Moody’s: No quick recovery for New Jersey, will lag the nation

Posted on August 10, 2009 by grim

From the Philly Inquirer:

Moody’s offers mixed economic outlook for N.J.

When Moody’s Investors Service released a mixed report on New Jersey’s financial outlook last week, Republicans seized the opportunity to argue that the state’s financial glass was half empty. Democrats saw it as half full.

Both sides are motivated, in part, by the intense governor’s race, but each perspective has validity.

The credit rating helps to determine how much interest the state will pay to borrow money for capital projects, although the markets do not always act in the way that a credit rating would seem to suggest.

Moody’s reaffirmed New Jersey’s rating for a $200 million school-construction bond issue expected this week, but also revised its “outlook” on the state’s general-obligation bonds from stable to negative.

John Cline, vice president for rating communications for Moody’s, said a negative outlook means the agency believes there is a 50 percent or greater chance that the credit rating will decline in the next 12 to 18 months.

The Corzine administration jumped on the fact that Moody’s had maintained the state’s credit rating, in the face of a grueling recession.

“The affirmation of New Jersey’s credit rating by all three rating agencies is a sign of confidence in Gov. Corzine’s overall handling of fiscal matters in these historically challenging economic times,” Treasury spokesman Tom Vincz said.

In addition to Moody’s, Fitch and S&P also recently affirmed their ratings of the state’s credit, Vincz said. S&P’s outlook for New Jersey remains “stable.”

Republicans took the opposite view, focusing on Moody’s change in outlook for New Jersey.

“It strains credulity to greet a critical report by claiming it is good news and refusing to address any of the report’s underlying concerns,” said Senate Republican Leader Tom Kean, of Union County. “Gov. Corzine is deluding himself and the taxpayers if he refuses to acknowledge an $8 billion structural deficit, much less do anything about it.”
…
Moody’s was critical, for example, of state use of nonrecurring revenues to fill budget gaps, “leaving the state with a sizable structural imbalance.”
…
Moody’s also pointed to the state’s high debt burden, low pension-funding ratio, and high post-retirement health-insurance liabilities as contributing factors to the change in outlook.

Like some other comparably rated states, the report said, New Jersey has depleted its reserves during the recession, which would leave the state in a tough spot if revenues came in lower than expected.

Moody’s also anticipates New Jersey will recover more slowly from the recession than the country as a whole because several of the state’s key industries, including financial services and pharmaceuticals, have been hit hard.

Posted in Economics, New Jersey Real Estate, Property Taxes | 209 Comments

Tick.. Tick.. Tick..

Posted on August 7, 2009 by grim

From the Record:

First-time homebuyers rush to meet tax credit deadline

First-time buyers are searching for homes with a growing sense of urgency, worried that time is running out on an $8,000 federal tax credit.

North Jersey real estate agents say they’re seeing a surge of first-timers who want to close on a property by Nov. 30, the deadline for the credit. The rush has set off bidding wars and stirred up a normally quiet August market.

“We’re inundated,” said Paula Clark, an agent with Coldwell Banker in Hillsdale.

To meet the Nov. 30 deadline, buyers need to have a contract by around Sept. 30 because inspections, mortgage approvals and other details typically take about two months.

House hunter Stan Salazar of the Bronx, a 34-year-old assistant building superintendent, said that he and his wife, Marianela, were drawn into the real estate market mainly by lower home prices. But they’d like to close in time to get the credit, he added.

“Hey, $8,000 is $8,000,” Salazar said, after touring an expanded Cape Cod in Fair Lawn Thursday afternoon with real estate agent Sheldon Neal of Re/Max in Oradell.

“It has pushed some of the buyers who have been watching the market into action,” said Abby Ceres-Buda, an agent with ERA A.J. Cali Real Estate in Hawthorne.

While $8,000 may not seem like a big deal when you’re talking about a purchase that typically runs $300,000 and up, it’s enough to get some cautious home shoppers off the fence.

“It’s not that much, you would think, but these are young kids starting out, so every little bit helps,” said Annekee Brahver-Keely, an agent with Russo Real Estate in Teaneck.
…
The tax credit is just one reason. First-time buyers are also attracted by lower home prices — down about 20 percent in the region from the market peak in 2006 — and mortgage rates in the 5.5 percent range. In addition, unlike trade-up buyers, they don’t face the obstacle of having to sell a house before they buy.

Still, the approaching tax credit deadline has heightened interest recently among first-time buyers.
…
Harry Elias, an agent with Friedberg Properties in Cresskill, said he got a call recently from a young couple eager to start the house hunt, after watching friends buy their first home. They saw that completing the sale could take two to three months, and want to close in time to qualify for the credit, Elias said.

