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.
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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

Any equity left to cash out?

Posted on November 8, 2011 by grim

From HousingWire:

Freddie Mac cash-out levels hit 16-year low

Monday, November 7th, 2011, 3:34 pm

About 82% of homeowners who refinanced in the third quarter either decreased or maintained their principal balance, up from 77% in the previous quarter according to Freddie Mac.

Cash-out borrowers, those who increased their balance by at least 5%, made up 18% of all refinancings in the third quarter, a significant decline from the average of 46% between 1985 and 2010.

Cash-out — or home equity converted to cash — levels also hit a 16-year low at $5.3 billion, down from $6.3 billion in the second quarter and from the peak of $83.7 billion in the second quarter 2006. (Holy Cow! From $83.7 billion in a single quarter to $5.3 today, what a change. -jb)

“Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings,” said Frank Nothaft, Freddie Mac vice president and chief economist.

The median interest-rate reduction was about 1.2 percentage points for a 30-year fixed-rate mortgage. Over the first year of the refinance loan life, these borrowers will save about $2,500 in interest payments on a $200,000 loan, Nothaft said.

Posted in Economics, Mortgages, National Real Estate | 163 Comments

Lenders slow to foreclose after the green light to go ahead

Posted on November 6, 2011 by grim

From the Record:

Legal issues slow foreclosures

In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Posted in Foreclosures, Housing Bubble, Housing Recovery, New Jersey Real Estate | 103 Comments

Recovery being led by gold coast condos?

Posted on November 4, 2011 by grim

From the NY Times:

A Bright Spot in the Condo Market

EVEN here — in a city that has been one of New Jersey’s most fertile breeding grounds for condominiums — construction has been virtually at a standstill since construction financing dried up several years ago.

“Nobody seems willing to take a chance on putting up anything but rentals anymore,” an exasperated Hudson County developer said last month.

But Martin Brady, the vice president for sales at the Marketing Directors, a company that markets both condominium and rental buildings in Manhattan and New Jersey, said the appetite for condos was growing stronger in Hudson County because developers had adjusted to more “value-conscious” buyers.

“The right product — efficiently sized, well priced, with amenities and finishes that are beautiful but not over-the-top — is well received,” Mr. Brady said.

Toll Brothers’ new 1450 Washington building here — a 156-unit building named for its street address — may be a case in point. Toll, which has a history of successes in Hoboken, started construction in August 2010, when sales pace for condos was generally at its weakest.
…
“We’ve already sold a third of the units,” said Benjamin D. Jogodnik, a senior vice president of the Toll Brothers City Living division, recently, “and we don’t have a formal sales office open yet.” (A sales office is set to open on Nov. 10 at the nearly complete building, called 1450 Washington, which is its address.)

There are signed contracts for 45 units, and deposits in advance of signings on another 8.The condo, expected to open for occupancy in March, is part of Toll Brothers’ waterfront complex in northeastern Hoboken. It stands across the street from the Hudson Tea building, a onetime factory that was a rental until Toll converted it to condos in 2006, and just east of Harborside Lofts, another factory building converted to condos, in 2007.

Hudson Tea and Harborside Lofts were priced near the top of the scale at the time they were created. At Harborside Lofts, which is now entirely sold, studios started at $450,000 and penthouses ranged up to $2.5 million.
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“Since then the economy has shifted — obviously,” Mr. Jogodnik said. “We studied the market very carefully before designing a product that would appeal to the group in the widest section of the pyramid of today’s buyers.”

In neighboring Jersey City, said Mr. Brady of Marketing Directors, 47 contracts have been signed since July at a new building at Liberty Harbor, the community being developed by Peter Mocco in slow phases on a 28-acre site adjacent to the historic Paulus Hook and Van Voorst neighborhoods.

The Liberty Harbor units are “efficiently designed, 650 to 700 square feet, with hardwood floors, granite counters, stainless steel appliances, priced from the high $200,000s to the low-to-mid $300,000s,” Mr. Brady said.

