Mortgage Modification Program A Failure

Posted on January 18, 2010 by grim

From Bloomberg:

Loan Modification Recipients Fall Short, Drop Out

About 25 percent of homeowners who received trial loan modifications through President Barack Obama’s main foreclosure prevention plan are failing to keep up with their new reduced payments, the Treasury Department said.

At least 196,000 borrowers have missed some or all of their required payments, according to comments Treasury officials made on a conference call today and calculations from government data. An additional 115,000 homeowners who started trial repayment plans last year have either dropped out or been kicked out of Obama’s Home Affordable Modification Program, the officials said.

“None of these programs have really been a success,” said Vivek Sriram, a mortgage strategist for RBC Capital Markets in New York. “With the high unemployment rate, it’s tough to solve the problem because these people will redefault even if their loan terms are fixed.”

The U.S. has shed 7.2 million jobs since the recession began in December 2007, with almost half those losses occurring after Obama took office in January 2009. The mortgage program, which Obama said would target as many as 4 million Americans struggling to hold onto their homes, has successfully modified 66,465 loans as of Dec. 31, according to data released today by the Treasury.

From UPI:

Mortgage modification numbers still small

Only a few U.S. homeowners enrolled in a federal foreclosure prevention program have achieved permanent loan modifications, statistics indicate.

Data released Friday by the U.S. Treasury Department showed that only 7 percent of those in the Obama administration’s Making Home Affordable program have moved from its trial phase into a permanent loan modification — about 66,000 of the 850,000 homeowners enrolled, The Washington Post reported.

Government and industry officials have said the main reason is that many of the homeowners in the program’s trial phase have been unable to provide enough documentation to prove they qualify and are at risk, but housing advocates counter that in some cases, homeowners have indeed provided the necessary paperwork but are in limbo while waiting for their lenders to act, the Post said.

Posted in Economics, National Real Estate, Politics, Risky Lending | 169 Comments

Weekend Open Discussion

Posted on January 15, 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 | 231 Comments

NJ Foreclosures: Stabilization at multi-year highs isn’t improvement

Posted on January 14, 2010 by grim

Don’t get me wrong, stabilization is good news, but realize that stabilization at these levels is nothing to cheer about. The rate of foreclosures in NJ did not decline in NJ in 2008, they increased by 1%. The best we can say is things aren’t getting worse, but stabilization at these levels over a long term would be disaster. Too early to sound the all-clear on foreclosures. Not only do we need to see the rate decline, but the rate needs to make a strong attempt at a return to the historical norm. What is most disconcerting is that given the incredible amount of federal stimulus and local anti-foreclosure legislation, at best those measures halted the increase. Given the dollars spent to simply arrest the increase, I really wonder how many more dollars are going to be required to push the market towards improving, and not just stabilizing.

From the Record:

Foreclosure filings nearly flat in N.J., but problem is far from over

Foreclosure filings in New Jersey totaled about 63,000 last year, a 1 percent increase over 2008, RealtyTrac said Wednesday. However, the housing market’s troubles are far from over, experts say.

“A massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond,” said James J. Saccacio, chief executive officer of RealtyTrac, which follows the foreclosure market.

Nationally, foreclosure filings were up about 21 percent in 2009, to 2.8 million. The worst-hit states continue to be Nevada, Arizona, Florida and California.

The foreclosure numbers “would have been worse if not for legislative and industry-related delays in processing delinquent loans,” Saccacio said. Those delays include trial-loan modifications, state legislation extending the foreclosure process and “an overwhelming volume of inventory clogging the foreclosure pipeline,” he said.
…
Salowe-Kaye said her agency is still being inundated by distressed homeowners. And nowadays, more are in trouble not because they got subprime loans but because they have lost their jobs, she said. New Jersey’s unemployment rate is 9.7 percent.
…
“A lot of foreclosures are being postponed,” she said. “But the house of cards will soon collapse, and a lot of people are going to be put out.”

