It was different this time

Posted on March 27, 2011 by grim

From the NY Times:

A Housing Market Cycle Different From Others

(Click the link for the accompanying charts)

TO judge by the overall level of home sales in the United States, the housing market has stabilized at a level well below the peak period of 2005 and 2006 but still higher than the sales rates that characterized prosperous periods in the 1980s and 1990s. Still, few of those sales are of new homes and a rising proportion are forced sales of homes no longer worth the amount that was borrowed.
…
The sales rate for existing homes — about 4.9 million over the last 12 months — is virtually the same as in mid-1999. Yet sales of newly built single-family homes have plunged to the lowest levels seen since the government began collecting statistics on such sales in 1963. The Census Bureau reported this week that only 17,000 new homes were sold in February, for an annual rate of 250,000 after taking seasonal factors into account. Both of those numbers are the lowest on record.
…
As a result, this cycle has been very different from previous ones. Home sales plunged in the early 1980s, when a combination of severe recession and high interest rates devastated the housing business, and they also suffered in 1990 and 1991, another recessionary period. But in each of those recessions, sales of new and existing homes declined at about the same pace.

It was decreased demand that hurt sales in previous downturns. Now demand is down, in part because some would-be buyers cannot qualify for mortgages that would have been available during the boom. But oversupply is also a major problem now.

Too many houses were built in many areas during the boom, and now housing starts have plunged, as can be seen in the bottom chart. There are fewer newly built homes available, and in some areas, buyers complain that builders have not been willing to cut prices to meet the prices available on used homes in the same area.

But there is a large number of used homes available. The National Association of Realtors estimates that almost two of every five used homes sold in February were on the market because the previous owner was in trouble. It says 26 percent of sales were from foreclosures, and an additional 13 percent were “short sales,” in which the lender agrees to allow the homeowner to sell the home for less than the outstanding balance of the loan. Sellers often have little say in the timing of such sales, and are in a poor bargaining position.

Posted in Economics, Housing Bubble, National Real Estate | 51 Comments

NJ unemployment up to 9.2 as discouraged return to labor force

Posted on March 25, 2011 by grim

From the Star Ledger:

N.J. unemployment rate rises as ‘discouraged workers’ resume job search

New Jersey added 7,500 jobs in February, but the state’s unemployment rate actually edged up as formerly “discouraged workers” re-entered the workforce, according to data released today by the state Department of Labor.

The unemployment rate rose to 9.2 percent, from 9.1 percent in January, as discouraged workers — used to describe those who gave up looking for work — are now resuming their job search, department officials said.

The workforce participation rate, which is used to calculate the unemployment rate, includes those who are employed and anyone who is looking for work. Due to the new additions, that rate increased to 65.5 percent last month, from 65.3 percent in January.

New Jersey also shed more jobs in January than previously estimated, according to the revised data. The state lost 15,800 jobs in the first month of the year, substantially higher than the preliminary estimate of 13,000.

But the data still shows considerable improvement compared to a year ago, when the state’s unemployment rate hit 9.7 percent.

From New Jersey Newsroom:

N.J. Labor Officials: 7,500 found work last month but unemployment at 9.2 percent

Long term job figures show growth of 17,200 private sector jobs between February 2010 and February, in contrast to the previous year’s loss of 96,600 private sector jobs between February 2009 and February 2010.

In January, 15,800 people lost their private sector of government jobs. If the department’s figures are correct and 7,500 people found work, that would mean 3,836,400 New Jerseyans are employed but another 399,500 remain jobless.

In addition, New Jersey personal incomes are on an upswing, labor officials said. According to the U.S. Bureau of Economic Analysis, the state’s aggregate personal income — an estimate of income earned by all residents — was $450.7 billion (at an annual rate) for the fourth quarter of 2010. This is a new record high and is 2.9 percent above the value for the fourth quarter of 2009.

“The income gain is one of the most encouraging signs yet that New Jersey’s economy is emerging from the recession,” Charles Steindel, the state Treasury Department’s chief economist.

