So who owns the house?

Posted on October 11, 2010 by grim

From Bloomberg:

Foreclosure Freeze May Sideline U.S. Homebuyers as Legal Worry Cuts Sales

A halt in home foreclosures at the largest U.S. mortgage firms may sideline buyers worried about legal issues, further depressing sales at a time when distressed properties account for almost a quarter of all transactions.

Revelations of mistakes in foreclosure proceedings are causing buyers to have misgivings about property titles, the right of home possession, said Richard DeKaser, chief economist at Woodley Park Research in Washington. Confidence in the legality of repossessions will cut foreclosure sales more than a reduction of available properties because the market already is flooded with repossessed homes, he said.

“The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,” DeKaser said. “The implications are that there’s been shoddy work.”
…
A reduction in foreclosure sales may result in a short-term boost to the nation’s median home price as buyers shy away from distressed properties, said Thomas Lawler, founder and president of Lawler Housing and Economic Consulting in Leesburg, Virginia.

In the second quarter, distressed homes — those that had received a default or auction notice or were seized banks — sold at an average 26 percent discount to properties not in the foreclosure process, according to RealtyTrac.
…
Any short-term boost to prices may be offset when a flood of properties are offered for sale after document problems are sorted out, Lawler said.

“Some people are breathing a short-term sigh of relief because the likelihood of distressed sales putting downward pressure on home prices has been put off,” Lawler said. “But no one is breathing a long-term sigh of relief because when these properties eventually come on the market, we’ll have both the confidence problem and the price problem.”
…
“The broader concern is that if banks took shortcuts here, what else did they do?” Sharga said. “Five years into this crisis, there’s no excuse for not having a process in place.”
…
Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance, or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.

Posted in Foreclosures, National Real Estate, Risky Lending | 119 Comments

Closing up until the Spring

Posted on October 9, 2010 by grim

From the NY Times:

A Long Winter Awaits Some Sellers

THE five-bedroom four-bath farm ranch on more than 2.5 acres that Margaret Trautmann owns in Upper Brookville has been on the market for nine months. Originally listed at $1.695 million, the 51-year-old slate-roofed house has since had its price cut by $100,000.

Ms. Trautmann has received four offers, but none for what she hoped to get for the 3,000-square-foot home where she reared three children and lived for 25 years.
…
“You have to stay in the game,” goes the advice — which translates as, plan to keep the listing active through the winter. “The houses today are at least a year on the market,” Ms. Trautmann said of the homes priced from $1 million to $2.5 million in her well-to-do neighborhood.
…
In years past, said Liz English, an associate broker with Netter Real Estate in West Islip and the president-elect of the Long Island Board of Realtors, the perception was that a house for sale would benefit from being taken off the market close to Thanksgiving and relisted at a higher price, with “a fresh approach,” in early spring. “That was because we were going up and up and up,” Ms. English said.

Four years after housing prices peaked, there is no sign that prices will be higher next spring.

In any case there is now a glut of luxury homes, particularly between $1 million and $2.5 million, and in some areas $5 million and above, on the North Shore market and in pricey South Shore areas like Woodsburgh, Hewlett Harbor, Hewlett Bay Park, Hewlett Neck and Back Lawrence.

Over all, in Nassau County, there are 1,590 residences listed at $1 million or more, according to the Multiple Listing Service of Long Island; in Suffolk in that range there are 1,058. Listing service data indicate that over the last five years, contracted sales typically peaked in July and August. The slowest months for closing sales are January and February.
…
In the Five Towns, Mr. Pugatch said, fall sales pick up in October, after the Jewish holidays. “December is my best month,” he said. “The people who come out in May and June and want to be chauffeured to eight or nine houses, they are all looking; they are not buying yet.” But by December, he said, 75 percent of lookers buy. “They are out looking in the rain and the snow,” he said. “Those are the best buyers you can get.”

And for those homes that are “priced right, if you are not in real-estate-denial mode, you can sell in 30 days.”
…
But Nava Mitnick, an associate broker with Daniel Gale, takes a different approach. Ms. Mitnick has multiple listings in Sands Point, where 64 homes (about 7 percent of the housing stock) are on the market, at a price range of $999,000 to $30 million. She suggested that sellers not “initiate a listing in November or December,” saying: “You won’t get the proper attention because people are otherwise occupied. It is not starting off on the right foot.”

Posted in Economics, National Real Estate | 97 Comments

Back to reality?

Posted on October 8, 2010 by grim

From the Press of Atlantic City:

Mortgate rates hit new low as qualifying standards hit new high, so what’s a housing market to do?

