Can’t wait to hear about how NJ spends the settlement

Posted on February 13, 2012 by grim

From Bloomberg:

Foreclosure Deal May Help States Prop Up Budgets, Raze Houses

Wisconsin plans to use part of its $140 million share of the national foreclosure settlement to fill a budget hole. Missouri would devote $40 million for education. Ohio wants to tear down vacant homes.

Ninety percent of the $25 million settlement announced Feb. 9 goes to borrowers, with states receiving at least $2.66 billion, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who helped negotiate the deal. The money for states is to “help fund consumer protection and state foreclosure-protection efforts,” according to the National Mortgage Settlement website, though states have discretion in spending, and their tax bases and budgets were hurt by the housing crash, Greenwood said in an e-mail.

Most states, especially those hit hard by foreclosures, likely will spend the money on related purposes instead of priorities that the public may not see as fitting the spirit of the settlement, said David Adkins, executive director of the Council of State Governments in Lexington, Kentucky.

“If my home were in foreclosure, I would want to make certain that the revenue in my state was directed at ameliorating that specific problem,”Adkins said.
…
At least 100,000 homes need to be demolished, DeWine said, and he is establishing a program to match funds that cities and land banks allocate for tearing down houses.

Using the settlement money for that purpose is appropriate because many homeowners are paying their mortgages and did nothing wrong, yet they face plummeting property values because of foreclosures around them, said Jim Rokakis, a former Cuyahoga County treasurer who directs Cleveland’s nonprofit Thriving Communities Institute.

“If you don’t take these homes down, these neighborhoods will continue to lose what little value they have left, they will be less safe and there will be zero chance of those neighborhoods coming back,” Rokakis said in a Feb. 9 telephone interview. “You can’t build the new American city until you take the old one down first.”

Posted in Foreclosures, Housing Recovery, Risky Lending | 137 Comments

Stop with the gimmicks and cut the price

Posted on February 11, 2012 by grim

From the NY Times:

Going Beyond Price Cuts

A PERSISTENT recession in house sales has led to a surge in “concessions” for buyers. In listings and brochures, and most recently through a program started up on Zillow.com, real estate agents are trumpeting the news: even sellers who have reduced asking prices by a lot are often willing to do more.

That means contract concessions, in which sellers may agree to cover a buyer’s closing costs, provide a gift card for a certain amount, pay in advance for renovations, or even subsidize taxes by allocating funds from their proceeds at closing.

As long as concessions are written into a contract, and are also explicit in the Housing and Urban Development settlement document (a form used in closings), many banks in New Jersey are approving mortgage loans with up to 3 percent of purchase price in seller concessions, according to sales professionals. And when it comes to loans issued with the backing of the Federal Housing Administration or Veterans Affairs, up to 6 percent of sales price is allowable, and is becoming a popular option, agents and brokers said.
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Right now, for example, a $5,000 credit toward closing costs — or a gift card for that amount — is being offered by the seller of a four-bedroom colonial in Wall Township that has been for sale for 16 months. The offer is being advertised as part of the independent broker Robert Bruno’s listing on Zillow.

Built five years ago, the house then cost $565,000, according to public records. It was offered for resale at $499,000; the price was reduced several times, and is now $459,900.

Four months ago, when Zillow began offering, for a fee, to highlight seller concessions on listings, Mr. Bruno opted in. The $5,000 concession offer appears in yellow highlighting under the price on the listing.
…
“Is it more attractive to save money over the life of the mortgage, or to bring less money to closing and have some cash available at the time of move-in?” Ms. Baldwin asked. “Generally, I would say nothing beats a price cut to make a sale. On the other hand, some people have to scrape just to come up with the higher down payments required now, and need some cash.”

In southern New Jersey, Christopher McKenty, a broker at Re/Max Connection, has a West Collingswood house listed on Zillow with a $2,500 “special offer.” But he says price cuts are “the name of the game.”

A price reduction still gets more attention, he said, adding that he probably won’t use the concession gambit in the future.

Posted in New Jersey Real Estate | 52 Comments

What’s our cut of the settlement?

Posted on February 9, 2012 by grim

From the Daily Record:

NJ gets $837.7M in nationwide mortgage and foreclosure settlement

New Jersey’s share of the $25 billion mortgage settlement announced Thursday is expected to bring financial relief to at least some of the state’s homeowners who are facing foreclosure or owe more than their homes are worth, analysts said.

