Sandy won’t be kind to the NJ housing market

Posted on November 29, 2012 by grim

From the WSJ:

N.J. Home Deals in Gridlock

Even before Sandy ripped through the Northeast coast last month, the region’s housing market had been among the weakest in the nation.

Now, damage from the storm is raising new concerns in coastal communities about falling home prices and more foreclosures as weary homeowners—some upside down on their mortgages or still reeling from last year’s Tropical Storm Irene—decide whether to stay or go.

The problems are especially evident in New Jersey, which has been largely left out of the housing recovery that has taken hold in much of the rest of the nation.

New Jersey home values declined 1.8% in September from a year earlier, according to real-estate data firm CoreLogic Inc. CLGX +0.47% Only Rhode Island and Illinois posted bigger declines. Nationally, prices were up by 5%, with 43 states seeing year-over-year gains.

Meanwhile, nearly one in six New Jersey homeowners with a mortgage is upside down, or owes more than their properties are worth. And the state has the second-highest foreclosure rate in the country—after Florida—with some 12.7% of loans that were three months past due or in foreclosure as of September, up from 11.9% one year ago, according to the Mortgage Bankers Association. Nationally, the share of seriously delinquent loans fell to 7%, from 7.9% one year earlier.

The fallout from Sandy could make a bad situation even worse. “Anybody who was about to buy a house and needed to get a mortgage, that is stopped in its tracks,” said Dana Miller, a real-estate agent with Weichert Realtors in Rumson, N.J.
…
Economists say that over the past decade, hurricanes have generally prompted a surge in mortgage delinquencies but not necessarily foreclosures because lenders tend to give borrowers time to catch up on payments after natural disasters.

Still, Sandy is one of the first major storms to hit a region with so many borrowers who already owe more than their homes are worth. “The foreclosure piece injects a lot of uncertainty into a market that was already dealing with a lot of problems,” says Lawrence Friscia, an attorney in Newark, N.J., who represents homeowners facing foreclosure.

“Let’s put it this way: a lot of these folks may make the calculus that they don’t want to throw good money after bad,” he says. If that happens, “the effect on these submarkets can be profound.”
…
Lawrence Yun, chief economist of the National Association of Realtors, says he expects that cancellations in home sales in New Jersey, New York and Connecticut during November will lead to a small decline in the national home-sales figure that will be reported next month.

Even in shore communities that didn’t sustain much damage, real-estate agents say higher flood-insurance costs could tamp down demand.
…
Tom Marino is going ahead with a $352,500 purchase of a three-bedroom split-level home in Brigantine, N.J., on the shore, even though the home was flooded. He was initially set to close on the vacation-home purchase three weeks ago, but had to wait until repairs to the home’s walls, heating systems and flooring have been made.

The sellers, who have flood insurance, finished those repairs and the home will be reappraised Friday. Mr. Marino, a 60-year-old professor of anatomy, hopes to close next week. He brushes aside concerns about declining property values. “Brigantine is a gem,” he says, “and it’s just going to be even better when it’s rebuilt.”

Posted in Economics, Housing Recovery, New Jersey Real Estate, Shore Real Estate | 205 Comments

Will 2013 be the year of the deal?

Posted on November 28, 2012 by grim

From the WSJ:

Will 2013 Be the Time for Home Buyers to Jump?

This New Year’s, you may want to make a resolution to go house hunting.

Home prices are finally starting to recover, but they’re still low enough to get a great deal. Add to that interest rates that are at historic lows, and 2013 may be the time for first-time home buyers to finally get in the game.

“We think the answer, definitively, is that home prices have bottomed,” says Stan Humphries, chief economist of real-estate firm Zillow. “Right now, buying looks very attractive, even for short-term time horizons.”