From the Star Ledger:

N.J. foreclosure filings level off

he number of foreclosure filings sent to New Jerseyans leveled off at the end of last year, according to RealtyTrac.

Lenders sent foreclosure filings to 63,208 commercial and residential properties in New Jersey, about 1 percent more than in 2008, according to the Irvine, Calif.-based firm.

The latest statistics are a sign the real estate market has bottomed-out, according to industry observers. However, they are still a substantial increase over the amount of filings seen before the most recent recession.

“I still think we’re a long way off from letting out that sigh of relief,” said James Bednar, who writes a real estate blog at njrereport.com

The number of filings in New Jersey sky-rocketed in 2008. In 2007, the number of properties that received foreclosure filings was 31,071. In 2006, it was 21,794.

From MarketWatch:

2009 foreclosures hit record high

The number of U.S. residential properties receiving at least one foreclosure filing jumped 21% in 2009 to a record 2.82 million, RealtyTrac, an online foreclosure marketplace, reported Thursday.
…
“As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans,” said James Saccacio, chief executive officer of RealtyTrac.

Saccacio said that monthly foreclosure filings peaked in July at 361,000, then declined for four months before rebounding in December. He said short-term factors, including trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline contributed to the second-half declines.

But “in the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond, as lenders gradually work their way through the backlog,” he said.

Posted in Foreclosures, New Jersey Real Estate | 379 Comments

Beige!

Posted on January 13, 2010 by grim

Beige Book, from the Fed:

Federal Reserve Districts – Second District–New York

Construction and Real Estate

Commercial real estate markets in the District were mixed but, on balance, softer since the last report. Manhattan’s office vacancy rate leveled off in the final quarter of 2009, but asking rents on Class A properties reportedly tumbled by 15 percent and were down 26 percent from a year earlier. Office markets surrounding New York City were mixed: asking rents declined moderately, while vacancy rates were little changed overall–up slightly in Westchester and Fairfield Counties but down slightly in northern New Jersey and Long Island. Office markets in upstate New York were generally stable, on balance, with faint signs of improvement in the Buffalo and Albany areas but modest softening in metropolitan Rochester. Sales transactions of office properties were exceptionally low throughout the District in the fourth quarter, and, in most cases, down from both the third quarter and a year earlier.

Housing markets have been mixed but, on balance, steady since the last report. Home sales reportedly slowed considerably in the Buffalo area in November and early December, though prices remained higher than a year ago; this slowing is partly attributed to the expiration of the [now extended] homebuyer tax credit. Contacts in northern New Jersey report that resale activity and prices have picked up modestly, though both remain at fairly depressed levels; the uptick in prices may be partly due to fewer distress sales. New home construction in northern New Jersey remains stable at an exceptionally low level, with a modest pickup in multi-family development offsetting further weakening in the single-family sector. New York City’s housing market has shown some signs of stabilizing. Co-op and condo prices continued to decline in the fourth quarter but at a more moderate pace than earlier in the year–in both Manhattan and the outer boroughs. Moreover, the number of transactions picked up, both from the third quarter and from a year earlier, and the inventory of unsold units, though still fairly high, fell 25 percent from late-2008 levels. Manhattan’s apartment rental market also showed signs of stabilizing in December, as both rents and inventories were virtually unchanged from November. Still, rents remain well below year-earlier levels, especially when landlord concessions (fee waivers and free rent for 1-2 months) are factored in, though some of the more aggressive incentives are reportedly being scaled back.

(emphasis added)

Posted in Foreclosures, New Jersey Real Estate | 125 Comments

Edison NJ Mortgage Lender Subpoenaed By HUD

Posted on January 12, 2010 by grim

Edison-based lender Security Atlantic Mortgage was subpoenaed by the HUD Office of the Inspector General today. Security Atlantic and 14 other lenders nationwide are being investigated by the U.S. Department of Housing and Urban Development for having significantly high default rates on FHA loans they’ve issued.