For homeowners in that category, though, it’s no slam dunk. Banks still will need to be relatively assured that homeowners can make their modified mortgage payments, they said.
Homeowners “have a better chance,” said Patrick J. O’Keefe, director of economic research for J.H. Cohn, an accounting firm based in Roseland. “But this is a partial solution.”

The U.S. government and 49 state attorneys general, including New Jersey, reached an agreement with the nation’s five biggest mortgage lenders – Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc. – to settle charges that the companies cut corners to foreclose on homes and deceived customers about loan modifications.
…
With the government unable to solve the puzzle, prices have declined so much that 310,000 homeowners in New Jersey – about 16 percent – owe more than their homes are worth, according to Jeffrey Otteau, president of the Otteau Valuation Group in East Brunswick.
…
New Jersey is in line to receive $837.7 million, state Attorney General Jeffrey S. Chiesa said. That money will be used to modify and refinance loans. It will go to pay for borrowers who “suffered servicing abuse” and were foreclosed on. And it will help pay for state housing programs.

The settlement affects only customers whose mortgages are owned and serviced by the five companies in the agreement. It’s an important distinction because the companies might have sold some mortgages to Fannie Mae and Freddie Mac, government-backed companies whose customers aren’t part of the agreement.

It isn’t clear how many New Jersey homeowners would qualify, but the five companies represent 60 percent of the industry, the state said.

The program, because of its complexity, could take three years to complete, the state said.
…
How much of a difference will it make? Observers were torn.

“It might need $1 trillion to really solve the problem, but maybe this will be enough to take people in the process of foreclosure … start to make performing loans,” said Joel Greenberg, chief executive officer of Novadebt, a Freehold Township credit counselor. “That’s got to help the situation, but it’s still the middle of a crisis. I don’t see this whole logjam breaking immediately.”

Posted in Housing Recovery, New Jersey Real Estate, Politics, Risky Lending | 117 Comments

Thursday Morning Grim

Posted on February 9, 2012 by grim

From CNBC (via Business Insider):

New York Housing Market Could Still Collapse: Analyst

There’s been a lot of talk recently about home prices reaching a bottom. Most notably, Bill McBride at Calculated Risk — perhaps the most respected housing market analysts in the blogosphere — says housing starts already bottomed and housing prices are likely to bottom in March.

But not everyone is convinced. Keith Jurow argues that home prices are nowhere near the bottom. In fact, he thinks that one particular market — New York City — is close to collapsing.

From Jurow:

Let’s look at the most misunderstood housing market in the country — the NYC metro. The published median sale price for both NYC and Long Island has seemingly held up better than other major metros — not much less than $400,000 for Queens or Suffolk counties. This has fooled people into thinking that the worst is over in the NYC area. On the contrary, the real collapse in prices is imminent.

In November 2011, Minyanville.com posted my 30-page New York City Housing Market Report. The report included never-seen-before charts, graphs and data that revealed what has been going on there. The banks have not been foreclosing for the past three years. This started well before the robo-signing mess. On February 7, 2012 there were a total of only 242 repossessed properties on the active MLS in Queens according to foreclosure.com. This is a borough with a population of 2.2 million.

Because of this, the number of seriously delinquent properties throughout NYC has been soaring. Based on individual charts for each borough from the NY Federal Reserve Bank which I included in my report, there were roughly 80,000 properties where the mortgage had not been paid in more than 90 days as of June 2011.

That number is considerably higher now. How about this statistic? I received updated numbers from the N.Y. State Department of Banking a few weeks ago. In 2009, the state legislature passed a law requiring all mortgage servicers to send a “pre-foreclosure notice” to all delinquent owner-occupants in danger of losing their home to foreclosure.

As of the end of December 2011, a total of 165,000 pre-foreclosure notices were sent to delinquent owner-occupants just in NYC. This does not include delinquent investors because the law requires that these notices be sent only to owner-occupants.

While not all of these borrowers were more than 90 days delinquent, the vast majority were 60+ days delinquent. What do you think will happen to home prices once the banks finally begin to foreclose on these properties? Prices will collapse in the four outer boroughs and will decline sharply in Manhattan. I am convinced that this will occur although we can’t be sure when the banks will begin to move on this.