The majority of the employment gain was recorded at private sector businesses, which added 6,800 jobs over the month as six of ten industry super-sectors recorded job gains. The number of government jobs increased by 700 in February.

Posted in Economics, Employment, New Jersey Real Estate | 184 Comments

New home sales post record low (if you trust the numbers, or if it even matters)

Posted on March 24, 2011 by grim

From Bloomberg:

U.S. New-Home Sales Unexpectedly Decline to Record-Low 250,000 Annual Pace

Purchases of new U.S. homes unexpectedly declined in February to the slowest pace on record and prices dropped to the lowest level since December 2003, adding to evidence the industry is floundering.

Sales decreased 16.9 percent to a 250,000 annual pace, figures from the Commerce Department showed today in Washington. Economists surveyed by Bloomberg News projected a gain to a 290,000 rate, according to the median estimate. The median price fell 8.9 percent from the same month in 2010.

Builders are struggling to compete with existing homes as foreclosures add to the overhang of unsold properties and drive down values. The figures underscore the Federal Reserve’s view that the housing market “continues to be depressed” even as the rest of the economy improves.

“We’ve got this tug of war going on where we’ve got this very weak housing sector and a manufacturing sector that’s doing fine,” said Brian Jones, an economist at Societe Generale in New York, whose 240,000 forecast was the lowest in the Bloomberg survey. “The new and existing home sales numbers were abysmal. You could say that part of it was attributable to unusually harsh weather.”

From MarketWatch:

Dismal home-sales data tell us nothing new

Financial markets overreacted to the news Wednesday that U.S. sales of new homes fell about 17% in February to a seasonally adjusted annual rate of 250,000, a record low and quite a bit worse than the 290,000 rate expected by the MarketWatch survey of top forecasters.

As of 11 a.m., an hour after the new-homes sales report was released, U.S. stock markets were down about 0.6%, while U.S. Treasury yields dropped. It wasn’t a huge move, but more than the economic data deserved.

The housing numbers from the Commerce Department are notoriously unreliable on a month-to-month basis and should not be used as the sole reason for any investment decision.

In February, the standard error on the monthly data was 19.1%. That means government statisticians are 90% confident that the real level of home sales in February was somewhere between 192,000 and 312,000. Sales might even have risen in February, for all we know.

What did the sales report tell us that we didn’t already know? Very little. We know home building and home sales are extremely weak. Home builders are depressed. So are many home owners, who owe more than their house is worth. Home prices have been falling modestly since the government’s main effort to prop up the market ended last fall with the expiration of the home buyer subsidy.

It’s possible that the awful sales data show that housing is weakening further, but the other evidence from other sources don’t confirm that. Home builders actually are a little more upbeat than they have been.

Many analysts believe housing has more or less hit bottom and hasn’t come back to any significant degree.

Based on the history of such bubbles, it’s likely to take years before home construction, home sales and home prices recover fully. Nothing reported on Wednesday changes that prognosis.

Posted in Economics, National Real Estate, New Development | 222 Comments

Economists turn sour on home prices

Posted on March 23, 2011 by grim

From HousingWire:

Housing double dip could be coming: MacroMarkets

A double-dip in housing could arrive this year with national home prices only 1% away from a new “post-crash low,” MacroMarkets said in its March 2011 Home Price Expectation Survey.

MacroMarkets compiled the report by gathering the opinions of more than 100 economists, real estate experts and investment and market strategists.

“Overall, the sentiment among our expert panel regarding the U.S. housing market outlook, continues to deteriorate, ” said Robert Shiller, co-founder of MacroMarkets. “Now they are expecting only a weak recovery, and even that is not until 2013.”

Shiller said only a few of the respondents expect to see a real home price recovery by 2015.

Beyond those few, the majority are bearish on the next few years. Half of those interviewed expect to see a double-dip in housing this year as legal issues stall the foreclosure process. Not to mention the pressure the housing sector is receiving from unemployment, tighter credit guidelines and rising home inventories that push out new home sales, the report said.