Security Atlantic Mortgage (http://www.fhaok.com) is a large FHA wholesale shop. According to their website, they’ve got 30% of the FHA market in New Jersey. According to the HUD Neighborhood Watch Early Warning System (Hat tip Calculated Risk) 15.48% of Security Atlantic’s FHA loan originations were in default or claim terminated compared to the 5.05% nationwide average.

From HUD:

HUD INSPECTOR GENERAL PROBES MORTGAGE COMPANIES WITH SIGNIFICANT CLAIM RATES

U.S. Department of Housing and Urban Development (HUD) Inspector General Kenneth M. Donohue and Federal Housing Administration (FHA) Commissioner David H. Stevens announced today an initiative focusing on mortgage companies with significant claim rates against the Federal Housing Administration mortgage insurance program.
…
Inspector General Donohue said, “The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved. We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud. We are members of the President’s Financial Fraud Enforcement Task Force and today’s activities reflect our commitment to seeking information on red flags that may arise from data analysis.

“This initiative was prompted, in part, by the FHA Commissioner, David Stevens, who was alarmed by the incidence of claims against the FHA insurance fund by a number of poor performing companies and reached out to the HUD OIG for assistance.

FHA is the new subprime. It’s amazing how many subprime shops have morphed into FHA lenders following the subprime collapse. As the securitization market shut down, FHA went from being a rarely used homeownership tool to being a cesspool for subprime loans. Too little too late Inspector Donahue, we’re all on the hook already.

“The FHA market share has skyrocketed,” Inspector General Donohue further said. “Our job is oversight. We work for the American taxpayer. Each loan on this list will be thoroughly examined and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted we are watching very carefully and that we are poised to take action against bad performers.”

“Skyrocketed” is code-word for get your wallets out taxpayers, you’re on the hook for one hell of a bailout.

Posted in New Jersey Real Estate, Risky Lending | 169 Comments

Otteau: Slow recovery for housing, no recovery for high-end

Posted on January 12, 2010 by grim

From the Record:

N.J. real estate prices headed up

New Jersey home prices have bottomed out and will rise about 2 percent this year, real estate appraiser Jeffrey Otteau predicted Monday.

“While things will get better from here, they’re going to get better at a slow, steady and sustained pace,” Otteau said. Otteau is based in East Brunswick, but he analyzes real estate markets around the state.
…
He predicted that prices, which he says have fallen about 18 percent since the peak of the market in 2006, will rise only about 3 percent a year for the next five years. As a result, home values won’t return to their 2005 levels until 2016.

Otteau’s prediction is in line with other forecasts that home values will be either rise slightly or be flat this year. No one is predicting a jump in values, and some analysts expect further declines.

Otteau said the housing recovery will be slow as foreclosures continue “flooding into the system” and high unemployment keeps potential buyers out of the market.

He said home sellers have to price their properties competitively, because buyers will not be willing or able to overpay. Aside from buyers’ stagnating incomes, lenders are no longer giving mortgages to unqualified buyers.
…
But sellers trying to unload million-dollar-plus homes are in trouble, he said.

“The luxury end of the market will probably never recover,” he said. He said that as baby boomers downsize from big homes, there will be fewer younger buyers who can afford to buy those properties.

There’s an even bigger oversupply of 55-and-up housing units, which were overbuilt during the housing boom, Otteau said. He estimates there is a 16-year supply of those units available.

Posted in Economics, New Jersey Real Estate | 224 Comments

Corzine “was unwilling to make the tough decisions”

Posted on January 11, 2010 by grim

From Bloomberg:

Corzine Leaves $8 Billion Gap as N.J. Governor Readies Exit

Jon Corzine, only the second sitting New Jersey governor to lose a general election since 1947, makes his farewell speech tomorrow with the third-most indebted U.S. state facing spending cuts as steep as 25 percent to close a record $8 billion budget gap.