The situation is even worse in Long Island — Nassau and Suffolk counties. I wrote a 22-page report on the Long Island housing market which Minyanville posted in December 2011. Just for these two counties — with a total of less than three million people — more than 149,000 pre-foreclosure notices had been sent as of the end of 2011.

As in NYC, the banks have not been foreclosing in Long Island. But they cannot put it off indefinitely. When they begin, prices there will collapse.

Posted in Foreclosures, Housing Bubble, New Jersey Real Estate, Risky Lending | 172 Comments

Taxes taxes and more taxes

Posted on February 8, 2012 by grim

From the Daily Record:

Property taxes in N.J. rise 2.4 percent despite state-imposed cap

New Jersey’s highest-in-the-nation property taxes continued to rise in 2011, although at a slower rate than in previous years, according to figures released by the state Department of Community Affairs.

The average annual property tax bill was up $183 from 2010 to 2011, to $7,759. That’s an increase of 2.4 percent, slightly more than half the 4.1 percent increase seen between 2009 and 2010.
…
In Monmouth County, the average property tax bill rose $248, to $8,040. That’s a 3.2 percent increase. Ocean County property owners saw their taxes jump an average of $618, to $5,434. That’s an increase of nearly 13 percent.
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Statewide, Paterson saw the highest property tax increase, at 17.3 percent to $8,829, for municipalities with more than 250 residents. Corbin City, in Atlantic County, had biggest drop, at 20.6 percent. The town has about 500 residents, and homeowners paid an average of $3,328 in property taxes.

Over the years the state has attempted to mitigate some of the rise in property taxes by distributing rebates to property owners. Rebate checks, previously mailed in October, averaged about $1,000 during Gov. Jon S. Corzine’s administration.

From the Courier Post:

Hey guv, it’s still property taxes

Gov. Chris Christie may not be the kind of leader who drifts whichever way the wind blows and changes his position based on polls.

But, if polls weren’t important to some degree as a barometer of voters’ opinions, then politicians wouldn’t rely so heavily upon them come campaign season.

An interesting new poll from Monmouth University/New Jersey Press Media finds that when it comes to lowering property taxes or lowering income taxes in the Garden State, a vast majority — 69 percent — think lowering property taxes should be the priority. Just 19 percent of poll respondents said reducing the state income tax should be the priority. Another 10 percent of those polled said both should be the priority.
…
As Christie turns the corner on the halfway point of his first term and prepares for a potential re-election bid in 2013, or a bid to some national office later, it’s understandable why he wants to lower state income taxes by 10 percent. New Jerseyans are overburdened by taxes and, for the governor, one of the least complicated taxes to lower is the income tax because it is directly controlled by the state.
…
The 2 percent cap on local government spending increases and property tax levy increases year-to-year was a great achievement. But, it has not lowered anyone’s property taxes. The cap has only slowed the pace of the tax increases.

Posted in New Jersey Real Estate, Property Taxes | 121 Comments

One step closer to settlement, at a price

Posted on February 7, 2012 by grim

From HousingWire:

More than 40 states to sign foreclosure settlement

More than 40 states will sign a settlement with the top-five mortgage servicers over alleged foreclosure abuses that arose more than one year ago, Iowa Attorney General Tom Miller said in a statement Monday night.

Last week, Miller extended the deadline to Monday for states wanting to sign the deal with Bank of America ($7.97 0.13%), Wells Fargo ($30.20 -0.43%), Citigroup ($33.30 -0.24%), JPMorgan Chase ($38.14 -0.14%) and Ally Financial ($22.95 0.03%).

“The sign-on deadline for the proposed joint state-federal mortgage servicing settlement passed Monday with more than 40 states signing on,” Miller said “This enables us to move forward into the very final stages of remaining work.Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”

Throughout the day, those representing states hardest hit by the foreclosure crisis signaled they are still working on the details of the settlement.

“We’re closer,” a spokesperson for California AG Kamala Harris said.

“My office is continuing to review the intricate draft settlement terms and advocating for improvements to address Nevada’s needs,” said Nevada AG Catherine Cortez Masto in a statement. “Receipt of important state specific information is necessary to make our determination and my office is still in discussions regarding that information.”

