Shiller hints at lower home prices

Posted on June 10, 2011 by grim

From the Record:

Home prices may drop another 25%, Shiller predicts

Home prices may drop as much as 25 percent, after inflation, over the next five years, economist Robert Shiller, co-founder of the Standard & Poor’s/Case-Shiller home price index, said Thursday.

“A 10 to 25 percent further decline in real home prices over the next five years would not surprise me at all,” Shiller said at a Standard & Poor’s housing summit in New York.

Shiller, a Yale professor, said it’s possible that the market will follow the grim path seen in Japan after a 1980s housing bubble. Property values there declined every year for about 15 years, dropping by two-thirds overall, he said.

But he cautioned that he was not making a forecast, saying that since the recent housing boom-and-bust cycle was the biggest in U.S. history, he can’t use previous housing patterns to figure out where this market is headed.

“It’s impossible for statisticians to forecast,” he said. “I honestly don’t know.”

Other housing analysts have recently predicted that prices will continue to drift lower this year and “bounce along the bottom” for a while, but the loss mentioned by Shiller is larger than most experts have forecast.

Shiller was joined Thursday by a number of housing experts, most of them also pessimistic about the housing market’s short-term prospects.

Keith Fox, president of McGraw-Hill Construction, which tracks the building industry, predicted that about 640,000 single- and multi-family units will be built in the U.S. this year. While that’s an improvement over the past few years, it’s well below the 2.2 million units produced in 2005.

“You can clearly see how depressed this market remains,” Fox said. And when residential construction dries up, other types of construction – including retail, schools, offices, and even roads – also slow down, because there are fewer new homeowners to use them, he said.

Fox said, however, that residential construction should post healthier gains in 2012 and 2013.

Other analysts said the high rate of homes in the foreclosure process will continue to weigh on the market. Diane Westerback, a managing director at Standard & Poor’s, said clearing the market of foreclosure properties will take longer in states such as New Jersey, where lenders must go through the courts to repossess homes. Foreclosure activity has slowed to a crawl in the state as lenders try to prove that they are following the correct legal procedures, after questions were raised last fall.

Christopher Mayer, a professor at Columbia University, said that homes on the market, plus those that will be dumped on the market because their owners can’t pay their mortgages, add up to about 1 1/2 years’ worth of housing inventory. Given those numbers, he said, “house prices are going to continue to fall.”

Thomas Gleason, a housing finance executive from Massachusetts, brought up the old adage, “May you live in interesting times.”

“As my kids would say, ‘Been there, done that,'” he said. “I’d like to live in a time where there’s a fully functioning housing market. That would be really interesting.”

Posted in Housing Bubble, National Real Estate | 217 Comments

June Beige Book

Posted on June 9, 2011 by grim

From the Federal Reserve:

Beige Book – New York District Summary

The Second District’s economy has continued to expand since the last report, though at a somewhat diminished pace. Labor market conditions have continued to improve modestly. Retail sales have held steady at favorable levels since the last report. Consumer confidence reports have been mixed. Tourism activity picked up in April but tapered off a bit in early May. Commercial real estate markets have been relatively stable. The residential purchase market has been steady to somewhat softer, but the rental market has continued to improve; new residential construction remains low. Finally, bankers report further weakening in consumer loan demand, tighter credit standards on the commercial sector, and higher delinquency rates on consumer loans but somewhat lower delinquencies in other loan categories.
…
Construction and Real Estate

Housing markets across the District have been mixed since the last report: the home purchase market has been steady to somewhat softer, but the rental market has continued to strengthen. Buffalo-area Realtors report steady market conditions, with sales activity and pending sales down from a year earlier but prices up roughly 5 percent. More broadly, home prices have been running moderately ahead of a year earlier across most of upstate New York, despite pockets of weakness in metropolitan Rochester and Albany. However, prices in the New York City metropolitan area, including northern New Jersey and southwestern Connecticut, have drifted down slightly and are modestly lower than a year ago.