Analysts and housing experts interviewed for the survey varied on just how much they expect home prices to decline in the fourth quarter of this year. The sliding scale of predictions runs the gamut, from Dean Baker, co-director at Center for Economic & Police Research, predicting an 11% decline year-over-year in home prices in the fourth quarter of 2011 to National Association of Realtors Chief Economist Lawrence Yun predicting prices will remain flat year-over-year in 4Q.

Other analysts include Chris Whalen with Institutional Risk Analytics, who expects prices will drop 10% year-over-year in the fourth quarter and IHS Global Insight chief economist Nariman Behravesh, who is predicting a 6.70% drop.

Posted in Economics, Housing Bubble, National Real Estate | 179 Comments

Realtors: “One cannot say that we are in a recovery right now”

Posted on March 21, 2011 by grim

From Bloomberg:

Sales of U.S. Existing Houses Fall, Prices Reach Nine-Year Low

Sales of previously owned U.S. homes dropped more than forecast in February, sending prices to the lowest level since 2002 and indicating the market is struggling to recover.

Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price fell 5.2 percent from a year earlier.

Foreclosures are adding to a glut of distressed properties on the market and pressuring values, leaving some Americans with bigger mortgages than their homes are worth as joblessness hovers near 9 percent. The figures underscore the Federal Reserve’s view that the housing market “continues to be depressed” even as the rest of the economy improves.

“The demand for housing just isn’t there,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We have to clear this inventory of foreclosures. We think that happens in the second half of the year.”

Estimates of the 76 economists surveyed by Bloomberg ranged from 4.8 million to 5.39 million.
…
“One cannot say that we are in a recovery right now,” Lawrence Yun, chief economist at the Realtors’ association, said at a press conference. “If the price decline persists, even with job recovery, it could hamper some buying enthusiasm.”

From the Huffington Post:

February Home Sales Plummet As Housing Market May Have Further To Fall

Sales of previously owned U.S. homes fell sharply in February, after several months of increases, according to a report released Monday, in an another blow to a sagging housing market that may have further to fall.

Existing home sales dropped 9.6 percent from January to February to an annual rate of 4.88 million units, according to the National Association of Realtors, an industry group. Compared with the same period last year, sales fell 2.8 percent. Home prices fell to their lowest in nearly nine years.

Although economists expected a decline from January’s annual rate of 5.36 million units sold — economists polled by Reuters expected February sales to fall 4.0 percent — the steepness of the drop came as a surprise. The last several months of housing market data from NAR showed glimmers of recovery, but many analysts now feel that the downward trend is clearly reasserting itself.

“Expectations had looked for a decline, but a much more modest decline than what we saw,” said Miller Tabak economist Dan Greenhaus. “I think what we’re seeing is a complete and total reversal of any strength we saw as a result of the first time homebuyers credit.”
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Home prices have fallen 31 percent since peaking in 2006, according to the Case-Shiller 20-city index released in February. (For the past several months, Case-Shiller has indicated that home values are dwindling in nearly every American market.) Last year, nearly 2.9 million homes received foreclosure notices — a 2 percent increase from 2009 — according to data collected by RealtyTrac, an online foreclosure market. More than a quarter of all U.S. home sales last year were of foreclosed properties.

“This decline basically wiped out about half of the gains in home sales that were made in the previous 3 months,” said Celia Chen, an economist at Moody’s Analytics.

From CNN/Money:

Existing home sales tumble 9.6%

Sales of existing homes fell in February after three straight monthly increases, an industry group said Monday.

According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, down 9.6% from January and 2.8% lower than February 2010 sales.

The report was worse than economists had expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 5.05 million.

At the same time, the median home price declined 5.2% compared to the previous year, to $156,100.

Posted in Economics, Housing Bubble, National Real Estate | 172 Comments

2010 wasn’t the bottom, will 2011 be?

