Foreclosures? Not in NYC.

Posted on November 29, 2011 by grim

From HousingWire:

NYC foreclosures drop 32%

New York City foreclosure filings dropped 32% in the third quarter over last year.

Lenders filed 3,168 foreclosures on single-family and multifamily properties during the quarter, according to a study from New York University Furman Center for Real Estate and Urban Policy. The notices, the first stage in the foreclosure process, also dropped 5.4% from the previous three months and were down more than 46% from the peak in 2009.

Roughly 73% of all filings occurred in either Brooklyn or Queens. Over the last two quarters, notices have been more evenly split between homeowners and landlords.

“Given persistent unemployment and delinquency rates nationally, it remains unclear whether the past four quarters of reductions in foreclosure notices is the result of the slow pace of foreclosure proceedings, or a promising sign that more homeowners are now able to meet their mortgage obligations,” said Vicki Been, faculty director of the Furman Center.

Court rule changes and a massive backlog pushed the average completion time to beyond 900 days, the longest in the nation, according to RealtyTrac, which monitors filings across the country.
…
Meanwhile, the 5,615 property sales in third quarter dropped 3.6% from last year. Home values declined in every borough but Manhattan.

“Sales volume continued to lag in the third quarter of 2011, showing little change since last quarter and remaining well below the sales volumes we’ve seen in the city in the past decade,” said Ingrid Gould Ellen, faculty co-director of the Furman Center.

In New York City, values are down more than 20% from the peak, which crested sporadically across all major boroughs just before the financial crisis struck in 2007.

Posted in Foreclosures, National Real Estate | 151 Comments

FHA: Nothing to see here, move along

Posted on November 28, 2011 by grim

From the WSJ:

What Housing Risk?

Before the 2007 housing bust, financial analysts who raised questions about Fannie Mae and Freddie Mac’s shaky finances were dismissed as cranks. So it’s worrying to see a thoughtful critique of another taxpayer-backed monolith—the Federal Housing Administration—receive a similar brush-off.

The flap centers around an American Enterprise Institute paper “Is FHA the Next Housing Bubble?” by Wharton real-estate finance professor Joseph Gyourko earlier this month. Mr. Gyourko notes that while the FHA’s loan exposure has grown to more than $1 trillion this fiscal year from $305 billion at the end of 2007, the agency hasn’t “increased its capital reserves commensurately.” Sure enough, the Department of Housing and Urban Development recently reported that the FHA’s capital reserves are 0.24%, a far cry from the 2% statutory minimum.

If the FHA were a private entity, these revelations would alarm investors exposed to the risk and force management to adjust. But the FHA is a bureaucracy, so its instinct is the opposite. In a blog post titled “The Continued Strength of the FHA,” Assistant Secretary for Research and Policy Development Raphael Bostic dismisses Mr. Gyouko’s “outrageous claims” and says the FHA’s books are “sound.” His arguments are worth mulling for what they reveal about what passes for FHA thinking.

Mr. Bostic focuses on the FHA’s expansion and recent reforms. Although the agency expects “record” payouts next year as borrowers default, it forecasts $9 billion of new business over the same period. FHA credit scores have improved markedly: At the end of 2007, 47% of borrowers had a credit score of less than 620, but today that figure is 3.5% and the average credit score tops 700. The Obama Administration has increased FHA premiums three times, made “reforms to credit policy, risk management, lender enforcement, and consumer protections,” and “total liquid assets are at their highest point ever,” Mr. Bostic notes.

In other words, the FHA wants to grow its way out of its problems by shedding subprime borrowers and expanding into prime loans, an area historically served by private insurers. Mr. Bostic makes this argument explicit, arguing that the FHA’s market dominance—the agency now backs nearly one-third of all new single-family mortgages—is “essential” to a housing-market recovery, adding: “Providing access to credit for homebuyers of all income ranges and in all communities, and stabilizing our housing market, has been FHA’s mission for nearly eight decades.”

And here we thought its mission was to make housing affordable for lower-income earners. But if the FHA now wants to dominate America’s housing market with taxpayer monies, that’s even more reason to examine the risks, not ignore them.