An authority on New Jersey’s housing industry reports that sales of existing homes have slowed since the last report, and new home sales remained depressed. A sizable inventory of foreclosed properties–roughly equal to nine months of sales–is reported to be putting downward pressure on home prices overall. However, low volume and a sizable incidence of distressed sales make it difficult to gauge price trends in northern New Jersey. Activity in New York City’s co-op and condo market was mixed but generally stable since the last report, with Manhattan, Brooklyn and Bronx holding steady–in terms of both prices and sales activity. Some softening was evident in Queens and Staten Island. Long Island’s market has been stable, though conditions have weakened in the Hamptons, where sales activity is off, especially at the high end.

In contrast with the sluggish purchase market, rental markets have performed fairly well, particularly in New York City: Manhattan rents are reported to be up roughly 6 percent from a year ago. Moreover, when the widespread withdrawal of landlord concessions is factored in, the rise in effective rents has been steeper. Rental vacancy rates have drifted down. Contacts in both New York City and northern New Jersey see relatively little new residential construction, and note that most new and proposed development is for rental housing.

Commercial real estate markets have been largely steady since the last report. Office markets showed signs of modest improvement in New York City, Long Island, and most of upstate New York, as vacancy rates edged down while asking rents were steady to up slightly. However, market conditions weakened somewhat in northern New Jersey, Westchester and Fairfield Counties, and in the Albany area. Industrial vacancy rates rose in Long Island but were little changed in other markets. In much of the District, asking rents on industrial properties, which had been declining through the end of 2010, have leveled off or moved up modestly in recent months.

Posted in Economics, New Jersey Real Estate | 148 Comments

Zillow: Foreclosures 25% of the Market (and rising!)

Posted on June 7, 2011 by grim

From HousingWire:

Foreclosures approach 25% of the housing market: Zillow

ales of homes foreclosed on in the previous 12 months made up 24% of the market in April, up from 16% one year ago, according to data compiled by Zillow.

It’s the 10th straight month of increases and yet another record high. There are still plenty of properties either in foreclosure or on the verge of it. Recent data puts the number of this shadow inventory at roughly 4.5 million.

And as these properties take more and more of the market share away from new or traditional sales, losses continued.

In April, 37.2% of homes sold for less than the previous purchase price, down only 1 basis point from the previous month and still 30% higher than one year ago.

The value of these homes fell as well, dropping 0.77% from the previous month and 8% from one year ago. However, Zillow Chief Economist Stan Humphries said values didn’t drop as far as they did between in November and December – a 0.89% dip – signaling some improvement in the trend.

A disparity between which homes are losing value continued in April. The most expensive one-third of homes in each market lost 0.74% in value, while the least expensive one-third of homes lost nearly a full percentage point in value.

A recent study from Altos Research showed signs of a volatile housing market for some time to come. Humphries adds the April data shows depreciation rates are improving in the Spring but not quickly enough to reach a bottom this year. JPMorgan Chase analysts recently pegged a new bottom for home prices for the summer of 2012.

Posted in Foreclosures, Housing Bubble, National Real Estate | 199 Comments

A hint of recovery in the NYC condo market?

Posted on June 7, 2011 by grim

From HousingWire:

Manhattan condos fall short of pre-recession price points

Manhattan condo prices regained 16% of their value in the past two years, but still remain 12% below pre-crisis levels, according to Radar Logic’s latest RPX Manhattan Condominium price report.

In March, Radar Logic priced the average Manhattan condo at $1,017 per square foot, up from $923 in 2009, but still below the $1,213 price point established in 2008.

Despite condos regaining some of their value these past two years, the Manhattan market still grapples with lackluster sales in this segment, the RPX report said. March condo sales were down 18% from 2008’s peak level, and the total condo transaction count fell 3% this past March when compared to year-ago levels.