Posted on March 21, 2011 by grim

From HousingWire:

Home prices dip 3.8% in 2010 RadarLogic index

Home prices in 25 metro markets tracked by analytics firm RadarLogic in its RPX Composite index declined by 3.8% in 2010, the firm reported.

Stability in home prices during the beginning of 2010 was attributed to stimulus of the housing market that came via the government’s homebuyer tax credits, low-down-payment Federal Housing Administration loans, and the Federal Reserve’s purchase of $1.25 trillion in mortgage-backed securities and $175 billion of housing agency debt, which helped keep mortgage rates near record lows.

When the stimulus ended mid-year, weakness returned to housing markets.

On a month-over-month basis, the RPX Composite price performed worse than its 10-year average in 10 of 12 months in 2010. On a year-over-year basis, the performance of the RPX Composite price through Dec. 31 was worse in 2010 than in any other year save for the bust years of 2007 and 2008.

The RPX Composite prices for the Midwest, West and South in 2010 each declined in excess of 5% from one year earlier. The RPX Composite price for the Northeast outperformed the prices for the other regions, declining just 1.5%. The Northeast price is heavily influenced by housing market dynamics in the New York metropolitan area, where home prices fared better than most other parts of the country.
…
In 2010, REO sales increased from 26% to 31% of total sales throughout the 25 metropolitan areas tracked by Radar Logic. Twenty-two of the metropolitan areas exhibited a year-over-year gain in REO sales’ share of total sales.

Posted in Economics, National Real Estate | 136 Comments

“If you have an hour, you can do this”

Posted on March 20, 2011 by grim

From the Courier News:

Tax assessment appeals on rise

Knowing how to get a property tax bill reduced has made Terri LaPoint one of the most popular people in town.

In the past couple of years, the Brielle resident has helped about 15 of her friends and neighbors navigate New Jersey’s property tax appeal system.

“People don’t know they can do this. It’s very easy,” she said.
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Because property taxes are tied to a home’s assessed value, that meant that many homeowners — herself included — were paying more than their fair share.

The remedy: appealing the assessment to the county Board of Taxation.

LaPoint said everyone she’s helped so far has slashed their assessments by at least $65,000. One couple cut their property tax bill by $1,900 the first year. LaPoint lopped 20 percent off her own assessment, saving herself nearly $1,500 in taxes.

Her advice: If you think you’re over-assessed, find out what comparable homes in your town are selling for, and if the evidence is there, file an appeal.

The deadline is soon: April 1. If your town had a municipal-wide revaluation or reassessment in the past tax year, then the deadline is May 1.

“If you have an hour, you can do this,” LaPoint said. “I mean, you have nothing to lose.”
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Cash-strapped New Jersey homeowners, saddled with the highest property taxes in the nation at an average of $7,576 per home, are getting the message.

More than 74,000 property tax appeals were filed last year, triple the amount in 2007, according to the New Jersey Division of Taxation. Residential homeowners filed approximately three-quarters of the appeals.

The total was the highest in 17 years, in large part because of the sharp decline in home values. About 60 percent of all appeals led to a revised assessment, resulting in $3.2 billion in assessed value reductions, a 9.5 percent rollback, state figures show.
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That outcome isn’t surprising, given that assessments in many municipalities across the state are badly out of whack.

A New Jersey Press Media analysis of home sales data found that inaccurate assessments likely cost New Jersey property owners as much as $1.6 billion in annual property tax overpayments.

Posted in New Jersey Real Estate, Property Taxes | 102 Comments

Tear it all down, start all over

Posted on March 18, 2011 by grim

From Bloomberg:

Christie’s Atlantic City Revival Seeks Halt to 30% Casino Plunge

New Jersey Governor Chris Christie is bucking voter skepticism and pushing ahead with his plan to revive the Atlantic City gambling resort, where casino revenue has plunged the most since the first one opened in 1978.

Christie, a first-term Republican, took control of the tourism district in the 48-block-long coastal city of 40,000 last month and relieved the 11 casinos there of some regulations. He redirected gaming fees to clean up and promote the area, and provided tax breaks to help restart construction of the $2.5 billion Revel casino that stalled in 2009.