While the timing may be right, the tougher standards lenders imposed after the housing crash are still very much in place. So buyers with good credit and a hefty down payment may benefit the most.
…
A bevy of data suggest housing prices have finally begun to climb back. So there’s a window of opportunity before prices start a faster upward march.
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For first-time home buyers, it may be easier to buy. Many first-time buyers are opting for loans backed by the Federal Housing Administration, since they now have looser credit and down-payment criteria compared with the tougher criteria for standard loans. The typical rate on a 30-year fixed-rate mortgage backed by the FHA was 3.31% last week, according to HSH.com.
…
Many potential buyers have sat out of the market and rented instead—because they were waiting for prices to bottom out, found it to be a cheaper option or couldn’t qualify for a mortgage. But the jump in renters after the housing collapse led to higher rents throughout much of the country. In many cases, it no longer makes financial sense to rent instead of buy.

In about three out of four U.S. housing markets, it now takes less than three years of owning a home with a standard 30-year mortgage for buying to be cheaper than renting a similar space, says Zillow’s Mr. Humphries.

Posted in Economics, Housing Recovery | 175 Comments

The Elusive First Time Buyer

Posted on November 27, 2012 by grim

From CNBC:

Housing Recovery Is Leaving Behind First-Time Buyers

Current homeowners are finally moving up, and distressed sales are making up less of the overall market—all signs of much-needed improvement in housing.

Current homeowners accounted for 54 percent of October’s non-distressed market, up from 50 percent in June, according to a new survey by Campbell/Inside Mortgage Finance.

This as the share of non-distressed sales surged to 64.7 percent, up from 55.7 percent as recently as February.

Unfortunately, first-time home buyers are seeing just the opposite, largely left out of this surge in sales and prices. Their share of the market, usually up in the 40 percent range historically, fell to 34.7 percent in October, the lowest in the Campbell/IMF survey’s three-year history.

The National Association of Realtors put their share even lower, at 31 percent.

Either way, they are the only group of buyers that have not seen their share of non-distressed home purchases rise over the past five months. The mortgage of choice for these buyers, FHA-insured loans, are increasingly tough to obtain.

From HousingWire:

The vanishing first-time homebuyer

It was only a matter of time before the market learned the true fate of the young, first-time homebuyer who may have a solid credit history and a good job, but lacks a 20% downpayment.

The reality is they are disappearing before our very eyes.

And the type of middle-class borrower that used to help drive new home sales is lost in translation as regulators continue to create a housing market that, while more careful in its future construction, may be more disruptive to the American dream.

If you read reports from Real Estate Economy Watch and Campbell/Inside Mortgage Finance, it seems first-time homebuyers make up less of the market today. In fact, Campbell/Inside Mortgage Finance said its HousingPulse Tracking Survey shows the share of first-time homebuyer purchases now at 34.7%, down from 37.1% in June and the lowest percentage in the survey’s history.

Real Estate Economy Watch notes the number of singles buying homes is declining, and the median credit scores for adults in the 25-34 and 35-44 ranges remain below the median scores required by the Federal Housing Administration and the mainstream providers of conventional mortgages.

While married buyers are still able to obtain the credit to access loans in the first-time homebuyer segment, the question is whether other borrowers are stumbling on tighter lending standards and an overregulated mortgage space.

Both sources reporting on this issue this week suggest lending standards are too tight. And at a time when rents are going up, a substantial portion of the first-time homebuyer market is not being served.

Posted in Economics, Housing Recovery | 145 Comments

Redevelop or we’ll take it from you and redevelop. Fair?

Posted on November 26, 2012 by grim

From the Philly Burbs:

Evesham to crack down on owners of neglected commercial properties

Fix it or risk it.

That’s the message the Township Council will be handing down to the owners of neglected commercial sites who are now in danger of losing their properties to eminent domain.

Specifically, Mayor Randy Brown pointed out the long-shuttered Olga’s Diner and the nearly empty Tri-Towne Plaza as prime examples of properties that should be redeveloped.

“I’m going to fast-track eminent domain or condemnation of these properties,” Brown said Friday. “We’ve got to do it. We have to move forward on this as soon as possible.”