In terms of where activity is occurring in Manhattan, the RPX report says larger units are pulling in more buyers. The sale of units in the 900- to 1,500-square-foot range grew year over year, while sales in the 450-to 900-square-foot market fell over last year in March.
…
Researchers with Radar Logic concluded that “the shift toward larger units has contributed to an improvement in the Manhattan Condominium RPX price relative to last year, as larger units command higher prices per square foot than smaller units.” Even still, the report stipulated that Radar Logic is not “comfortable calling it a recovery” just yet.

The Manhattan neighborhoods reporting the largest year-over-year price gains included Chelsea/West Village, where prices rose 23.4%; the East Village/Lower East Side, where prices jumped 16.6%, and Soho/Tribeca, where prices are 14.7% higher.

Posted in Economics, National Real Estate | 161 Comments

New Record or Super Lowball?

Posted on June 6, 2011 by grim

From the Asbury Park Press:

Rumson mansion sells for $12 million

A spectacular grand estate on the Navesink River in Rumson built by Pete and Judi Dawkins sold for $12 million on Friday, a figure less than half the initial $29.9 million asking price.

The 18-room house at 80 W. River Road — 18,000 square feet with six bedrooms and seven bathrooms — was sold to an unidentified area buyer, said the buyer’s agent, Kelly Zaccaro, a sales associate with Gloria Nilson Realtors Real Living in Rumson.

“They bought this because it was really beautiful and very well-done,” Zaccaro said. “It was the most amazingly built house. The attention to detail they put into it was beyond anything I have ever seen.”

The selling price breaks the previous record — last July’s $9.9 million for the seaside Spring Lake mansion formerly owned by the late New Jersey Devils owner John McMullen — on the Monmouth/Ocean Multiple Listing Service. A private sale for a waterfront home on Navesink River Road in Middletown netted nearly $13.2 million in 2005, and is now on the market for $11 million.

The Dawkins house was originally listed at $29.9 million in March 2010 by Turpin Realtors in Tewksbury before it dropped to $19.5 million in July. The Dawkins’ real estate agent had no comment on the sale. John Turpin, the agency’s broker-of-record, could not be reached.
…
Dawkins and his wife, Judi, bought the property over 10 years ago for $4.5 million. After a year, they decided to dismantle the existing house. They brought in noted architect Bernard Wharton, who designed their dream house, which was completed in 2004.

Posted in Economics, Shore Real Estate | 119 Comments

The gem of Newark

Posted on June 3, 2011 by grim

From the NY Times:

The Suburban Side of Newark

PRETTY much as in any suburb around northern New Jersey, prices in the Forest Hill section of this city are down, the sales pace has slowed, and short sales and foreclosures have increased.

The intriguing part of that situation, of course, is that Forest Hill is not suburban. It is a highly unusual neighborhood in the state’s largest city, and one of its poorest.

Newark at large, real estate professionals say, has about 18 months’ worth of inventory on the market right now; last year, at some points, there was more than two years’ worth.

“But Forest Hill is not Newark,” said P. J. Calello of the Calello Agency, a family company that has owned and managed property in the neighborhood for 25 years. “It’s part of Newark, but not in the real estate sense.”

One house on Lake Street here, a seven-bedroom five-bath Georgian colonial built in 1920, sold for $849,900 last year, having gone into contract four months after it was listed. In May, the six-bedroom brick colonial at 514-516 Highland Avenue, priced in the high $400,000s, went into contract after just four weeks.

Other houses — especially those at the fringes of the state-designated historic district in Forest Hill, and those priced above $500,000 — took longer to sell, or did not sell at all, even after a year or more, multiple listings show.

“The point is not that this is what always happens,” said Kenneth M. Kroll, who bought the Lake Street house with his partner, David Johnstone, moving into Newark from Rutherford last fall. “But it does happen that bigger, more expensive homes still sell here. Even in a recession, or an economic malaise, or whatever we are calling it, this place is special.”

