg. The debt was arranged by JPMorgan Chase & Co. in February 2011.

With encouragement from Christie, the state’s Economic Development Authority granted $261 million in tax incentives to help jump start stalled construction of the project in February 2011. Christie, a Republican, signed legislation at the Revel construction site that created a state tourism district in the city, boosted marketing of the resorts and eased regulations on casino operators.

“My vision for Atlantic City is that Atlantic City needs to become Las Vegas East,” the governor said in a January 2011 interview with Bloomberg News.
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Christie stepped in after Morgan Stanley walked away from the beachfront project in 2010, halting funding on what was conceived as the city’s biggest resort and writing off most of its $1.2 billion investment.

“We are committed to the resurgence of Atlantic City, the tourism district, and the many efforts currently underway to bring world-class attractions and entertainment to the city,” Michael Drewniak, a spokesman for Christie, said in an e-mailed statement.

Posted in Economics, Politics, Shore Real Estate, South Jersey Real Estate | 120 Comments

Is the big recovery done?

Posted on February 19, 2013 by grim

From the Financial Times:

Housing: The long climb back

…The Greens bought a foreclosed house for about $31,000. They renovated it, rented it out – and discovered a successful new business model. Today they own 76 homes, most of them painted with a signature blue front door.
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Now the Greens have a different problem: there are no cheap houses left to buy.
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The nature of the recovery in Cape Coral and similar areas is bringing back bad memories: it is bubbly, driven by financial investors, and focused on the same “sand states” as the last boom. In Cape Coral, one of the hardest-hit markets in the country, prices are up by 13 per cent on a year ago; in Phoenix, Arizona, they are 24 per cent higher.

But this is not the start of a new US housing bubble, nor is one likely for years to come. After five years in free fall, US houses are now at something like fair value, and new regulation means there is little mortgage helium to inflate prices again.

More likely, the US housing market is in the first, volatile stage of a return to normality, with gently rising prices and the return of new construction. That should support growth in the US economy – but not dominate it like a decade ago. This means Americans still hoping to build most of their wealth from their houses – a persistent notion even after the experience of the past five years – are likely to be disappointed.
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A stable housing recovery can only happen if prices really are back to normal. The six-year bubble upset all notions of what a house is truly worth. Sleepy little bungalows in Florida doubled in price; your house, suddenly, could make you rich.

There is no good way to define fair value for houses, says Robert Shiller, a Yale professor who warned of both the internet and housing bubbles. Today, he says US home prices are close to their long-run trend. The median sale price for an existing home was $178,900 in the fourth quarter of 2012, according to the National Association of Realtors, up 10 per cent on a year ago.
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“House prices have gone up a little bit since 1890 in real terms,” says Mr Shiller. With prices about right relative to history, there is no reason to expect big moves up and down over the next decade or two.
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Another requirement – absorbing unwanted houses built during the boom – also seems to be met.

Although the US housing crash evokes an image of endless stretches of unwanted houses in a desert, over-construction was only a small part of the US housing bubble from 2003 to 2006. In fact, new building never matched its 1970s peak.

“I think the excess was in terms of home price appreciation and the excess was in terms of home ownership,” says Michelle Meyer, a housing economist at Bank of America Merrill Lynch in New York.
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Right now, rapid house price rises are confined to markets such as Arizona, Nevada and northern California, which were at the heart of the bust. States where a judge must approve foreclosures, such as Illinois and Ohio, are further back in the process.

Of the 100 largest housing markets, 15 are up by more than 10 per cent on a year ago; in 32 others, including big cities such as Chicago and Philadelphia, prices fell or rose by less than 3 per cent.

The narrowness of today’s revival – and the reason it is likely to evolve into a gentler recovery – is confirmed by the curious mixture of investor demand and restricted supply that is playing out in housing markets such as Cape Coral.
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Sam Khater, deputy chief economist at housing data supplier CoreLogic, points out that this situation is somewhat artificial and the house price rally may soon run out of steam. There are lots of people – investors and homeowners – who will want to sell as soon as prices get a bit higher. “What you might have is a series of rolling bubblettes,” says Mr Khater, as investors work through the available inventory in distressed markets.
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Many tried to live the dream of riches from housing during the bubble; what let the Greens succeed was the bursting of it. Unless there is a shift in US financial regulation, however, they may be some of the last Americans to make big money from houses for some years to come.

Posted in Economics, Housing Recovery, National Real Estate | 131 Comments

New homes about to get more expensive

Posted on February 18, 2013 by grim

From the Star Ledger:

Fire suppression systems in new homes is aim of New Jersey bill

Builders in New Jersey may soon have to install fire suppression systems in all new single or two-family homes.

A state bill, the New Home Fire Safety Act, would prohibit officials from issuing a certificate of occupancy for such homes until a fire suppression system abiding by state code is placed.