Florida AG Pam Bondi said she “remains involved in the settlement discussions in order to reach the best resolution for Floridians and all Americans.” She signed a joint letter with other republican AGs in 2010, saying a settlement that would involve principal reduction creates a moral hazard and lead to more strategic defaults.
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An official in one AG office said an announcement is expected at the end of this week at the earliest.

From Bloomberg:

California, N.Y. Are Among Fewer Than 10 Mortgage Deal Holdouts

California and New York’s attorneys general haven’t signed on to a proposed settlement with five banks over foreclosure practices that has won the support of more than 40 states.

California’s Kamala Harris and New York’s Eric Schneiderman, who have been some of the most outspoken in pushing for changes to the deal, are among those who hadn’t joined the agreement as of yesterday’s deadline for states to decide. More than 40 states signed on to the accord, according to Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.

“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor. “If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”
…
Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. made a last-minute demand that New York drop claims filed against them Feb. 3 as a condition of the settlement, a person familiar with the matter said.

The push by the three banks raised a new obstacle in getting Schneiderman’s support for the deal, said the person. New York, along with California, Nevada and Delaware said late yesterday they hadn’t signed on to the settlement.

New York sued Bank of America, JPMorgan and Wells Fargo in state court in Brooklyn, saying their use of a mortgage database known as MERS led to improper foreclosures. Schneiderman said the banks’ use of the Mortgage Electronic Registration Systems database misled homeowners, undermined foreclosure proceedings and created uncertainty about ownership interests in properties.

Posted in Foreclosures, Mortgages, National Real Estate, North Jersey Real Estate | 122 Comments

Foreclosure settlement to finally be reached today?

Posted on February 6, 2012 by grim

From Bloomberg:

Foreclosure Deal Deadline Arrives as States Must Choose Whether to Sign On

States that balked at bank liability releases in a proposed $25 billion nationwide settlement over foreclosure practices must decide by today whether its mortgage relief and reforms are worth the legal claims they’ll give up.

While some states have already announced their intention to sign the deal, others including California Attorney General Kamala Harris have yet to publicly commit in part due to terms that protect the banks from future litigation. Without Harris, the deal’s value will drop by several billion dollars, according to a person familiar with the matter.

The agreement is “beyond fixing,” said George Goehl, executive director of National People’s Action, a network of community organizations which advocates for fair lending and affordable housing.

“People are very disappointed in what this is going to be both in terms of dollars and release of claims,” Goehl said in a telephone interview. “We’re giving away the store.”

Most states don’t have the resources to go it alone and fight the banks in court, said James Tierney, director of Columbia Law School’s National State Attorneys General Program. States such as California that may reject the agreement must decide whether the time and money needed to fight for a better deal is worth it, given that the settlement provides immediate relief for homeowners, he said.

“How long does it take and how much better?” Tierney said of a state pursuing its own deal. “Is it so much better that it warrants the cost and delay?”
…
Today’s deadline, extended by the parties from Feb. 3, comes almost 16 months after all 50 states announced they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes.

Posted in Foreclosures, Mortgages, National Real Estate, Risky Lending | 106 Comments

CoreLogic: December Home Prices

Posted on February 3, 2012 by grim

From CoreLogic (no link):

CoreLogic® Home Price Index Shows Fifth Consecutive Month-Over-Month Decline

Home prices in the U.S. decreased 1.4 percent on a month-over-month basis, the fifth consecutive monthly decline. However, the HPI excluding distressed sales posted its first month-over-month gain since July 2011, rising 0.2 percent. The CoreLogic HPI shows that, including distressed sales, home prices in the U.S. decreased 4.7 percent in 2011 compared with December 2010. This year-end report shows that home prices continued the trend of year-end decreases—this is the fifth consecutive year with a decrease in the HPI. The HPI excluding distressed sales shows that home prices decreased by 0.9 percent in 2011, giving an indication of the impact of distressed sales on home prices in 2011.

Highlights as of December 2011

Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).

Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).

Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).

Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).

“While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

Posted in Economics, Housing Bubble, Housing Recovery, New Jersey Real Estate | 187 Comments

NJ contracts continue to post positive prints

Posted on February 2, 2012 by grim

From the Otteau Group (no link):

Home Sales Up in December Making it 7 of the Last 8 Months

The New Jersey housing market continues to build momentum as it turned the corner into the new year. Combined purchase contracts for resales and new homes rose in December by 8% compared to one year ago which was the largest single monthly increase since June. That the rise in December, which is traditionally a slow period for home sales, was the largest of the year suggests a more robust spring selling season ahead.