Posted in Economics, Housing Bubble, National Real Estate, Risky Lending | 121 Comments

No quick rebound for housing

Posted on November 27, 2011 by grim

From CNBC:

Housing Prices Won’t Recover Until 2013: Economists

U.S. home prices will stagnate through next year and only start recovering in 2013, according to economists polled by Reuters who also felt the stimulus options being floated will not do much to reinvigorate the market.

The housing market, considered by many as critical to any meaningful economic recovery, is still struggling to find its footing after collapsing by a third over the past several years, leaving many owing more than their homes are worth.

The poll of 27 analysts taken Nov. 17-22 was more downbeat than a survey taken two months ago, which predicted small home prices rises next year of less than 1 percent on average.

With an excess of unsold homes holding prices down and more foreclosures expected, lawmakers and experts have floated various options for propping up the market until the economy improves and Americans start buying homes again.

But most of the economists polled were sharply critical of two of the main proposals: more purchases of mortgage-backed securities (MBS) by the U.S. Federal Reserve and a reduction in loan principal for struggling homeowners.
…
As well, 19 out of 26 who replied said prices could eventually recover without a major program to write down principal payments.

Opponents of such a scheme argue it would come with a hefty price tag, and such a measure would likely be politically sensitive heading into an election year.

Advocates say it’s the only way to head off another wave of foreclosures by keeping underwater borrowers in their homes and will speed up the recovery. Seven economists said house prices would not recover without a writedown plan.
“We see little prospect that any policy action will meaningfully impact the housing outlook over the next year,” said Sam Bullard, senior economist at Wells Fargo.

“Unfortunately, a sustained improvement in housing will not likely get underway until the mountain of foreclosures is cleared and the price discovery process plays out.”
…
Home prices as measured by the S&P/Case-Shiller home price index are expected to finish out this year down 3.3 percent compared with the 3.8 percent decline forecast in the September’s poll.

But prices are seen slipping 0.3 percent next year compared to September’s forecast for a 0.8 percent gain. Prices are expected to rise a meagre 1.5 percent in 2013.

Eighteen economists said they see prices bottoming in 2012, with 12 of those expecting it will happen in the first half of the year. Just one economist each said a bottom won’t be found until 2013 and 2014, while 7 said it has already happened.

Posted in Economics, Employment, Foreclosures, Housing Recovery, National Real Estate | 23 Comments

Town Mergers – Elegant solution or are we the suckers?

Posted on November 23, 2011 by grim

From the APP:

Gov: Mergers can help towns save tax dollars

Gov. Chris Christie threw state support behind the successful effort to consolidate the Princetons into one town, but said he is not sure how many more town mergers are in the forecast.

“This has been an effort in the works since 1953,” Christie said of the merger of Princeton Township and Princeton Borough, which is expected to be complete within a year and will reduce the number of New Jersey municipalities to 565.

“In New Jersey, as you know, it’s slow and steady. We eventually got there,” he said.

Christie held a town hall meeting Tuesday at the Princeton Public Library, here in the borough, taking a victory lap two weeks after residents of the two towns approved a merger referendum.

A study commission said combining the governments would save more than $3.2 million mostly through elimination of redundant administration and services. Christie sweetened the pot with a proposal for the state to pay for first-year consolidation costs and allowing towns to spread other transition costs over five years.

There had been three failed previous efforts to consolidate the Princetons, most recently in 1996.

Christie, accompanied by Princeton Township Mayor Chad Goerner and Princeton Borough Council President Kevin Wilkes, told an audience of 150 people that merging towns is one way to achieve local government savings and “challenge the status quo.’’

But consolidation is not for everybody, Christie said, and added that it can be encouraged by the state, but should not be mandated.

“I think locally driven discussions are the only way to do it,” he said. “It’s a contentious and emotional issue for some and also a complicated one.”

Currently, there is little other formal movement toward connecting towns aside from proposed unions of tiny Merchantville and larger Cherry Hill, and of Scotch Plains and Fanwood.