It was turned over to a Senate committee early this month but has not yet come to the Senate floor for a vote.

Its aim, supporters say, is to protect residents and firefighters by getting a jump on controlling flames early on. But it would also bring added costs for a real estate industry trying to recover from a drawn-out downturn.

Home fire suppression systems basically consist of piping that brings water to heat-sensing sprinkler heads placed throughout the structure. Proponents and leaders in the industry say that they can quickly contain fires at their origin, make firefighters’ jobs much safer and giving much added protection to residents.
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“This is a simple, commonsense step that will quite simply save lives and property,” Wisniewski, the Assembly’s Deputy Speaker, said.

“We know these suppression systems are effective, so there’s really no reason whey they shouldn’t be as commonplace in new construction as windows and doors.”

Green, the Speaker Pro Tempore, agreed.

“Ensuring public safety is among our top priorities, and this would be an important step toward ensuring fire safety in new construction,” he said.

“A change like this can go a long way toward saving lives of residents and firefighters, and that’s always a good thing.”

Posted in New Jersey Real Estate, Politics | 131 Comments

Have a kid, move to the … city?

Posted on February 17, 2013 by grim

From the Record:

NYC beckons new parents as North Jersey suburbs no longer seen as only place to raise kids

In a striking reversal, growing numbers of young parents are choosing the bustle of New York City over the calm of suburban life as a place to live, a trend that is already changing the face of some neighborhoods across North Jersey and could have long-term implications for schools, the housing market and beyond.

The number of children under the age of 5 has fallen 20 to 40 percent in many wealthy communities, with an overall drop of 12 percent across Bergen and Passaic counties since 2000, according to U.S. Census Bureau data. At the same time, middle- and upper-income areas of Manhattan and Brooklyn have seen virtually the opposite shift in both the number of young adults as well as preschool children, an analysis of the data by The Record found.

The trend, a break in a pattern that has held since before World War II, has left Bergen County with 6,000 fewer children younger than 5 years old than it had in 2000. Passaic’s figure, meanwhile, has slid by about 6,000 since 2005. Similar declines have appeared in suburban Westchester and Nassau counties in New York, the analysis found.

“This is a huge deal,” said Andrew Beveridge, a sociologist at Queens College in New York City who studies population flows. “Affluent men and women in this area who want to have kids are much more likely to have kids in New York City and not move to the suburbs, which is the opposite of the way things used to go. The city is in, and the suburbs are out.”
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But while economic forces go in cycles, the shift in preference for urban life could portend long-term changes in the status of the suburbs as a place to buy houses, settle and raise children.

Already, the fallout is hitting at least a few North Jersey school systems, causing reductions in the number of classes or rerouting of children among schools, officials say.

“It’s astonishing. Remarkable,” said Adam Fried, superintendent in the Harrington Park School District, which cut the number of kindergarten classes after the enrollment dropped from 70 to 36 children in 2012. “It’s a big concern.”
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Real estate experts say they’ve noticed the trend as well. Upwardly mobile young families have long been the lifeblood of upscale suburbia. As their numbers decline, the impact could be felt by home sellers already reeling from 20 to 30 percent price drops the past five years, said Jeffrey Otteau, an East Brunswick real estate appraiser who follows the statewide housing market.

“The effect will be less demand and subpar price increases for suburban real estate, and price declines for large-lot luxury suburban houses,” he said. “It’s a zero-sum game.”
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Whether the preference for urban life among affluent parents continues into the future remains to be seen.

But Beveridge, the Queens College sociologist, discerns a structural change in how parents see the suburbs, especially if they want to be closer to jobs in the city.

“The suburbs were set up nicely for the idea that the husband would commute to and from city, and the wife would stay home,” he said. “Now, she is working, so that completely changes things, particularly if she is working at a relatively high-status job.”

Posted in Demographics, Economics, New Jersey Real Estate | 49 Comments

Otteau: NJ home prices up 2.9% in Q4

Posted on February 16, 2013 by grim

From the Record:

Home prices up 2.9 percent in NJ, appraiser says

Home prices rose 2.9 percent in New Jersey, to an average of $276,944, in the fourth quarter of 2012, an East Brunswick appraiser said Friday. The increase is the first reported by appraiser Jeffrey Otteau in the state since late 2010.

Otteau, who tracks the housing market statewide, said the higher prices were driven by a recent revival of the Garden State’s employment market, which added 48,000 jobs in 2012 — the biggest gain since 2000. However, the state ended the year with an unemployment rate of 9.6 percent, well above the national rate of 7.8 percent in December.

Otteau’s price results differ from other analysts’ reports, which use other methods and look at slightly different areas. For example, the Standard & Poor’s/Case-Shiller index recently reported that prices dipped 1.2 percent in the New York metropolitan area, including North Jersey, from November 2011 to November 2012. Prices in the region are about 24.5 percent below their peaks in mid-2006, and are back to the levels of late 2003, according to Case-Shiller.