Posted in Housing Recovery, New Jersey Real Estate | 130 Comments

Case Shiller: NY metro prices fall 2.3% in November

Posted on February 1, 2012 by grim

From the Record:

Region’s home prices drop 2.3%

Home prices in the New York metropolitan area, including North Jersey, dropped 2.3 percent in November, compared with a year earlier, the Standard & Poor’s Case-Shiller index reported Tuesday. Nationally, prices dropped 3.7 percent.

Prices in the region have fallen 23 percent since the market peak in 2006, and are back to early 2004 levels. Nationally, prices have declined 33 percent since the peak, and are back to the levels of mid-2003.
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In Bergen County, the median price of a single-family home fell 8 percent, to a median $400,000 in November, while the number of sales dropped about 3 percent. In Passaic, prices dropped 8.4 percent, to a median $288,500, while the number of sales dropped 13.7 percent.

These numbers are from the N.J. and Garden State multiple listing services, and reflect the mix of properties sold during the month. Case-Shiller does not break down data by county, but its numbers are considered more accurate because it tracks the value of the same properties over time.
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“The trend is down, and there are few, if any, signs in the numbers that a turning point is close at hand.”

— David M. Blitzer, chairman of the index committee at Standard & Poor’s

“With the prospect of rising foreclosures — as the legal and administrative issues are resolved — we can expect the downward pressure on prices to increase in the coming months, despite historically low mortgage rates.”

— Patrick O’Keefe, an economist with J.H. Cohn in Roseland

“There’s been a substantial decline in prices in the New York metropolitan area, but that’s not quite enough to bring prices back in line with household income levels. By the summer of 2012, home prices in the area are expected to fall an additional 7.7 percent.”

— David Stiff, economist, Fiserv Inc.

Posted in Economics, New Jersey Real Estate | 144 Comments

Fed: NJ economy outpacing NYC

Posted on January 31, 2012 by grim

From the Record:

NJs economy picks up as NYCs slows

As New York State’s economic activity has leveled off, New Jersey’s has picked up — and the state job market is stronger than the unemployment rate of 9 percent suggests, according to the Federal Reserve Bank of New York.

New Jersey’s economy has generally been less healthy than that of New York City and state since the recession ended. In July, the city’s jobless rate was 8.6 percent, and New York State’s was 8 percent, compared with 9.5 percent in New Jersey.

New Jersey’s growth was “quite robust” in the last three months of 2011, while New York State has seen only “minimal job gains” since August, William C. Dudley, the bank’s president, said at its quarterly briefing on Friday.

“In contrast, New Jersey’s economy, which was sluggish throughout 2010 and into the first half of 2011, has picked up noticeably,” he said.

The unemployment rate in New Jersey and New York City is the same — 9 percent for December — and New York State’s is 8 percent.

The bank president’s comments came a week after New Jersey released figures showing the state added 39,400 private-sector jobs in 2011, the largest annual increase since 2000. The state’s jobless rate still lags behind the national rate of 8.5 percent.

Jason Bram, an economist for the federal bank, said New Jersey’s unemployment rate would likely be lower, except for the strong influx of people into the state labor force.

“In New Jersey, it’s really much better than it would appear,” Bram said. “More people who weren’t in the labor force are looking for a job.”

People who had stopped looking for work are now more optimistic and are looking again, Bram said.

He said Bergen, Hudson and Passaic counties added jobs at a faster rate than the national employment increase of 0.7 percent from June to December last year. New York City also increased employment faster than the nation in that period, he said.

Posted in Economics, New Jersey Real Estate | 182 Comments

I think I can, I think I can

Posted on January 30, 2012 by grim

From CNN/Money:

The housing recovery that wasn’t

Over the past few months, a spate of good news about the U.S. housing market has led some to think a recovery is finally on the horizon.

The evidence is compelling. It now costs almost as much to rent as buy. Since the housing bubble burst in 2006, home prices have fallen by 33% nationwide — more than they did during the Great Depression. Waves of foreclosures and tighter lending standards have helped drive a surge in rentals. And during the third quarter, the median monthly mortgage payment totaled $698 compared to the median monthly asking rent of $700, according to Capital Economics, citing data from the National Association of Realtors and the Census Bureau. What’s more, the cost of borrowing has fallen to record lows, with interest rates for 30-year fixed rate mortgages hovering around 4%.
…
That optimism is well-deserved, right? Not exactly.

