Slump over? Not so quick.

Posted on April 11, 2010 by grim

But first, a musical interlude:

From the NYT:

Don’t Bet the Farm on the Housing Recovery

MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?

Alas, the evidence is equivocal at best.

The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

If only it were that simple.

Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.
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THE question now is whether a strong case has been built for a new bull market since the home-price turning point in May 2009. Though there is no way to be precise, I don’t believe it has.

Since that turning point, most public discourse on housing has not been about a new long-term view of the market. Instead, it focused initially on whether the recession was over and on the extraordinary measures the government was taking to support the housing market.

Now we’re shifting into a new phase. The recession is generally viewed as being over, and those extraordinary measures are being lifted.
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Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue.

Posted in Economics, Housing Bubble, National Real Estate | 133 Comments

Actually, it’ll take another bubble.

Posted on April 9, 2010 by grim

From MarketWatch:

Recovering lost home equity will take years

I recently asked the folks at HSH Associates, the popular and oft-quoted Pompton Plains, N.J., financial publishing house, to run some numbers, and their findings aren’t terribly encouraging.

“It’s going to be a long time coming,” said Keith Gumbinger, vice president at HSH, about the prospects for rebuilding “lost” equity.

I put quote marks around the word “lost” because it’s my opinion that you can’t lose what you never had. So over and above what you paid for your house, your transaction costs and whatever you’ve put into the place in the way of improvements, you haven’t lost a dime. At least not until you are ready to sell.
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This much we know: Prices have fallen 32.6%, peak to trough, between 2006 and the third quarter of 2009, according to the Standard & Poor’s Case-Shiller home-price index, which tracks changes in the value of residential real estate in 20 metropolitan regions.

Going forward is pretty much a toss-up, but HSH is assuming a flat real-estate market with no increase in value through June. Then, from July through August 2011, a period of 14 months, prices are projected to increase at a rate of about 2.5% a year. From then on out, the company is figuring on a yearly gain of 3%.
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With these percentages in mind, let’s look at what happens to the value of a $200,000 house purchased at the top of the market in July 2006:

By the time the market hits bottom — at least, the bottom according to Case-Shiller — that property was worth a paltry $134,800, a decline of 32.6%. Using HSH’s assumptions, the value of our imaginary house won’t get back to the $200,000 forked over by our fictitious buyer until — are you ready for this? — July 2022.

That’s right: It will be 12-and-a-half more years until this house is once again worth what was originally paid for it.

Again, it’s worth pointing out that this is just an educated guess. Even Gumbinger concedes it takes a “real leap of faith” to project this far into the future.

“We could end up running through a whole other recession cycle,” he said, noting that the U.S. economy tends to fall into a business cycle contraction every 10 years or so. “And house values could move up more strongly or more weakly, depending on any number of circumstances.”

But there it is, in all its cold, sobering reality — a dozen more years just to get back to ground zero.

Posted in Economics, Housing Bubble, National Real Estate | 621 Comments

Frat House Bordello

Posted on April 8, 2010 by grim

From the LA Times:

Foreclosure auction of Nicolas Cage’s mansion is a flop

Nicolas Cage is leaving Bel-Air. And not by choice.

The fate of the sprawling Tudor mansion owned by the actor, who won an Oscar for his role in “Leaving Las Vegas,” was decided Wednesday far from the baronial estate.

It was up for auction Wednesday morning — along with a handful of other foreclosed properties — on the steps of the county courthouse in Pomona.

After a rapid-fire spiel by the auctioneer, the bidding was opened at $10.4 million, far less than the $35 million that Cage had tried unsuccessfully to sell the house for.

To put it mildly, the house, though impressive, was not to everyone’s taste. Real estate agent Bret Parsons, who toured it most recently in October, described the interiors as “fascinating and bizarre.”

“The design was ‘frat house bordello,’ ” Parsons said. “There must have been 300 comic book covers elaborately framed and hanging on the walls.”

Model train sets on raised tracks a couple feet below the ceiling circled the inside of the breakfast room and two bedrooms.

There were also no takers in the courthouse sale, and in less than a minute the auction closed, with ownership reverting to the foreclosing lender — just one of six holding a total of $18 million in loans on the property.