Mortgage rates this month have fallen to their lowest levels in recorded history, but local industry observers still do not expect a flurry of home-buying to follow.

Many applicants who meet today’s tougher standards for mortgage eligibility would need to pay 20 percent up front for a house. Would-be buyers are waiting for prices to bottom out, or putting off growing their families, or simply waiting for more job stability, said Michael Busler, associate professor of business studies at the Richard Stockton College of New Jersey.

“We’re in a housing crisis,” Busler said. “We have an oversupply of houses because we built so much and there are so many foreclosures hitting the market. They’re hoping (for the federal government) to stimulate demand somewhat. Normally, recoveries from severe recessions are much more robust than the one we’re having.”
…
At First Mutual in Pleasantville, Thursday’s average 30-year rate was even lower, about 4.125 percent, branch manager Jim Malamut said.
…
However, historically, low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade. A shore market of mostly second homes struggled, too.

“The rates are wonderful. They couldn’t be any better, but it’s become more difficult to get a mortgage for a buyer,” said Linda C. Naame, a Century 21 broker and owner in Egg Harbor City.

Naame said she is noticing that clients need a credit score above 640 to get any kind of mortgage. That can be difficult for some first-time buyers who have had trouble getting or keeping jobs in a poor economy, thus costing them chances to build credit.

“It used to be whenever you were in the 600s, you were OK,” Naame said.

Malamut said applicants qualified about 65 percent to 70 percent of the time in 2005; the figure is “probably 40 percent” today.

“Everything is looked at very closely, where before it wasn’t looked at closely,” Malamut said. “The whole industry’s in overhaul.”
…
The larger down-payment standard “is an obstacle, but it’s probably a good obstacle,” Malamut said. “It makes people put more of an investment into their purchase. A couple years ago, people were buying houses because they were told they had to buy houses. Now, we’re back to reality.”

Posted in Economics, New Jersey Real Estate, Risky Lending | 373 Comments

Bye Bye McMansions! (Good Riddance)

Posted on October 7, 2010 by grim

From the NY Times:

Builders Move Beyond McMansions in New Jersey

Faced with the prospect that New Jersey’s buildable open space could be gone by midcentury, developers are turning to projects that tap into existing infrastructure, use vacant buildings and emphasize the vertical over the horizontal.

A report released in July by Rowan and Rutgers Universities found that, after comparing aerial photos of the state, the years from 1986 to 2007 were New Jersey’s most sprawling period, when unprotected land was developed most rapidly.

When development ground to a halt in mid-2007 as the housing market collapsed, New Jersey had more acres of subdivisions and shopping malls than it had of upland forests and was down to its last million acres of developable land, according to the report, called “Changing Landscapes in the Garden State.”
…
“What will trigger denser development is that there’s no space left, and what is left no one can build on,” said David Henderson, a principal at HHG Development Associates, a Trenton company that focuses on sustainable building practices. According to the Rowan and Rutgers report, New Jersey is poised to become the first state to develop every acre of unprotected land, a milestone researchers predict will happen “sometime within the middle of the century.” But whatever the imperative, a number of untraditional projects seem to be finding acceptance with home buyers.
…
One answer to sprawl is to build up rather than out. In 2004, Toll Brothers and Pinnacle paid $76 million for a 24-acre former Maxwell House coffee factory on the Hoboken waterfront and razed the 11 original buildings. In their place rose two 12-story luxury condos with ground-floor retail shops and a new street grid that connected the public to the waterfront, which includes a park and a waterfront walkway.
…
Residential building permits in urban and suburban town centers in 15 regions across the country more than doubled from 1990 to 2008, particularly in the New York metropolitan area, where redevelopment in urban areas made up half of all new residential construction, according to a study, “Residential Construction Trends in America’s Metropolitan Regions,” released by the Environmental Protection Agency in January. The increases were particularly sharp in the last five years, with the trend continuing even in 2008, as the residential housing market weakened.

“I don’t see that McMansions are going to be the way of the future,” said Jacqueline Urgo, president of the Marketing Directors, a marketing and residential sales agency. “Opulence is out. It’s smart living that people are looking for.”
…
“This is the way things are heading. It’s all about affordability and sustainability today,” said Thomas Troy, a principal of Sharbell. “A lot of the shine around the McMansion is gone.”

Posted in Economics, New Development, New Jersey Real Estate | 227 Comments

“it is time that banks are held accountable for their practices.” (But what about borrowers?)

Posted on October 6, 2010 by grim

The fact of the matter is that the borrower is in default, and should be foreclosed on.