Posted in Economics, New Jersey Real Estate, Property Taxes | 156 Comments

October Home Sales Surprise (only slightly)

Posted on November 22, 2011 by grim

From the WSJ Developments Blog:

Behind the Numbers: Thankful for Existing-Home Sales

Here’s a reason for America’s real-estate agents to start celebrating Thanksgiving a few days early: Sales of previously owned homes in the U.S. — the biggest part of the market — unexpectedly climbed in October.

As we report, existing-home sales ticked up 1.4% from a month earlier, the National Association of Realtors trade group reports. Sales rose in the West, South and Midwest, but fell in the Northeast, which may have been slowed by an early-season snowstorm.

Economists surveyed by Dow Jones Newswires had expected home sales to fall by 2.2%.

While beating expectations is a good thing — and the hard-hit housing market could be near a bottom — demand remains weak because of the limping economy, elevated unemployment and tight lending standards that are preventing many would-be buyers from securing mortgage funding.

Plenty of consumers are also afraid that home prices, down 30% or more from the peak, aren’t done falling. And it doesn’t look like they are: October’s median sales price was $162,500, down 4.7% from $170,600 a year earlier.
…
Paul Diggle, economist, Capital Economics: “The modest rise in existing home sales in October may reflect the recent improvements in economic activity and the labor market. But a sustained and significant recovery in home sales is just not on the cards when large numbers of potential buyers are constrained by negative equity and tight credit conditions.”

Joshua Shapiro, economist, MFR: “Inventories are high relative to sales rates, and would be even more so if all those wishing to sell their home actually had the house on the market instead of keeping it off in the face of eroding prices.”

Ellen Zentner, economist, Nomura: “Despite more job gains this year, affordability remaining near record highs, and rising rents generally steering renters to buying, home sales have been unable to break out of a narrow range. Programs such as bulk sales to investors and speeding the process of foreclosure would go far in dispensing of the incredible overhang of REO properties.”

From Bloomberg:

Sales of Existing U.S. Homes Unexpectedly Increase

Sales of previously owned homes in the U.S. unexpectedly rose in October, a sign falling prices may be attracting buyers.

Purchases increased 1.4 percent to a 4.97 million annual rate, the National Association of Realtors said today in Washington. The median forecast of 75 economists surveyed by Bloomberg News was for a 4.8 million rate. The median house price dropped 4.7 percent from a year earlier, and the number of properties for sale was the lowest for any October since 2005.

Borrowing costs near a record low are helping homebuyers take advantage of housing that’s growing more affordable as prices drop. At the same time, the end of a temporary halt on foreclosures may push more properties onto the market, triggering further slides in value that may prevent the industry from recovering for years.

“The housing market is stabilizing, but it has a long road to a full recovery,” said Sal Guatieri, a senior U.S. economist at BMO Capital Markets in Toronto. “There are still a lot of depressed properties in the pipeline that will hit the market, and demand likely needs to strengthen above a 5 million annual rate to absorb the overhang of unsold homes and alleviate the downward pressure on prices.”

Posted in Employment, Housing Recovery, National Real Estate | 117 Comments

Bottoms up!

Posted on November 21, 2011 by grim

From the WSJ:

Housing Market May Be Nearing a Bottom

The housing market is starting to show a pulse.

For the first time in a long time, housing figures are coming in better than expected. The National Association of Home Builders’ sentiment index jumped three points this month to 20, its highest reading in over a year. Last week, the Commerce Department said building permits and construction of single-family homes rose in October. The Federal Reserve’s fourth-quarter loan survey showed a pickup in demand for mortgage loans.

Mission accomplished? Not quite. Construction is picking up but remains at historically depressed levels, and broader sales activity is still anemic. Indeed, the National Association of Realtors’ existing-home sales report, out Monday, is likely to show a second straight monthly decline in October to a seasonally adjusted annualized pace of about 4.8 million units. That would mean the sales rate has dropped by more than 10% so far this year.