Posted in Foreclosures, Humor | 891 Comments

Hole just got deeper

Posted on April 7, 2010 by grim

From Bloomberg:

New Jersey Taxes $250 Million Behind Christie Plan

New Jersey will get about $250 million less revenue than Governor Chris Christie projected for this fiscal year and next because of lagging retail sales taxes, according to a copy of a legislative analyst’s report provided by a person who received it before its release.

In the budget year ending June 30, New Jersey will collect $27.6 billion, about $82 million less than Christie projected March 16. The state will receive $28.1 billion, or about $168 million less than the governor anticipates in his $29.3 billion budget for next fiscal year, according to the forecast by David Rosen, legislative budget and finance officer.
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“Reflecting the downbeat economic news, nearly all major state tax revenues have dropped, many to levels not seen in several years,” the report said. “Years of revenue growth have evaporated.”

From the Star Ledger:

N.J. revenue expected to be $250M less than projected, report says

Gov. Chris Christie’s grim budget forecast in March may not have been dark enough, with New Jersey revenue collections likely to come up $250 million short through June 2011, according to a nonpartisan report to be released Wednesday.
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For the fiscal year starting July 1, OLS estimates revenue will be $167.7 million lower than the $28.3 billion Christie projected when he outlined his proposed $29.3 billion budget in March. Revenue for the fiscal year ending this June is projected at $27.6 billion, $81.7 million less than projected.
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Treasurer Andrew Sidamon-Eristoff, who is scheduled to appear before the Assembly Budget Committee today, downplayed the importance of $167 million in a $29.3 billion budget and today said the administration will not update its estimates nor adjust its proposal.

“It’s real money, it’s significant, but it is a relatively small differential,” said Sidamon-Eristoff, who declined to answer more detailed questions before his appearance.

Posted in Economics, New Jersey Real Estate, Property Taxes | 403 Comments

An actual “virtual tsunami of tax appeals”

Posted on April 6, 2010 by grim

From the Record:

Commercial properties’ slump could slam homeowners

The commercial real estate slump may be dragging down landlords’ rental incomes, but it may also help reduce their tax bills.

Faced with values that have plunged over the last two years, commercial real estate owners are expected to appeal their properties’ assessments in record numbers this year, hoping to trim their property tax bills.

Since the commercial real estate market’s peak in October 2007, values of office buildings, warehouses, shopping centers, apartment complexes and hotels nationwide declined 41 percent by December, according to ratings agency Moody’s Investors Service.

This year and next, New Jersey’s cities and towns will see “a virtual tsunami of tax appeals,” said Frank E. Ferruggia, an attorney who specializes in the process at McCarter & English LLP in Newark. Successful commercial appeals mean lower assessments and reduced taxes, putting more of a burden on homeowners.

Last year, New Jersey’s Tax Court docketed 13,635 tax appeals, most of them involving commercial properties, an increase of 22 percent compared to the 11,201 in 2008 and triple the caseload for appeals in 2001, according to an Oct. 30 state Tax Court report. Last year’s increase doesn’t include 1,991 additional appeals that were filed but not docketed because of the court’s backlog.

The Tax Court report predicted an increase this year because of declining real estate values. As of last Monday, the Tax Court had received roughly 8,000 appeals, up from the 6,823 the court received during the same time last year, said Lynne Allsop, court executive.

“They’re sucking wind. There’s no question about it. Between lower rents and higher vacancies, they’re really getting squeezed from all ends,” said Carl Rizzo, an attorney at Cole, Schotz, Meisel, Forman & Leonard P.A. in Hackensack, referring to property owners he represents.
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Losing property tax revenue from commercial properties leaves municipal leaders with tough choices. Towns can raise the tax rate as the tax burden shifts to other taxpayers because of reduced assessments. They can borrow money through issuing bonds to replace lost revenue. Or they can cut expenses.

Posted in Economics, New Jersey Real Estate, Property Taxes | 358 Comments

Paying for Unemployment

Posted on April 5, 2010 by grim

From the APP:

NJ unemployment fund: Short of cash

Christopher Nagy, a carpenter from Bradley Beach, was called into his employer’s office on Christmas Eve 2009 and told that not only would he not receive a bonus this year, but also he would lose his job.

For Nagy, a single father with a 7-year-old son, it meant life on the unemployment rolls. No cable television and Internet. No movies. No trips to the mall.

“Every single penny, before it comes, is already spoken for,” said Nagy, 37.

Nagy is one of thousands of New Jersey workers who lost their jobs in the Great Recession and are surviving on unemployment benefits. Too many for the state’s trust fund to support.