The one-term Democrat is leaving with tax revenue down 12 percent since taking office in 2006, local property levies up 9 percent to the highest-in-the-nation average of $7,045 and his Republican successor, former U.S. prosecutor Christopher Christie, proposing state-aid reductions that may force towns to fire teachers, close libraries and stop maintaining parks.

Corzine, 63, the former chairman of Goldman, Sachs & Co., vowed to use his Wall Street experience to repair the state’s finances after his election. After winning increases in taxes and proposing to raise highway tolls 800 percent, he faced mounting voter disapproval as the global recession that started in 2007 pushed New Jersey’s unemployment rate to a 32-year high.

The governor’s inability to erase chronic deficits and the economic slump have left chaos for his successor, said John Mousseau, who helps oversee $1.4 billion at Cumberland Advisors Inc. in Vineland, New Jersey.

“Governor-elect Christie has a hell of a problem ahead of him,” Mousseau said. “Were the expectations higher for Governor Corzine? Obviously.”
…
The governor “was unwilling to make the tough decisions he needed to make,” said Senator Kevin O’Toole, a Republican member of the Senate Budget Committee from Wayne. “There was this great hope that he’d be an imaginative, aggressive Wall Street genius who was going to fix state finances in New Jersey. Governor Corzine was ill-equipped to deal with Trenton and with state politics.”
…
Christie, 47, takes office Jan. 19 as New Jersey faces an $8 billion deficit in the fiscal year beginning July 1, more than a quarter of the budget and its biggest shortfall ever, according to the nonpartisan Office of Legislative Services. To narrow the gap, he asked state department heads to prepare scenarios for cuts of 15 percent to 25 percent.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 323 Comments

Like clockwork, with spring comes optimism.

Posted on January 10, 2010 by grim

But is it founded in logic, reason, and data? Or is it nothing more than the same hopeful cheerleading we’ve seen for at least the past 3 spring seasons?

From the NY Times:

Optimism About the New Year

SO is it over? The three-year period of unrelenting home price declines: has it stopped? And is it possible that sales prices will go the other way in 2010?

Excited by brisk business in some locales even during the traditionally slow holidays, a few real estate brokers began blurting out such hopes.
…
Statistically speaking, there are grounds for modest optimism that prices will trend upward in the near future, said the market analyst Jeffrey Otteau, whose Otteau Valuation Group continuously tracks sales data in 21 counties for real estate companies.

Mr. Otteau cited one recent report indicating that New Jersey was one of a half dozen “breakout” states in which prices had already begun to creep up in the second half of 2009. That report came from the Federal Housing Finance Agency, which indexes purchase prices of homes with mortgages guaranteed by Freddie Mac and Fannie Mae.

Looking at data from the entire period of the slide — the start of 2006 through the third quarter of 2009 — Mr. Otteau concluded that the state’s residential market “didn’t get hammered all that bad” compared with the nation at large, and was likely to recover faster.
…
The median home price declined 12.4 percent statewide over the three years, to $289,275 from $330,331, by the Otteau Group calculations. Two northwestern New Jersey counties, Sussex and Hunterdon, got hit much harder than the average, both experiencing declines of more than 20 percent, which various analysts have ascribed to sparser development, smaller population and greater distance from job centers.

Back when home prices were at their highest, buyers had started to “push west” to those counties, trading longer commutes for affordability, said James Bednar, who writes a blog on state real estate at njrereport.com. With the general decline in prices during the past few years, “demand to move to those western counties has dropped,” said Mr. Bednar, whose online self-description is “Grim.”
…
In Hudson County, by contrast, median purchase prices fell just 2.6 percent, peak to trough. The pace of sales pace slowed sharply over the three-year period, even as thousands of new, high-end condominiums came on the market. But Hudson’s proximity to Manhattan jobs bolstered values, as it has for the 30 years, since waterfront area redevelopment began west of the river. ****

In Essex, Somerset, Mercer, Camden, Atlantic and Salem counties, prices declined 5 to 10 percent.

