Prices lower, mortgage money cheap, but homes still unaffordable for many

Posted on January 30, 2011 by grim

From the Record:

Typical home in North Jersey still out of reach for typical household.

Mortgage rates are at a rock-bottom 5 percent, and home prices have tumbled as much as 20 percent — making North Jersey homes much more affordable.

But the region remains one of the costliest real estate markets in the country. Buying a home — including the cost of property taxes — remains more of a stretch than it was even a decade ago. In a recent analysis of property sales data, The Record found that a North Jersey household with the median income is further away than they were in 2000 from being able buy a median-priced house — a traditional measure of affordability.

Kate and Mark Chabus know this reality firsthand. She’s a nurse and he’s a chef, with paychecks that put them in the range of Bergen County’s median household income of around $90,000. Because they’re expecting their second child, they’re about to outgrow their Englewood apartment. They started their house hunt in Bergen County, looking at properties in the $330,000 range — about $100,000 below the county median.

“Every time we mentioned to anyone that we’re thinking of buying, they’d say, ‘This is the time to do it; you can get a good deal,’ ” Kate Chabus, 28, said. But the Bergen County homes that they could afford needed a lot of work. So instead, they’re buying a three-bedroom Pequannock town house that was listed in the mid-$300,000s.
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Unless incomes rise rapidly or banks ease their mortgage standards, the numbers suggest that home prices may be headed down further, with Passaic ripe for the biggest drops. However, analysts caution that other factors, including the area’s proximity to New York City, could boost demand enough to prevent steep additional declines.

The typical Bergen household could afford the typical house in a majority of New Jersey counties, but not in Hunterdon, Essex, Morris, Monmouth, Somerset and Cape May. The typical Passaic household, however, would have to go to Cumberland, Salem, Gloucester or Camden counties in the generally poorer and more rural southwestern corner of the state to find something affordable.

While incomes (after inflation) have dropped 4 percent in Bergen County and 18 percent in Passaic over the past decade, the region’s home prices are about 70 percent higher than they were in 2000.

“Even with the price corrections that have occurred, our most expensive markets are still not back to the level of affordability that we saw prior to the housing bubble,” said David Stiff, chief economist at Fiserv, an information management company that tracks real estate prices. “That’s definitely true with the New York metropolitan area. It’s also true in a number of other markets, such as San Francisco and Los Angeles. Households place a premium on being able to live in those markets, in part because there are more high-paying jobs and more diverse economies, so that if they need to change jobs, it’s easier to change jobs.”

Fiserv predicts a further 10 percent decline in the region’s home prices. But according to The Record’s analysis, Bergen prices would have to come down 17 percent, and Passaic prices even more, to be truly affordable — defined by the federal government as monthly housing costs that take up no more than 31 percent of a household’s monthly income. (Some mortgage lenders will allow for a higher percentage to be spent on housing, but generally only for borrowers with excellent credit scores, little debt and large down payments.)

Posted in Employment, Housing Bubble, New Jersey Real Estate | 112 Comments

Housing chill cools previously hot markets

Posted on January 28, 2011 by grim

From the NY Times:

As Inventory Rises, More Towns Make the ‘Cold’ List

REMEMBER when brokers used to say the sales pace in a particular town, neighborhood or ZIP code had turned white-hot or was sizzling?

Back in the day (say, two years ago or more), a list of the hottest communities was published each month in the Otteau Valuation Group’s report to subscribing real estate professionals. Sometimes, more than two dozen towns would be on that list, each with just four months’ worth of inventory or less to burn; six months’ inventory is considered the threshold for health.

In late 2009, after inventory swelled precipitously in New Jersey, the “hot” lists stopped coming.

Today, few towns would qualify for the now-extinct list: Chatham, for instance, had just three months’ worth of listed homes to sell, according to the December report from Otteau Valuation, which is based in New Brunswick. But analysts tend to compile statistics based on developing trends — and hotness is no longer, well, hot.

In fact, today’s trend should perhaps be called “coldness.” Using the statistics reported by Otteau, it is striking how starkly the coldest communities stand out.
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But even within the northern half, narrowing focus to half a dozen counties within the metropolitan area — Bergen, Essex, Hudson, Morris, Passaic and Union — plenty of spots are in the grip of a fierce chill.