It has put employers on the hook for a tax hike worth $1 billion and locked Republican Gov. Chris Christie and the Democratic-controlled Legislature in a standoff over how to fix it. No matter the outcome, observers said, the unemployment system could take a decade to recover.

“It’s impossible for many states to recover to positive balances in one, two or even three years,” said Douglas Holmes, president of UWC Strategic Services, a Washington, D.C., group that lobbies for businesses. “This is going to be something that will be addressed at least through 2020.”

New Jersey is one of them. Workers in the state who lose their jobs this year are eligible for 60 percent of their average weekly pay, up to $600. The benefits last for 26 weeks. Once they expire, workers can collect unemployment benefits that can last another 73 weeks from the federal government.

The state-funded benefits come from an unemployment trust fund that is financed by both a tax on employers and a tax on workers. The amount employers pay depends on how often their workers file claims.

The fund, however, crumbled. The state’s unemployment rate skyrocketed from 4.5 percent when the U.S. recession began in December 2007 to close to 10 percent, a 33-year high. Some 490,000 workers in the Garden State are receiving state-funded benefits, according to the New Jersey Department of Labor and Workforce Development.

The result: The state last year paid $3.7 billion in benefits and collected $1.9 billion in revenue, forcing it to borrow the balance from the federal government. New Jersey owes the federal government $1.5 billion as of March 29, Holmes said.

The debt isn’t the only problem. State law calls for employers to stabilize the unemployment trust fund by paying a higher tax. On its current course, employers would see their unemployment taxes increase by anywhere from 32 percent to 225 percent.

Posted in Economics, New Development, Politics | 342 Comments

Weekend Open Discussion

Posted on April 2, 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 labelled “[#] 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 | 331 Comments

NY Metro Home Prices Fall Again

Posted on March 31, 2010 by grim

According to the S&P Case Shiller Home Price Index (January 2010 – Released yesterday), aggregate prices have now fallen for the past 5 months in the NY Metro Area. It appears we may be moving towards a double dip scenario if the trend continues. There is a high likelihood of this occurring as housing stimulus is removed from the market. Almost all of the month to month recoveries seen between April and July of 2009 have been eliminated.

The NY Metro area continues to underperform.

Year over Year
Aggregate (Overall Market) – Prices have fallen an additional 5.3%
Low Tier (Under $284999) – Prices have fallen an additional 7.7%
Middle Tier ($284999 – $430496) – Prices have fallen an additional 5.1%
High Tier (Over $430496) – Prices have fallen an additional 4.7%
Condos – Prices have fallen an additional 6.4%

Posted in Economics, New Jersey Real Estate | 563 Comments

“You don’t make drug addicts go cold turkey”

Posted on March 30, 2010 by grim

From the NY Times:

Spurt of Home Buying as End of Tax Credit Looms

Nine hundred days after putting their house on the market, Andrew and Jane Palestini were beginning to think they might be stuck in Iowa forever.

The looming expiration of the government’s housing tax credit pushed them into action. They dropped their price by an additional $10,000, to $235,000. Somewhat to their shock, a buyer emerged. The house is now under contract.

“I can’t feel happy,” said Mr. Palestini, a retired administrative law judge with the Social Security Administration. “Just relieved.”

After several disastrous months for home sales across the country, when volume dropped by 23 percent, the pace appears to be picking up again. The number of Des Moines homes under contract in February rose by a third from the January level. The number of pending contracts jumped 10 percent in Naples, Fla., 14 percent in Houston and 21 percent in Portland, Ore.

These deals will be reflected in the national sales reports when they become final, this month or next. There is no evidence that prices have begun to move in response to the higher volume. Indeed, so many homes are coming on the market that prices might well fall further.

Real estate agents say buyers and sellers are hurrying to take advantage of the tax credit, which is worth up to $8,000 for home buyers. But the last-minute rush is also prompting some foreboding about what will happen to the market on April 30 when the credit ends — and whether it is too risky to let it end at all.

James M. Poterba, an economist at the Massachusetts Institute of Technology, calls this “the exit strategy problem.”

“If you have a short-run program to stimulate demand, it’s always tricky to figure out how you gently remove it without going off a precipice,” he said.
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Arguments for extending the tax credit a second time are just beginning. Robert Shiller, a professor of economics at Yale and co-developer of the Standard & Poor’s/Case-Shiller housing price index, is an early advocate. He thinks the credit was a bad idea that nevertheless the market cannot do without.