Meanwhile, the foreclosure supply is ticking back up. After declining for three straight quarters, the percentage of loans on which foreclosure action has started rose in the third quarter, the Mortgage Bankers Association’s latest survey showed. This was partly due to remediation programs and the sunset of earlier foreclosure halts, the group said. The continued trickle of distressed properties is likely to keep downward pressure on home prices.
…
Bank of America Merrill Lynch economists expect the foreclosure process to speed up in nonjudicial states next year, with liquidations peaking in 2013. This is partly why they expect home prices to drop another 8% on average nationwide over the next 18 months before bottoming. This assumes a healthy pickup in sales; if customers shy away because of economic angst or tighter lending criteria, a rebound will take longer to materialize.

Still, six years after existing-home sales peaked, the market is at least edging toward a bottom. The biblical notion that seven years of famine follows seven years of feast may have something to it.

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

Under Pressure

Posted on November 20, 2011 by grim

Pressure pushing down on me
Pressing down on you
no man ask for
Under pressure – that burns a building down
Splits a family in two
Puts people on streets
It’s the terror of knowing
What this world is about
Watching some good friends
Screaming let me out
Pray tomorrow – gets me higher
Pressure on people – people on streets
(Under Pressure, Queen)

From the WSJ:

Homes Under Pressure

Those looking for signs of a recovery in New Jersey home values may need to take the long view, as more than 100,000 homeowners are dealing with foreclosures that are stalled in court and another 48,000 are way behind on mortgage payments.

The numbers were among the results of a national mortgage delinquency survey released this week that suggest a backlog of unresolved foreclosures in New Jersey could be a drag on home prices for years to come.

“Foreclosures place downward pressure on neighborhoods,” said Jeffrey G. Otteau, an appraiser and housing consultant. “Home prices are falling fastest in those urban and rural markets most affected by foreclosures.”

Sarah G. Laks, who runs a real estate and construction business, fought in court to head off a foreclosure auction on her five-bedroom home in Lakewood, NJ. She said the backlog of foreclosures was “hurting the building industry,” and she blamed the backlog on the difficulties in negotiating reduced payments with banks.

The delinquency survey, by the Mortgage Bankers Association, found that 8.1% of homes in New Jersey were in foreclosure in the third quarter.

It ranked second, after Florida, in the percentage of mortgages in foreclosure, surpassing Nevada, which was hard hit during the downturn. New York ranked fifth among all states, with 5.7% of homes in foreclosure, while Connecticut ranked ninth, with 4.8% reported in foreclosure. The figures are based on a survey of all homes with mortgages.

The high rankings were reported even though the region was spared the worst of the housing downturn, and has shown strong signs of stabilization: The shares of homeowners with newly delinquent mortgages were below average in the region, and a small fraction of those in Florida and Nevada.

The foreclosure figures were so high in the region because New York, New Jersey and Connecticut all require that foreclosures be handled through court proceedings. These in turn were delayed by complaints about robo-signing: bank employees signing documents without knowing they were accurate.

In New Jersey, major banks suspended most mortgage filings last December, until banks could demonstrate that there were no irregularities in their foreclosure practices. The banks were permitted to resume mortgage activity in August and September, but an appellate court decision in August added new requirements and uncertainty for banks, further delaying many foreclosures, court officials said.

Posted in Economics, Housing Bubble, Housing Recovery, New Jersey Real Estate | 29 Comments

NJ Unemployment Falls to 9.1%, 2,500 net jobs created in October

Posted on November 18, 2011 by grim

From the Star Ledger:

NJ unemployment falls and jobs increase as state shares in slowly growing U.S. economy

New Jersey’s unemployment rate dropped to 9.1 percent last month as private businesses added 4,000 jobs, state officials announced today.

It was the third month in a row that the New Jersey unemployment rate dropped.

“Since January, seven of the nine monthly changes have been positive,” said Rutgers economics professor Joseph Seneca. “The increase since that time, 38,600 private sector jobs, puts the state on the best pace for private sector job growth since the late 1990s.”

Seneca said it was a good sign that in the October unemployment report, the unemployment rate fell and the workforce expanded.

