New Jersey Real Estate Report

From Fierce Biotech:

Pfizer and Merck signal deep cuts in R&D groups

Pfizer and Merck have begun to spell out exactly where the axe will fall as they each absorb a big new acquisition into their organizations. According to Pharmalot, Pfizer has told New Jersey officials that 400 people at Wyeth’s old Monmouth Junction research center are getting the pink slip at the end of this month. And Merck will eliminate 500 jobs–mostly sales and administrative positions–from Schering-Plough’s old headquarters in Kenilworth.

These layoffs are just the beginning, of course. Both pharma companies are planning deep cuts to eradicate any overlaps with the companies that they are swallowing. And in another ominous note for Big Pharma’s embattled R&D organizations, Merck CEO Dick Clark told an audience attending a Goldman Sachs event that the company has to look at “the number of research sites you need” post-merger.

From the PharmExec Blog:

Cold Cuts: Merck Layoffs Loom

It is not just cold outside these days, as Merck & Co. makes some cold hard decisions. Following on the heels of its now closed acquisition of Schering-Plough, Merck is making significant job cuts across its operations. Some 16,000 jobs are expected to be eliminated in total as a result of the merger.

According to the Wall Street Journal, Merck CEO Dick Clark wants to “eliminate some of the duplication,” especially with respect to the sales force. Many of those cuts were made today, according to various reports. The size and scale of those cuts, however, remain unclear, with no official word from the company.

From the Star Ledger:

Report: Office space availability to rise in the new year

Increased office space availability will continue to plague the commercial real estate market in the new year, according to Santa Ana, Calif-based Grubb & Ellis.
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“Limited leasing velocity involving corporate relocations and consolidations, rather than significant real estate expansions, was a recurring theme of the Northern and Central New Jersey office market during the past year,” Grubb & Ellis said in a statement. “And, (it) is forecasted to plot the course of the market into 2010, as well.”
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New Jersey’s Gold Coast in Hudson County and Parsippany were hit the hardest, according to the report. Each registered more than 1.1 million square feet of sublease space at the end of 2009.

From the Record:

Housing recovery may be anemic

After three years of hard times, analysts say, the housing market is likely to begin recovering this year. But between high unemployment and rising foreclosures, the recovery is expected to be weak and slow.

“The housing market will improve throughout 2010,” said Patrick O’Keefe, an economist with the Roseland accounting firm J.H. Cohn. “But it’s not going to be anything to write home about. I wouldn’t even e-mail about a lot of it.”
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Prices have fallen about 30 percent nationwide from their peak, and 20 percent in the region. Is 2010 the year that prices start to rebound?

Patrick Newport, an economist with IHS Global Insight doesn’t think so. He forecasts a price drop of 5 percent during 2010.

“With foreclosures still rising and the fact that the economy is still losing jobs, we’re going to see prices start falling again,” he said.
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According to the National Association of Home Builders, the New York-White Plains-Wayne area, which includes Bergen and Passaic counties, was the nation’s least affordable major housing market during the third quarter of 2009. Only about 19 percent of all homes sold during the third quarter were affordable to those earning the area’s median income of $64,800, according to the NAHB.

That’s the main reason that Karen Weaver, an analyst with Deutsche Bank Securities, recently predicted that home prices in the area may drop significantly.

Home values “would need to decline another 29 percent just to restore prices to the point in New York’s history when housing was at its most affordable,” she wrote in a recent report. Even if prices just revert to their average affordability levels, she wrote, they would drop by 8 percent.

Lower prices can pose a serious financial hardship for homeowners who owe more on their mortgages than their homes are now worth. Those owners may find it impossible to sell.

But it’s a different story for buyers.