Chockablock with Victorian architectural gems that coexist in close proximity to midcentury ranches and aluminum-sided two-family houses, the neighborhood is not gated or marked off in any way; yet it has always stood apart.

“ ‘Where are we?’ people always seem to ask when they drift over from the cherry blossom festival in Branch Brook Park, or come through on a tour bus,” said Rolando Bobadilla, who moved to the neighborhood from Brooklyn with his wife and children.

Frederick P. H. Cooke, an architect who rents a place in Forest Hill and is looking to buy, agreed. “Most people don’t know the neighborhood exists,” he said, explaining that he had first become aware of it when he was renting in downtown Newark and joined a book club in Forest Hill.

Most of the mansions in Forest Hill, so called because it sits on a ridge between Branch Brook and the Passaic River, were built by factory owners and other prosperous citizens from 1870 to 1920.

Posted in New Jersey Real Estate | 257 Comments

Will reduced loan limits kill the high-end?

Posted on June 2, 2011 by grim

From HousingWire:

Lower loan limits deadline may not boost housing prices

The Federal Housing Finance Agency is expected to reduce conforming loan limits on mortgages guaranteed by Fannie Mae and Freddie Mac this October. The hopeful anticipation is that demand driven by buyers looking to beat the deadline this summer will also drive up prices, thereby reducing recent dips in home values.

But the rush may have less of an effect than thought, according to some analysts, and likely won’t last.

The limits were originally raised in February 2008 as part of the economic stimulus, allowing the government-sponsored enterprises to guarantee more loans and more of the market at a time when private capital had all but vanished.
…
Anthony Sanders, a professor of real estate finance at George Mason University said the scramble to get ahead of the conforming loan limit cuts – which would drive up costs for loans higher than the new limits – could push prices back up.

“But that will be a short-lived blip, much like the Administration’s tax credit,” Sanders said in a blog post this week.

Alex Villacorta, the senior statistician at data analytics firm Clear Capital, which called the double-dip two months before S&P/Case-Shiller, took a look a closer look at the data and found that lowering the conforming loan limits may not have such a drastic boost on prices.

Villacorta pointed to Marin, Calif. specifically. There, the conforming loan limit will like be cut to $625,500 from $729,750, which equates to a 14% drop. Since February 2008, when the new loan limits were set, Marin home prices for this upper-tier pricing segment have already dropped 25% as of the end of the first quarter.

“I think prices will rise for homes between the old and new limits,” Villacorta said. “In that range it certainly could happen. But, really, to get a better gauge is to see how many buyers are really in this segment. In that range, it’s a very small percentage.”
…
For these higher-end markets such as Marin, San Francisco and New York, prices might actually fall off come October as the buyer pool in these areas drop off without the government guarantee on higher-valued loans. Still, Villacorta said like the current volatility, there will be many variables to blame.

“You would be hard pressed to base another drop in prices on any decrease in the buyer pool or the conforming loan limits alone,” Villacorta said. “There’s already a significant amount of factors causing the drop.”

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate, Risky Lending | 128 Comments

Double Dip for New Jersey Home Prices

Posted on June 1, 2011 by grim

From the Record:

Home-price index at lowest point since 2006 bust

Home values have slid into a “double dip,” dropping more than 3 percent in March from a year earlier, the Standard & Poor’s Case-Shiller index reported Tuesday.

“Home prices continue on their downward spiral, with no relief in sight,” said David Blitzer, chairman of the index committee at Standard & Poor’s.

Values in the New York metropolitan area, including North Jersey, declined 3.4 percent in March from a year earlier. Nationally, home prices were down 3.6 percent.

Prices in the region have returned to the levels of January 2004, while national prices are back to the levels of mid-2002. Standard & Poor’s declared a double dip because values have dropped below the recent low point, hit in April 2009.