Since the housing market imploded, analysts have predicted year after year that prices might at long last bottom out. Will it finally happen this year? Perhaps next? Bottoming necessarily out precedes turning the corner — and until that happens optimists should be cautious. Economists widely cite the short-term obstacles weighing down prices. These factors range from high unemployment and household debt to the so-called “shadow inventory,” or all the properties that have yet to come into the market because of pending foreclosures or skittish homeowners delaying sales until prices improve.

These threats are very real. But there’s a bigger threat — and drag on any future recovery — that doesn’t get nearly the attention it deserves: rising interest rates.

Admittedly, rates probably won’t increase any time soon. In a sign that the economy is recovering slower than expected, the Federal Reserve announced last week that it would keep its record-low rate for another three years. The central bank has already kept its key rate at nearly zero for three years. And last summer, officials launched “operation twist,” whereby the central bank bought $400 billion in long-term bonds in hopes to give the economy a boost and, more specifically, lower the cost of taking out home mortgages.

Problem is, interest rates can’t stay low forever. Eventually they’ll have to rise, which could very well drive home prices down since the cost of taking out a mortgage becomes more expensive. Even if rates rise slowly over several years, prices could either fall much further or, at best, stagnate. This is partly why the Fed has been so obsessed with keeping rates down. “The market will look like a frog in boiling water once rates rise,” says Lance Roberts, CEO of Streettalk Advisors, a Houston, Texas-based investment advisory company. Roberts, who also contributes to Advisor Perspectives, which publishes newsletters and online articles focused on investment strategies, laid out his case in a recent post.

At some point, interest rates will start rising back toward the long-term median of 8.9% from the current 4%. Depending when and how quickly, the jump would make homes much less affordable for the average American family. Roberts notes that, back in 1968, U.S. households on average spent 7% of their real disposable income on their mortgage payment with a down payment typically at 20%. Assuming the same down payment, that share has more than doubled to 15% today or likely higher since many mortgages approved over the last decade required little or no money down. “With real disposable incomes stagnant as inflation pressures rise, that 15% of the budget is becoming much harder to sustain,” he says.
…
So while the housing market may eventually overcome the immediate bumps of foreclosures, high unemployment and the like, real optimists should be looking at the direction of interest rates before they get their hopes up.

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

Which gets cut: Income taxes or property taxes?

Posted on January 27, 2012 by grim

From Bloomberg:

Christie Pushes Income-Tax Cut as Democrats Eye Property Levies

Governor Chris Christie told a group of business leaders that Democrats in the Legislature may jeopardize New Jersey’s economic recovery by putting social issues ahead of job-creation and tax cuts.
…
“They want to play around with social issues to try and make people look bad,” Christie said. “Here’s what the public is going to care about: Are they working? Are they working in a job that pays well and provides their family with health insurance?”

Christie’s remarks echoed his Jan. 17 State of the State speech to the Legislature and a subsequent series of public meetings in which he pressed his case for hastening what he calls “the Jersey comeback” by cutting taxes. The Washington- based Tax Foundation yesterday ranked New Jersey last among U.S. states in terms of business climate.
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Assembly Majority Leader Louis Greenwald, a Cherry Hill Democrat, said his party is weighing “a couple of ideas” to lower pressure from New Jersey’s highest-in-the-nation property taxes. He declined to give specifics following Christie’s speech, while saying any relief would be both immediate and long-term.
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Christie took office in 2010 pledging to cut taxes as the state’s economic conditions improved. He said his proposed reduction would spur the state’s economy, which he added should be the top issue in Trenton.

“Do they care about the stuff we’ve been talking about for the past week?” Christie said, referring to state residents. “What they care about is whether their husband or wife will have a job, will they have money to put food on the table?”

The governor has so far declined to say how he’d make up for the revenue if taxes are cut. Democrats have said a 10 percent rollback may mean as much as a $1.1 billion decline in state receipts.
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“People care about civil rights, and they also care about the middle-class property tax relief and job creation plans this governor vetoed as he zealously protects and advocates for tax cuts for the rich,” Tom Hester, a spokesman for Assembly Speaker Sheila Oliver, said last night. “His priorities are so out of step with working class New Jersey.”