The influx of first-timers has led to multiple offers on houses in good condition. In addition, more properties at the lower end of the market are selling at or near their full asking price, agents say.
…
Other buyers have been trying to buy for several months, but have lost out as the competition heated up in the starter-home market.

“We’ve had bidding wars on some houses, especially in the $400,000-$450,000 range,” said Jeana Cowie, a Re/Max agent in Oradell.

Now they worry they won’t be able to find a place and close in time.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 384 Comments

Housing market is just fine, move along.

Posted on August 6, 2009 by grim

From the WSJ:

Fannie Mae Loss Balloons; Says Needs Treasury For Survival

Fannie Mae (FNM) posted a sharply wider second-quarter loss on $18.8 billion of credit-related impacts as delinquencies continued to surge and the company admitted it is reliant on the government’s help to stay in business.

The mortgage financier, placed under conservatorship in September to prevent its potential implosion, requested another $10.7 billion of aid as part of the $200 billion package extended to Fannie. It has received $34.2 billion so far.

“Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury,” said Fannie in its quarterly report, filed late Thursday with the Securities and Exchange Commission. “As a result, we are dependent on the continued support of Treasury in order to continue operating our business.”

From the AP:

Fannie Mae seeks $10.7B in US aid after 2Q loss

The mounting price tag for the rescue of Fannie and its goverment-sponsored sibling, Freddie Mac, is surpassed only by insurer American International Group Inc., which has received $182.5 billion in financial support from the government so far.

Fannie Mae’s new request for $10.7 billion from the Treasury Department will bring the total for Fannie and Freddie to nearly $96 billion. Freddie is expected to report its quarterly results on Friday.

The government has pledged up to $400 billion in aid for the two companies, which play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. They have been under government control since last September, when their near-collapse helped set off the financial crisis.

From Fannie Mae:

Fannie Mae Reports Second-Quarter 2009 Results

Fannie Mae (FNM/NYSE) reported a loss of $14.8 billion, or ($2.67) per diluted share, in the second quarter of 2009, compared with a loss of $23.2 billion, or ($4.09) per diluted share, in the first quarter of 2009. Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment.
…
Total nonperforming loans in our guaranty book of business were $171.0 billion on June 30, 2009, compared with $144.9 billion on March 31, 2009, and $119.2 billion on December 31, 2008. The carrying value of our foreclosed properties was $6.2 billion, compared with $6.4 billion on March 31, 2009, and $6.6 billion on December 31, 2008.

Posted in Economics, Housing Bubble | 93 Comments

Paying property tax? Appeal!

Posted on August 6, 2009 by grim

From the NYT the local Blog:

An Appeal for a Better Real Estate Tax System

Property taxes in New Jersey are the highest in the nation by percent of a homeowner’s income and by just about any other measure.

In my 23 years of living in two different houses in South Orange, I have lodged a total of five tax appeals. I succeeded in the first four and believe I will succeed in the fifth, which I just argued on
July 14 in East Orange at the Essex County Board of Taxation [.pdf].

In essence, if I prove that my house is grossly overvalued compared to comparable sales before October 1, 2008, then I will save a hefty amount on the taxes I pay for tax year 2009.

The very fact that I have had meritorious grounds to file five appeals tells me that the tax system is not really “fair “ and “equalized,” even though government officials and appraisal company representatives might intend it to be.

I have seen entire blocks that were under-assessed. I have also seen houses that were over-assessed, where year after year the government collected substantially more revenue than it would have received had the homeowner challenged the assessment.

As a self-taught participant in the tax appeal system I have learned that the bigger question underlying this system is: Is this the fairest and best way to raise money for our state and local governments? This political hot potato has been tossed back and forth in New Jersey without resolution.

Posted in New Jersey Real Estate, Property Taxes | 235 Comments

Northern NJ July Home Sales

Posted on August 5, 2009 by grim

(I’ll post the remainder of the graphs later in the day)

Preliminary July sales and inventory data for Northern New Jersey (GSMLS) is in. Please note that this data is subject to revision.

The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 500, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.


(click to enlarge)

The second graph is another view at the sales data for the full year. Please note that this graph does cross at zero.


(click to enlarge)

The third graph displays only July sales, 2000 to 2009 YOY.


(click to enlarge)

The fourth graph displays an overlay of Sales and Inventory from 2003 to 2009.


(click to enlarge)

Posted in Economics, New Jersey Real Estate | 185 Comments

No hope for the high-end

Posted on August 3, 2009 by grim

From the WSJ:

High-End Homes Frozen Out of Budding Housing Rebound

Housing is fast dividing into two markets: Sales of low- and moderately priced homes are picking up and values have stopped falling in some parts of the nation. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate.

Signs of the divide are visible across the country, including in suburban Chicago. In middle-class Schaumburg, Ill., which had a median income of $65,000 in 2007, sales were up 41% in June from the depressed level of a year earlier and bidding wars have broken out on some properties. “I can’t even tell you how many I’ve been in over the last two months,” says Joe Stacy, a local real-estate agent.