Where did anyone get the idea that the pre-MERS world of robosigners was without error or fraud? These exact same types of issues occurred prior to MERS, which was the whole reason that title insurance existed in the first place (god forbid a piece of paper representing a lien be lost).

The old system of paper filing/recording deeds as public record in the local municipality as proof of title/ownership is antiquated, expensive, and a waste of time.

Oh woe is me for suggesting that MERS was a step in the right direction, not a wrong one.

——————————-

From the NY Times:

Foreclosure Furor Rises; Many Call for a Freeze

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”

In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible.”
…
Both developments indicated that scarcely two weeks after the country’s fourth-biggest lender, GMAC Mortgage, revealed that it was suspending all foreclosures in the 23 states where the process requires judicial approval, concerns about flawed foreclosures had mushroomed into a nationwide problem.

Some of the finger-pointing was also being directed back at Congress. The Ohio secretary of state, Jennifer Brunner, suggested in a telephone interview on Tuesday that a bill passed by Congress last week about notarizations could facilitate foreclosure fraud.

Dubious notary practices used by banks to justify foreclosures have come under scrutiny in recent weeks as GMAC and other top lenders suspended homeowner evictions over possible improper procedures.
…
Ms. Brunner pointed out that some states had adopted “electronic notarization” laws that ignored the requirement of a signer’s personal appearance before a notary. “Many of these policies for electronic notarization are driven by technology rather than by principle, and they are dangerous to consumers,” she said.
…
Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.

As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”

The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.
…
Other calls for investigations came from Senators Al Franken, a Democrat from Minnesota, and Robert Menendez, a Democrat from New Jersey.

Posted in Foreclosures, National Real Estate | 118 Comments

Pending home sales fall in the Northeast

Posted on October 5, 2010 by grim

From Forbes:

Pending Home Sales Don’t Move The Needle

The pending home sales index for the month of August released today by the National Association of Realtors beat analyst expectations, rising 4% to 82.3 from 78.9 in July. Home buying still haven’t caught up to last year, when it was 103, but the worst-hit markets are appearing to recover fastest.

Analysts are seeing faster than expected gains in the housing markets that took the biggest blows when the real estate bubble burst and slower recoveries in less-affected areas.

From MarketWatch:

Pending U.S. home sales up 4.3% in August

Sales of homes in the U.S. rose 4.3% in August, based on the number of contracts signed.

The National Association of Realtors said its pending home sales index rose to 82.3 from 78.9 in July, adding to evidence that suggests home sales will improve gradually over the next few months.

Pending sales reflect contracts signed between home buyers and sellers. The closing of a sale usually takes a few months.
…
Pending sales fell 2.9% in the Northeast, but rose 2.1% in the Midwest, 6.4% in the West and 6.7% in the Midwest, according to the association.

Posted in Economics, National Real Estate | 216 Comments

“They’re angry. They’re bitter. They’re in a bad place; they’re in a sad place,”

Posted on October 4, 2010 by grim

From the Record:

In a tough market, home sellers feel discouraged

Ken and Linda Bolsch put their five-bedroom, five-year-old Mahwah colonial on the market in January, sure that buyers would appreciate its low taxes, wooded lot, and impeccable decor and landscaping.

But after nine months — and a price cut from $925,000 to $749,000 — the house is still on the market, with the couple looking at a substantial loss at that price.

“We fell in love with the house from the moment we saw it, and we don’t know why other people aren’t doing the same,” Ken Bolsch said. “We’re so confused and confounded about the whole thing.”

These are tough days for sellers. Sales have plunged at least 20 percent from last year’s numbers, following the expiration of a federal tax credit for home buyers, and the real estate market is headed into a traditionally slow season. Small wonder that sellers feel discouraged and disappointed.

Bob Sandusky of Weichert, the Bolsches’ agent, sums up sellers’ feelings in one word: “frustration.”

“They’re angry. They’re bitter. They’re in a bad place; they’re in a sad place,” said Attilio Adamo of Prudential Adamo Realty in Harrington Park.

The usual prescription for a house that won’t sell is simple: Cut the price.

“If the seller allows you to price it right, it goes,” said Roslyn Breitstein of Prudential Adamo.

But many sellers can’t stomach that thought. If they bought within the past few years, they may have mortgages bigger than the amount they could get for the house.

“They can’t believe that their house could be worth 30 percent less than what their neighbor got a few years ago,” said Barbara Liati of Prominent Properties Sotheby’s International Realty in Tenafly.

In fact, there’s one sentence that real estate agents hear over and over: “I’m not giving my house away.”