Beyond a doubt, the coldest is in the Essex County city of Irvington, which has an estimated 52.5 months’ worth of unsold inventory. In other words, it would take more than four years to sell all the houses currently listed.
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Interestingly, the municipality in northern New Jersey with the second-largest inventory is a small and affluent one, the borough of Ho-Ho-Kus in Bergen County.

Like its county neighbor Alpine — the nation’s wealthiest ZIP code, according to Forbes Magazine — as well as nearby Franklin Lakes, Ho-Ho-Kus has a high median household income ($164,000, according to census projections from citydata.com) and house values ($1.2 million).

But as in those two small and exclusive communities, relatively few houses are put up for sale at any time — and those few are taking longer to sell. With 33 homes on the market in October and November, two contracts were signed in November and none in October. That put the inventory rate at 33 months’ worth. In Alpine, it was 28 months, and in Franklin Lakes, 21.4.
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In Essex, home of Newark, the state’s largest city, communities that ranked just below Irvington were: Essex Fells, with 38 months’ worth; North Caldwell, with 25.5 months; East Orange, with 23.6 months; and Belleville, with 23. Newark itself had 19.8 months’ worth.

In Hudson County, which includes the string of Hudson riverfront towns facing Manhattan, West New York had the highest inventory: 23.3 months’ worth. This mostly middle-class community is home to part of the high-end Port Imperial riverfront residential complex, which saw slacker condominium sales — especially resales — despite its two light rail stops and ferry station.

The second- and third-biggest inventories were in the Journal Square section of Jersey City and in Weehawken.

In Passaic County, the places with the biggest backlogs were Pompton Lakes, with 29.3 months; Haledon, with 24.7; and Bloomingdale, with 17.7. Wanaque’s inventory was almost the same as Bloomingdale’s, 17.5 months.

In Union County, which over all had the lowest inventory of any county, at 9.6 months, those communities with the highest were Roselle, at 19.6 months; Plainfield, at 18.7; and Linden, at 14.1.

Posted in Housing Bubble, New Jersey Real Estate | 314 Comments

Calls to scrap failed HAMP program grow louder

Posted on January 27, 2011 by grim

From USA Today:

Inspector general: Mortgage modification program a ‘failure’

A mortgage modification program aimed at saving homeowners from foreclosure has failed because regulators are “afraid to rein in or impose penalties on the mortgage servicers” whose record “has been nothing short of abysmal,” the program’s watchdog told Congress Wednesday.

As a result, some House Republicans moved to scrap the 2-year-old program.

Neil Barofsky, the special inspector general for the government’s bank bailouts, bluntly labeled the mortgage program a “failure” in testimony before the House oversight committee.

“And I think that if Treasury doesn’t respond to some of these things in a quick manner,” he said, the call to dismantle the Home Affordable Modification Program (HAMP) “is just going to become a louder and louder chorus, and understandably so.”

Three Republicans, led by Rep. Jim Jordan, R-Ohio, introduced a bill Tuesday to end the program, saving up to $30 billion in unspent bailout funds.

“We think any objective look at this, it doesn’t warrant continued spending of taxpayer dollars,” Jordan said. He did not say what, if anything, he would replace the program with.

Posted in Foreclosures, National Real Estate, Politics, Risky Lending | 161 Comments

Dip 2.0 – Homebuyer credit was a waste of money

Posted on January 26, 2011 by grim

From HousingWire:

Housing analysts expect home price declines through 2011

Data firm Radar Logic and consultant Capital Economics said Tuesday that they expect home prices to decline further this year.

Their analysis comes in the wake of Tuesday’s The S&P/Case-Shiller composite home price index, which fell 1.6% from a year ago and 1% month-over-month. Prices on homes with mortgages backed by the federal government were unchanged during the same time period, according to the Federal Housing Finance Administration.

“Notwithstanding the deceleration in the rate of home prices, we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011,” the Radar Logic said.

Radar Logic made a similar assessment when it released its RPX composite price index last week, which showed a 0.3% increase in home prices from October to November.

Research firm Capital Economics also forecasts a price drop. The firm predicts a 5% drop by the end of 2011.

“That will send more homeowners into negative equity and constrain consumption growth,” Capital Economics said.

From the Christian Science Monitor:

Home prices fall for fifth month in a row

It’s important to recognize that as we continue to move away from the government’s tax sham, the home sales and price movement fueled by that epic monstrosity are left further and further behind.

Yet, it will be some time before the effects are completely expunged from the CSI as its methodology uses a three month rolling average of the source data and further, as BostonBubble points out, since Congress moved to extend the closing deadline for the credit until September, the CSI data may not be free of the distortion until the February 2011 release!