But 25 miles away in the affluent town of Kenilworth, with a median income of $230,000, home sales have stalled. While there are 65 homes on the market, just 13 have sold this year. “We’re extremely oversupplied,” says Sherry Molitor, a local real-estate agent. “Sellers are struggling to realize that we’re back to 2001-02 prices.”

The divide between the mass market and the high-end — generally defined as homes that cost above $750,000 — partly reflects the effects of Washington’s housing-rescue plan, which is producing winners and losers.

Policymakers have helped spur sales of lower-priced homes by offering first-time buyers a federal tax credit of as much as $8,000, by driving mortgage rates to near 50-year lows and by expanding the mission of the Federal Housing Administration, which will guarantee mortgages for consumers buying homes with down payments as low as 3.5%.

Sales at the lower end are also helped by the large number of foreclosed homes that banks have dumped at fire-sale prices, which has pulled down values of neighboring houses and sparked bargain hunting. Prices in both Las Vegas and Phoenix are down more than 50% from their peaks of several years ago, according to the S&P/Case-Shiller index.
…
To be sure, the affluent housing market is substantially smaller than the mass market. Sales of existing homes priced over $750,000 accounted for 2.3% of all sales in the first quarter of this year, compared to 4.4% of the housing market in 2007, according to the National Association of Realtors.
…
Inventory of expensive homes is rising. Overall, the inventory of unsold homes in June was enough to last 9.4 months at the current selling pace, down from 11 months a year ago, according to the NAR. But the supply of unsold homes priced above $750,000 swelled to around 17 months in June, up from a 14.5-month backlog one year ago. A recent forecast by analysts at J.P. Morgan Chase & Co. said it would take until at least 2012 for the expensive-home market to recover and that peak-to-trough declines could surpass 60%, compared to 40% for the rest of the market.
…
A recent survey by the NAR found nearly three-quarters of real-estate agents said buyers were purchasing smaller houses due to tighter credit requirements. “We’re in a ‘trade-down’ environment for the first time since the 1930s,” says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.
…
Having lost large amounts in the stock market and on real estate, “a lot of people are licking their wounds and hoarding their cash,” says Sally Daley, a real-estate broker who sells luxury homes in Vero Beach, Fla. She says many customers are asking, “Do I really need this big a house?”

Posted in Economics, Housing Bubble, National Real Estate | 252 Comments

July Comp Killer!

Posted on August 2, 2009 by grim

Hat tip to ww4b for the Hunterdon and Warren comp killers, more to follow.

Hunterdon Comp Killers

660 County Rd 579, Alexandria Twp NJ
Purchased: 9/17/2004
Purchase Price: $440,000
MLS# 2670578
Listed: 4/2/2009
List Price: $429,000
Sold: 7/24/2009
Sale Price: $397,000
10% under the 2004 sales price

27 Inverrary Pl, Clinton Twp NJ
Purchased: 11/05/2004
Purchase Price: $330,000
MLS# 2651966
Listed: 2/20/2009
List Price: $359,900
Sold: 7/16/2009
Sale Price: $325,000
1% under the 2004 sales price

24 Willow Brook Ln, Clinton Twp NJ
Purchased: 2/1/2006
Purchase Price: $725,000
MLS# 2637608
Listed: 1/27/2009
List Price: $675,000
Sold: 7/1/2009
Sale Price: $590,000
18% under the 2006 sales price

81 Crestview Dr, Clinton Twp NJ
Purchased: 9/14/2005
Purchase Price: $762,000
MLS# 2677335
Listed: 4/26/2009
List Price: $675,000
Sold: 7/31/2009
Sale Price: $625,000
18% under the 2005 sales price

67 Crestview Dr, Clinton Twp NJ
Purchased: 3/30/2006
Purchase Price: $720,035
MLS# 2685869
Listed: 5/27/2009
List Price: $699,500
Sold: 7/30/2009
Sale Price: $650,000
10% under the 2006 sales price

88 Amwell Rd, East Amwell Twp NJ
Purchased: 9/18/2006
Purchase Price: $549,000
MLS# 2686676
Listed: 5/29/2009
List Price: $524,980
Sold: 7/24/2009
Sale Price: $488,000
11% under the 2006 sales price

1607 Spruce Hills Dr, Glen Gardner NJ
Purchased: 3/31/2006
Purchase Price: $163,000
MLS# 2688041
Listed: 6/23/2009
List Price: $150,000
Sold: 7/29/2009
Sale Price: $150,000
8% under the 2006 sales price

6 Manning Ct, High Bridge NJ
Purchased: 7/28/2004
Purchase Price: $419,000
MLS# 2673988
Listed: 4/15/2009
List Price: $399,900
Sold: 7/8/2009
Sale Price: $390,000
7% under the 2004 sales price