Posted in Economics, New Jersey Real Estate | 180 Comments

No bottom for the shore

Posted on October 3, 2010 by grim

From the Philly Inquirer:

Shore home prices still falling

ome prices at the Jersey Shore continue to search for a bottom, almost four years after the U.S. housing market took a downward turn.

An analysis of second-quarter 2010 sale prices in Atlantic and Cape May Counties, done by Econsult Inc. vice president Kevin Gillen for Prudential Fox & Roach, shows that the typical Shore house has lost 24 percent of its value since the market’s peak in the second quarter of 2006.

By comparison, Philadelphia’s single-family home prices fell 6.8 percent in the same period, U.S. prices dropped an average of 13.2 percent, and the average decline for New Jersey as a whole was 13.6 percent.

“This disparity is likely attributable to the fact that the market for Shore homes is disproportionately composed of vacation homes, rather than year-round primary residences,” Gillen said last week. “As foreclosures have climbed along with unemployment and mortgage delinquencies, most households are incentivized to liquidate their second home or vacation home before doing likewise to their year-round residence.”
…
In 2005, said Moody’s Analytics Inc. chief economist Mark Zandi, “76 percent of loans to purchase a single-family home in the Ocean City metro area were to investors – the highest in the country.”

“Yes, the boom, bubble, and bust in Jersey Shore prices is due, in significant part, to the rampant speculation in housing,” Zandi said.

Bill Mestichelli of Philadelphia has sold two vacation houses and a rental property in Ocean City in six years. Even with a dip in prices of 14.7 percent since 2006, he said, “I think the market down there is still way overpriced.

“The mortgage companies are very tight with lending for second homes without a hefty down payment,” Mestichelli said. “I plan to get back in the market in Ocean City in about two years, when I believe the prices will stabilize.”
…
How distressed is the Shore? Since 2007, there have been 10,527 foreclosure filings in Atlantic County, with lenders taking back 1,236 homes, according to RealtyTrac Inc., of Irvine, Calif., which tracks U.S. foreclosures. For the same period in Cape May County, there were 4,665 filings and 580 lender repossessions.

The hardest-hit town has been Atlantic City, where prices have nose-dived 63.3 percent since the market’s peak, Gillen’s analysis indicated.

Posted in Shore Real Estate | 63 Comments

Weekend Open Discussion

Posted on October 1, 2010 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labeled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 214 Comments

One in seven homes sold in NJ in some stage of foreclosure

Posted on September 30, 2010 by grim

From the Record:

15% of NJ homes sold in second quarter were in foreclosure process

About 15 percent — or one in every seven — homes sold in New Jersey during the second quarter were in some stage of the foreclosure process, RealtyTrac reported Wednesday.

That compares with about 24 percent of homes sold nationwide during the quarter, according to the California-based RealtyTrac, which tracks the foreclosure market nationwide.

RealtyTrac said distressed sales made up a smaller part of the market than a year earlier, but that was in part because the number of regular sales increased as a result of the federal home buyers’ tax credit, now expired.

James J. Saccacio, RealtyTrac’s CEO, predicted that the end of the tax credit could drive more buyers back to distressed sales. Those can be bank-owned properties or short sales, in which a lender agrees to accept less than is owed on the mortgage so a seller can get out from under an unaffordable mortgage.

Such sales can be a good deal for buyers, according to RealtyTrac. It estimated that in the second quarter, homes in the foreclosure process sold, on average, for 26 percent less than non-foreclosure sales.

The best deals came in bank-owned properties, which sold at a 34 percent discount.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 159 Comments

New Jersey Home Price Tracker – September 2010

Posted on September 28, 2010 by grim

The New Jersey Home Price Index Tracker has been updated to include:
* July S&P Case Shiller (Aggregate, Tiered, Condo)


(click to enlarge)


(click to enlarge)

S&P Case Shiller NY Metro Commutable Area Home Price Index

Low Tier (Under $289395) – Peaked in October 2006 and is down 24.4% from peak

Mid Tier ($289,395 – $450,042) – Peaked in September 2006 and is down 21.0% from peak

High Tier (Over $450042) – Peaked in June 2006 and is down 14.0% from peak

Aggregate (Overall Market) – Peaked in June 2006 and is down 19.0% from peak

Condo-Only Index – Peaked in February 2006 and is down 13.7% from peak

Posted in Economics, New Jersey Real Estate | 211 Comments

August contracts down 25% year over year

Posted on September 27, 2010 by grim

From the Otteau Group:

Recent Housing Slump Extends to 4 Straight Months

Purchase contracts to buy a home in New Jersey fell by 25% in August compared to one year ago as the housing market continues to weaken in the aftermath of expired federal homebuyer tax credits. The August decline continues a string of 4 consecutive months of slumping home sales since the tax credits expired on April 30th.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 192 Comments

“But the market didn’t improve.”