In any event, you can see from the latest CSI data that the price trends are starting to slump and, as I recently pointed out, the more timely and less distorted Radar Logic RPX data is already capturing notable price weakness nationwide.

From the Daily Markets:

Home Prices Falling Again

In November, home prices continued to slip, and the declines were very widespread. The Case-Schiller Composite 10 City index (C-10) fell 0.37% on a seasonally adjusted basis, and is down 0.43% from a year ago. The broader Composite 20 City index (which includes the cities in the C-10) fell by 0.54% on the month and is down 1.61% from a year ago.

This is the first time in this second leg down in housing prices that the year-over-year change has been negative for both composites. Of the 20 cities, only three — San Diego up 0.52%, Washington DC up 0.51% and Charlotte up 0.07% — posted gains on the month, while 16 saw prices fall. Las Vegas was unchanged on the month. Year over year, four metro areas saw gains and 16 suffered losses.

This is the fifth straight month-to-month decline in the composites. It thus looks like a new downtrend in housing prices is under way.
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Eight cities posted new post peak lows. From the April 2006 peak of the housing market, the C-10 is down 30.99% while the C-20 is off by 30.91%.

The Case-Schiller data is the gold standard for housing price information but it comes with a very significant lag. This is November data we are talking about, after all, and it is actually a three-month moving average, so it still includes data from September and October. Existing home sales have been weak relatively weak in recent months (see “Existing Home Sales Rise”). While the inventory to sales ratio is down from the June peak of 12.5 months, it is still elevated at 8.1 months.

The second leg in the housing price downturn is not over. Housing prices are going to fall again in coming months.

Posted in Employment, Housing Bubble, National Real Estate | 141 Comments

November home prices disappoint, double dip likely

Posted on January 25, 2011 by grim

From CNBC:

Price Drop Points to Likely Double Dip in Housing Market

Single-family home prices fell for a fifth straight month in November and a double-dip in home prices could be confirmed by spring, a closely watched survey said Tuesday.

The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas declined 0.5 percent in November from October on a seasonally adjusted basis, though it was not as sharp as the 0.8 percent fall expected by economists.

Prices have fallen 1.6 percent in the past year, sharper than the 1.4 percent predicted by economists polled by Reuters.

“Everything in this report is unfortunately still sagging and still pointing downward,” David Blitzer, S&P 500 Index Committee chairman, said in a CNBC interview just after the report was released. “The recent news across the board on housing except for existing home sales has been very, very disappointing. We still seem to be at best scraping along the bottom.”

From Bloomberg:

Home Prices in U.S. Declined 1.6% From Year Earlier

Residential real-estate prices dropped in November by the most in a year, signaling housing has yet to join the U.S. rebound.

The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent from November the prior year, the biggest 12-month decrease since December 2009, the group said today in New York. The decline matched the median forecast of economists surveyed by Bloomberg News.

Mounting foreclosures will probably throw more properties on the market this year, further depressing prices, homeowners’ equity and construction. The lack of a sustained housing rebound and unemployment above 9 percent are among reasons the Federal Reserve may announce this week it’ll complete a second round of stimulus that will pump $600 billion into the economy by June.

“The housing market is in a state of hibernation,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We have a very severe foreclosure problem. Prices are going to keep weakening this year. Weakness in the housing market is likely to keep the Fed relatively cautious in its statement tomorrow.”

Posted in Economics, Housing Bubble, National Real Estate | 89 Comments

Property tax rebates coming back, but can we afford them?

Posted on January 25, 2011 by grim

From the Star Ledger:

Gov. Christie says he will restore N.J. property tax rebates

Gov. Chris Christie said today he will restore property tax rebates that were eliminated in the budget last year.

“We’re going to reinstitute the rebate this spring and you’re going to get it quarterly as a credit on your property tax bill,” Christie said at a town hall meeting.

Christie said the rebates will not come as an annual check, as it did in previous incarnations.

Christie said the October checks cost the state money to print and mail. He also said that the state had to borrow and pay interest on the rebates because they were made during the fall.

Beginning in the second quarter of this calendar year, Christie said taxpayers eligible for rebates will see a reduction in the property tax bills. Christie said as the 2 percent property tax cap takes effect, his office will also try to offset additional increases.