In Bergen, Union, Monmouth and Gloucester counties, the decline was 10 to 15 percent.

Besides Sussex and Hunterdon, the hardest-hit counties — with declines between 15 and 20 percent — were Passaic, Morris and Warren, in the northern part of the state; Ocean and Burlington in central Jersey; and Cape May at the southern tip.
…
In general, Mr. Bednar said, “it’s that lower end that is taking the biggest hit.” On the other hand, it is his view that those same lower-priced areas saw “the biggest speculation, and biggest run-up” in prices during the boom years before 2006.
…
Mr. Otteau suggested that it was best not to obsess over home values in the short term.

According to the housing finance agency, he noted, New Jersey’s median home price rose nearly 6 percent when measured over a five-year period, 2003 to 2009. Going back all the way to 1991, when the agency started keeping its statistics in their current form, the median home price has risen 129 percent.

“If you bought in the last five years and need to sell your house today,” Mr. Otteau said, “then the short-term cycle is relevant. But only about 1 out of 10 homeowners are in that situation. For the rest of us, it doesn’t really matter what home prices are doing right now.”

**** I’m not sure exactly where the pricing data came from, but some of those appear to be off a bit, for example:

According to the NJAR, for Hudson County

2008 Q3 to 2009 Q3 – Down 9.7%
2007 Q3 to 2008 Q3 – Down 6.9%
2006 Q3 to 2007 Q3 – Down 0.3%

Median Price
2006 Q3 – $366,000 (rough peak)
2009 Q3 – $306,000 (current, not trough)

Down 16.4% peak to current.

Posted in Economics, New Jersey Real Estate | 175 Comments

Change coming to NJ Real Estate! (and the weekend open discussion)

Posted on January 8, 2010 by grim

From the New Jersey Association of Realtors: (This might just be the first time I’m citing the NJAR without insulting them).

Continuing Education for Real Estate Licensees Receives Final Legislative Approval (no link)

On January 7, 2010, the New Jersey Senate approved A-3099/S-2068, which provides for mandatory continuing education (CE) for real estate brokers, broker-salespersons and salespersons. The final passage of this bill in the Legislature represents two years of work by NJAR® and the NJAR® CE Task Force.
…
Governor Jon Corzine must sign A-3099/S-2068 before it can become law.

But much, much more importantly:

Legislation Permitting Rebates Approved by State Senate (no link)

At its January 7, 2010 meeting, the New Jersey Senate approved A-373, which permits rebates to be provided to consumers in real estate transactions. After several years of working with the sponsors of this bill, NJAR® secured amendments stating that only brokers can offer rebates to those purchasing property, rather than allowing all real estate licensees to offer rebates to buyers and sellers, as the original version of the bill would have allowed. In addition, the amendments provide greater consumer protections, including mandating that rebates can only be in the form of a credit or check and requiring that rebates be documented in a contract at the beginning of a brokerage relationship in a written or electronic form or in a buyer agency agreement.

Under current state law, New Jersey real estate licensees are not permitted to offer rebates. Before becoming law, this bill must be signed by Governor Jon Corzine.

For some more background on the latter change, from the Star Ledger (older piece):

Law under consideration would let brokers pay real estate clients

Soon your realtor could be paying you.

It’s illegal right now, but pending legislation would allow realtors and real estate brokers to pay home-buyers a portion of their commissions at the close of a deal.

New Jersey is one of 11 states that don’t allow the incentive, said Sen. Nicholas P. Scutari (D-Union), one of the bill’s sponsors. It would be up to the individual real estate agent to decide whether to pay the client.

“We’re trying to help the real estate market and to allow real estate agents and brokers to make deals happen,” Scutari said.