Under state law, a property can be declared in need of redevelopment and face being taken by a municipality if the site is abandoned, unsafe or dilapidated, among other criteria.

Neither the owner of the Olga’s Diner property, John Stavros of Cherry Hill, nor RD Management, responsible for the Tri-Towne Plaza, returned calls for comment Friday.

Township officials said they could work with the owners to improve their buildings as part of a rehabilitation approach.

“Rehabilitation is more of a carrot than a stick,” said Leah Furey Bruder, planner for the Planning Board.

Rather than seize the property, the rehabilitation process is less stringent and similar to an “invitation” for businesses to improve their properties through incentives, Furey Bruder said.

But at this point, “I like the stick (approach). A big 2-by-4,” Brown said during a discussion on the issue at the council’s work session last week.

“They have fed off Evesham residents for decades — and now Olga’s and (RD Management) couldn’t care less,” the mayor continued.

Posted in Economics, New Development, New Jersey Real Estate | 88 Comments

Sandy Stimulus?

Posted on November 23, 2012 by grim

From Bloomberg:

Sandy Seen Boosting U.S. With as Much as $240 Billion Rebuilding

John Cataneo is working his 20 employees overtime and still can’t keep up with demand from customers who need plumbing repaired after superstorm Sandy. He says he’s hired two new workers and may need more.

“We’re just not getting to some people that are asking for help,” said Cataneo, co-owner of Gateway Plumbing & Heating in Manhattan. “But we’re doing the best we can.”
…
Cataneo’s experience shows how the storm is giving the U.S. Northeast — and the rest of the country — an economic boost that may eventually surpass the loss of business it caused. Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.

“Construction costs to rebuild all that was lost will be more than simply replacement because a lot of the work will also involve fortifying structures,” said Bernard Baumohl, chief global economist at Economic Outlook. “We’ll see construction ramped up, and that’s going to bring in jobs and an increase in demand for material of all sorts, and that’s going to further stimulate the economy.”

Estimates of insured damage caused by Sandy range from $7 billion to $25 billion. When lost wages and sales are added, the total comes to $50 billion, according to Oakland, California-based catastrophe risk modeler Equecat Inc. — a figure that may be recouped next year as repair and reconstruction efforts spur new building and sales of household goods.
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Sandy may reduce economic growth by 0.25 percent to 0.5 percent in the fourth quarter after it disrupted industrial production, retail sales and employment, according to economists at Goldman Sachs Group Inc. Most of the reconstruction will take place in the first quarter of 2013, adding as much as half a point to growth, according to a Nov. 21 note to clients.
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Reconstruction following a storm has an effect similar to a government-funded stimulus program, said Gary Schlossberg, a San Francisco-based senior economist at Wells Capital Management, which oversees about $331 billion.

“It’s certainly a form of stimulus, no doubt, and the ripple effects of the spending could leave you further ahead than where you were at the start before the storm,” said Schlossberg. “The administration wouldn’t want a hurricane to be a source of stimulus because the costs in losses and suffering outweigh the benefits.”

Posted in Economics, New Development, New Jersey Real Estate | 153 Comments

Thanksgiving Open Discussion

Posted on November 22, 2012 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labeled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 65 Comments

Fire sale or the next boom?

Posted on November 21, 2012 by grim

From Reuters:

After Sandy, some dump homes, while others hunt for bargains

“Reduced for Quick Sale!” reads Mike Montalbano’s Craigslist ad for the three-bedroom home he needs to sell before he can relocate for a new job.

The drywall is new, as are the appliances. The only problem? Location. Montalbano’s home is in Tom’s River, New Jersey, which was pummeled by last month’s Sandy megastorm.

“A lot of people are scared to come back to the water,” says Montalbano. “Back in the day, everybody wanted to come to the shore. Now it’s a mess down here.”

Montalbano was lucky. His home sits higher than others, and the storm waters hit his lawn but did not make it into his house.