“We’re looking for a way to increase the amount we give each quarter,” Christie said. “When this year’s budget coming up we’re going to see if we can expand the program further to try to give people some relief as we expand this 2 percent cap.”

Posted in New Jersey Real Estate, Politics, Property Taxes | 37 Comments

Never saw this one coming

Posted on January 24, 2011 by grim

Not from our area, but I couldn’t help but stop to read this article this morning.

From the St. Petersburg Times:

Even Habitat for Humanity sometimes has to foreclose

Thousands of lenders are filing foreclosure lawsuits all over the country, but this one is a little bit different: Habitat for Humanity.

The Habitat organization for East and Central Pasco had never filed a foreclosure lawsuit against a client, but this month filed two.

“It hurts inside if you have to serve them with these types of papers,” said president and chief executive John Finnerty. “We’re in the business of putting people into houses, not taking them out.”

The Habitat organization in Hillsborough County filed three foreclosure lawsuits in July. The Pinellas organization filed one last month.

The “great recession” is hurting homeowners all over the country, so perhaps it’s not surprising that even people who receive Habitat’s relatively low-cost houses would feel the pinch.
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Habitat uses volunteer workers and donated materials to build and refurbish homes for needy people, so it’s not your average lender.

The clients who receive Habitat homes work on the houses themselves, putting “sweat equity” into their shelter. They receive financial and budgeting instruction before moving in. And although the program is aimed at helping needy people, clients must have enough income to pay off the home loans, often stretched over a 30-year period.

Habitat charges no interest for the loans and makes no profit. But it does expect to be paid back, because it uses the monthly proceeds to build more houses.

Posted in Economics, Foreclosures, Mortgages, National Real Estate | 100 Comments

This won’t end well

Posted on January 22, 2011 by grim

From the NY Times:

Banks Want Pieces of Fannie-Freddie Pie

As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation’s largest banks are offering a few suggestions.

Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities — that would be stamped with a government guarantee.
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A spokesman for the Treasury declined to comment on the administration’s plans, but one former Treasury official warned against the banks’ proposal.

“I don’t think that private shareholder-owned entities should issue federal government guarantees,” said Michael S. Barr, who worked on housing issues at the Treasury Department until the end of last month and then returned to his job as a law professor at the University of Michigan. “I think that creates the same conflict we had in the past.”

Mr. Barr said that banks with the largest mortgage businesses had suggested that they be allowed to issue the government’s guarantee, setting themselves up as a second-generation of Fannie and Freddie. As for the two housing giants, Mr. Barr said, “No one argues for Fannie or Freddie to continue in their current form. It’s just not politically plausible.”
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If the government decides to continue offering a guarantee for a broad swath of securities backed by mortgages to middle-class homeowners, it does not have to use a private company. A government agency could issue that guarantee, much the way the Federal Housing Administration does now for borrowers with lower incomes or other factors that disqualify them from conventional loans.

Posted in Mortgages, National Real Estate, Politics | 80 Comments

December existing home sales jump, but still lower than last year

Posted on January 21, 2011 by grim

From Bloomberg:

Sales of U.S. Existing Homes Jump More Than Estimated to Seven-Month High

Sales of U.S. previously owned homes jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing up further.

Purchases of existing houses, which are tabulated when a contract closes, increased 12 percent to a 5.28 million annual rate, the most since May and exceeding the highest estimate of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price dropped 1 percent from a year earlier, and the share of sales represented by foreclosures climbed.

Buyers are returning to the housing market after a government tax credit expired in the middle of 2010, indicating the drop in prices and cheap lending rates are making homes more affordable. At the same time, unemployment in excess of 9 percent and record foreclosures are among concerns that have prompted Federal Reserve policy makers to follow through with a second round of quantitative easing.

“Home sales are improving slowly, but surely,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We really need to see job creation pick up to ensure housing continues to recover. Housing clearly is still a weak spot in the economy.”

For all of last year, purchases decreased to 4.91 million, the fewest since 1997.

From Reuters:

Existing home sales surged in December

Home resales jumped more than expected in December despite bad weather as sellers cut prices, offering some hope for a sector that has been struggling to recover from its worst slump in modern history.
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MARK VITNER, SENIOR ECONOMIST, WELLS FARGO SECURITIES, CHARLOTTE, NORTH CAROLINA: “It is a little surprising we saw such a big increase in existing home sales, but it is quite possible this reflects foreclosed properties and short sales. Banks likely wanted them off their books toward the end of year. There does not seem to be a whole lot of momentum in housing sector and we will not see much improvement until we move past this mountain of foreclosures. High level of sales look good on surface, but these properties are mostly being bought by investors and not true demand.”
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PAUL LARSON, EQUITIES STRATEGIST, MORNINGSTAR, CHICAGO: “You have to take the home sales number with a grain of salt. We have a lot of foreclosures moving through the pipeline, and since those don’t play by rules of seasonality they can skew numbers. I don’t want to read too much into it.