“You don’t make drug addicts go cold turkey,” Mr. Shiller said. “The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house.” He advocates phasing it out gradually.

Posted in Economics, Housing Bubble, National Real Estate | 508 Comments

2009 – Not the year of housing

Posted on March 29, 2010 by grim

From the Record:

Home sales fell in North Jersey in 2009

North Jersey home prices dropped 8 percent last year, falling to their lowest level since 2004 and draining billions of dollars from the housing market.

Despite federal efforts to prop up the market with low mortgage rates and an $8,000 tax credit, the median price for single-family homes dropped 8 percent in Bergen County and 9 percent in Passaic County, according to an analysis of sales data by The Record. For the year, homes sold at a median price of $415,000 in Bergen and $320,000 in Passaic. Prices dropped the most at the low and high ends of the market.

“We entered 2009 staring into the economic abyss,” said Rutgers economist James Hughes. And that was reflected in the housing market, which continued to pay for the excesses of the housing boom.

It’s too early to tell how 2010 prices will shape up, although many analysts believe housing demand will slacken after the tax credit expires next month.
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In fact, prices in 2009 were down about 15 percent from their peaks in the middle of the decade — much less than the roughly 30 percent average decline seen nationwide. Even more striking, the number of sales in the two counties has plummeted by 62 percent since the market peak, The Record’s analysis found. Only about 7,400 residential real estate sales were recorded in Bergen and Passaic, down from 19,300 in 2005.

For most people, who are neither buying or selling, lower values reduce household wealth, making consumers less willing — and able — to borrow and spend. This lost housing wealth has added to a sense of unease about the economy, which has been plagued by unemployment rates around 10 percent.
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Median prices dropped most in areas with the lowest and highest prices. In communities where the typical price is less than $300,000, the median price sank 15 percent in 2009. At the high end, where homes generally sell for at least $750,000, the typical price dropped 11 percent.

Total sales volume in the two counties plummeted from $9.3 billion in 2005 to $3.3 billion in 2009.

In a separate sign of market trouble, there was one category of sales that did not drop in 2009. Roughly 1,500 sales were recorded during or immediately after foreclosures by lenders against owners who stopped making mortgage payments, about the same as in 2008.

The market has lost roughly $22.5 billion in total value since prices started falling in 2007. That figure is reached by multiplying the typical home loss — $60,000 to $65,000 — during the slump by the 355,000 housing units in the two counties.

Hardest hit last year were less-expensive markets such as Paterson, Fairview, Hackensack and Prospect Park, where the median price sank 18 to 27 percent. Many affluent towns also were affected. The typical price dropped 13 to 29 percent in Allendale, Edgewater, Norwood and Old Tappan.

A few places seemed to escape the market’s wrath, with stable prices and even some gains seen in Cliffside Park, Englewood Cliffs, Ho-Ho-Kus, Mahwah and Totowa.

All told, 76 of the 86 municipalities in Bergen and Passaic saw continued dips in prices.

Posted in Housing Bubble, New Jersey Real Estate | 374 Comments

Housing Bailout Plan #46 47 (Hard to keep up with these)

Posted on March 26, 2010 by grim

From Bloomberg:

U.S. Said to Widen Homeowner Aid, Subsidize Mortgage Reductions

The Obama administration plans to announce programs to help homeowners avoid foreclosure, including subsidies for borrowers who owe more than their home is worth.

The plan, to be unveiled today, would expand Treasury Department and Federal Housing Administration programs and use funds from the $700 billion Troubled Asset Relief Program, according to two administration officials. The administration faced a week of criticism from lawmakers and watchdog groups who say the government hasn’t helped enough homeowners stave off foreclosure.

“It’s almost like a triage policy,” said Eric Barden, chief investment officer of Barden Capital Management in Austin, Texas. “It limits the losses of the most overvalued properties and it also limits the losses to the borrowers that are in the most distress.”
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The new plan would increase payments to lenders that modify second mortgages, an official said. Banks’ unwillingness to write down second liens has helped block efforts to prevent foreclosures, said Josh Rosner, managing director at Graham, Fisher & Co. The Washington Post reported earlier on the administration’s plan.
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The administration will propose allowing more mortgages to be refinanced into FHA guarantee programs if the borrower is current on the loan, one of the officials said. The lender would have to cut the amount owed by at least 10 percent to less than the value of the home. The first and second mortgages combined would have to be no more than 115 percent of the home’s value.

