NJ homeowners sinking, but not drowning

Posted on December 8, 2009 by grim

From the Daily Record:

Report: 1 in 7 N.J. homeowners owe more than property is worth

Nearly one in seven New Jersey homeowners owe more on their mortgage than their property is worth, according to a recently released nationwide study.

New Jersey, though, fared significantly better in the third quarter than the national average, in which nearly 23 percent of U.S. homeowners were grappling with negative equity.

The study by First American CoreLogic, a real-estate information company in California, is reflected in the ongoing phenomenon of “short sales” – the term for when the proceeds from a house sale are insufficient to pay off the mortgage. In New Jersey, there were 290,838 mortgages, or 15.4 percent, in which the homeowner owed more than the value of their property as of September.

The study did not look specifically at Morris County – data was created at the ZIP code level, the company said – but provided breakdowns for two regions in New Jersey. In Atlantic City-Hamilton, 14,155 mortgaged properties, or 19.54 percent, were in negative equity. In Trenton-Ewing, 12,534 properties, or 14.88 percent, were in negative equity.

“Negative equity continues to be pervasive and to impact almost every segment of the housing market,” said Mark Fleming, chief economist with First American CoreLogic.
…
Steve Alessandrini, vice president of corporate communications for Weichert Realtors in Morris Plains, was encouraged by New Jersey’s loan-to-value ratio … the amount of the mortgage expressed as a percentage of the value – of 62 percent.

“New Jersey actually had one of the lowest loan-to-value ratios. That’s a good sign that, collectively, New Jersey homeowners are not overly leveraged,” Alessandrini said.

He added that, for many homeowners with negative equity, the problem might prove self-correcting.

“The largest number of people who are currently under water are those who have bought their homes in the last few years. If they’re going to be in their home seven to 10 years, that’s not likely to be a problem when it comes time to sell,” Alessandrini said.

Posted in Economics, New Jersey Real Estate | 176 Comments

Another day, another stimulus

Posted on December 8, 2009 by grim

From the NY Times:

Obama Announces New Jobs Programs

President Obama on Tuesday will announce three proposals intended to turn around the nation’s beleaguered job market, including strengthening investments to small businesses that have struggled to expand because of the credit crunch in America.
…
The speech, according to a senior administration official, will outline a series of steps to help small businesses grow and hire new staff. The president also will call for increasing the investment in infrastructure through building and modernizing highways, railways, bridges and tunnels. He also will propose a new program that provides rebates for consumers who retrofit their homes to become more energy efficient.

“We don’t think there is one silver bullet, one plan, one speech or a singular piece of legislation that alone will solve double digit unemployment,” Mr. Obama is expected to say in his remarks, according to a senior administration official.

It is Mr. Obama’s latest effort to draw attention to the economy. In his speech, the president will outline how he intends to jumpstart the job market by spending the excess in government bailout money.

The president also will call for using some of the $200 billion in Troubled Asset Relief Program to help pay down the $1.4 trillion budget deficit. One week after taking his economic message on the road, Mr. Obama is in Washington on Tuesday, offering an outline for his plan for Congress to help boost the job market next year.

“The president is absolutely committed to getting every American who is unemployed and wants a job back to work,” Christina Roemer, the chairwoman of the White House Council of Economic Advisers, said in an interview Tuesday on MSNBC.

Posted in Economics, National Real Estate, Politics | 133 Comments

“Few bright spots”

Posted on December 6, 2009 by grim

From the Star Ledger:

Home prices, sales decline

There are a few bright spots but by and large Somerset and Hunterdon counties — much like the rest of the state — were not spared from falling home prices and decreasing home sales from 2008 to 2009.

Home sale data show that Somerset County saw a drop-off in the median selling price of a home of about 8.4 percent, falling from an median sale price of $360,000 to $329,750. The number of homes sold slipped about 30 percent, from 1,066 homes sold from January to June in 2008 to just 749 sold in the first six months of 2009.
…
Hunterdon County fared slightly better in sale prices, but saw an even more substantial decline in the number of homes sold. The median sale price fell from $382,750 to $365,000, a drop of about 4.7 percent. But the number of homes sold slid by more than 40 percent, from 426 in 2008 to just 253 in 2009.

The data are based on an analysis of state information on home sales comparing the first six months of 2008 to the first six months of 2009.
…
State data show the median sale price of a home in Green Brook fell by 36 percent, from $475,000 to $300,000. In Bernards, home sale prices fell just under 28 percent from $573,000 to $410,000 while Bound Brook saw a drop of just under 20 percent, from $324,900 to $260,000.