From the Philly Inquirer:

Existing-home sales continue to climb

Sales of previously owned homes across the nation rose in December for the fifth time in the last six months, offering a promise to some in the real estate industry of a long-awaited recovery in 2011.

Sales rose 12.3 percent from November, the National Association of Realtors reported Thursday, but were 2.9 percent below December 2009.

The median price nationally fell 1 percent, to $168,800, reflecting the continued effects of a record volume of distressed homes, which were 36 percent of the U.S. market in December, up from 32 percent a year earlier.

The end of 2009 was the expected expiration date of the federal tax credit for home buyers, which accounted for a large spike in sales. As it turned out, the tax credit was extended and expanded. After its April 30 expiration, sales of previously owned houses nationwide plunged to levels not seen for almost 40 years.

Posted in Economics, National Real Estate | 83 Comments

December not a good month for Jersey jobs

Posted on January 20, 2011 by grim

From New Jersey Newsroom:

NJ unemployment sees 16,300 lost jobs in December

Another 16,300 New Jerseyans lost their jobs in December

In the private sector, 13,300 jobs disappeared while 3,000 government and school jobs were lost.

Despite the new horror figures, the state Department of Labor and Workforce Development said New Jersey’s unemployment rate moved slightly lower by 0.1 percentage point to 9.1 percent, remaining below the national rate of 9.4 percent. The state said 3,828,000 New Jerseyans were working last month.

The Labor Department estimates that 407,800 New Jerseyans are currently unemployed.
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In December, eight of ten industry supersectors experienced a decline in employment. Industries with significant job losses included trade, transportation and utilities (-3,800), leisure and hospitality (-2,100), financial activities (-1,800), education and health services (-1,800), and professional and business services (-1,700). Smaller losses occurred in other services (-600) and information (-800). Only manufacturing (+200) and mining and logging (+100) added jobs over the month. Local governments cut 2,100 jobs.

Over the month, the unadjusted workweek for manufacturing workers decreased by 0.2 to 40.3 hours, average hourly earnings increased by $0.09 to $18.93 and weekly earnings were down by $0.14 to $762.88. Compared with December of last year, the unadjusted workweek was lower by 1.7 hours, average hourly earnings increased by $0.90 and weekly earnings were higher by $5.62.

From the WSJ:

New Jersey Employers Slash Jobs

New Jersey lost 16,300 jobs in December — including 13,300 in the private sector — while the state’s unemployment rate fell to 9.1%, the state labor department said Wednesday.
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Across the state, the unemployment rate fell to 9.1% and the labor force lost workers. Economists say the unemployment rate — a measure of people looking for work –– can drop as people who are discouraged stop trying to get jobs.

From Bloomberg:

New Jersey’s Economy Lost 16,300 Jobs in December

New Jersey, the second-wealthiest U.S. state by per-capita income, lost 16,300 jobs in December as both the private and public sectors shrank payrolls.

The number of jobs based in New Jersey fell by 13,300 at companies and 3,000 in government, the state labor department said in a statement today. The unemployment rate, a separate measure of jobs held just by state residents, declined by 0.1 percentage point to 9.1 percent.

New Jersey lost 30,700 jobs last year, with the majority in the public sector, according to the release. A year earlier, the state shed 121,100 private-sector jobs while adding 7,000 government positions.

Posted in Economics, Employment, New Jersey Real Estate | 133 Comments

Settlement in the works for NJ robosigners

Posted on January 19, 2011 by grim

From the NY Post:

NJ judge OKs talks for ‘robo-sign’ banks

The nation’s six largest mortgage lenders — chastised by a New Jersey judge last month for shoddy foreclosure practices and threatened with the freezing of thousands of foreclosure actions — are expected to open settlement talks with the judge today.

New Jersey Superior Court Judge Mary Jacobson had ordered the banks to appear in her courtroom today to prove their foreclosure practices are legitimate — but that hearing has been pushed back until Feb. 14 to allow for the two sides to seek to settle the matter.