The intervention may come too late, even with Revel opening in 2012, said Dennis Forst, a gaming analyst at KeyBanc Capital Markets. Gambling revenue in Atlantic City, the second-largest U.S. casino market, is down 30 percent from 2006. Older betting parlors may close as Sands Casino Resort in Pennsylvania, Dover Downs in Delaware and other rivals draw gamblers from Philadelphia and New York, he said.

“Outside competition is only going to increase,” he said during an interview in New York. “Atlantic City had 30 years to work this out, to make themselves indestructible, and they’ve wasted all of those years,” said Forst, who has covered the industry for 40 years. He received top rankings of analyst polls in the Wall Street Journal and Institutional Investor and Forbes magazines, according to KeyBanc.
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New Jersey is seeking to halt a drop in the 8 percent tax on casino revenue that funds programs for seniors and the disabled. The industry gives another 1.25 percent of revenue to the Casino Reinvestment Development Authority, which helped fund $1.8 billion of projects since 1984, including airport expansion and housing for casino workers.

Atlantic City’s gambling houses employed 33,272 as of last month, down from more than 45,000 in 2004, according to state data. The 8 percent gaming tax netted the state $260.9 million in 2010, down from more than $400 million in 2006.

Posted in Economics, New Development, New Jersey Real Estate | 263 Comments

QE3… QE4… QE5… The bailouts aren’t going to fix the housing market.

Posted on March 17, 2011 by grim

From the International Business Times:

Terrible housing data will spark talks of QE3: Borthwick

Wednesday’s housing data was terrible.

February housing starts dropped to an annual rate of 479,000 units and building permits fell to an annual rate of 517,000 units. Both figures measure the pace of US housing construction.

According to Reuters, February’s housing starts – down 22.5 percent from the previous month – showed the largest drop since 1984 and building permits came in at the lowest level on record.

Despite the overall US economic recovery, Wednesday’s data continue to confirm the persistent weakness in the real estate market.

The large shadow inventory, subdued level of consumer confidence, and stringent lending standards are key factors responsible for the weakness in the housing market – which some experts to expect to double dip later this year.

The persistent real estate weakness “tell us the Fed will continue the QE2 [second round of quantitative easing] and the market will begin to discuss QE3,” said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.

“The Fed has consistently pointed to housing and employment as being important indicators for US growth,” he explained.

So the slow improvement in the jobs market and bad news coming out of the housing market may prompt the Federal Reserve to continue to be accommodative.

From MarketWatch:

U.S. housing starts approach record low

New construction of U.S. housing units plunged in February, erasing a sharp gain in January and coming close to an all-time-low level.

Starts fell 22.5% to a seasonally adjusted annual rate of 479,000, the Commerce Department said. This is just 0.4% above the record low of 477,000 units set in April 2009.

The decline in starts in February was the largest since March 1984.

January starts were revised higher to a 618,000 pace from the 596,000 previously reported. The 18.4% jump in January was due to an 87.4% surge in apartment starts, which analysts attributed to special factors.

As a result, economists were expecting a decline in February — but nothing close to the actual drop. Analysts polled by MarketWatch had forecasted starts to fall to a 570,000 rate.
…
Paul Dales, senior U.S. economist at Capital Economics, said that there is simply no need for housing starts given the excess supply of existing homes that are more attractive to buyers.

With house prices falling again, home builders have little desire to boost construction, he noted.
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Building permits fell 8.2% to a record-low seasonally adjusted annual rate of 517,000 in February. Building permits for single-family homes dropped 9.3% to a 382,000 rate. Many economists consider single-family permits to be the most important number in the government’s release.

Posted in Economics, Housing Bubble, National Real Estate | 248 Comments

Property taxes continue to skyrocket

Posted on March 16, 2011 by grim

From New Jersey Newsroom:

12 N.J. towns look to override Christie’s property tax cap

Your property taxes were even worse than you thought last year. New Jersey’s taxpayers paid out nearly $1 billion more on their bills in 2010.