428 Bellis Rd, Holland Twp NJ (REO)
Purchased: 3/19/2004
Purchase Price: $396,000
Purchased: 2/27/2006
Purchase Price: $500,000
MLS# 2675791
Listed: 4/20/2009
List Price: $229,000
Sold: 7/30/2009
Sale Price: $210,000
47% under the 2004 sales price
58% under the 2006 sales price

6 Knox Ln, Lebanon Boro NJ
Purchased: 11/10/2005
Purchase Price: $516,000
MLS# 2662547
Listed: 3/12/2009
List Price: $539,000
Sold: 7/24/2009
Sale Price: $479,000
7% under the 2005 sales price

1309 Normandy Ct, Raritan Twp NJ
Purchased: 10/18/2006
Purchase Price: $178,000
MLS# 2653297
Listed: 2/23/2009
List Price: $169,900
Sold: 7/14/2009
Sale Price: $157,500
13% under the 2006 sales price

36 Elm Terrace, Raritan Twp NJ
Purchased: 12/1/2004
Purchase Price: $312,500
MLS# 2681325
Listed: 5/9/2009
List Price: $280,000
Sold: 7/16/2009
Sale Price: $280,000
10% under the 2004 sales price

145 Old Croton Rd, Raritan Twp NJ
Purchased: 12/1/2005
Purchase Price: $360,000
MLS# 2653967
Listed: 2/23/2009
List Price: $335,000
Sold: 7/17/2009
Sale Price: $310,000
14% under the 2005 sales price

40 Kentworth Ct, Raritan Twp NJ
Purchased: 8/25/2004
Purchase Price: $350,000
MLS# 2646673
Listed: 2/11/2009
List Price: $344,040
Sold: 7/2/2009
Sale Price: $324,000
7% under the 2004 sales price

3 Hartpence Ct, Raritan Twp NJ
Purchased: 6/18/2004
Purchase Price: $475,000
MLS# 2657407
Listed: 3/1/2009
List Price: $469,900
Sold: 7/24/2009
Sale Price: $427,000
10% under the 2004 sales price

127 Kuhl Rd, Raritan Twp NJ
Purchased: 2/28/2006
Purchase Price: $545,000
MLS# 2664015
Listed: 4/17/2009
List Price: $475,000
Sold: 7/27/2009
Sale Price: $456,000
16% under the 2006 sales price

3 Stirrup Ln, Raritan Twp NJ
Purchased: 5/1/2006
Purchase Price: $546,000
Purchased: 11/15/2007
Purchase Price: $517,500
MLS# 2667152
Listed: 3/25/2009
List Price: $519,900
Sold: 7/31/2009
Sale Price: $489,900
10% under the 2006 sales price
5% under the 2007 sales price

3 Haven Hill Rise, Raritan Twp NJ
Purchased: 8/24/2004
Purchase Price: $595,000
MLS# 2665054
Listed: 3/20/2009
List Price: $589,000
Sold: 7/30/2009
Sale Price: $530,000
11% under the 2004 sales price

15 Shurts Rd, Readington Twp NJ (REO)
Purchased: 9/16/2004
Purchase Price: $365,000
MLS# 2646348
Listed: 2/10/2009
List Price: $464,900
Sold: 7/1/2009
Sale Price: $350,000
4% under the 2004 sales price

35 Lance Rd, Readington NJ
Purchased: 12/15/2004
Purchase Price: $730,000
MLS# 2512084
Listed: 4/26/2008
List Price: $760,000
Sold: 7/1/2009
Sale Price: $691,000
5% under the 2004 sales price

11 Dogwood Dr, Readington Twp NJ
Purchased: 1/14/2008
Purchase Price: $945,000
MLS# 2646764
Listed: 2/12/2009
List Price: $929,900
Sold: 7/17/2009
Sale Price: $827,500
12% under the 2008 sales price

Warren Comp Killers

170 Old Farm Dr, Allamuchy NJ
Purchased: 10/2/2008
Purchase Price: $195,000
MLS# 2678184
Listed: 4/29/2009
List Price: $189,000
Sold: 7/10/2009
Sale Price: $181,000
7% under the 2008 sales price

9 Purple Martin Dr, Allamuchy NJ
Purchased: 6/3/2004
Purchase Price: $268,000
MLS# 2637593
Listed: 1/27/2009
List Price: $265,000
Sold: 7/10/2009
Sale Price: $246,000
8% under the 2004 sales price

821 Lopatcong St, Belvidere NJ (REO)
Purchased: 8/7/2006
Purchase Price: $295,000
MLS# 2672794
Listed: 4/9/2009
List Price: $134,900
Sold: 7/30/2009
Sale Price: $140,000
53% under the 2006 sales price