Prices were shored up in 2009 and 2010 by an $8,000 federal tax credit for home buyers. But after that credit expired last year, demand for homes plummeted and prices began trending down again. Hence, the double dip.
…
Case-Shiller does not break out sale prices by county, but according to the N.J. Multiple Listing Service, Bergen County single-family home prices rose 2.5 percent, to a median $410,000, from March 2010 to March 2011. According to the Garden State Multiple Listing Service, Passaic County single-family prices declined 18 percent to a median $242,040.

These numbers reflect the mix of properties sold during the month, so if a large number of lower-priced homes are sold, for example, that will tend to skew values lower. Case-Shiller is considered a more reliable measure of home values because it tracks the value of the same properties over time.

Several North Jersey real estate agents said they were not surprised to hear of the lower Case-Shiller numbers.

“Since the end of the tax credit, we anticipated a slowdown and we clearly saw it,” said Linda Port, a Re/Max agent in Paramus.

“I have seen prices come down a bit,” said Maryanne Elsaesser, a Coldwell Banker agent in Wyckoff. “Sellers seem to be holding firm on what they will accept, and buyers are holding firm on the max they will pay.”

Lisa Molnar, an appraiser with Skyline Appraisals in Ringwood, said values are holding steady among the most sought-after properties — such as lakefront homes or homes in Ridgewood, with its commuter train station and well-regarded school system.

But prices are sliding, she said, in Warren and Sussex counties, as well as in Paterson and Passaic, where most of the sales are foreclosures.

Posted in Employment, Housing Bubble, New Jersey Real Estate | 190 Comments

Case Shiller March Home Prices

Posted on May 31, 2011 by grim

From Bloomberg:

Home Prices in U.S. Probably Kept Falling as Housing Absent From Recovery

U.S. home prices probably slumped in March by the most in 16 months, indicating residential real estate will keep weighing on the expansion, economists said before a report today.

Property values in 20 cities dropped 3.4 percent from March 2010, the biggest year-over-year decline since November 2009, according to the median forecast of 25 economists surveyed by Bloomberg News ahead of a report from S&P/Case-Shiller. Other reports may show manufacturing slowed in May and consumer confidence rose as fuel costs eased.

“Weak demand and a deluge of discounted sales of distressed properties have weighed significantly on prices,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It’s hard to be enthusiastic about the economy’s prospects as long as house prices are falling.”

A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. The figures come as recent reports on manufacturing and consumer spending show the economy is slowing.

The Case-Shiller report is due at 9 a.m. New York time. Estimates for the year-over-year change in March home prices ranged from declines of 4.9 percent to 2.8 percent. Economists surveyed projected the gauge of residential real-estate values decreased 0.2 percent in March from the prior month, the same as in February, after adjusting for seasonal variations.

Posted in Economics, National Real Estate | 147 Comments

Stay off my beach!

Posted on May 28, 2011 by grim

From the WSJ:

Another Fight on Jersey Shore

The quest for easy access at the Jersey Shore could be a thing of the past.

State regulators have proposed allowing every town to decide where—if anywhere—to provide parking, bathrooms and other necessities for families packing up and heading to the beach, frustrating people who were hoping for stricter policies that would force towns to accommodate sun-worshippers. Towns’ plans would need state approval.

It’s a reversal from a Corzine administration policy that tried to create standardized rules, such as requiring towns to provide round-the-clock parking and public facilities every half-mile. The state was paying for shore maintenance, and courts had ruled beaches are open to the public up to the high water mark.

But those rules were struck down in 2009 after the town of Avalon sued, and the New Jersey Department of Environmental Protection is trying a new approach.

State officials promise access will be the same, or better, and they say they’re frustrated with claims to the contrary. Towns will have the option to supplement statewide regulations that require new developments to have access points.
…
Still, some say it’s just wrong for towns to all but block beaches and waterways that belong to the public. It’s not simply about walkways or openings to the sand. In essence, parking and bathrooms contribute to truly open access, said Helen Henderson, a policy advocate with the American Littoral Society.