That differed from previous months such as September when the unemployment rate dropped despite lost jobs, perhaps because some people stopped looking for work and weren’t counted for the rate.

Even September’s mixed report got a little rosier this week as the state announced that an estimated loss of 11,000 jobs that month had been revised downward to only 5,000 jobs lost after more information was gathered from employers.

“The pace is not gangbusters, but it’s positive,” said Seneca. “In October, the country added 104,000 private sector jobs. New Jersey added 4,000 of those. It’s participating in the national expansion.”

A continuing negative in New Jersey’s job market was the loss of 1,500 public sector jobs, and Seneca said that trend is likely to continue as the state and local governments grapple with fiscal constraints. (I beg to differ, the fact that we can show gains while reducing the size of goverment is a huge positive – jb)

From the APP:

NJ unemployment dips as state creates 4,000 private-sector jobs

New Jersey’s economy pumped 4,000 jobs into the private sector in October, even as public employment shrunk, the state reported Thursday.

A survey found the state’s unemployment rate fell to 9.1 percent from 9.2 percent in September, according to the New Jersey Department of Labor and Workforce Development.

“This is an encouraging report,” said Rutgers University economist Joseph Seneca. “It affirms that private-sector growth is continuing in New Jersey.”
…
It comes as New Jersey’s labor market has tried to gain traction after a devastating recession cost the state 269,000 jobs.

In October, private-sector employment increased by 4,000 jobs, while the public sector, which is still contracting, dropped 1,500 jobs, the state said, for a net gain of 2,500 jobs.

“The rebound in the job count in October, along with the drop in the unemployment rate, suggests that the state’s economy continues to move forward,” said Charles Steindel, chief economist for the New Jersey Department of Treasury, in a statement. “The pace of improvement is much less than we all desire, but we are going the right way.”

Posted in Economics, New Jersey Real Estate | 99 Comments

What to make of “hyperlocal” recoveries? Noise? Something more?

Posted on November 17, 2011 by grim

From US News:

Are Things Looking Up for the Housing Market?

For-sale home inventories are dropping nationally while median sales prices are rising, according to new data released Wednesday, a rare but encouraging sign of renewed optimism in America’s feeble housing market.

Inventories declined 3.48 percent from September to October, according to Realtor.com, and are down 20.77 percent from one year ago. Median list prices, which have remained essentially unchanged since June, were up 2.65 percent nationally year over year.

“These developments can be viewed as a positive sign that the market has stabilized and in some parts of the country, has begun to recover,” the report said. “Lower inventories combined with generally stable list prices can be seen as a positive sign that the overall market is holding its own.”
…
To be sure, there’s still plenty of variation across the country. After all, real estate is nothing if not hyper-local. Markets remain fragile, particularly those with high unemployment rates and large numbers of seriously delinquent borrowers, which threatens to add to an already gigantic shadow inventory.
…
Still, some markets have begun to rally and show nascent signs of recovery, even as others continue to struggle. Parts of Florida, some of the hardest hit by the housing market decline, have consistently posted improving list prices and reduced inventories. Indeed, median list prices remain well below their pre-crisis peaks. Florida held the top five spots for markets with the largest year-over-year median list price increases in October. The Fort Myers and Miami metro areas saw the largest year-over-year increases, posting 33 and 25 percent price upticks respectively.

On the flip side, markets at the epicenter of the original housing market implosion—Las Vegas and parts of California—continue to lag. In addition, markets such as Chicago and Detroit, which didn’t see the meteoric run-up in building and home prices, are now experiencing some of the most severe price declines. Home prices in those midwestern cities sunk almost 13 and 11 percent respectively.
…
While the housing market still has a lot of ground to make up, key indicators are beginning to point in the right direction, experts say. Regional variation will persist as some markets fare better and others lag due to external economic pressures and the continuing fallout from foreclosures, overbuilding, and homeowners with negative equity.