1308 Brian Circle, Greenwich Twp NJ
Purchased: 9/30/2004
Purchase Price: $334,000
MLS# 2664889
Listed: 3/19/2009
List Price: $297,500
Sold: 7/1/2009
Sale Price: $287,000
14% under the 2004 sales price

817 Mary Circle, Greenwich Twp NJ
Purchased: 4/30/2003
Purchase Price: $320,000
MLS# 2627439
Listed: 1/10/2009
List Price: $343,900
Sold: 7/9/2009
Sale Price: $312,000
3% under the 2003 sales price

503 Standish Pl, Greenwich Twp NJ
Purchased: 9/28/2004
Purchase Price: $455,000
MLS# 2679628
Listed: 5/4/2009
List Price: $415,000
Sold: 7/15/2009
Sale Price: $415,000
9% under the 2004 sales price

405 Parker Rd, Greenwich Twp NJ
Purchased: 3/30/2005
Purchase Price: $852,000
MLS# 2575409
Listed: 9/8/2008
List Price: $699,900
Sold: 7/10/2009
Sale Price: $650,000
23% under the 2005 sales price

105 Madison St, Hackettstown NJ
Purchased: 3/28/2005
Purchase Price: $289,000
Purchased: 4/9/2008
Purchase Price: $315,500
MLS# 2685622
Listed: 5/22/2009
List Price: $256,900
Sold: 7/23/2009
Sale Price: $257,000
11% under the 2005 sales price
19% under the 2008 sales price

21 Mitchell Rd, Hackettstown NJ
Purchased: 1/30/2006
Purchase Price: $350,000
MLS# 2580004
Listed: 9/18/2008
List Price: $314,900
Sold: 7/20/2009
Sale Price: $220,000
37% under the 2006 sales price

4 Heather Ct, Mansfield Twp NJ
Purchased: 3/26/2007
Purchase Price: $344,900
MLS# 2677763
Listed: 4/27/2009
List Price: $319,900
Sold: 7/27/2009
Sale Price: $315,000
9% under the 2007 sales price

133 Hudson St, Phillipsburg NJ (REO)
Purchased: 11/30/2004
Purchase Price: $160,000
MLS# 2689094
Listed: 6/5/2009
List Price: $61,555
Sold: 7/9/2009
Sale Price: $55,000
66% under the 2004 sales price

355 Grant St, Phillipsburg NJ
Purchased: 9/16/2008
Purchase Price: $234,500
MLS# 2611948
Listed: 12/1/2008
List Price: $199,900
Sold: 7/10/2009
Sale Price: $155,000
34% under the 2008 sales price

227 Natalie Dr, Phillipsburg NJ (REO)
Purchased: 3/22/2001
Purchase Price: $230,000
MLS# 2666636
Listed: 3/23/2009
List Price: $214,900
Sold: 7/2/2009
Sale Price: $225,000
2% under the 2001 sales price

250 Buckley Ave, White Twp NJ
Purchased: 12/1/2006
Purchase Price: $580,000
MLS# 2577582
Listed: 9/13/2008
List Price: $499,900
Sold: 7/22/2009
Sale Price: $470,000
19% under the 2006 sales price

Posted in Comp Killer | 137 Comments

Weekend Open Discussion

Posted on July 31, 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.

And finally, a little weekend humor, Arrive on Vacation Leave on Probation by BT Wall, hat tip to Brian Donohue at the Star Ledger.

Posted in General | 366 Comments

Does bottom imply recovery?

Posted on July 30, 2009 by grim

From Bloomberg:

Housing’s Tequila Hangover Isn’t Easily Shaken: David Reilly

A housing bust is a lot like a tequila hangover. After the most acute signs of distress have passed, it still takes a long time before things start to feel normal again.

So even if housing markets are approaching or have reached a bottom — a matter of great debate at the moment, especially given yesterday’s release of May home-price figures — history shows a rebound isn’t likely to be anywhere near as fast or furious as the meltdown it followed.

Sometimes, rebounds don’t happen at all. Not, at least, without a large dose of inflation. And that carries its own risks for the economy and investors.

To see a mirage-like rebound, look at Midland, Texas. That area is still waiting to fully pull out of a housing slump that began in the early 1980s.

Data from the Federal Housing Finance Agency show that inflation-adjusted prices in the Midland area finally bottomed about late 2000. They are still about 30 percent below their peak reached in 1982, the FHFA said in a June report examining past house-price declines.

This underscores how differently housing markets often behave compared with stock markets, which can quickly bounce back from lows.

Pulling out of a housing slump can take twice as long as it took for home prices to melt down, according to the FHFA. That fact should temper some enthusiasm over recent signs that housing markets are stabilizing.
…
Yet “real home prices for many areas within the U.S. have not yet returned to values they approached in the 1980s,” the FHFA report said. The agency found that real, inflation-adjusted home prices can take anywhere from 10 to 20 years to recover from previous peaks.