That has not proved compelling to would-be buyers. His house is listed for $245,900, some $5,000 less than his original asking price. And even if he sells for that amount, he will lose about $40,000 on the property.

Several renters have inquired, but Montalbano fears that tenants could hurt his property. On the other hand, he does not think his odds of selling are very good. “The market will come back, but who knows when?” he says.

That is the “crystal ball” question that no one in Sandy-affected areas such as the New Jersey shore, Staten Island, New York and New York City’s Rockaway Peninsula can answer.

But there are a few things real estate agents can say with confidence.

First, the rental market in these areas is set to explode, thanks to a combination of displaced homeowners and contractors needing temporary housing.

Second, currently scheduled closings will be held up as buyers try to renegotiate and banks require new inspections and appraisals.

And third, investors looking for fire sales will come sniffing around.

“I’ve had people calling me saying, ‘I’m interested in oceanfront, and I’m ready to buy it now for $500,000,'” says Robin Shapiro, whose real estate business in Neponsit, New York, on the Rockaway Peninsula bears her name. “That’s not going to happen. Last month a property in Neponsit sold for $5 million. No one is dumping these oceanfront properties.”

History might prove her right. In South Carolina, where the barrier islands were trounced by Hurricane Hugo in 1989, home values rose sharply in the years immediately following and have been on an upward trajectory ever since.

A Zillow.com analysis shows home prices along the South Carolina coast rose 2.3 percent over the last 10 years, twice the rate of inland properties in the state.

Michael Scarafile, president of Carolina One Real Estate in North Charleston, South Carolina, remembers how Hugo led to an influx of properties on the market – and hordes of investors.

“Immediately afterward, you had opportunistic people taking advantage of people who said, ‘I’m done; I’m selling the house as is,'” Scarafile says.

Those who did not sell brought in a kind of post-Hugo renaissance.

Old bungalows that were completely destroyed or condemned gave way to new construction of high-end homes that could better withstand the next storm. The bridge to the barrier Isle of Palms was washed out by Hugo and replaced by a stronger structure that could handle more traffic. Palm trees replaced power lines, which were placed underground. And everyone was putting in new kitchens and new roofs, which revitalized the existing housing stock.

“Over the next year or two, the islands really had a new birth,” says Scarafile. “Memories are short. And now here we are, 23 years later, and we’ve never had anything close to Hugo.”
…
Realtors in Sandy-affected regions can only hope to repeat Charleston’s story. For now, the mood is anxious and uncertain, and anyone looking to make a tidy profit in storm-damaged real estate is taking a risk.

Posted in Housing Recovery, Shore Real Estate | 71 Comments

Rise Up!

Posted on November 20, 2012 by grim

From the WSJ:

Shore’s Toll ‘Worse Than We Thought’ .

Nearly three weeks after Sandy came ashore on the New Jersey coast, some of the beach towns that made this area famous remain largely empty and dark, shells of their bustling summer selves.

The scope of the destruction didn’t come into focus for many homeowners until this weekend, when authorities began letting people back into communities still covered in mounds of sand and littered with debris. Some year-round residents, others seasonal, they trickled back to the seaside and witnessed the wreckage they had heard about.

“Complete devastation,” said Bob Larosa, 54 years old, who was waiting in front of his home Sunday for the bus back to the mainland from this Jersey Shore destination after a long day of sorting through the damage. “It feels like a complete loss.”

Mr. Larosa said he and his wife, Kathy Larosa, 55, bought their one-story bungalow as a vacation home in Ortley Beach eight years ago. They live in Roseland, N.J., full time.

The couple had seen photos of their home before coming in person, and knew it was still standing. But nothing prepared them for the inside.

“We’ve been looking at the pictures, but I still walked in the backyard and started crying,” said Ms. Larosa, a teacher. “It’s the kind of thing you see on TV, and you think it happens to other people.”