“Banks continue to carry second liens on their books at vastly inflated value,” Rosner said. “If the government reduced their ability to overinflate these assets, the banks would be more willing to engage in principal reductions.”

The Treasury would help unemployed homeowners reduce mortgage payments for at least three months while they look for work, the officials said. If homeowners don’t find a job in that time, or if they find a new job at a lower salary, they will be evaluated for further assistance.

Posted in Economics, National Real Estate | 610 Comments

Lowball: Bruce Edition

Posted on March 25, 2010 by grim

From Housing Watch:

Springsteen Takes a Loss on House Sale

Bruce Springsteen, winner of 20 Grammy Awards, has sold one of his two neighboring homes in Florida’s Palm Beach County for $1 million less than its original list price, reported the Palm Beach Daily News. This is just further proof that celebrity real estate isn’t immune to the housing bubble.

The legendary rocker sold the home at 3561 Ambassador Road in Wellington for $2.95 million, a big cut from its original $3.95 million list price. The sale price is also less than the $3.1 million Springsteen paid for the 5-bedroom in the spring of 2008. The $150,000 loss (not including his real estate agent’s cut), may seem like a drop in the Atlantic Ocean for a man worth millions, but when you consider the short time he owned the home, it’s quite a chunk of change.
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The Springsteens’ primary residence is in Rumson, N.J., and they also own a home in Beverly Hills, CA.

From the Palm Beach Daily News:

Bruce Springsteen sells one of two Wellington houses to Daniel, Ellen Crown

New Jersey rock star Bruce Springsteen, through his Los Angeles attorney Nancy G. Chapman, has sold one of his two Equestrian Club Estates houses in Wellington for $2.95 million, according to the warranty deed filed late Thursday afternoon.

The buyers, Daniel M. and Ellen Podell Crown, live in New York and Connecticut.
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The property was listed for $3.95 million, according to several sources.

In June 2008, Springsteen bought 3561 Ambassador Road for $3.1 million; the following September, Springsteen’s Stone Hill Trust closed on an adjacent improved parcel, 3581 Ambassador Road, for $4.6 million, purchasing it from William Farish Jr. and Kelly Farish, according to Palm Beach County Property Appraiser’s Office records.

Posted in Comp Killer, Lowball, National Real Estate | 366 Comments

Is the slump over in the Northeast?

Posted on March 24, 2010 by grim

From the NYT:

Northeast Home Sales Post 13 Pct. Annual Increase

Home sales in the Northeast rose in February as the economy showed signs of recovery, inspiring buyers.

The National Association of Realtors also said Tuesday that Northeast sales were 13 percent higher on a year-over-year basis, the biggest improvement in any of the four U.S. regions.

Nationwide, homes sales were up 8 percent from February a year ago, without adjusting for seasonal factors.

The improved sales activity in the region helped drive up prices. The median sales price of $254,700 for an existing home was almost 8 percent higher than February 2009, making the Northeast the sole region to show a price increase from last year.

The national median sales price of $165,100 was down almost 2 percent.
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Home sales in the Northeast rose in February as the economy showed signs of recovery, inspiring buyers.

The National Association of Realtors also said Tuesday that Northeast sales were 13 percent higher on a year-over-year basis, the biggest improvement in any of the four U.S. regions.

Nationwide, homes sales were up 8 percent from February a year ago, without adjusting for seasonal factors.

The improved sales activity in the region helped drive up prices. The median sales price of $254,700 for an existing home was almost 8 percent higher than February 2009, making the Northeast the sole region to show a price increase from last year.

The national median sales price of $165,100 was down almost 2 percent.
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Biggest sales gains: Sales in the New York City suburbs climbed 29 percent from a year ago, the second consecutive month of strong growth in that market.

Miriam Bernstein, an agent with Re/Max Prime Properties in Scarsdale, N.Y., saw evidence of growing demand in the pricey New York suburban market, coupled with an occasional lack of supply.

”A tremendous number of buyers are out there ready to buy, but I don’t think we have enough houses for what they’re looking for,” she said.
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Biggest sales declines: Sales in Trenton, N.J., fell 14 percent, while Hartford, Conn., was down nearly 9 percent and Philadelphia off 6 percent.