Of course, home prices look better in Midland, throughout Texas and nationally when they aren’t adjusted for inflation. So-called nominal home prices in Texas, for example, are up 80 percent from an early 1990s trough.

In this case, inflation is a meltdown antidote. Yet it isn’t clear the U.S. can easily inflate its way out of the current housing hole.
…
Talk of housing bottoms almost always assumes home prices will rise. That can be a dangerous notion, as many boom-time home buyers discovered.
…
I was reminded of this while visiting an open house last weekend in Scotch Plains, New Jersey. The house for sale was instructive because it had been built in the late 1700s and the broker supplied a transaction history.

The first ownership change with a listed dollar amount occurred in 1870, when the two-story, clapboard farmhouse sold for $13,000. Two years later it changed hands for $12,000.

The house wasn’t sold again until 1911, fetching $7,200. That marked both a nominal, and real, loss for the sellers. Two years later, the house was foreclosed on.

In 1927, the house sold for $13,500. The next sale, in 1949, was for $19,500, marking an annualized 2 percent return.

That wasn’t bad, given that the period included the stock- market crash, the Great Depression and the World War II recovery. Things were bleaker on a real basis. The Bureau of Labor Statistics inflation calculator shows that $13,000 in 1927 was worth an inflation-adjusted $19,040 in 1949. So, on a real basis, the sellers made just $400 over 22 years.

History is a good reminder that housing cycles are marathons, not short V-sprints.

Posted in Economics, National Real Estate | 232 Comments

Beige Book – NY/NJ Real Estate

Posted on July 29, 2009 by grim

From the Federal Reserve:

Beige Book – Second District–New York

The Second District’s economy has shown more signs of stabilizing in recent weeks, though, on balance, economic activity may still be contracting. The labor market remains exceptionally weak but with some signs of leveling off. Manufacturing sector contacts report stable conditions and are generally optimistic about the near–term outlook. Retailers indicate that sales were steady in June and early July while continuing to run well below 2008 levels. Consumer confidence was mixed but generally steady at a low level in June. Tourism activity in New York City has also been sluggish but little changed since the last report, as have been commercial real estate markets. Housing markets have shown some signs of stabilizing in northern New Jersey and upstate New York but continued to deteriorate in New York City and especially in Manhattan. Finally, bankers report a downturn in loan demand-particularly from the household sector-as well as ongoing tightening in credit standards and steady to higher delinquency rates.
…
Construction and Real Estate
…
Housing markets remained soft throughout most of the District, though there were signs of stabilization in a number of areas. Contacts in northern New Jersey indicate that the market has a somewhat more positive tone than in recent months: prices, though still down about 15 percent over the year, appear to have stabilized somewhat and volume has picked up moderately. There is still reported to be a moderate degree of new development of multi-family buildings along the Hudson waterfront, but otherwise new construction activity is described as moribund. New construction in the Buffalo-Niagara Falls area was reported to be exceptionally slow in April and May but picked up in June; while the high end of the market has weakened somewhat, sales activity at the low end ($150,000 and under) has reportedly been fairly brisk, with multiple bids, sometimes above the asking price. This strength was largely attributed to the $8,000 tax credit for first-time homebuyers. Overall, home prices have held relatively steady in western New York State.

New York City’s market, however, has shown further signs of deteriorating, in both the sales and rental markets. In the second quarter, the median sales price for existing co-ops and condos in Manhattan reportedly fell 26 percent from a year earlier, while the number of sales transactions fell 50 percent; the inventory (number of units listed) was up 9%, though there is reported to be a substantial “shadow” inventory of new apartments-condo units that are unsold but not yet listed. Brooklyn’s and Queens’ markets have also slackened in the second quarter, with median prices of existing apartments reported to be down 15 to 17 percent from a year earlier, and the number of transactions down roughly 30 percent. The city’s rental market has also slackened further, with asking rents reported to be down 8-12 percent over the past year, and actual rents off more than 17 percent, on a per square foot basis. Also, landlords are increasingly offering concessions-free rent for one or more months–in slack neighborhoods.