When condo construction virtually ceased in Hoboken, Mr. Brady said, finished condos slowly continued to sell — even at the priciest level. The 38 condos on upper floors of the W Hoboken Hotel originally sold out quickly in 2008 when asking prices were set at $1.7 million. A number of those sales then fell apart, and about a dozen units were put back on the market.
…
As for 1450 Washington, prices for studios start in the low $300,000s; one-bedrooms in the high $300,000s; two-bedrooms in the low $600,00s; three-bedrooms with a minimum of 1,500 square feet in the mid-$900,00s. On higher floors in the two-tiered building, prices are somewhat higher.

Posted in Housing Recovery, New Development, New Jersey Real Estate | 202 Comments

Both economists and meteorologists predicting long winter

Posted on November 3, 2011 by grim

From HousingWire:

Clear Capital: Home prices begin their descent

October home prices fell 2.8% from a year earlier, the 13th straight month of such declines, according to Clear Capital.

Home prices increased 0.6% from the previous three months, which flattened out from the 3.5% in gain the month before.

Alex Villacorta, director of research and analytics at Clear Capital, said homebuyer demand is expected to decay even more in the coming months as the flow of distressed inventory continues.

“October home price gains have leveled out, confirming what our data has pointed to over the last several months,” Villacorta said. “Short term gains have been nearly eliminated while longer term performance measures point to mostly negative territory through the turn of the year.”

Three of the four U.S. regions posted home price gains, but they were well off their summer growth. Prices increased the most over the past three months in the Midwest at 2.6% and fell 1% out West.
…
“We can expect another long winter as the housing market will truly be put to the test against these downward forces,” Villacorta said.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 94 Comments

Mob extorts subprime lender, not sure who the crook is

Posted on November 2, 2011 by grim

From the Post:

Mortgage firm is Mafia Inc: feds

It was a hostile corporate takeover — Mafia-style.

The son of jailed former Lucchese boss Nicodemo “Little Nicky’’ Scarfo used the trusted mob technique of extortion to gain control of a cash-rich mortgage company — and then loot it for millions, according to federal prosecutors in New Jersey.

“The [mob’s] criminal activities have evolved from the back alleys to the boardrooms,” said Michael Ward, FBI agent-in-charge in Newark, said of the stunning scheme.

Nicodemo “Junior’’ Scarfo, 46, and 12 others, including an accountant and five lawyers — one, David Adler, from tony Chappaqua, NY — were nailed in the scheme involving Irving, Texas-based FirstPlus Financial Group, authorities said.
…
Instead of targeting a more typical Mafia staple such as a restaurant or illegal-gambling racket, the mobster offspring and his cronies zeroed in on FPFG, which had been raking in millions from its subprime-mortgage business at the height of the real-estate boom, the feds said.
…
“They saw the potential, they saw this small company that was cash-rich, looking to do a restructuring,” one law-enforcement source told The Post. “They saw an opportunity to exploit. It was wrong place, wrong time” for the firm.

The group began threatening the board of directors — and their families — to get them to vote their way, or else.
…
In another instance, when Pelullo was trying to get enough directors to vote his way, he allegedly screamed at an associate: “I don’t care if [any voting members] are in a funeral parlor, I don’t care if they’re in a f–kin’ hospital respirator, we’ll send somebody there.

“I want their vote, I want their signature, and I want it done by the close of the day today.”

The scheme netted $ 12 million by bleeding FPFG dry. The money was laundered by manipulating mergers of sham shell companies they owned and engaging in phony consulting contracts, prosecutors alleged.

Posted in Humor, National Real Estate, Risky Lending | 92 Comments

Careful with that claim, you might just get screwed twice

Posted on November 1, 2011 by grim

From the Record:

Storms may push homeowners’ insurance rates higher

Homeowners’ insurance rates may go up as insurers seek to offset losses expected from the unusual pre-Halloween snowstorm that socked the region on Saturday, and from Hurricane Irene and other severe weather, according to industry observers.