“That’s not something that the DEP can remove, any more than they can the right to free speech,” she said. “We have these fundamental rights that exist.”
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Mr. Cantor said there were a handful of towns that people complain about: Sea Bright, Deal, Loveladies, Mantoloking and some sections of Long Branch. He said the state is working with those towns to create plans. Towns that don’t comply could face stricter and more expensive permitting, as well as be ineligible for applying for certain state funds. Some of those penalties are not in current regulations, but will be included soon, he said.

That’s not good enough for Ms. Henderson.

“We don’t trust them, and we don’t trust the municipalities to do right by the people,” Ms. Henderson said. “That opportunity has been there in the past and it hasn’t been fulfilled.”

From CBS2:

Proposed Beach Access Changes Along Jersey Shore Drawing Mixed Reaction

To some New Jersey beachgoers, it’s like getting sand kicked in their face.

A new proposal may allow individual shore towns to determine rules for beach access, and that means shore-lovers could get shut out of their favorite beaches, reports CBS 2′s Christine Sloan.

While people will have no problem lying out on the beach for this Memorial Day Weekend, environmentalists said that by the end of the summer, they may have a tougher time getting on the more exclusive beaches in New Jersey.

The state’s Department of Environmental Protection wants to relax rules, allowing shore towns to create their own beach access plans.

“The rule proposal gives more power to the towns, and we think it’s a mistake because historically, some towns – only a handful – have restricted beach access,” John Weber said.

Weber, who works with an organization called Surfrider that’s fighting the proposal, pointed to exclusive towns like Bay Head and Mantoloking. He said they’ve made it difficult to use their beaches by providing little parking, no bathrooms and excessive rules.

If the proposal goes through, Weber said, they could have more power to limit access.

Tourist Emily Wilson said she sees nothing wrong with that.

“It’s nice to have a sense of community, where you go on the beach and know it’s only your neighbors or people renting your neighbor’s house,” she said. “It keeps it nice and private.”

Posted in Shore Real Estate | 128 Comments

Happy days are here again!

Posted on May 27, 2011 by grim

From the Record:

“Liar loans” still available, but not for everybody

Stated-income mortgage loans, which do not require borrowers to verify their income, came to be known as “liar loans” during the subprime lending bust when many of the loans went bad and widespread lying about incomes came to light.

Surprisingly, more than 2 1/2 years after the crash of Lehman Brothers, despite a nascent government crackdown on reckless lending, stated income loans are still available to those who know where to look in this slow market.

Hudson City Savings Bank, which is known as a conservative lender, has been making stated income loans for 15 years or more, and still makes them. Spencer Savings Bank, based in Elmwood Park, stopped doing them a few years ago but brought them back in February.

It’s still legal to make such loans, which are also called “low-doc” or “no-doc” loans, but for borrowers they are more expensive and lenders make it hard to lie.

“We don’t want people to tell us they’re a kindergarten teacher making half a million dollars a year,” said Thomas Laird, chief lending officer at Hudson City, the largest New Jersey-based bank.

“The asset position has to be commensurate with the income they are purported to have. They’ve got to be very high quality credit borrowers and they have to have 35 percent or more down in order to qualify,” Laird said.

Borrowers also pay an interest rate half a percentage point higher than conventional loans.

“We are extremely careful with this product,” said Mercedes Pedrick, vice president and director of mortgage originations at Spencer Savings, which has 19 branches in Bergen, Passaic, Morris, Essex, and Union counties.
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“If they have a savings pattern that shows they are making the kind of income they are telling us they are making, even if they’re not necessarily showing it to Uncle Sam, they may qualify [for a stated income loan],” Laird said.

Eventually investment bankers started buying the loans and securitizing them, Alverson said. During the real estate bubble in the mid 2000s the loans were made to many amateur real estate speculators of modest means, and many of those loans soon were in default, Alverson said.

“Everybody wanted to be the next Donald Trump.”

Posted in Housing Bubble, New Jersey Real Estate, Risky Lending | 147 Comments

“It is an industrial-strength upgrading.”