Some of the larger municipalities in Hunterdon, like Clinton and Union, also registered drops in sale prices. Clinton Township saw its median home sale price fall from $425,000 to $371,500, about 12.6 percent, while Union’s sale prices fell from $211,500 to $176,000, or about 16.8 percent.

There were some municipalities that bucked the trend in Somerset County, however. The data show Branchburg and Raritan each posted gains in the median home sale price, while nearby Hillsborough held steady. Branchburg recorded the highest of these gains, jumping by more than 16 percent with the median home sale increasing from $372,000 to $432,500.

Posted in Housing Bubble, New Jersey Real Estate | 223 Comments

Weekend Open Discussion

Posted on December 4, 2009 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 | 279 Comments

December Beige Book

Posted on December 3, 2009 by grim

From the Federal Reserve:

Summary of Commentary on Current Economic Conditions (Beige Book) – December 2009

Second District–New York

The Second District’s economy has shown further signs of improvement since the last report, though the labor market remains soft. There are no indications of any significant price pressures. Manufacturing sector contacts report steady to increasing activity and continued improvement in general business conditions, and a large majority remain optimistic about the near-term outlook. Auto dealers report a rebound in sales in recent weeks. General merchandise retailers also say that sales have improved since the last report. There are signs of a pickup in tourism activity in New York City.

Commercial real estate markets–in both the office and industrial categories–have been steady to moderately weaker since the last report. Residential real estate markets have been mixed since the last report, but generally weaker, especially at the high end of the market; New York City’s sales and rental markets have been particularly weak. Finally, bankers report rising delinquency rates–articularly on mortgages, both residential and commercial; they also note continued tightening in credit standards, and weaker loan demand.
…
Commercial real estate markets in the District were again steady to softer since the last report. Manhattan’s office vacancy rate climbed again in October, while asking rents continued to fall and are running 25 percent below comparable 2008 levels; effective rents are reported to have fallen even more steeply–especially when concessions are factored in. Northern New Jersey’s market has been particularly slack, though office markets in Long Island and the northern suburbs appear to be somewhat firmer: in all these markets around New York City, vacancy rates have been relatively steady, while asking rents are running 4-5 percent lower than a year earlier. Office rental markets in upstate New York are mixed: vacancy and rent data suggest that metropolitan Rochester’s market has softened somewhat, while Buffalo’s market has been steady to slightly stronger. On the other hand, a commercial real estate firm in western New York State maintains that demand for both office and retail space is weak and that there is virtually no new development activity.

Housing markets have been mixed but, on balance, a bit softer since the last report. Home sales and prices have reportedly weakened moderately in the Buffalo area, in part due to the impending expiration of the [now extended] homebuyer tax credit. Contacts in northern New Jersey report that resale transactions remain low but have picked up a bit, and that selling prices appear to have stabilized at low levels. However, builders have reportedly stepped back on new development as they remain skittish about having excess inventory. New York City’s housing market has continued to weaken: while sales activity for existing apartments has rebounded from depressed levels, sales of new units remain very sluggish. Selling prices for existing units are reported to be down roughly 25 percent from a year earlier, with even steeper declines at the high end of the market; weakness at the high end is also evident in northern New Jersey. Developers looking to unload large inventories have begun to auction off condo units with steep discounts–primarily in Brooklyn, but also in the Bronx. New York City’s rental market also continues to weaken, with contract rents in Manhattan falling roughly 10 percent over the past 12 months; moreover, when concessions are factored in, the decline in effective rents has been a good deal steeper. On the supply side, one industry expert estimates that nearly 3,000 new rental units have been completed in Manhattan thus far in 2009–roughly double the figure for all of 2008.

Posted in Economics, New Jersey Real Estate | 395 Comments

“The gravy train continues to roll”

Posted on December 2, 2009 by grim

From the Star Ledger:

N.J. investigations unit reports huge payouts by local government

They receive paid days off for Christmas shopping, donating blood and weddings. And when these public employees retire, they can cash in tens of thousands of dollars worth of unused sick time and vacation days.

Extensive taxpayer-funded benefits for some local government employees are straining the budgets of New Jersey municipalities, according to a report the State Commission of Investigation released today.

Despite a recession that has depleted tax revenue and forced layoffs, the report says, municipalities continue to spend tens of millions of dollars on big payouts to retiring workers.