New Jersey still has a large backlog of distressed properties expected to end up in foreclosure over the next several years. They are likely to put downward pressure on prices, especially in urban areas, because foreclosed properties typically sell at a large discount.

RealtyTrac reported this week that foreclosure filings doubled in New Jersey from January 2012 to January 2013, with one in every 1,024 households in the state in some stage of the foreclosure process. In Bergen County, the number was one in every 1,275, while in Passaic, it was one in every 905.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 45 Comments

Lowball! Trump Edition

Posted on February 15, 2013 by grim

From the Star Ledger:

‘You’re acquired’: Atlantic City’s Trump Plaza fetches $20 million in bargain-basement deal

Trump Plaza, the Boardwalk centerpiece of Donald Trump’s one-time Atlantic City empire, was sold Thursday to a California company for $20 million in the cheapest of a series of bargain-basement deals for distressed gambling halls in the struggling New Jersey seaside resort.

The Meruelo Group of Downey, Calif., plans to close the deal by May 31. It is the lowest price ever paid for a casino in Atlantic City.

The company has not decided on a new name for the casino-resort, but said it will not continue to use the Trump name.
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“Trump Plaza is one of the world’s most recognized gaming resort destinations and is an integral part of the Atlantic City landscape,” said Alex Meruelo, founder and CEO of the Meruelo Group. “Our company is thrilled to have the opportunity to become the new owners of this property, and we are firmly committed toward establishing it as one of the elite destinations in Atlantic City and on the East Coast.”

Robert Griffin, CEO of Trump Entertainment Resorts, told The Associated Press the deal shows the Atlantic City market is still attractive to investors, given the right price.

“This is good news for the city, for the state, and for the Plaza,” he said. “There is still considerable interest in this market.”
…
Trump Plaza, which cost $210 million to build, opened in May 1984 as one of Donald Trump’s pet projects. The real estate mogul has since limited his dealings in Atlantic City to a 10 percent stake in Trump Entertainment Resorts.

Trump told The Associated Press he is a bit wistful to see his former properties in Atlantic City sold off and renamed.

“There was a period of time when Atlantic City was the hottest place in the world,” he said. “I got out years ago, and my timing was very good. But the world turns. They’re getting a very good location.”
…
The sale price was also consistent with the fire-sale prices casinos have been going for lately in Atlantic City. Resorts Casino Hotel sold for $31.5 million in Dec. 2010. Trump Marina Hotel Casino fetched $38 million when it was sold in May 2011 and became the Golden Nugget.

Posted in Economics, Lowball, Shore Real Estate | 123 Comments

For Sale, Includes Toilets

Posted on February 13, 2013 by grim

From Bloomberg:

Pipe-Swipers Take Toilets as U.S. Homes With Plumbing Ebb

Bill Heaney gets about two calls a day from people who bought foreclosed, vacant Detroit homes that lack basic plumbing — victims of thieves who strip pipes, water heaters and toilets.

“All the pipes will be gone,” said Heaney, 70, who has run Heaney Plumbing & Heating in Detroit for more than four decades. “It’s really gotten bad, probably the last four years, and we’ve been getting a lot of calls. The furnaces, the water heaters and all the pipes, even the sinks — gone.”

Amid the worst recession since the Great Depression, pilfering cut the number of U.S. homes with complete plumbing by about 10.4 percent from 2008 to 2011, according to U.S. Census data compiled by Bloomberg. That reversed a five-decade trend. The decay of housing adds another obstacle to recovery in Rust Belt cities already beset by crime and poverty.

Detroit leads U.S. cities in homes that the Census Bureau says lack basic plumbing. The agency found similar devolution in Flint, Michigan; Cleveland and Dayton, Ohio; Camden, New Jersey; and Buffalo, New York.

“It’s a vicious circle,” said John George, who has run the nonprofit Motor City Blight Busters in Detroit for a quarter century, trying to rehabilitate crumbling neighborhoods. “Blight is like a cancer. If you don’t nip it in the bud, it spreads. Before you know it, you look up, the whole street is gone. It’s a major problem.”
…
The problem is distinctly urban and insidious, said Alan Mallach, a senior fellow at the Brookings Institution in Washington.

“When a unit becomes vacant in large parts of Detroit, Cleveland, Camden, you name it, it gets stripped,” he said. “Where you have these roving stripping gangs, as well as vandalism, the houses will go pretty fast.”

To qualify as having full plumbing, a house must have hot and cold running water; a flush toilet; a bathtub or shower; and a sink with a faucet, according to census criteria. Almost 3 million homes in the U.S., about 2.2 percent of the total, lacked plumbing in 2011, according to the census figures.

Posted in Foreclosures, National Real Estate | 96 Comments