“Rates usually don’t go up because of one storm,” said Loretta Worters, vice president of the Insurance Information Institute. “If there’s been a lot of disasters in certain areas over a period of years, there could be higher premiums where they see there is a lot of loss in a particular area.”

Some homeowners’ rates have already gone up this year, said Jennifer Manthey, a customer service representative at insurance brokerage Insurance Center of North Jersey in Hackensack, which received about 10 homeowners’ claims Monday morning.

“It’s unfortunate when people have been paying premiums for 20 years and they put in a small claim and their rates go through the roof,” Manthey said.

The average cost of a homeowners policy in New Jersey in 2008 was relatively modest at $691, ranking 25th among the states, according to the latest statistics available from the National Association of Insurance Commissioners. That was below the national average of $791. The highest-priced state was Texas with an average annual premium of $1,460.

Last year a number of insurers received permission to raise homeowners’ rates. The state’s top homeowner policy underwriter, State Farm Fire and Casualty, was granted permission for a 4.6 percent increase.

Most of the claims for this weekend’s storm will be from fallen trees and limbs damaging automobiles and roofs, Worters said. Tree removal is covered only if the tree hits a house under most policies.

J. Robert Hunter, an insurance expert from the Consumer Federation of America, said that even with high losses this year from storms and tornadoes, the property and casualty industry is flush with capital, and most insurers shouldn’t need to raise rates. Snowstorms such as the one that hit the region this weekend should already be figured into pricing models, he said.

“Theoretically, there shouldn’t be a major impact,” Hunter said. “Sometimes insurance companies use the opportunity of events like these to try to raise rates they wanted to raise anyway.”

Posted in Economics, New Jersey Real Estate | 97 Comments

Only thing better than a double dip, is a triple dip

Posted on October 31, 2011 by grim

From CNN/Money:

Home prices heading for triple-dip

The besieged housing market has even further to fall before home prices really hit rock bottom.

According to Fiserv, a financial analytics company, home values are expected to fall another 3.6% by next June, pushing them to a new low of 35% below the peak reached in early 2006 and marking a triple dip in prices.

Several factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv’s chief economist.

Should home values meet Fiserv’s expectations, it would make it the third (and lowest) trough for home prices since the housing bubble burst.

The first post-bubble bottom was hit in 2009, when prices fell to 31% below peak. The First-Time Homebuyer Credit helped perk prices up by mid-2010, but by the time the credit expired, prices fell again.

In the second dip, which was reached last winter, prices were down 33%before staging a mild rally that was artificially spurred as banks slowed the processing of foreclosures following the robo-signing scandal, which found that loan servicers were rapidly signing foreclosures without properly vetting them.
…
Even after the housing market begins its comeback in mid-2012, the recovery is predicted to be modest at best. Nationwide, Fiserv is projecting that home prices will climb just 2.4% between June 2012 and June 2013.

A few individual metro areas will do better, with 31 of the 385 markets Fiserv monitors expected to pile up double-digit gains. Another 71 markets are expected to post increases of 5% or better.

Posted in Economics, Housing Bubble, National Real Estate | 78 Comments

Snoctobergeddon Open Discussion

Posted on October 29, 2011 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 | 100 Comments

September pending home sales up YOY, but slip on the month

Posted on October 28, 2011 by grim

From Inman:

Pending home sales index rises from one year ago

A monthly index that tracks pending sales of U.S. resale homes rose in September compared to a year ago, while falling on a month-to-month basis, the National Association of Realtors reported today.
…
NAR’s Pending Home Sales Index, which measures real estate sales contracts signed but not yet closed, increased 6.4 percent year over year, to 84.5, in September. On a monthly basis, the index declined 4.6 percent. The index typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group.
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The index rose on an annual basis in all four U.S. regions. The Midwest saw the greatest increase, up 12.3 percent to 71.5. The region also saw the greatest month-to-month index decline, down 6.2 percent.
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The Northeast saw a 4 percent index increase compared to a year ago, to 60.6, and a monthly decline of 4.7 percent.