“The gravy train continues to roll without impediment for select groups of employees on the public payroll,” it reads. “Startling amounts of taxpayer-funded booty continue to be dispensed across New Jersey without regard for the common good.”

The SCI, which examines crime and corruption and reports to the Legislature, said it discovered $39 million in extravagant payouts after reviewing 75 towns, counties and local authorities. State employees can receive a maximum of $15,000 for unused sick time, but such limits aren’t standard at the local level.
…
The SCI report is a black eye for municipalities who have clamored for more state assistance to help cope with the recession. Lawmakers on both sides of the aisle expressed outrage over the expensive perks.

“It shocks the conscience,” said Assemblyman Lou Greenwald (D-Camden), who pledged legislation to cap severance payments. “The taxpayers have every right to be offended.”
…
Montclair State University Brigid Harrison expects political power struggles if the state cracks down on employee benefits at the local level.

“Counties are often political fiefdoms,” she said. “County freeholders or executive boards get to pad the ranks of public employees with political supporters.”

Posted in Politics, Property Taxes | 220 Comments

“My new goal is to become a manager at Lowe’s”

Posted on December 1, 2009 by grim

From the WSJ:

Working Two Jobs and Still Underemployed

For Richard Crane, the “new normal” in the labor market began when he was laid off from a New Jersey battery plant in the summer of 2006.

Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald’s, whatever he could find.

“I thought it would be temporary,” says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay.

Mr. Crane is part of a growing group of underemployed — people in part-time jobs who want full-time work or people in jobs that don’t employ their skills. Since the recession began two years ago, the number of people involuntarily working part-time jobs has more than doubled to 9.3 million, according to the federal Bureau of Labor Statistics, the highest number on record.
…
State labor officials and economists generally label the underemployed as those who are working part-time when they would prefer full-time work, as well as people who are working beneath their skill level.

Federal figures on the underemployed, however, don’t count that second group — those who are overqualified for their jobs. Still, the government’s broadest measure of labor underutilization — known as the U6 — has more than doubled in the two years since the recession began to 17.5%, and it is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearly one in five people are either unemployed, involuntarily working part-time or “marginally attached” — they want jobs but haven’t searched in at least a month. It also counts “discouraged workers” who have stopped searching.

“The number would be much higher if we included the mechanical engineers working at 7-Eleven,” says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank.

Posted in Economics | 231 Comments

Can we really afford home rule?

Posted on November 30, 2009 by grim

From the Daily Record:

Do we really love home rule?

A recent poll says residents are not as enamored with their home towns as some think.

A Quinnipiac University poll asked residents if they would support merging school districts and municipalities to lower property towns. Some 73 percent said yes. Only 22 percent said no.

That response does not surprise us. Of course, a majority of New Jersey residents probably would agree to just about anything if the offer was accompanied by the words, “reducing property taxes.”

Notwithstanding, the results are interesting.

It is true that merging some towns and school districts is not going to solve the state’s property tax crisis. No one should think that. But merging jurisdictions and eliminating high-paid public jobs, and the benefits that go with them, would help.

Most of those who like home rule are those doing the ruling. That is why we do not see mergers.

Just about every recent governor has talked about reducing the more than 1,100 combined school districts and municipalities in New Jersey, but the talk does not go very far.
…
The record is clear. With rare exception, towns are not going to combine themselves. (One exception may be the Chesters in Morris County where a merger is being considered.) Before that, the last municipality to voluntarily “go out of business” was Pahaquarry in Warren County. The town had fewer than 50 full-time residents and most of it was parkland.

Posted in New Jersey Real Estate, Politics, Property Taxes | 261 Comments

President Obama is going to pay your mortgage! (Taxpayers really, but who is counting?)

Posted on November 29, 2009 by grim

From the NYT:

U.S. Will Push Mortgage Firms to Reduce More Loan Payments

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

Posted in Economics, National Real Estate, Politics, Risky Lending | 107 Comments

“The owners have already walked out — just given up”

Posted on November 28, 2009 by grim

From the Press of Atlantic City:

Sheriff’s sales increase as housing bust continues

Larry Notch may have the most difficult job at the Cape May County Sheriff’s Office.

The veteran investigator is in charge of serving court papers on homeowners who are so far in debt that they are at risk of losing their homes. And when all efforts fail to raise money or renegotiate a loan, Notch is the one who must evict the former homeowners and their possessions.

Lately, he has been busier than ever.