And on the first (fire away, this one really is meaningless. Damn, I insulted the NJAR. Guess I really can’t quote them without insult). From the Star Ledger:

N.J. Senate votes to require continuing education for real estate agents

“A major contributing factor to that (housing) crisis has been some bad advice home buyers received,” said Senate Majority Leader Steve Sweeney ( D-Gloucester), in a statement, adding that there is a need for real estate agents to become more knowledgeable.

The bill, S-2068, would demand that real estate agents complete an additional 16 hours of classes every two years — or face $200 in fines.

Posted in New Jersey Real Estate | 249 Comments

The end of Big Pharma in NJ?

Posted on January 7, 2010 by grim

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.

Posted in Economics, New Jersey Real Estate | 288 Comments

Short Sales Up 22.4% in Q3

Posted on January 7, 2010 by grim

From the Star Ledger:

Lenders are hard-pressed to keep up with the demand of short sales

Thinking he’d found a cheap vacation home, Louis Pallante in April bid $300,000 for a fixer-upper in Toms River.

And then he waited to hear from the seller. And waited. After finally learning six months later that his offer had been rejected, he upped his bid to $315,000. But before he could close on the property, it went into foreclosure, only adding to his frustration.

“I can’t get a number or a name or anything from anyone,” said Pallante, 55, a reinsurance claims manager from Belleville.

Like many New Jersey residents hunting for discounted real estate, Pallante is learning firsthand there is nothing short about the short-sale process, in which lenders unload properties for less than they’re owed and borrowers get their debt wiped clean.

That’s because deals must be approved by mortgage holders as well as other creditors, and the sale of the property can be held up for as much as six months as stakeholders haggle over how much money they’re owed, according to real estate lawyers, analysts and agents.
…
Nationwide, the number of short sales increased by 22.4 percent to 30,766 in the third quarter of 2009, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

About one in 10 residential sales last year was a short sale, according to the National Association of Realtors.

Joe Zinman, chief executive of Aurora Financial Group in Marlton, said he used to deal with just one short sale at a time. Now, he might be handling as many as 15 at any given time.

“It has increased dramatically,” he said. “Understand that three, four years ago you had properties that were appreciating in value, at rather dramatic annual percentages, and you didn’t have a marketplace with this element of depreciation.”
…
Buyers, real estate agents and attorneys are playing a guessing game when it comes to figuring out how much a lender wants to unload a troubled property, said Barry Guberman, a Monmouth County real estate attorney.

“The biggest reason why short sales don’t get approved is that the (bank) negotiator will say that the price is below market value,” Guberman said. “They will almost never tell you what figure they’re looking for.”

There are no guarantees a sale will go through once the process has begun, said Sal Poliandro, a Saddle River-based real estate agent who specializes in short sales. Mortgage holders can foreclose before a short sale is completed, he said.

“The short-sale process and the foreclosure process are two trains running on parallel tracks,” he said. “The fact that you’re trying to do a short sale doesn’t stop foreclosure.”

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate | 256 Comments

Gold Coast Glitters

Posted on January 6, 2010 by grim

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.
…
“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.”
…
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.

Posted in Economics, New Jersey Real Estate | 46 Comments

Pending Sales Dip, Northeast Plunges

Posted on January 6, 2010 by grim

From the WSJ:

Home-Sale Gauge Fell as Tax Deal Expired

A gauge of housing-market activity plunged in November, largely reflecting a surge of home buyers in October racing to beat a deadline for a tax credit.
…
The National Association of Realtors’ index for pending sales of previously owned homes slid 16% to 96 in November, from an upwardly revised 114.3 in October, the industry group said Tuesday. Pending home sales fell across all regions of the U.S.

“It is uncertain how much demand was pulled forward by the original expiration date of the [first-time home buyers’] tax incentive, but today’s report indicates that it was considerable,” MFR Inc. chief U.S. economist Joshua Shapiro wrote to clients.