Posted in Economics, New Jersey Real Estate | 70 Comments

New Jersey Home Price Tracker – July

Posted on July 28, 2009 by grim

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


(click to enlarge)


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

Low Tier (Under $284606) – Peaked in October 2006 and is down 24.51% from peak

Mid Tier ($284606 – $417722) – Peaked in September 2006 and is down 22.74% from peak

High Tier (Over $417722) – Peaked in June 2006 and is down 16.95% from peak

Aggregate (Overall Market) – Peaked in June 2006 and is down 21.00% from peak

Condo-Only Index – Peaked in February 2006 and is down 13.80% from peak

NY Metro Area Aggregate Year over Year Changes

May 08 -7.74%
Jun 08 -7.04%
Jul 08 -7.04%
Aug 08 -6.61%
Sep 08 -7.13%
Oct 08 -7.71%
Nov 08 -8.72%
Dec 08 -9.17%
Jan 09 -9.74%
Feb 09-10.33%
Mar 09 -11.80%
Apr 09 -12.45%
May 09 -12.21%

Bonus Graphs from Veto and Kettle:


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(click to enlarge)

More Kettle/Veto graphs can be found here: http://tinyurl.com/mwlab5

Posted in Economics, New Jersey Real Estate | 302 Comments

May S&P Case Shiller Home Price Index

Posted on July 28, 2009 by grim

From Calculated Risk:

Case-Shiller Prices Fall in May Seasonally Adjusted

Case-Shiller has released the Seasonally Adjusted house price index.

Prices fell slightly in May (compared to April) for the Composite 10 and Composite 20 indexes.

Seasonally adjusted, prices fell in 12 of the 20 Case Shiller cities.

There is a strong seasonal pattern to house prices, and it is important to use the SA data. Unfortunately Case-Shiller did not release the SA data earlier this morning. This has lead to numerous incorrect headlines about prices increasing from April to May. That is correct, if they mention the data is Not Seasonally Adjusted.

From Marketwatch:

U.S. Case-Shiller index down 17.1% in past year
U.S. May Case-Shiller home prices up 0.5%
U.S. home prices up month to month for first time in nearly three years: Case-Shiller

From Standard and Poor’s:

Home Price Declines Continue to Abate According to the S&P/Case-Shiller Home Price Indices

Data through May 2009, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved for the fourth consecutive month in 2009.
…
“The pace of descent in home price values appears to be slowing” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April. Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing”.

“While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.” Mr. Blitzer added.”

From the AP:

Index shows home prices increase from April to May

A widely watched index shows home prices posted their first monthly increase since the summer of 2006, indicating prices are finally stabilizing.

The Standard & Poor’s/Case-Shiller home price index of 20 major cities released Tuesday rose 0.5 percent from April, but was still 17.1 percent below May a year ago.

From CNN/Money:

Home price index up for 1st time in 3 years

The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday.

The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor’s and economists Case-Shiller. It was the first increase in the monthly index since July 2006.

On an annual basis, home prices in the 20 cities fell 17.1%, but it was the fourth straight month that the year-over-year decline lessened.

From Bloomberg:

Home Prices in 20 U.S. Cities Fell 17.1% in May From Year Ago

Home values in 20 major U.S. cities fell less than forecast in May, reinforcing evidence that the market is stabilizing.

The S&P/Case-Shiller home-price index dropped 17.1 percent from a year earlier, the smallest drop in nine months, following an 18.1 percent drop in April, the group said today in New York. The gauge rose from the prior month for the first time in almost three years.

Price declines may keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Even so, rising unemployment, stagnant confidence and the loss of wealth caused in part by the drop in property values mean a rebound may be slow to take hold.

“Lower home prices and improved affordability should start to stimulate home sales somewhat during 2009 despite higher unemployment,” James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, said before the report.

Economists forecast the index would drop 17.9 percent from a year earlier, according to the median of 32 projections in a Bloomberg News survey. Estimates ranged from declines of 17.5 percent to 18.3 percent.

Compared with a month earlier, home prices climbed 0.5 percent in May, the first gain since July 2006 and biggest since May of that year, today’s report showed. Just six of the cities showed a decline in prices from April to May.

The price figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.

Posted in Economics, National Real Estate | 301 Comments

Market recovery? Or just the hope for it?

Posted on July 27, 2009 by grim

From the New York Times:

Hopeful Signs in Housing

HOMEOWNERS and sellers of New Jersey, are you sitting down? You are about to read a recent state housing-trend analysis that’s not half bad: Overall sales are up; inventory is down; and, after three years, home prices may be on the verge of halting their decline.

In June, according to Jeffrey G. Otteau, whose company issues monthly reports to the real estate industry, there was a “breakthrough”: the number of home sales exceeded that of June 2008 by 12 percent. Such a year-over-year increase has not occurred since midsummer 2007, said Mr. Otteau, the president of the Otteau Valuation Group in New Brunswick.
…
It does not mean that the state’s economic troubles are over, Mr. Otteau said in a recent telephone interview.

Generally, he said, home prices tend to stabilize when there is a six-month housing supply. “We are getting very close,” he said, noting that the total number of homes on the market in the 21 counties that his company monitors had sunk to about the same number as were listed in 2006, before the market fell to its knees.
…
In June, there were 25 towns with a four-month supply, or less, according to his company’s data. These communities are scattered across 6 counties (10 in Bergen, 6 in Essex, 3 in Middlesex, 3 in Union, and a town each in Morris, Mercer and Passaic.)