Realtors were split on the impact of the historic winter storms that buried the mid-Atlantic states, particularly Pennsylvania and New Jersey, while leaving northern New England relatively unscathed.
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Sellers whose homes have been on the market for months may also be starting to lose patience and showing more flexibility.

Agents need to have a ”hard conversation” with sellers whose properties have been on the market for six months or more, Magee said.

”You are starting to see some reality settling in with a lot of the sellers,” he said. ”You’re seeing price reductions of $15-$20,000.”

Posted in Economics, New Jersey Real Estate | 400 Comments

February Existing Home Sales

Posted on March 23, 2010 by grim

From Bloomberg:

Sales of Existing U.S. Homes Probably Fell for a Third Month

Sales of existing U.S. homes probably fell in February for a third month, indicating the lack of jobs is hindering government efforts to revive demand, economists said before a report today.

The extension and expansion of a federal tax credit that helped stabilize housing in 2009 has yet to spark sales this year as hiring hasn’t materialized. Home Depot Inc. is among companies cutting prices to stimulate demand as the world’s largest economy recovers from the worst recession since the 1930s.

“We’re not going to see a significant recovery for some time, though there is a recovery” in housing, said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We really need to see the job market picking up.”

The National Association of Realtors’ report is due at 10 a.m. in Washington. Survey estimates ranged from 4.75 million to 5.2 million. January sales came in at a 5.05 million pace, a 7.2 percent decline from December, which in turn was down 16 percent from the prior month.

Posted in Economics, National Real Estate | 425 Comments

Age Unrestricted Communities

Posted on March 22, 2010 by grim

From USA Today:

In N.J. community, age less of issue these days

Elazer and Barbara Lew were the first to move in to Pine River Village in Lakewood, N.J., a development for people ages 55 and older.

“I liked the idea of moving to an adult community, with all the services and amenities,” says Barbara, 63, who works at a nearby school for children with special needs. “I liked the idea of having people our own age to socialize with.”

That was three years ago — just before the housing market crashed and the recession hit. Suddenly, older buyers who had wanted to enjoy the amenities that age-restricted communities offer couldn’t sell their homes. On top of that, their retirement funds were taking a beating as stock prices plummeted. Some who had planned to retire and move decided to stay put and keep working.

About 20 Pine River Village homes had sold when the developer approached the homeowners with a proposal: agree to lift the age restriction on housing built on half of the development.
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New Jersey, which has a 16-year supply of age-restricted housing, is at the forefront of this movement. The state’s towns and counties welcomed no-kids housing with gusto because the developments created revenue without putting a strain on local school budgets.

“They used that tool too often — to excess,” says Robert Lang, urban sociologist at the University of Nevada-Las Vegas. “It was overstocked because it was easy to get approved.”

Ralph Zucker, whose company is building Pine River and Somerset Walk, said many developers “pushed back on regular development because it was a lot easier to do age-restricted communities. … Now, we see an active market for non-restricted housing.”

Last year, New Jersey passed a law that allows developers to ask municipalities to do away with age limits on projects that have already been approved. More affordable housing would be built in return.

From the APP:

Developers struggling to fill 55+ communities

An increasing number of developers struggling to find older residents for their 55-plus housing communities have relaxed the age restrictions to attract younger home buyers.

The housing collapse and recession hurt sales in active adult communities, which in the past 10 years had multiplied as the first wave of 79 million Baby Boomers entered retirement. The real estate boom allowed retirees to make big bucks on their old homes and pay cash for smaller houses.

“The 50-plus buyer has had a double whammy in the last couple of years,” says Brian Gentry, president of Landed Gentry Homes and Communities, based in Burlington, Wash. “They lost the ability to turn their house into cash, and a lot of them have taken a pretty big hit in their portfolios.”

His company found more success with multigenerational developments, he says. They built enclaves for younger adults in a Mount Vernon development initially aimed at older buyers.
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Somerset Development was building 173 homes for older adults at Pine River Village in Lakewood, N.J., when the market tanked.

“We started right as the market was cooling off, sold about 20 homes and the market just died,” says Ralph Zucker, Somerset president.

He went to the 26 residents at the time for approval and then to Lakewood Township officials for a zoning change. Now, about half of the homes will be for all ages in a separate development.

Posted in Economics, New Jersey Real Estate | 441 Comments