A pile of destroyed carpets, mattresses and a vacuum cleaner sat outside their home. The fence was caved in on the side. But she said they will rebuild.

“We’re going to have to,” Ms. Larosa said.
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John Messner was ripping out dry wall and insulation from the three-story home where his daughter lives full-time. He put it in black plastic bags and piled it outside. He said he hadn’t had time to do much more than that. “It’s a lot worse than when I left it,” said Mr. Messner, a real-estate broker and appraiser from Drexel Hills, Penn. “[The water] came up under the door and up through the floors. The insulation was soaked, so it just sat there for two weeks.”

Buses carried many into Ortley Beach, but they had to leave by 2 p.m. Toms River police Cpl. Ron Rader helped organize the rides. He said more than 2,000 people came. Some shed tears.

“All of them, it’s the same thing: ‘We expected the worst, but it’s so much worse than we thought it would be,'” he said. “I don’t think it’s sunk in yet.”

But some people had nothing left and so they grabbed a small memento and called it a day, he said. “I’ve seen people getting off the bus, seeing their home and getting right back on,” he said. “There’s nothing left.”

Posted in Shore Real Estate | 87 Comments

October Existing Home Sales

Posted on November 19, 2012 by grim

From Bloomberg:

Sales of U.S. Existing Houses Probably Held Near Two-Year High

Sales of previously owned U.S. homes probably held in October near a two-year high, indicating the recovery in residential real estate is being sustained by cheap borrowing costs, economists said a report may show today.

Purchases held at a 4.75 million annual rate last month, according to the median forecast of 64 economists surveyed by Bloomberg. In August, demand reached a 4.83 million rate, the most since May 2010. Homebuilder confidence probably held at a six-year high in November, another report may show.

Propelled by the lowest mortgage rates on record, cheaper properties and improved consumer sentiment, housing is one of the economy’s sources of strength. The pace of October sales underscores what Federal Reserve Chairman Ben S. Bernanke called “signs of improvement” in a market still hampered by strict bank-lending standards.

“You’ve got low mortgage rates, you’ve got gradual improvement in the labor market, and you have very low inventories,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “Housing is positioned to move significantly higher over the next year.”

The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.55 million to 5.05 million.

Posted in Employment, Housing Recovery, National Real Estate | 62 Comments

North Jersey Contracts – October 2012

Posted on November 17, 2012 by grim

(Source GSMLS, except Bergen which is based off NJMLS)

October Pending Home Sales (Contracts)
——————————-

Bergen County
October 2011 – 549
October 2012 – 640 (Up 16.6% YOY)

Essex County
October 2011 – 403
October 2012 – 519 (Up 28.8% YOY)

Hunterdon County
October 2011 – 226
October 2012 – 282 (Up 24.8% YOY)

Morris County
October 2011 – 434
October 2012 – 599 (Up 38.0% YOY)

Passaic County
October 2011 – 343
October 2012 – 431 (Up 25.7% YOY)

Somerset County
October 2011 – 362
October 2012 – 450 (Up 24.3% YOY)

Sussex County
October 2011 – 230
October 2012 – 334 (Up 45.2% YOY)

Union County
October 2011 – 381
October 2012 – 474 (Up 24.4% YOY)

Warren County
October 2011 – 202
October 2012 – 274 (Up 35.6% YOY)

Posted in Economics, Housing Recovery, North Jersey Real Estate | 69 Comments

Housing tight in a post-Sandy NJ

Posted on November 16, 2012 by grim

From the WSJ:

Landlords Offer Homes to Displaced

Private landlords in New York City have offered to provide several thousand vacant units to house people displaced by the superstorm Sandy, according to people familiar with the matter.

It is just one of the solutions being rapidly concocted as both New York and New Jersey rush to tackle the most daunting task of Sandy’s aftermath: housing tens of thousands of newly homeless people, in a region with few apartments and little empty land.