Posted in Economics, Housing Recovery, National Real Estate | 124 Comments

Bye bye middle class burbs

Posted on November 16, 2011 by grim

Sound familiar? Where have all the middle class neighborhoods gone? Seems like in Jersey, it’s becoming more and more common to have to either stretch far above one’s income to afford a nice neighborhood, or have to settle for something much much worse. The middle ground still exists, but it seems like you need to move further out to find it.

Will the trend continue? If so, welcome to bizzaro-world, where stretching for the unaffordable home is a more fiscally sound option. Buying the affordable home, which exists within a neighborhood falling into disrepair seems like a sure way to lose money long term, as resale values suffer as a result.

From the NY Times:

Middle-Class Areas Shrink as Income Gap Grows, New Report Finds

The portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a new study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent.

The study, conducted by Stanford University and scheduled for release on Wednesday by the Russell Sage Foundation and Brown University, uses census data to examine family income at the neighborhood level in the country’s 117 biggest metropolitan areas.

The findings show a changed map of prosperity in the United States over the past four decades, with larger patches of affluence and poverty and a shrinking middle.

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.

The study comes at a time of growing concern about inequality and an ever-louder partisan debate over whether it matters. It raises, but does not answer, the question of whether increased economic inequality, and the resulting income segregation, impedes social mobility.

Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.

But the shift is more than just changes in income. The study also found that there is more residential sorting by income, with the rich flocking together in new exurbs and gentrifying pockets where lower- and middle-income families cannot afford to live.

Posted in Economics, National Real Estate | 113 Comments

Who matters more? Rich or poor?

Posted on November 15, 2011 by grim

From Bloomberg:

NJ Taxes Cause Rich People to Move, Economist Says

New Jersey’s high taxes drive out wealthy residents, slowing the state’s recovery, said Charles Steindel, the state treasury department’s chief economist.

Property, income and estate taxes are the top reasons people leave, said Steindel, who released a study of federal tax data and a survey of financial advisers today at an economic forum in Trenton organized by the treasury department.

overnor Chris Christie, a first-term Republican, has twice vetoed measures sponsored by Democrats that would have raised income taxes on residents earning $1 million or more. Senate President Stephen Sweeney, the state’s highest-ranking Democratic lawmaker, said last week his party would push again for passage of a so-called millionaire’s tax.

“There is a relationship between state tax rates and where people move,” Steindel, a former senior vice president of the Federal Reserve Bank of New York, told reporters. “The higher tax-rate states generally lose more people every year.”

Steindel released the results of a survey of subscribers to the state’s online newsletter, which includes financial advisers to high-wealth clients. More than half of the respondents said their clients had recently left or expressed interest in leaving, Steindel said.

Three-fourths of those who expressed interest in leaving have annual incomes over $100,000, while 15 percent earn more than $1 million, according to the survey.
…
The survey by Christie’s administration is at odds with an August study by the Washington-based Center on Budget and Policy Priorities, which found that housing prices and job opportunities have more impact on migration patterns than tax rates. The group advocates more spending on government programs for the poor.

The center’s study, conducted by researchers at Stanford University, examined New Jersey’s 2004 tax increase on income exceeding $500,000. It found that migration among that group increased at a similar rate as those not subject to the tax.

“For two years we’ve treated millionaires with kid gloves and it has not worked,” Sweeney told reporters Nov. 10 in Trenton. “We’re going to fight with this governor when we know he’s wrong.”

Posted in Economics, New Jersey Real Estate | 120 Comments

White Elephant Returns to Jersey

Posted on November 14, 2011 by grim

From the Star Ledger:

McMansions swell the real eastate market as homebuyers think small

Ten years ago, when their grandchildren were young and visiting often, Frank and Rosemary Santoloci bought a brand new five-bedroom, four-bathroom home on four acres in Sparta.

There was ample room to play indoors, swim in the pool and and spend time outdoors.

But now the boys have gown up and don’t come over as frequently, so last spring, the couple put their home on the market. The house sold within four months — after they cut the price.

The Santolocis are among the lucky ones.

There is a glut of these McMansions on the market in the suburbs throughout New Jersey, real estate agents and analysts said.