“Can you imagine being in a home most of your life and having to leave because you got caught up in this situation?” he asked.

Cape May County, with its thousands of resort properties, was in some ways insulated from the national mortgage crisis as investors waited in hopes of a quick market rebound. But like the rest of the nation before it, Cape May County is seeing a rise in foreclosures now.

The county auctioned 280 properties last year, double the number in 2006 during the flush real estate market boom. So far this year, the county has sold 287, with five weeks to go.

The same phenomenon was seen across the region.

Cumberland County has seen 453 sheriff sales so far this year.

Ocean County has tallied 553 sales so far compared with 518 last year and 99 during the peak of the last real estate market boom in 2005.

“We’re finding when we go to houses to post them, the owners have already walked out — just given up,” Ocean County Undersheriff Wayne Rupert said. “I think next year is going to be at least as bad as this year and maybe worse. It’s a shame, but these things are happening all over.”

Posted in Housing Bubble, New Jersey Real Estate | 59 Comments

Black Friday Open Discussion

Posted on November 27, 2009 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 | 111 Comments

I’m thankful for our prudent state and local government

Posted on November 26, 2009 by grim

From the Star Ledger:

N.J. budget deficit grows to $1B for current fiscal year

The state today said it is facing a $1 billion hole in this year’s budget — a shortfall five times bigger than previously disclosed — and will cut funding for schools, municipalities, higher education, hospitals and pension plans to help close the gap.

A Treasury spokesman said the state collected $412 million less in taxes than expected through October.

“It is going to be a gut-wrenching experience,” said Bill Dressel, executive director of the New Jersey League of Municipalities.

The crunch has already led to a disagreement with Gov.-elect Chris Christie, who has called for spending freezes. On Tuesday, Corzine and Christie clashed over emergency funding for food banks and soup kitchens.
…
That revelation is the latest budget problem facing New Jersey as it grapples with fallout from the deepest economic downturn since the Great Depression. Two days after he lost the election, Gov. Jon Corzine said the state needed to find $400 million in savings to cover shortfalls that included $190 million in anticipated taxes that did not materialize.

In addition, the state already will start off next fiscal year’s budgeting process with an $8 billion hole, according to a report from a nonpartisan legislative office.

The depth of the state’s current $1 billion shortfall was not revealed until today, when it was included in a required statement sent to Wall Street bond investors. It means officials now have to tell people who were expecting money they will not be getting it.
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It is the second straight year the state has been forced to make mid-year budget adjustments to deal with revenue shortfalls in the billions.

From the APP:

N.J. budget deficit could reach $1.5 billion

New Jersey’s budget problem worsened in October, with a $222 million shortfall that exceeded its deficit in tax collections from July, August and September combined.

In a prospectus sent Wednesday to prospective bondholders, the state says its deficit could be $1 billion. It said that could be closed in part through “up to $400 million actions affecting major cost centers, including: school aid, municipal aid, higher education, hospitals and the state contribution to the pension plans.”

However, the 5.1 percent, $412.7 million year-to-date tax shortfall would, if maintained over the course of the next eight months, leave collections almost $1.5 billion behind budget.

Odds are it won’t, as tax collections fluctuate. Sales tax revenues are greatly influenced by the Christmas shopping season; income taxes could see a bump from Wall Street bonuses, but that won’t be known until April and May.

From New Jersey Newsroom:

As N.J. budget shortfall grows, local, school aid at risk

With the deficit for the current 2010-11 state budget growing toward $1 billion, the outgoing Corzine administration could be forced to cut aid to cities, towns, schools, and hospitals as well as state contributions to public employee pension plans.

The grim outlook became public Wednesday in a state report sent to Wall street bond investors.

“Largely due to continuing revenue shortfalls and the need for supplemental appropriations, the projected deficit by the close of the current fiscal year (June 30) is now estimated at $1 billion,’’ said Sen. Barbara Buono, chairman of the Senate Budget and Appropriations Committee. “Obviously, many worthy and deserving programs that are in need of state funding will have to make do without it. We have no choice – there simply isn’t enough money to sustain our current state budget, let alone any additional spending proposals.’’

Posted in New Jersey Real Estate, Politics, Property Taxes | 62 Comments

NJ industrial rents fall to “lowest in a decade”

Posted on November 25, 2009 by grim

From the NY Times:

Industrial Real Estate, a New Jersey Bulwark, Shows Some Cracks

Over the years, as the real estate markets for offices, residences and stores in New Jersey have gone through peaks and valleys, the market for industrial real estate has been like the buildings themselves — not flashy, but big, solid and reliable.