Government officials, nonprofit organizations and academics have floated myriad solutions—from parking a cruise ship in New York Harbor to housing people temporarily in abandoned subway stations. More realistically, officials are cobbling together a plan consisting of vacant apartments and rental houses, government-issued housing units and even a defunct military barracks in New Jersey. They also expect that some displaced people will find shelter with friends and family.

“The 1% [in Manhattan] vacancy is one thing. Another is we’re land-constrained. We are in a housing emergency as we are every year. It’s an emergency situation on top of an existing emergency housing situation,” said Corinne Packard, a professor who teaches post-catastrophe reconstruction at New York University’s Schack Institute of Real Estate.

Ms. Packard said she isn’t concerned the city won’t be able to come up with enough housing for everyone, but time won’t be on its side.

“The question is how long will people have to live in this tenuous, temporary situation?” she said.

Mayor Michael Bloomberg has publicly speculated that as many as 40,000 people could be displaced by Sandy. He has since revised that estimate to fewer than 10,000, but estimates of the region’s newly homeless remained unclear Thursday.

The Federal Emergency Management Agency said Thursday that more than 96,000 applicants are eligible for housing money—about 63,000 in New York and almost 33,000 in New Jersey. Some of those have been approved for assistance with paying for hotels, while others have received payments for longer term repairs to their homes or help with short-term rental units.
…
In New Jersey, real estate groups and hotels have identified more than 5,000 units that could be made available, said Lisa Ryan, a spokeswoman for the state Department of Community Affairs.

The New Jersey Association of Realtors has sent listings of homes to FEMA that could be rented on a temporary basis, including vacant summer homes. But a lack of rental supply may require people to move outside their immediate vicinity, said Jarrod Grasso, the association’s CEO. “It’s an inconvenience but at least it’s a roof over their heads,” Mr. Grasso said about those searching for apartments.

Posted in Economics, New Jersey Real Estate | 155 Comments

NJ Foreclosures up 140%, does it matter?

Posted on November 15, 2012 by grim

From the Record:

Foreclosure filings rise in NJ

Lenders continued to ramp up foreclosure activity in New Jersey last month, as mortgage companies worked through the backlog of cases that piled up in the wake of accusations that lenders were abusing homeowners’ rights in a rush to evict.

Foreclosure filings climbed 140 percent in the state in October, compared with a year earlier, according to RealtyTrac. That increase was the biggest nationwide. For the U.S. overall, foreclosure filings slid 19 percent from a year earlier.

Yet New Jersey’s foreclosure rate remains well below the national pace. In New Jersey, one in every 1,200 households got a foreclosure filing in October, compared with one in every 706 nationwide. RealtyTrac counts all filings that are part of the foreclosure process, from the lender’s first notice that the homeowner is in default to sale of the property at sheriff’s auction.

Posted in Economics, Foreclosures, Housing Recovery, New Jersey Real Estate | 154 Comments

Paying the Sandy Tax

Posted on November 14, 2012 by grim

From Bloomberg:

Christie Says Damage Costs From Sandy Outside Tax Cap

New Jersey Governor Chris Christie said property owners in areas devastated by Superstorm Sandy may face higher tax bills, as local governments exceed his 2 percent cap on annual increases to cover rebuilding costs.

The state may release a preliminary tally of the damage and revenue effects as soon as Nov. 16, Christie, 50, said today in a Statehouse news briefing. He said municipalities will be able to get federal aid to cover some rebuilding costs, and said the property-tax increase cap he and lawmakers passed in 2010 has a natural-disaster exemption.

“It tells taxpayers in towns that were destroyed that they’re probably going to have higher taxes — it’s got to be paid for,” Christie said. “Most people in these towns will recognize that if they believe the money is being spent reasonably and responsibly to rebuild their towns, they’ll be happy to do it.”
…
Christie has made controlling the state’s highest-in-the- U.S. tax burden on residents a mainstay of his administration. New Jersey’s homeowners paid an average of $7,759 in real-estate levies last year.