Posted on May 26, 2011 by grim

From the APP:

CEOs more optimistic about N.J. economy

New Jersey’s chief executives are more upbeat about the state’s economy than previously, but many plan to cut costs this year, a survey released Wednesday said.

The survey, presented at the New Jersey Economic Policy Summit, showed a significant positive attitude adjustment by chief executive officers toward the state’s economy and business climate.

Nearly three-quarters of CEOs rated New Jersey’s economy as fair or good, up from just over a third in a late 2009 survey, according to the results outlined by economist James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

And 59 percent said the economy will get better over the next 12 months, a rosier outlook than the previous survey in which that sentiment was shared by just 38 percent.

“This is a sharp rebound for the state,” Hughes said. “It is an industrial-strength upgrading.”

It comes as the state continues to struggle with job growth. After shedding 117,700 jobs in 2009, New Jersey gained 5,200 private sector jobs in 2010. In the first four months this year, the state added 19,800 private sector jobs.

“We are certainly moving in the right direction,” Hughes said. “Despite the new positives, New Jersey, like the nation, remains in a deep employment hole.”
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“While many challenges lie ahead, this is a very positive survey showing that the state’s economy and its policies affecting business are improving and heading in the right direction,” said Phillip Kirschner, president of the New Jersey Business and Industry Association, an organizer of the New Jersey Economic Policy Summit.
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New Jersey’s economy has gotten better during the past 12 months, 42 percent of respondents said, while 8 percent think it has worsened.
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Nearly a third, 32 percent, expect to hire New Jersey employees this year, up from 15 percent in the last survey. Almost three-quarters expect higher revenues in 2011, up from 64 percent in the late 2009 survey.

Almost 75 percent have hired employees during the economic recovery following the Great Recession, while 68 percent have increased wages.

Still, there were rough spots, as 78 percent said they planned to reduce, or continue to reduce, costs in 2011, up from 76 percent in the last survey.
…
“While the results also show that New Jersey is still viewed as having a long way to go in terms of its tax structure and regulatory environment as compared to other states, attitudes clearly have gotten better,” Hughes said.

Posted in Economics, Employment, New Jersey Real Estate | 116 Comments

Who said the high-end was immune?

Posted on May 25, 2011 by grim

From Bloomberg:

Greenwich’s Priciest Homes Languish With Four Years of Supply

It’s been more than 500 days since Stanley Cheslock put his 26,000-square-foot Greenwich, Connecticut, “dream home” on the market for $17.95 million.

The house and its surrounding estate — custom built by Cheslock in 2003, with a movie theater and 3,700-bottle wine cellar — is waiting for a buyer who sees the current asking price, $15.95 million, as a bargain.

“It’s a steal,” said Cheslock, a co-founder of an investment firm, who has knocked almost 50 percent off the price he was asking when he first tried to sell the property five years ago. “It’s way underpriced.”

Homes priced at $10 million and above are accumulating on the market in Greenwich, a town about 30 miles (48 kilometers) north of Manhattan that’s known as the U.S. hedge fund capital. They’re moving so slowly that it would take more than four years to sell them all, the biggest backlog since at least 2004, according to Mark Pruner, an agent with Prudential Connecticut Realty. Wall Street’s greater emphasis on deferred compensation, in which a portion of an annual bonus will be paid in the future, has stifled demand, he said.

“Our market moves very closely with the financial markets,” Pruner, based in Greenwich, said in an interview. “Deferred compensation has totally hammered the over-$10 million market because people just aren’t getting large amounts of cash, and that market has traditionally been a cash market.”

Fifty-two houses in that price range were listed for sale as of May 19, according to Pruner. Four have sold this year and two are in contract. At that pace, it would take 52 months to sell the inventory, he said. If that backlog remains through the end of the year, it would be the biggest in his data going back to 2004.
…
“Previously, if you got a $10 million bonus, buying a $5 million house wasn’t that big a deal” said Pruner, who estimates that about half of all homebuyers in Greenwich work in the financial industry.