From Bloomberg:

Pending Home Sales Decreases by 4.6%

The number of contracts to purchase previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand.

The 4.6 percent decrease in the index of pending home sales, the biggest since April, followed a 1.2 percent drop the previous month, the National Association of Realtors said today in Washington. Economists forecast a 0.4 percent gain, according to the median of 38 estimates in a Bloomberg News survey.

Consumer sentiment at depressed levels, unemployment above 9 percent and limited access to credit are preventing Americans from taking advantage of near record-low mortgage rates and discounted pricing on homes. The prospect of more foreclosures adding to supply and further weighing on prices means any recovery in housing may take years.

“Sales continue to bump along the bottom,” Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “A meaningful recovery in sales will likely not occur until the mountain of foreclosures and pending foreclosures clears.”

Estimates for pending home sales ranged from a drop of 1.5 percent to an increase of 2.8 percent, according to the Bloomberg survey. Pending sales rose 7.9 percent from September 2010.

Posted in Employment, Housing Recovery, National Real Estate | 120 Comments

One one hand, it’s not getting any worse, on the other, it’s not getting any better

Posted on October 27, 2011 by grim

From NJBiz:

N.J. home sales flat as U.S. data show improvement

Sales of new single-family homes in September were up 5.7 percent from August, but 0.9 percent lower than September 2010 sales, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development.

In New Jersey, though, sales of new homes have remained pretty much unchanged.

“The housing market has been moving sideways since May,” said Jeffrey Otteau, president of East Brunswick-based Otteau Valuation Group, which provides information on real estate trends. “The bottom was reached in New Jersey in May. Since then, there has no longer been a decline in sales, but we haven’t seen any improvement either.”

Otteau cited a decline in consumer optimism and slow job creation as significant factors in home sales.

“Housing demand is, at the root level, driven by job creation,” he said. “You have to be working and have an income if you want to make that very expensive purchase.”
…
“On the one hand, it’s positive news that New Jersey has hit the low point,” Otteau said. “On the other hand, we have not seen any improvement or recovery yet. We expect this slowdown will continue into next year.”

Posted in Economics, Housing Recovery, New Jersey Real Estate | 161 Comments

NJ/NY Metro prices down 3.4% in August

Posted on October 26, 2011 by grim

From the Record:

Home prices dropped 3.4 percent in August

What’s new: Home prices in the New York metropolitan area, which includes North Jersey, dropped 3.4 percent in August, compared with August 2010, the Standard & Poor’s/Case-Shiller index reported on Tuesday.

Nationally, home prices declined 3.8 percent year over year. However, prices were up slightly from July to August, both nationally and in the region.

What it means: Prices in the area have returned to the levels of spring 2004, and are down almost 22 percent from the market peak in mid-2006. Nationally, prices are back to mid-2003 levels, and about 31 percent below peak levels.

Home prices have been under pressure because of elevated unemployment, which makes it more difficult for potential buyers to afford homes, as well as tighter mortgage standards and a continuing high percentage of short sales and foreclosures on the market. These distressed properties tend to sell at a discount.

What’s happening locally: Single-family home prices slid 4.5 percent, to a median price of $480,000, in Bergen County from August 2010 to August 2011, while the number of sales rose 13 percent. Prices dropped 8 percent, to a median $259,169, in Passaic County, while the number of sales declined 10 percent.
…
What they’re saying: “Whether prices have established a bottom depends on future foreclosure activity, which is likely to increase as servicers address the legal/administrative issues that have cropped up over the past three years.”

Posted in Housing Bubble, Housing Recovery, New Jersey Real Estate | 150 Comments

Relationship between taxes, services, and debt too complex for Jersey taxpayers to grasp

Posted on October 25, 2011 by grim

Fallacy: The taxes we pay this year, pay for the services we use this year.