Certain homebuyers once prized these large houses, tucked away on a few acres of land and featuring half a dozen bedrooms, grand entranceways, and three-car garages.

But in the face of the economic collapse, declines in personal wealth, a tight housing market, and a shift of what prospective homeowners want, all that has changed.

Major demographic changes could also make the market shrink even further in the next five years, as baby boomers retire and look to downsize. The generation behind them is smaller and has less money and a desire to live closer to urban centers.

“We definitely have an oversupply of inventory for the so-called McMansions,” said Mary Pat Spekhardt, a real estate agent with Coldwell Banker in Sparta who worked with the Santolocis.

“Houses are staying on the market double the time that they used to, and everyone is frustrated,” she said. “We can’t make buyers, though, that’s the problem. We market, market, market the house and make the house stand out, but the buyers are few and far between.”

In New Jersey, it would take 14.6 months to sell the current inventory of houses listed between $600,000 and $1 million, according to real estate analyst Jeffrey Otteau, president of Otteau Valuation Group. The only houses that are selling are those with unique features, like an inground pool or a media room in the basement, agents said.

And the issue is only going to get worse.

Posted in Economics, New Development, New Jersey Real Estate | 168 Comments

Lawyers and tanks and mold, oh my!

Posted on November 12, 2011 by grim

From the NY Times:

What Lies Beneath, and Behind

ON top of the obvious hurdles to getting a home sale finalized these days, some brokers say hidden environmental issues are more often showing up at the last minute: a new inspection turns up an underground oil tank no one knew was there; air quality monitoring suggests mold is growing behind basement wallboards; or perhaps the radon levels are high.

“Lately many of our transactions have been harder to make due to things you can’t see with the naked eye,” said Karen Eastman Bigos, a broker with the Towne Realty Group in Short Hills.

The reason stems in part from the rigors of a market in which every dollar of value is crucial to buyers. To meet their expectations, their lawyers are more demanding about having every possible test done to uncover hidden liabilities, she and other brokers said. (Lawyer reviews of contracts are required before any house closing in New Jersey.)

At the same time, there is less public money available for environmental cleanup. The state’s program to assist homeowners with the cost of oil tank removal ran out of money in May. New applications are still being taken, the state Department of Environmental Protection announced, but there is a backlog, and no new money was allocated this year.

Ms. Bigos said her agency had had a spate of recent issues with abandoned oil and gasoline tanks.

In some cases, “we have all the paperwork, the tank was closed and filled with sand by a licensed company, all by permit, all with inspections,” she said, “but lawyers want the tanks out of the ground anyway.”

In others, a previously undiscovered oil tank — sometimes a second one — has turned up on a corner of a lot where inspectors using metal detectors didn’t look before, Ms. Bigos said.

According to several tank removal specialists, standard practice used to be a scan encompassing only the area within 20 feet of a house. But in older communities with mansions set on huge lots — Llewellyn Park in West Orange, for instance — old gasoline tanks are often found buried near garages, said Christopher M. Tiso, the president of ATS Environmental in Sparta.
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Lawyers today usually urge buyers to insist that an oil tank be retested or removed — even if it has been properly certified as having been shut down cleanly. Ms. Bigos estimated that as many as 25 percent of “properly” abandoned tanks were discovered to have ground leaks when retested at the behest of buyers. Mr. Tiso said he believed it was more like 35 percent.

Mr. Tiso, whose company also works on septic-tank issues, says that even when a property is being sold as-is, or is a short sale or foreclosure listing, he recommends a full inspection. “If the property is owned by the bank, and there’s a problem that could wind up being really expensive to fix,” he said, “then it’s on the record that it is the bank’s responsibility.”

Posted in New Jersey Real Estate | 66 Comments

Do foreclosures even matter anymore?

Posted on November 10, 2011 by grim

From Bloomberg:

Foreclosure Filings in U.S. Rise 7% as Bank ‘Rain Delay’ Eases

U.S. foreclosure filings rose 7 percent in October to a seven-month high as lenders started to speed up action against delinquent borrowers after a yearlong review into documentation, according to RealtyTrac Inc.