The New Jersey Home Price Index Tracker has been updated to include:
* October S&P Case Shiller (Aggregate, Tiered, Condo)
* Q3 FHFA Home Price Index (HPI, Purchase Only)
* Q3 NJAR Home Price Index (Statewide Median)

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FHFA (Formerly known as the OFHEO) Home Price Index

HPI (Includes Refis) – Peaked in Q1 2007 and is down 12.42% from peak

Purchase Only – Peaked in Q2 2006 and is down 11.88% from peak

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

Low Tier (Under $284606) – Peaked in October 2006 and is down 22.73% from peak

Mid Tier ($284606 – $417722) – Peaked in September 2006 and is down 19.65% from peak

High Tier (Over $417722) – Peaked in June 2006 and is down 15.09% from peak

Aggregate (Overall Market) – Peaked in June 2006 and is down 18.91% from peak

Condo-Only Index – Peaked in February 2006 and is down 15.63% from peak

NY Metro Area Aggregate Year over Year Changes

Oct 08 -7.72%
Nov 08 -8.74%
Dec 08 -9.22%
Jan 09 -9.73%
Feb 09 -10.32%
Mar 09 -11.66%
Apr 09 -12.36%
May 09 -11.87%
Jun 09 -11.49%
Jul 09 -10.24%
Aug 09 -9.42%
Sep 09 -8.66%
Oct 09 -7.73%

From the Record:

North Jersey homes prices flat in October

Housing prices in the New York metropolitan area, which includes North Jersey, remained flat in October and declined 7.7 percent compared to October 2008, reported the Standard & Poors/Case-Shiller Home-Price Indices.

Case-Shiller does not break down sales by county. But according to figures from the New Jersey Multiple Listing Service, median single-family home prices in Bergen County were $439,500 in October, down 2.9 percent from a year earlier.

In Passaic County, according to figures from the Garden State Multiple Listing Service as reported by Weichert Realtors, the average single-family home sold for $308,000, down 20 percent from a year earlier.
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To economist Patrick O’Keefe with J.H. Cohn in Roseland, Case-Shiller’s October numbers for North Jersey show that the market reached its bottom in April and housing prices are up 1.4 percent since then, he said.

“I think it’s apparent in the data that the April point was the bottom,” said O’Keefe. “But the improvement since then – here in North Jersey area – has not been an unbroken upward line.”

The seasonally adjusted data, which he said is more appropriate for real estate, reports small, month-to-month declines of less than 1 percent in prices from August to September and again in October.

From the WSJ:

Home Prices Inch Up, but Outlook Murky

Home prices stabilized in October, but the latest reading on the S&P/Case-Shiller index of home prices didn’t dispel fears that prices are heading for a second dip.
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The Case-Shiller index of home prices for 20 cities increased a seasonally adjusted 0.4% from September, the fifth consecutive monthly increase. Before seasonal adjustment, the index was unchanged. Home prices are 7.3% lower than a year ago, a less-steep annual rate of decline than in previous months.

The index, which is closely watched because it tracks the sale of the same houses over time, showed home prices in October were at the same level as they were in the fall of 2003 and 29% below the peak in the second quarter of 2006.

“All in all, this report should be described as flat,” David Blitzer, the chairman of the S&P index committee, said in a statement.

From the APP:

2009: The year in review

In business for 25 years, Mary Burnetsky, the owner of Farley’s Ice Cream in Jackson, had seen enough economic cycles to believe that her industry might have been recession-proof.

hen came 2009. Her customers, hit by rising job losses, eliminated everything they didn’t need, including — gasp! — ice cream.

“Our business is way down this year,” Burnetsky said last week. “Why, I have no idea. I can only assume people can’t afford to buy ice cream as a luxury.”

The year 2009 ends this week, and few people are shedding a tear. The year will be remembered as the time when workers lost their jobs, homeowners fought to avoid foreclosure and consumers saw their credit-card interest rates rise.

It was part of the fallout of the longest recession since the Great Depression, and it left no one unscathed.
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The state from January to November lost 88,900 jobs, and its unemployment rate rose from 7.3 percent to 9.7 percent. When the unemployment rate reached 9.8 percent in September, it marked the highest jobless rate since 1977, according to the state.
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Behind the job losses was an economy trying to recover from the housing market’s collapse. The federal government tried to stabilize the industry to mixed results.

The government bought mortgage-backed securities and drove down mortgage rates to historic lows of less than 5 percent. And it offered buyers thousands of dollars in tax breaks to jump-start sales.
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The government made less progress convincing lenders to modify the mortgages of homeowners who could no longer afford their payments.
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The net result? The median price of an existing home in the region that includes the Shore was $343,800 during the third quarter, down 8.9 percent from $377,300 in the same quarter a year ago, according to the National Association of Realtors.
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“It was really a year of stabilization and setting a stage for what should be recovery in 2010,” Jeffrey Otteau, an East Brunswick-based real estate analyst.