Lawyers for banks ensnared in a nationwide robo-signing foreclosure scandal — including JPMorgan Chase, Bank of America and GMAC’s Ally Financial — are scheduled to meet with Edward Dauber, the court’s lawyer in the case, to discuss a possible deal this morning, court documents show.

Dauber didn’t return a request for comment.

The banks are hoping to prove to the judge that they have cleaned up their act following a nationwide scandal exposing the banks’ widespread practice of submitting forged or falsified documents, so-called robo-signing of loan documents, to speed up home foreclosures.

Last month, in an effort to ensure New Jersey residents aren’t being illegally kicked out of their homes, the state’s chief justice, Stuart Rabner, took the unusual step of ordering the banks to prove their foreclosures are on the up-and-up within 30 days or risk their foreclosure cases being suspended.

GMAC serviced 4,354 foreclosures in New Jersey as of Nov. 30, and Citigroup said it has 4,023 active foreclosures in the state, court filings show.

Posted in Mortgages, New Jersey Real Estate, Politics | 153 Comments

Two and a half thousand billion? Oh bother.

Posted on January 18, 2011 by grim

From Financial Times:

States Warned of $2 Trillion Pensions Shortfall

US public pensions face a shortfall of $2,500 billion that will force state and local governments to sell assets and make deep cuts to services, according to the former chairman of New Jersey’s pension fund.

The severe US economic recession has cast a spotlight on years of fiscal mismanagement, including chronic underfunding of retirement promises.

“States face cost pressure, most prominently from retirement benefits and Medicaid [the health programme for the poor],” Orin Kramer told the Financial Times.

“One consequence is that asset sales and privatisation will pick up. The very unfortunate consequence is that various safety nets for the most vulnerable citizens will be cut back.”

Mr Kramer, an influential figure in the Democratic party and still a member of the investment council that oversees the New Jersey pension fund, has been an outspoken critic of public pension accounting, which allows for the averaging of investment gains and losses over a number of years through a process called “smoothing”.

Using data from the states, the Pew Center on the States, a research group, has estimated a funding gap for pension, healthcare and other non-pension benefits, such as life assurance, of at least $1,000 billion as of the end of fiscal 2008.

Chris Christie, the Republican governor of New Jersey, said in his state of the state speech last week that, without reform, the unfunded liability of the state’s pension system would rise from $54 billion now to $183 billion within 30 years.

Mr Kramer’s estimates are based on the assets and liabilities of the top 25 public pension funds at the end of 2010. The gap has risen from an estimate of more than $2,000 billion at the end of 2009.

Posted in Economics, National Real Estate, Politics | 117 Comments

Unemployment too generous?

Posted on January 17, 2011 by grim

From the Daily Record:

Some think NJ’s unemployment program is too generous

Speaking as a panelist before the state’s biggest business lobby last month, Assembly Republican Leader Alex DeCroce must have thought his opinion that the state’s unemployment benefits were too generous would resonate with the audience.

It may have. But soon after the New Jersey Business and Industry Association panel discussion ended, The Associated Press reported his comments to a wider audience, including his observation that jobless benefits “are too good for these people” and don’t provide enough incentive to return to work.

Senate President Stephen Sweeney, who shared the stage, fumed. And DeCroce the next day tried to apologize, if not to his Democratic colleagues, at least to unemployed workers.

“My comments were made to a gathering of business leaders and I wanted to convey the need to fix a system that is on the verge of collapse,” he said in a statement. “I wanted to emphasize that there are individuals who are gaming the system (and) contributing to its current state.”

That system is broken. For the third consecutive year, New Jersey likely won’t have enough money to pay benefits to jobless workers, forcing it to borrow from the federal government.

It leaves employers facing another premium increase. It leaves business and labor leaders to hash out ways to improve the unemployment system and keep their constituents satisfied. And it leaves observers hoping that the state will address the root of the problem: The recession and slow recovery have left thousands of people out of work for so long that their skills have become outdated.

“I think there was an implication (in DeCroce’s remarks) that people who collect unemployment have an entitlement mentality,” said John Sarno, president of the Employers Association of New Jersey, a Livingston-based organization that advises employers.
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Workers who lose their jobs this year through no fault of their own are entitled to receive two-thirds of their wages, up to $598 a week. The top benefit fell from $600 last year because the state’s average wage in 2009, used to determine benefits, declined for the first time in 40 years.