Notably lacking from that list is Hudson County. Although it had the strongest market of any county until the Wall Street crisis last fall, the area is still lagging. So far this year, it has had 28 percent fewer sales than the corresponding period in 2008.

At least its sales pace has increased each month since January. In June, the inventory was down to 11.5 months, from 19. Still, that was only at the lower prices. Among homes priced above $1 million, Hudson had a 52-month supply, most of them waterfront-area condominiums.

In all counties except Passaic, the new data showed that the sales pace is slowest for homes priced over $1 million. In Passaic, the largest inventory — a 27-month supply — was for homes priced from $600,000 to $1 million.

Statewide, there is an 18.6-month supply of homes priced from $1 million to $2.5 million, and a 35.8-month supply of homes listed at $2 million or more, these numbers show.

“In general,” Mr. Otteau said, “fewer homes are being put on the market so far this year compared to last.” In June, there were 14 percent fewer new listings than a year before. Part of the reason for that, he acknowledged, is that some people gave up hope of selling their homes in a harsh market and decided to wait. Also, builders have put up fewer new houses this year.

Hudson County had 18 percent fewer new listings. And even Monmouth County, where homes in oceanfront communities inevitably swell the listings during the summer, had 8 percent fewer new listings this year than last.
…
“Do these very positive housing market numbers in June mean that we suddenly don’t have an economy in trouble, and unemployment up around 10 percent?” he said. “No.”

But unemployment is a “trailing indicator” of trends, he said, and while the housing market is only one measure of what lies ahead, in New Jersey its signs bode well.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 226 Comments

Weekend Open Discussion

Posted on July 24, 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 | 485 Comments

June Existing Home Sales!

Posted on July 23, 2009 by grim

From Bloomberg:

Home Resales in U.S. Increased 3.6% in June, More Than Forecast

Home resales in the U.S. rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices.

Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Associiation of Realtors said today in Washington. Median prices fell 15 percent.

The gain in sales confirms Federal Reserve Chairman Ben S. Bernanke’s remarks this week that the worst housing slump in eight decades appears to be moderating. A record drop in household wealth, due in part to the plunge in property values, and mounting unemployment are among the reasons rebounds in housing and the economy are likely to be drawn out.

“The bottoming process in the housing market is under way,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “The stabilization has been driven in part by an increase in deeply discounted foreclosed properties.”

Economists forecast existing sales would rise to a 4.84 million rate from a previously reported 4.77 million for May, according to the median of 68 projections in a Bloomberg News survey. Estimates ranged from 4.7 million to 5 million.
…
June traditionally is one of the top sales months of the year as families prepare to move before the start of the next school term, according to the NAR. The group adjusts the figures for these seasonal variations in order to facilitate month-to- month comparisons.

Sales were down 0.2 percent compared with a year earlier.

The number of houses on the market fell 0.7 percent to 3.82 million in June, NAR said. At the current sales pace, it would take 9.4 months to sell those homes, compared with 9.8 months in May. A 7 months supply is usually consistent with stabilization in prices, NAR chief economist Lawrence Yun, said in a press conference. It may take until the end of this year or early 2010 before property values steady, he said.

The median price of an existing home fell to $181,800 from $215,000 a year earlier, the NAR said.

From MarketWatch:

U.S June existing home sales up 3rd straight month

Resales of U.S. single-family homes and condos rose 3.6% in June to a seasonally adjusted annual rate of 4.89 million, the highest level since last October, the National Association of Realtors reported Thursday. Resales have risen for three straight months. The housing market appears to be healing, said Lawrence Yun, the NAR chief economist. The increase was higher than expected. Economists surveyed by MarketWatch expected sales to rise to 4.85 million. Inventories of unsold homes are still elevated and putting pressure on prices. The inventory of unsold homes on the market fell to a 9.4 month supply at the June sales pace, down from 9.8 months in May. Yun said that inventories would have to be at a 7 month supply to get price stabilization. The median sales prices fell 15.4% in the past year to $181,800. Resale activity is concentrated in lower-priced home as a result of tax incentives, analysts said. Distressed properties accounted for 31% of sales in June.

From CNBC:

Existing Home Sales Rise for Third Straight Month

Sales of previously owned homes in the United States increased at a faster-than-expected annual pace in June, an industry survey showed Thursday, in the third straight month of gains.

The National Association of Realtors said that sales rose 3.6 percent to an annual rate of 4.89 million units from a downwardly revised 4.72 million pace in May. June’s reading compared with forecasts for a 4.84 million unit annual pace.

It was the highest level of sales since October 2008.

The median sales price was $181,800 in June down 15.4 percent from $215,000 in the same month last year, but up from $174,700 in May.

Posted in Economics, National Real Estate | 368 Comments