Taxes will continue to rise because we need to pay for services consumed in earlier years. The amount of taxes paid in a single year does not pay for the services consumed in that year, because municipal and state governments can borrow money beyond your ability to pay it back. Now, to balance the spending, we need to both consume fewer services than in those previous years, while simultaneously paying higher taxes to cover the previously borrowed debt. When you are paying higher taxes for reduced services this year, thank the old guy down the street, and the politicians he voted for, because they didn’t pay their fair share. What you don’t understand Mr. Mintz, is that it’s you who are the problem.

Rant off.

From the Daily Journal:

Christie’s Cuts – Higher property taxes, fewer cops, rising crime rates in some areas

First, the good news: Property tax increases have slowed in many New Jersey towns.

But the bad news is that many residents have seen municipal services cut as their taxes continue to climb.

Cities and suburbs all over New Jersey have laid off police officers and other public employees in the past 12 months as a drop in state aid and lingering economic doldrums have put the squeeze on municipal finances.

While many towns were able to keep property tax increases at or below a newly imposed 2 percent cap, municipal officials have been forced to cut jobs and slash services to keep from raising taxes even more.

The average property tax bill in New Jersey rose $167 this year, to $7,754, according to a New Jersey Press Media analysis of certified property tax rates in 545 of the state’s 566 municipalities. (The 21 other municipalities, including some of the state’s largest cities, have not yet set their rates.) New Jersey has been home to the highest average property tax in the nation for a number of years.

From 2010 to 2011, the average property tax bill rose 2.2 percent, slightly more than half of the 4.1 percent increase seen a year earlier.

The smaller increase is little consolation to people like Ocean County resident Barry Mintz. Property taxes on his home in Brick Township are now $8,500, up from about $5,000 when he moved in just 12 years ago. As taxes rose, municipal services declined, he said.

“We used to have twice-a-week garbage collection and now it’s down to once a week,” Mintz, 71, said. “When you downsize the public works department and cut services, what am I paying for?”
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New Jersey government payrolls, including local, school, county and state workers, dropped by 29,000 at the end of last year, down to 622,000 jobs, according to the federal Bureau of Labor Statistics.
…
Gov. Chris Christie pledged to shrink the size of government during his 2009 campaign.

His spokesman Michael Drewniak last week said New Jersey has experienced “a remarkable turnaround, when you look at the skyward trajectory of state and local spending and resulting property tax hikes year after year in the decade before this administration arrived in Trenton.”
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In Camden, the average property tax bill rose 10 percent, to $1,363.

In Newark, it rose 5.9 percent, to $6,063.

In Paterson, where 125 police officers were laid off, property tax bills jumped 17.4 percent, to an average of $8,833.

“Anyone who is honest and realistic with themselves knows that New Jersey and its municipalities were living beyond their means for way too long,” Drewniak said.

Posted in New Jersey Real Estate, Property Taxes | 103 Comments

August Case Shiller Predictions

Posted on October 24, 2011 by grim

Where do you think home prices went in August?

From HousingWire:

Zillow: Case-Shiller likely fell 3.8% in August

Two key indices of home prices likely fell in August, suggesting large numbers of foreclosures and continued high joblessness are acting as a drag on the market, according to a new forecast.

The Case-Shiller 20-city composite home price index, scheduled to be released on Tuesday, likely fell 3.8% in August from a year earlier and 0.3% from July on a seasonally adjusted basis, said a forecast from Zillow Inc. chief economist Stan Humphries. The downward trend will continue through the end of the year, he predicts.

“We expect to see continued home value depreciation as unemployment and negative equity remain high,” said Humphries. “The large foreclosure pipeline will produce relatively low priced REOs in the market, putting downward pressure on prices going forward, and we do expect the pace at which homes exit this pipeline to pick up in the near-term.”