The old 4 percent tax hikes raised the average property tax bill in the state by $295 to $7,576.

According to NorthJersey.com, in North Jersey, property tax bills went up on average even more in 2010; to $10,057 in Bergen County, and $8,459 in Passaic County.

The Asbury Park Press reports it is the largest increase since 2007, when taxes spiked 7.3 percent.

The state’s 566 municipal governments saw the sharpest tax increase at 7.1 percent – the same towns that are now facing a 2 percent cap on their taxes this year. School taxes rose 3.3 percent and county taxes rose 1.5 percent last year.

New Jersey Governor Chris Christie last year signed a measure capping growth in the taxes as of Jan. 1 at 2 percent unless local governments ask voters for permission for a bigger increase. The law also exempted higher levies to cover bond payments, increased health-insurance or pension costs and natural disasters.

Already at least 12 New Jersey communities want to exceed his 2 percent cap, reported Bloomberg.com, less than three months after it took effect.

The communities placed advertisements in newspapers alerting voters to referendums in April, Bill Dressel, executive director of the New Jersey League of Municipalities said yesterday in an e-mail. Towns readying for the referendums included Brick and Edgewater Park, he said.

Towns scheduled to hold referendums, according to the League of Municipalities are Brick, Edgewater Park, Florence, Hardwick, Hope Township, Lambertville, Plumsted, Mansfield, Maurice River, Mount Holly, Mount Laurel, and Northvale.

Posted in New Jersey Real Estate, Property Taxes | 203 Comments

“I wouldn’t be overly influenced by the idea that home prices are low, and they might suddenly take off”

Posted on March 15, 2011 by grim

From CNBC:

Home Ownership May Be for the Few, Not the Many

Homeownership has long been associated with investment savvy.

Tax breaks, equity growth and the sanctity of the American dream — the real estate community has made a pretty compelling case over the years for the merits of purchasing property versus throwing your money away on rent.

But as the housing market redefines itself in the wake of the subprime mortgage crisis and the ensuing industry recession, a number of economists who follow the industry suggest the benefit of buying no longer applies. Others say it never did.

Yale economist Robert J. Shiller, whose book “Irrational Exuberance” accurately predicted the stock market collapse in 2000, notes that U.S. housing prices posted roughly a zero percent gain between 1890 and 1990, after adjusting for inflation.

“That’s the remarkable thing that most people don’t realize,” he says. “This is not a financial investment. It’s an investment that provides you services and you have to answer for yourself how you value that.”

The biggest dividend of real estate, says Shiller, is the lifestyle it affords. Some are willing to pay a premium for kid-friendly neighborhoods, quiet streets, a historic home or a condo close to work.

But taking the plunge today is a bigger financial gamble than it once was.

“If you’re doing it more with investment motives, then I think you have to be careful,” says Shiller, who co-founded the Standard & Poor’s Case-Shiller Index for housing prices. “I wouldn’t be overly influenced by the idea that home prices are low, and they might suddenly take off — that’s what’s coloring some people’s thinking now. It might be more accurate to wait another five years.”

Or not at all.

Research by Jack C. Francis, a former Federal Reserve economist and professor at Baruch College at the City University of New York, reveals that residential real estate has consistently failed to measure up with other asset classes over the last 30 years.

From 1978 to 2008, he found, the S&P 500 returned an average of 11 percent a year, while U.S. small-cap stocks produced an average return of roughly 13 percent. Single-family homes posted less than a 6 percent gain.

“For generations, parents and grandparents have been telling us that the way to get ahead was to buy a house and keep making payments with a fixed interest rate and after 20 or 30 years it would be way up in value and that was your nest egg in old age,” says Francis. “You could either live in it rent free or sell it and use the proceeds to rent an apartment.”

That was good advice until 2006 when home prices collapsed, he says, and it “may become good advice 10 years from now, but right now it’s not.”