Oliver, a Democrat from East Orange, has said that an analysis by her office showed a family with a $50,000 annual income would pay $80 less in taxes under Christie’s plan, while someone earning $1 million would save $7,200.

Posted in New Jersey Real Estate, Politics, Property Taxes | 283 Comments

Where have all the foreclosures gone?

Posted on January 26, 2012 by grim

From the Record:

One in 12 N.J. home sales was a foreclosure in third quarter

About one in every 12 New Jersey home sales in the third quarter of 2011 involved foreclosed properties — a steep drop from the previous year, according to RealtyTrac, a California company that follows the foreclosure market.

Nationally, foreclosure sales made up 20 percent of sales in the third quarter, down from 30 percent in the same period a year earlier.

Lenders have sharply pulled back on foreclosure activity since fall 2010, when reports arose that lenders’ representatives were “robo-signing” affidavits and other documents — signing them so quickly they couldn’t be verified. Lenders are now trying to show courts in New Jersey and other states that they are not cutting corners in foreclosures. And state attorneys general are close to a settlement with lenders over their foreclosure practices.

“Even with the hurdles to selling foreclosures, foreclosure sales continue to represent a historically high percentage of all sales,” said Brandon Moore, chief executive officer of RealtyTrac. “In 2005 and 2006, foreclosure sales consistently accounted for less than 5 percent of all sales nationwide.”
…
Foreclosed properties typically sell at a steep discount, which tends to pull down the prices of competing properties. In New Jersey, foreclosed properties sold for an average of $208,801 in the third quarter, a 38 percent discount to regular properties. Nationally, foreclosed properties sold for an average $165,322, a 34 percent discount, RealtyTrac said.

“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement between multiple states attorneys general and major lenders, the sooner the market can more efficiently dispose of these distressed properties,” Moore said.

Posted in Foreclosures, New Jersey Real Estate | 138 Comments

What part does hope play in economic forecasting?

Posted on January 25, 2012 by grim

From HousingWire:

RealtyTrac: Several economists missed the mark with 2011 projections

Every new year brings predictions on how the economy is expected to fare, especially in terms of home sales, prices and gross domestic product growth.

But with 2012 still in its infancy, RealtyTrac took a different approach this week by revisiting economists who released positive forecasts in January 2011.

In hindsight, the economists told the real estate data firm they were correct in stating the nation would avoid a double-dip recession in 2011. But they failed when making forecasts on housing and were off when projecting a home-price bottom, larger increases in GDP and improving consumer confidence.

“As housing goes, it shaped up pretty much as we expected. Prices are a little softer than expected. I thought price declines would stop at end of the year (2010), but they haven’t,” said Christopher Thornberg with Principal Beacon Economics. “We said no second recession. No double dip. We’re being proven dead on that call.”
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Mark Zandi, chief economist with Moody’s Analytics, also said his 2011 home price forecast was off.

“The housing market didn’t exactly hit bottom in 2011 as I had expected,” Zandi said. “Home sales and housing construction have likely hit bottom, but house prices will likely decline a bit more in 2012. All in all, housing and the economy were a bit weaker this year than I had hoped for.”
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In the end, 2011 was a flat year, said Jay Butler, professor emeritus with the W.P. Carey School of Business at Arizona State University.

“I was a little more optimistic than it turned out to be. It was pretty much a flat year,” Butler said. “People moved their expectations out even further to 2014-2015 until things get much better.”

He also said property is going up in some places and foreclosure prices edged higher.

“The motivation is the deal,” according to the professor. “Everybody is looking for inexpensive homes. Investors are still dominating the market. The problem is there’s no real clear trends. It’s like the stock market.”

The economists expect distressed properties to remain a large part of the housing inventory.

“I expect the share to rise from closer to one-third (of all inventory ) in 2011 to as high as 40% early next year,” Zandi said. “The number of first mortgage loans in the foreclosure pipeline remains very high, but is down a bit from where it was a year ago.” He added, “Once the state AG suit is settled, this inventory should begin to decline in earnest. It is very encouraging that early state delinquency (less than 60 days) is low and falling quickly.”

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