A total of 230,678 properties received notices of default, auction or repossession, compared with 214,855 in September, the Irvine, California-based data seller said today in a report. One in every 563 U.S. households got a filing.

Notices plunged almost 31 percent from October 2010, when banks and loan servicers began slowing the process after complaints over the way they handled documents for defaults and home seizures. The monthly gain in filings signal that a “rain delay” in foreclosures may be easing, according to RealtyTrac Chief Executive Officer James J. Saccacio. The backlog has been partly to blame for a stalled U.S. housing recovery, he said.

“Sloppy paperwork, government intervention, a slow economy and lack of confidence is a giant concoction lengthening the process,” Saccacio said in a telephone interview.

He estimated that the U.S. housing market needs as long as 40 months to clear a glut of distressed homes that includes properties with negative equity. Almost 29 percent of Americans with a mortgage owe more than their property is worth, Zillow Inc. said this week.
…
Default notices increased 10 percent in October from September and rose to an 11-month high in so-called judicial states, where most bank delays had been occurring because the courts oversee foreclosures. Default filings jumped 28 percent in Florida, 50 percent in Pennsylvania and 61 percent in Indiana from September, according to RealtyTrac.

Total default notices were down 23 percent on a year-over- year basis.

U.S. auction notices climbed 8 percent from September, including a 22 percent increase in judicial states. They rose 57 percent in Florida, 43 percent in Minnesota and 38 percent in Illinois. Total scheduled auctions were down 38 percent from October 2010.

Home seizures jumped 4 percent from the previous month, while falling 27 percent from a year earlier. They climbed sequentially by 40 percent in Michigan, 45 percent in Oregon, 48 percent in New Jersey and 73 percent in Indiana, according to RealtyTrac.

Posted in Foreclosures, Housing Bubble, Housing Recovery, National Real Estate | 223 Comments

Princetons to merge – A new trend for NJ?

Posted on November 9, 2011 by grim

From Bloomberg:

Two Princeton Towns in New Jersey Vote in Favor of Consolidation

Voters in the two New Jersey towns that share the Princeton name with the Ivy League university approved a ballot measure to merge.

The proposal to combine the 1.9-square-mile Princeton Borough, which includes the downtown shopping and dining area, and the surrounding 16.6-square-mile Princeton Township passed in the township with 3,542 in favor and 604 against, and in the borough with 1,238 for and 828 against, according to unofficial results posted on Mercer County’s website.

Governor Chris Christie, a first-term Republican, endorsed the plan, offering to pay 20 percent of the total $1.7 million cost. The towns had rejected at least three earlier consolidation attempts, most recently in 1996.

Christie, who took office in 2010, is urging New Jersey’s 566 municipalities to combine operations to help stem growth in property-tax bills, the highest in the U.S. Governors in Ohio and Pennsylvania are asking local officials to do the same. Property-tax collections, the main income source for municipalities, dropped 1.2 percent, to $88.5 billion, in the second quarter from a year earlier, the third-straight decline, the U.S. Census Bureau reported in September.
…
The borough, with about 12,300 residents, has a median home value of $619,700 and household income of $106,551. The township, with about 16,300 people, has a median home value of $760,900 and household income is $105,662, according to data from the municipalities.
…
A group called Preserve Our Historic Borough argued that a forecast $3.1 million in annual savings was overestimated by at least $1 million. Unite Princeton disagreed, saying the towns were aligned culturally and economically, and would never realize such savings on their own.

Princeton borough has $51 million of debt outstanding, while the township has $56.1 million, according to data compiled by Bloomberg. Standard & Poor’s rates the borough AA+, the second-highest grade, and the township its top AAA.

The two towns share more than a dozen services including animal control, solid waste and fire. They have their own police departments, each with 30 sworn personnel. In both cases, police is the largest cost, $3.5 million in the borough and $3.8 million in the township, according to the center’s report. Their 2010 budgets combined totaled $65.1 million.

Posted in Economics, New Jersey Real Estate, Politics | 190 Comments