Posted in Employment, Housing Bubble, National Real Estate | 268 Comments

The cost of open space

Posted on March 14, 2011 by grim

From the Star Ledger:

In many N.J. towns that undergo revaluations, homeowners end up paying more open space taxes

In the nation’s most densely populated state, Garden State residents value their space.

But they may not be so thrilled about what they are paying for it. The reason is a tiny municipal tax for open space — pennies per $100 of a home’s valuation — that, left unchecked, has added up to big bucks in some towns.

The result is homeowners in 50 New Jersey towns have paid out some $15 million more to preserve land, farms and historic and recreational sites than they had in previous years. In one town last year, the tax bills jumped by more than $150 for some homeowners.

The quirk comes into play when towns conduct revaluations. The problem is towns — which make adjustments to prevent other slices of the tax pie from skyrocketing — fail to do the same for the open space tax. Because that tax’s rate is tied to property values, the levy goes up when properties appreciate.

The longer a town goes between revaluations, the more homes are worth and the bigger the bite taken by the open space tax.
…
Over the last five years, 71 New Jersey towns with open space taxes underwent property revaluations. Nearly three-quarters of them failed to adjust their open space tax rates, leading to a 128 percent increase in their combined levies — a windfall of more than $15.5 million. By contrast, municipal taxes in those towns rose an average of 12 percent.
…
“I don’t think there was any malicious intent in their error,” said Librizzi, who currently serves as the tax assessor for Verona, Nutley and North Caldwell. “I don’t think the general public completely understands how the open space tax is calculated.”

Posted in New Jersey Real Estate, Politics, Property Taxes | 219 Comments

Signs of life in the condo market?

Posted on March 12, 2011 by grim

From the NY Times:

A Thaw in the Condo Market

LAST month a few strong blips indicated a quickening pulse on the New Jersey condominium market. Or maybe just a pulse.

There were 15 sales in four weeks at one building in Jersey City, 6 at another, 5 at a Hoboken building where sales had been lagging — even a premarketing sale at a town house development in Livingston.

Portents of a spring revival? Or a mere minitrend that will melt with the last of the snow?

“Ha! That’s the $64 million question, now isn’t it?” said Dean Geibel, the chief executive of Metro Homes, who described February as the best month in two years for his two buildings — Gulls Cove in Jersey City and Metro Stop in Hoboken.

“This is not an uptick in prices,” Mr. Geibel added. “But the increase in sales is still huge, because it has been so slow for so long. It raises the question, ‘Is there going to be a traditional spring market with a widespread uptick?’ ”
…
Why would the sales heat up in February? Ms. Ferrara suggested that one reason might be concern over mortgage rates’ climb beyond 5 percent, and over their potential to rise significantly, and fast, when the economy improves. About 60 percent of recent buyers at Crystal Point are employed in finance, she said, and therefore probably likely to keep a close watch on trends.

Also, she added, a tight rental market in New Jersey is probably a factor. The statewide vacancy rate is at a low 6 to 7 percent, according to market analysts; price breaks and other incentives have largely been abandoned; and monthly rates are starting to rise.

“In the rent-versus-buy scenario,” Ms. Ferrara said, “when people take tax benefits of ownership into account, we are now seeing some urgency of people deciding to buy.”
…
Meanwhile, condominium prices remain depressed. Over the last year, the average price in Jersey City dipped by 13 percent, to $467,297, according to a Marketing Directors analysis.

Posted in Economics, New Development, New Jersey Real Estate | 157 Comments

Not a good start for employment in 2011

Posted on March 10, 2011 by grim

From the APP:

NJ unemployment 9.1%; state lost 13,000 jobs in January

New Jersey lost 17,000 jobs in 2010 and another 13,000 jobs in January, the state reported today, in a sign that the economic recovery didn’t generate enough momentum to convince employers to begin hiring.

The state’s unemployment rate was 9.1 percent in January, slightly higher than the national rate of 9 percent, the report said.