Posted on September 27, 2010 by grim

From the Star Ledger:

Home prices flat in first half of year, but may be headed lower

A three-year slump in North Jersey home prices leveled off in the first half of 2010, as the federal tax credit helped increase sales. But since the $8,000 credit expired, sales have plummeted, and experts predict prices will slide again before year’s end.

“The hope was that the tax credit would hold things together until the market fundamentally improved,” said Jim Diffley, an economist with IHS Global Insight. “But the market didn’t improve.”

An analysis of January-June real estate sales by The Record found that the median home price in Bergen County rose slightly from $410,000 in the first half of 2009 to $415,000 during the same period of 2010, while Passaic County’s typical price dipped a bit, from $322,500 to $315,000. Those small changes followed price declines of nearly 10 percent from 2008 to 2009.

But once the tax credit ended, the housing market began to sink again, said Jeffrey Otteau, an East Brunswick real estate appraiser who tracks home values statewide. The number of sales is down more than 20 percent nationwide and in the region since the credit ended.

“In the second half of the year, we will see modest price declines — we’re thinking about a 3 percent decline,” Otteau said. “Whether that will continue into 2011 will be determined wholly by what happens with the job market.”
…
The housing market was invigorated last spring by first-time buyers like Amanda Smerdon and Michael Spiga, who rushed to beat the April 30 deadline to sign a contract for the tax credit. The two bought a Dumont Cape Cod in move-in condition for $340,000.
…
They benefited not only from the tax credit, but also from low mortgage rates and home prices that have come down since their peaks during the housing boom of a few years ago. In fact, the people who sold them the house, Scott and Susan Memberg, took a $55,000 — or 14 percent — loss on the price they paid in August 2005.
…
The experts agree. Otteau predicted that house prices will continue to be dampened by the high rate of foreclosures and other distressed sales, which tend to be at discounts; tight lending standards that make it hard for prospective buyers to get a mortgage; and most of all, a weak job market.

From where she sits, in her new home in Dumont, Smerdon already sees signs that prices may be headed lower.

“A house around the corner from us just recently went on the market for $265,000,” $75,000 less than she and her fiancé paid, she said.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 81 Comments

For Sale! … Or Rent!

Posted on September 25, 2010 by grim

From the NY Times:

As Sales Slump, Rental Stock Rises

IN New Jersey, those big suburban homes that used to be called exemplars of the American dream of homeownership are increasingly available for a monthly fee.

Houses with yards and eat-in kitchens, cedar decks and garage-door openers — some recently built, others older and set in the well-established kind of neighborhood where the mailman waves and trick-or-treaters travel en masse — are available for rent in “numbers not seen before,” in the words of Nicole Idler of Friedman Properties and Associates, a longtime broker in Bergen County.

In Bergen alone, 1,589 single-family homes are listed for rent, according to Ms. Idler’s search of multiple listings. Many of those are being offered for sale at the same time, though she and other agents said it was not possible to pinpoint that percentage. (The total number of single-family houses on the market in the county is 4,259, according to the listings.)

“Obviously, there are more single-family homes available for rent because the for-sale market is so difficult,” said Barbara Wilke, an agent in the Ridgewood office of Marron Gildea & Donohue Realtors.

Ms. Idler agreed with that assessment, adding that “both markets have become flooded.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 114 Comments

Fixing debt with more debt

Posted on September 24, 2010 by grim

From the Courier Post:

State to get $112M to halt foreclosures

Program that will help unemployed and underemployed homeowners make their monthly mortgage payments for up to 24 months, state officials said Thursday. Since 2006, foreclosures have jumped nearly 200 percent in New Jersey.

The governor’s office says the program will assist an estimated 2,500 to 4,000 households.

The New Jersey Home Keeper program will provide zero-interest, deferred-payment mortgage loans to homeowners who through no fault of their own are unable to make payments and are in danger of losing their homes to foreclosure.

The program allows time for the homeowner to seek re-employment or complete job-training programs.

Loans will be capped at $48,000 per household. The average assistance loan is expected to be $38,000, state officials said.

In a statement, Gov. Chris Christie said: “New Jersey homeowners have been hit hard by the national foreclosure crisis. Otherwise hard-working individuals who qualify deserve this support to get through the remainder of this recession while keeping their homes and family life intact.”

Posted in Foreclosures, New Jersey Real Estate | 233 Comments