Christie said today it was “silly’” to speculate on how the storm may affect tax growth. He has already pushed back a quarterly deadline to pay property levies and said today that he may work with the Democrat-controlled Legislature to set up a tax-relief program for storm victims.

The governor also said he won’t support a higher gasoline tax to fix the state’s transit system, which was heavily damaged by the storm. He said he has no estimate for how the clean-up efforts may affect property tax bills, and said he still supports his proposed tax-cut until he sees more proof that dealing with Sandy makes it less affordable.

Posted in Economics, New Jersey Real Estate, Property Taxes | 172 Comments

Foreclosure a big bargain? Maybe not.

Posted on November 13, 2012 by grim

From HousingWire:

Falling REO inventory dries up foreclosure discounts

Some metro areas across the U.S. are experiencing steep discounts on foreclosed properties – upwards of 27% in some cases – but the overall mark-down is not as deep as it seems, Zillow said in a new report.

The online real estate listing firm said the national-foreclosure discount on distressed properties is about 7.7%, a paltry amount considering how much lower REOs sell for in certain locales.

Truth is, there are fewer foreclosures out there. Last month, RealtyTrac the online marketplace for foreclosures, reported a yearly decrease in 131 out of the nation’s 212 metropolitan areas.

“Two-thirds of the nation’s largest metros posted decreases in foreclosure activity in the third quarter, indicating that most of the nation’s housing markets are past the worst of the foreclosure problem” said Daren Blomquist, vice president at RealtyTrac.

Zillow uses a different methodology, of course, and compares the sales price of a foreclosure to the estimated-non-distressed sale level of the exact same property.

Metros like Pittsburgh and Cleveland experience foreclosure discounts as steep as 27.4% and 25.8%, respectively.

“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow chief economist Stan Humphries. “Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.”

Sacramento is a market where the foreclosure discount is a small 0.7% difference from an average property price. In the high-priced Los Angeles and New York markets, foreclosure discounts are now running at 4.2% and 15.5%, respectively.

Posted in Economics, Foreclosures, Housing Recovery | 189 Comments

They will return … to higher prices?

Posted on November 12, 2012 by grim

From Bloomberg:

Jersey Shore’s Lure to Homebuyers Seen Surviving Hurricane Sandy

Danea Kelly made her first shopping trip for a New Jersey shore vacation home on the Saturday before Hurricane Sandy made landfall. It won’t be her last.

While Kelly, 41, decided she no longer wants property directly on the ocean, the storm may open up new opportunities.

“You take your chances anytime you get involved with real estate,” said Kelly, who is house-hunting with her brother in North Wildwood, which dodged the worst of the Oct. 29 storm that tore apart the boardwalk in Atlantic City, 40 miles (65 kilometers) up the coast. “We may now have less competition from other buyers and it might steer some people who have lived down there a long time, who may decide, ‘It’s time for me to sell.’”

Real estate markets on the Jersey Shore will suffer in the wake of Sandy, which inflicted as much as $50 billion of business and property losses and caused at least 100 deaths in the U.S. In the hardest-hit communities, rebuilding of bridges, roads, dunes and homes will take months or even years. Home construction and insurance costs will probably rise.

While it will take time for buyers to regain confidence after the storm and last year’s Hurricane Irene exposed the vulnerabilities of oceanfront property, they will return, as they did to storm-wracked beaches in Florida, North Carolina and Texas, said Lawrence Yun, chief economist for the National Association of Realtors.
…
“The allure of having an oceanfront property is just too great,” Yun said in a telephone interview from Washington. “People recognize that there are bad natural-disaster events and they just cross their fingers and hope it doesn’t happen to them.”

When house-hunters come back, they’ll compete for a reduced supply of undamaged homes with higher asking prices, according to Yun. Rebuilt properties will feature costly upgrades such as sturdier roofs and wind-resistant windows, which also may push up resale prices.

Posted in Economics, Housing Recovery, Shore Real Estate | 139 Comments