The jobs report released by the state Department of Labor and Workforce Development, is made up of two surveys — one of New Jersey employers to calculate the number of jobs and one of New Jersey residents to calculate the unemployment rate.

The report today is notable because it offers a more complete account for 2010.

The revision showed the economy performed better in 2010 than the 30,700 jobs that the state initially was thought to have lost. But it did little to change the conclusion that employers last year continued to grapple with the fallout of the recession.

The report showed the economy continued to undergo a transition. The private sector added 5,200 jobs in 2010 after losing 117,700 jobs in 2009. The public sector lost 22,200 jobs in 2010 after adding 4,200 jobs in 2010.

From the Star Ledger:

N.J. loses 13,000 jobs at start of year; unemployment rate stays at 9.1 percent

New Jersey lost 13,000 jobs in January in both the private and public sectors, according to data released by the state Department of Labor today.

The state shed 7,100 private sector jobs and 5,900 public sector jobs, while the unemployment rate was unchanged at 9.1 percent.

The private sector job losses were led by professional and business services, which lost 4,000 jobs. In the public sector, the state shed 3,800 jobs, while local governments shed 2,600. Federal jobs ticked up slightly by 500.

The state also revised its jobs figures for 2010, showing an overall loss of 17,000 jobs fueled by cuts in the public sector. The state gained 5,200 private sector jobs during 2010, but shed 22,200 public sector jobs. That’s slightly better than the department’s preliminary report on 2010 jobs, which overestimated public sector losses and said the private sector had lost jobs.

From New Jersey Newsroom:

N.J. employment gains in 2010 wiped out by January losses

The results of a review of New Jersey employment situation for the past 11 months reveal that New Jersey’s economic situation remains dark.

The state Department of Labor maintains New Jersey gained 5,200 private sector jobs but lost 22,200 government jobs in 2010, compared to a loss of 117,700 private sector jobs and a gain of 4,200 government jobs in 2009.

But for last January, the most recent month for which statistics are available, preliminary estimates show 13,000 jobs were lost, wiping out the 2010 gain. At least 7,100 private sector jobs and 5,900 government jobs were lost during the month. The preliminary unemployment rate remained unchanged in January at 9.1 percent, just above the U.S. rate of 9.0 percent. Currently, 407,700 New Jersey adults are unemployed.

Posted in Economics, Employment, New Jersey Real Estate | 252 Comments

“A property is worth what a buyer is willing to pay.”

Posted on March 10, 2011 by grim

From the Star Ledger:

Fawn Hill Farm sold for bargain price

You know the luxury property market is struggling when one of New Jersey’s most lavish estates sells for barely one-quarter of its original listing price.

Fawn Hill Farm, the storied Harding Township landmark that hit the auction block last October, sold for just $6.4 million — a fraction of its original listing price of $22.5 million — according to a recent update on the auction company’s website.

The 34-acre property, located in the affluent New Vernon section of the township, languished on the market for five years before owners Herb and Gloria Glatt hired an auction company as a final resort. By that time, they had marked down the price to $15.3 million, but with no luck.
…
Mary Horn, the listing agent for Fawn Hill for four years, estimates the estate was worth double its auction price. In the year leading up to the auction, she received an $8 million offer for the house alone, but the owners hoped to get even more with an auction, she said.

“It’s worth a lot more than $6 million,” said Horn, who specializes in luxury homes at Weichert Realtors. “I was there at the auction—I was numb.”

To be sure, New Jersey’s high-end property market has been hit hard by the recession, she said. Horn recently sold two homes in Far Hills—one for $4.3 million, less than half of its original asking price, and the other for $3.9 million, about $1 million less than the owner paid for it.

Still, for owners who are realistic about their selling prices, there’s still a market, she said.

A spokeswoman for Concierge said the auction was “very successful,” with 11 bidders participating after more than 200 showings of the home.

“The challenge today is that buyers and sellers aren’t certain what the true value of property is,” said Laura Brady, vice president of Concierge in Manhattan. “A property is worth what a buyer is willing to pay.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 132 Comments