No longer. The tenor of third-quarter market reports about the warehouse sector has ranged from unhappy to abysmal.

One big commercial real estate services concern, CB Richard Ellis, reported, for instance, that 11.7 percent of the state’s industrial property was available for either purchase or lease as of Sept. 30. That was the highest rate it has recorded since 1992 and a 32 percent rise in 12 months.

Another company, Cushman & Wakefield, uses somewhat different parameters in its calculations, but said it agreed with the “thrust and reasoning” of CBRE’s report. Its measure of the vacancy rate for warehouses and distribution centers was 8.8 percent as of Sept. 30.

Furthermore, industrial specialists said that asking rents were plummeting statewide, and that in many submarkets, effective rents were the lowest in a decade.
…
“Staggering,” Mr. Knee said. “I haven’t seen it in all my 21 years in the business.”

Posted in Economics, New Jersey Real Estate | 188 Comments

October Northeast Sales Jump 25%, NY Metro Only 5%

Posted on November 24, 2009 by grim

From the NY Times:

Northeast Home Sales Soar 25 Percent in October

ome sales in the Northeast soared in October as first-time buyers clamored to close deals before the expiration of a federal tax credit.

The nine-state region registered 85,000 home resales last month, up 25 percent from a year ago when the financial crisis gripped the country, the National Association of Realtors said Monday. The median price, however, fell about 3 percent to $235,400.

Nationally, sales of existing homes jumped almost 21 percent from October last year, without adjusting for seasonal factors. The median sales price tumbled 7 percent to $173,100.

The surge in sales came as many first-time homebuyers rushed to qualify for an $8,000 tax credit that was scheduled to expire at the end of this month before Congress extended it through April.
…
”The only reason we’re seeing good numbers is because of government policies that are propping the market up,” said Patrick Newport, an economist with IHS Global Insight. ”Housing is still fundamentally weak.”

All nine major Northeast cities tracked in the Associated Press-Re/Max Monthly Housing Report showed annual increases in home sales last month. The report, also released Monday, analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.

Here are some highlights from the region:

–Biggest sales gain: Trenton, N.J., saw sales climb by 45 percent from a year ago. Prices there continue to fall, tumbling 11 percent year-over-year to $231,500.

Lower-priced homes between $150,000 to $350,000, are leading the brisk sales, said T. Christopher Hill, an agent with Re/Max TriCounty in Hamilton Township, N.J., thanks in large part to the first-time homebuyer tax credit.
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As for November? Hill predicts a strong sales month, but the numbers won’t be as high as September and October.
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— Smallest sales gain: Sales in the New York City suburbs increased 5 percent in October, while the median price lost 3 percent to $385,000.

Despite lagging in the region, the performance was a step up for the area which has been battered by job losses in the financial sector.
…
–Biggest price gain: For October, Pittsburgh prices inched up 2 percent from a year ago to $118,000, the only price increase in the region. Sales there rose almost 11 percent.

”We weren’t invited to the party, so we don’t have a hangover,” said Dan Kite of Northwood Realty Services, explaining the relative stability of Pittsburgh’s home prices.

Posted in Economics, National Real Estate, New Jersey Real Estate | 284 Comments

October Existing Home Sales

Posted on November 23, 2009 by grim

From Bloomberg:

Sales of Existing U.S. Homes Probably Rose to a Two-Year High

Sales of existing U.S. homes probably increased in October to the highest level in more than two years, spurred in part by a tax credit that lured first-time buyers, economists said before a report today.

Purchases rose 2.3 percent to a 5.7 million annual rate, according to the median forecast of 60 economists surveyed by Bloomberg News. The expected increase from September’s 5.57 million pace would be the sixth in the past seven months.

Cheaper homes and stimulus such as the $8,000 homebuyer tax credit, extended and expanded by the Obama administration this month, have revived an ailing housing market that contributed to the worst economic slump since the Great Depression. Further improvement that would aid the economy’s recovery depends on an easing in unemployment and foreclosures.

“We are making progress in housing,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “Inventories are getting under control due to the pickup in sales. It’s not going to be a vigorous recovery but it’ll contribute to growth.”

The National Association of Realtors’ report is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 5.2 million to 6 million. Resales fell to a 4.49 million pace in January, the lowest level since comparable records began in 1999.

Posted in Economics, National Real Estate | 271 Comments