“If you get $20 million — $3 million in cash and 17 in deferred compensation — are you going to borrow another $2 million in cash to buy a house? I don’t think so,” he said.

Posted in Economics, Housing Bubble, National Real Estate | 168 Comments

Pessimistic outlook for new home sales in April

Posted on May 24, 2011 by grim

From Bloomberg:

Purchases of New Homes in U.S. Probably Held Near Record Low

Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.

New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.

The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.

“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.

The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.
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Douglas Yearley Jr., chief executive officer at Toll Brothers Inc., the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”

Posted in Employment, National Real Estate, New Development | 159 Comments

Jersey Shore Triptych

Posted on May 23, 2011 by grim

From Fox Philly:

Summer Shore Rentals On The Rise

As Memorial Day weekend, the unofficial start of the summer season, approaches, most people have their eyes on a Jersey Shore vacation, and some are saying vacation rentals are on the rise.

In Ocean City, N.J., rentals are already up from last summer. Real estate specialists on the shore say that it might actually be difficult to find an available rental property this late in the season if you haven’t already started looking.

From the Record:

Shore tourism outlook is bright

The summer forecast is bright for Shore travel, which accounts for about two-thirds of the state’s $39 billion tourism industry.

An improving economy, along with vacationers’ desire to stay close to home in the face of high gasoline prices, will boost Shore visits this summer, according to a recent “shorecast” panel at Richard Stockton College in Atlantic County.

Tourism officials are already seeing signs of growth.

“Parking revenues, rentals, hotel accommodations and beach tag sales — all strong indicators of what kind of season we expect to have — are way ahead of last year’s pace,” Michele Gillian, executive director of the Ocean City Chamber of Commerce, said at the panel discussion. And last year was pretty strong, thanks to hot, dry weather.

In interviews, tourism officials said that website visits and requests for travel brochures are up significantly over last year. Diane Wieland, director of the Cape May County Department of Tourism, has seen an increase in vacation home rentals and hotel reservations in the southern Shore towns.

While the Shore draws most heavily from New Jersey, New York and Pennsylvania, tourism departments have increased their marketing in Quebec. The Canadian dollar is worth slightly more than the American dollar, making U.S. vacations more affordable for Canadians.

“There are an estimated half-million Canadians who travel to New Jersey each year,” Wieland said.

Lori Pepenella, a marketing executive at the Southern Ocean County Chamber of Commerce, said that weekend and day visits to Long Beach Island are already running ahead of last year.
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But economic stresses continue to force visitors to economize where they can. Tourism officials say visitors are choosing shorter stays — day trips or weekend getaways — and asking about lodging that includes kitchenettes, so they can avoid spending on restaurant meals. That trend has been in place since the recession began in late 2007.

From the Philly Inquirer:

Taking the backroads to the Shore

Heading to the Shore over an expressway isn’t for everyone. Some folks prefer the backroads.

But for the experienced trekker, writing down the names of the roads can be tricky. Notes can include phrases such as “past the car dealerships,” “that farm stand with the peaches,” “that graveyard” and “666.”

Jersey Shore backroads can be hard to pin down. Except for adventurous drivers wandering off the Atlantic City Expressway or Garden State Parkway’s standard routes with a map or GPS in hand, most Shore routes were handed down by parents and grandparents. They started their summer vacations before the Atlantic City Expressway opened in 1964, and ahead of the Garden State Parkway’s completion in 1957.

“I grew up with parents trying to figure out the back way to avoid part of the Garden State Parkway by going through, parallel, and over it,” says Kathryn Quigley, 44. Her family drove from Northeast Philadelphia to Stone Harbor along a route that included “the TAC” (i.e. the Tacony-Palmyra Bridge), a “restaurant with a triangle-shaped roof, and the bathrooms were out back.”

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