The Case-Shiller 10-City composite index is expected to register a seasonally adjusted decline of 3.5% in August from the previous year, and 0.2% compared to July.

“After showing monthly appreciation earlier this year and building some momentum, recent weak economic data is starting to be reflected in home values,” Humphries said. “Existing home sales have been disappointing, with September sales down 3% from August.”

Humphries is bearish on the overall housing market for at least the next year.

A survey of more than 100 economists by Pulsenomics shows the median expectation for that group is a decline in the Case-Shiller 20-city index of 2.8% in the fourth quarter from the final three months of 2010. Zillow, on the other hand, is projected a 4.5% decline, and then another 2.5% drop from the fourth quarter of 2011 to 2012.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 136 Comments

Few takers for flooded Jersey homes

Posted on October 23, 2011 by grim

From the Record:

After the floods, sellers face lower prices

Even before you open the door, you smell the mildew inside the white-brick house in Lincoln Park, a block from the Pompton River. Two feet of water sloshed into the first floor after Hurricane Irene hit, coating the furniture with dried river mud and destroying the floors and walls.
…
Before the flood, the house was for sale, with an asking price of $269,000, down from $309,000. Now it’s off the market, and its future is unclear.

“It’s really not salable at this point,” says listing agent Tina Dobsa of Re/Max Legends in Wayne.

The house is a stark illustration of the plight of many homeowners in North Jersey flood zones who want to sell. The problem for them is that buyers may prove just as unwilling to face the thought of flooding. When a few years pass between floods, buyers are more willing to accept the risk in exchange for a price that’s typically 10 percent to 25 percent below that of similar homes on dry ground.

But after repeated floods over the past two years, “there’s not enough time to forget,” says Pat Lowe, a Coldwell Banker agent in Wayne. As a result, values in flood zones have plummeted in a housing market that’s already weak.

“People are really going to take a hit on this,” says Jennifer Barone, an agent with LeConte Realty in Hasbrouck Heights.

“Nobody’s going to buy a house in a flood zone,” Dobsa says. “What kind of value would you put on it?”

“The only thing sellers can do is lower the price,” says Dan Weixeldorfer, broker at Re/Max Legends in Mahwah. “You can’t move the house and you can’t erase the stigma. There’s a value for everything; if the price is low enough, people are willing to take the risk.”
…
Sal Poliandro, a Re/Max agent in Saddle River, says the only calls he’s gotten on flood properties in Passaic County are from investors, often offering less than $100,000.

And since the hurricane, buyers are on the alert for any hint of flood problems, real estate agents say.

“The first question everyone asks is if the owners got water,” says Angele Ekert, a Coldwell Banker agent in Ridgewood. “I showed a home where the sellers had recently painted and paneled the basement. The agent assured us there was no water during the hurricane, but my buyer is certain they are hiding something.”
…
Appraiser Michael Keough of Pompton Lakes says homes in the area sold for more than $300,000 at the market peak.

What properties in the flood zone will actually sell for — and how long it will take — is still a question, Keough says.

He says some homeowners are so devastated and disgusted by the repeated floods that they are simply walking away, allowing the lenders to take the properties.

Kathy Brown, who lives on Lincoln Avenue next to the house that exploded, also says several of her neighbors say they won’t return to their flood-damaged homes.
…
Elizabeth Briseno says that when she and her boyfriend bought their Pompton Lakes home in December 2008, they were told they needed flood insurance but that there hadn’t been a claim in decades. But they’ve been flooded twice this year — in March and after Hurricane Irene. More than $20,000 worth of their belongings were destroyed, Briseno says.

Making matters worse, both are out of work and unable to pay the mortgage.

They are attempting to sell the house as a short sale, asking $150,000 — less than half of what they paid three years ago. Even at $150,000, they’ve gotten no offers, says Poliandro, their agent.

“The flooding has changed the real estate market,” Briseno says. “There’s no one buying here now.”

Posted in Economics, New Jersey Real Estate | 40 Comments