The money for jobless benefits comes from an unemployment trust fund financed both by taxes on employers and workers. The amount employers pay depends on how often their workers file claims. It ranges this year from .4 percent to 5.4 percent. Employees pay .38 percent. Employers and employees pay taxes on wages up to $29,600. So a worker who makes more than $29,600 will pay $113.22 for the year.
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New Jersey’s insolvent unemployment trust fund is a product of its own making. Lawmakers from 1992 to 2006 diverted $4.6 billion from the fund to pay for other programs, leaving it on thin ice if the unemployment rate were to soar unexpectedly.

The economy collapsed in late 2007, and the unemployment rate climbed from 4.5 percent in December 2007 to 10 percent two years later, a 33-year high. It was 9.2 percent in November, according to the most recent statistics.

The result: New Jersey in 2009 paid $3.2 billion in benefits and collected $1.9 billion in premiums. Last year, it paid $3.4 billion in benefits and collected $2.2 billion in premiums. Its cushion gone, the state borrowed $1.75 billion from the federal government the past two years to pay benefits, according to the Department of Labor and Workforce Development.
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Christie in his proposal last Februrary to reform the unemployment system supported a $50-a-week cut in maximum weekly benefits. New Jersey last year had the fourth highest benefit — behind Massachusetts, Rhode Island and Connecticut, according to the National Employment Law Project, a worker advocacy group.

Posted in Economics, Politics | 136 Comments

Builder screws buyer, buyer gets $7m in court

Posted on January 16, 2011 by grim

From the Daily Record:

Developer, agent ordered to pay $7 million for Florham Park, NJ, house sliding down hill

Finding that a developer and his construction agent violated state consumer fraud laws, a judge Friday ordered the pair to pay $7 million to a scientist who contracted in 2006 to buy a luxury home in Florham Park that is slowly sliding downhill and can’t be occupied.

Superior Court Judge W. Hunt Dumont in Morristown found that Joseph Natale, a principal in JDN Properties of Florham Park LLC, and his construction agent, Randy DeLuca, founder of Deltrus LLC, engaged in “unconscionable commercial practices” to the detriment of former scientist Dr. Humayun Akhtar and his wife, Yosria.

The judge’s award is made up of the $1.6 million cost of the 4,400-square-foot home on Beacon Hill Drive in Florham Park; $519,560 in tax, insurance, utility and other costs the Akhtars have incurred on the property they have never occupied; and $740,906 in legal fees.

The total award comes to $7,094,111 because the judge found that since fraud occurred, under the state’s Consumer Fraud Act, he would impose triple damages, exclusive of the legal fees.

The judge found that architectural specifications were not followed when the home was built. Based upon testimony he heard during a proceeding known as a “proof hearing,” the judge learned that soil conditions were not suitable to support the weight of the home and concrete footings were placed just 18 inches in the ground instead of the required 3 feet.

Numerous cracks have appeared and at least part of the house is in long-term danger of collapsing, the judge noted.

While the home was still in the process of being finished, the Akhtars first learned it was deteriorating when a plumber visited in 2006, noticed cracks, and concluded “the house is sliding down the hill,” the judge said.

Posted in New Development, New Jersey Real Estate | 54 Comments

Wave of foreclosures coming in 2011?

Posted on January 14, 2011 by grim

From CNBC:

The Foreclosure Dump

It’s coming, no question.

Today’s report from RealtyTrac serves as a warning to big banks, Fannie, Freddie and local communities; The foreclosure glut is coming, and they’d better be ready to get rid of that glut in a big way.

2010 saw a record number of bank repossessions, over a million, even with a big drop in volume toward the end of the year, thanks to the robo-signing scandal and ensuing foreclosure freezes.

“Early indications in January were that this robo-signing related delay will be over by the end of first quarter if not sooner,” says RealtyTrac’s Rick Sharga. “I think we’re going to see a significant spike in foreclosure activity early in 2011, and that will contribute in part to 2011 being a record year.”

Sharga estimates as many as a quarter of a million foreclosures that should have happened in 2010 will now be pushed into the 2011 numbers, and added to an already huge supply of bank owned properties. The four biggest banks already have close to $7 billion worth of foreclosed properties (REO) on their books, and Fannie and Freddie have about $24 billion collectively. While REO sales make up about one third of all sales in the current market, there is an estimated 3 year supply.

Posted in Foreclosures, Housing Bubble, National Real Estate | 189 Comments