Despite November’s steep drop, the pending home sales index for the month was 15.5% higher than it was a year earlier.

From MarketWatch:

Pending home sales index plunges 16%

Pending home sales plunged a seasonally adjusted 16% from October to November as a highly popular tax credit for first-time buyers was set to expire on Nov. 30, the National Association of Realtors reported Tuesday.

The report suggests that sales of existing homes will drop off in the next few months.

The pending sales index, which had risen nine months in a row before falling in November, was 15.5% higher than in November 2008. October’s increase was revised higher to 3.9% from 3.7% previously reported.
…
The NAR’s pending sales index for November fell in all four regions: down 26% in the Northeast and Midwest, down 15% in the South, and down about 3% in the West.

Posted in Economics, National Real Estate | 265 Comments

This story again?

Posted on January 5, 2010 by grim

From CNN/Money:

Will bonuses save the day for Manhattan real estate?

Bonuses are making a comeback on Wall Street and that might help stabilize the Manhattan real estate market.

While Manhattan home prices dropped between 10% and 15% in the last quarter of 2009 compared with a year earlier, the losses have started to slack off, according to a host of markets reports released Tuesday by big New York brokerage firms.
…
“People feel there’s stability in New York. The fear factor is gone. The year 2009 started out in absolute fear. This year is starting off in hopefulness,” said Pam Liebman, CEO of the Corcoran Group, one of New York’s biggest real estate brokers.

For the fourth quarter, the Corcoran Group reported a median price drop of 15% year-over-year to $795,000. That was also 4% lower than three months earlier.

Prudential Douglas Elliman put the declines at 10% year-over-year and 4.7% quarter-over-quarter to $810,000.
…
“Fundamentals are beginning to look a lot better,” said Heym. “Price declines have been slimming, the economy seems to be in recovery and Wall Street bonuses are back.”
…
The biggest improvement was in sales volume, which was actually above average for the quarter. Sales grew 8% year-over-year and 11% quarter-over-quarter, according to Jonathan Miller of the appraisal firm Miller Samuel, which produces the market report for Prudential Douglas Elliman.

All those sales carved into inventory, culling 18% from what was available just a quarter earlier and 25% year-over-year, Miller said.
…
Homebuyers hit the market as Wall Street’s fiscal health improved. Financial industry jobs pay much better than any other major New York business, with the sector accounting for just 5% of employment in the city but a whopping 25% of earnings. And those bankers pulling down big bonuses buy many of the luxury apartments sold in Manhattan’s priciest districts.
…
However, any price upturn could encourage sellers who had been holding back to put homes on the market. There’s no way to know how much of this “shadow inventory” could emerge, but any significant addition could dampen prices.

Miller also pointed out that job losses may continue, which could certainly harm buyer confidence, even for people still with jobs. And obtaining financing for mortgages is also still challenging.

Posted in Economics, National Real Estate | 284 Comments

“I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained” – Paulson 2007

Posted on January 4, 2010 by grim

From Bloomberg:

Housing Animal Spirits to Be Banished by Prime Foreclosures

Homeowners with the best credit are the next big risk for the U.S. housing market.

An increase in mortgage defaults among prime borrowers in 2009 is likely to accelerate this year, slowing the real estate recovery even as Americans become more optimistic about the economy, said Robert Shiller and Karl Case, the economists who created the S&P/Case-Shiller Home Price Index.

“There will be continuing foreclosures, and not just subprime, it will be prime mortgages,” Shiller, a professor at Yale University, said in an interview. “This is creating a huge shadow inventory of homes that are still owned, but they’re going to be on the market in the next year or so.”

The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec. 21 report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Unemployed homeowners struggling to pay their bills will default on their home loans and increase foreclosures, Shiller and Wellesley College’s Case said.
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“Unemployment is not respecting income boundaries,” said Case in an interview. “It’s affecting rich people, poor people and middle-income people and they all have mortgages.” The U.S. may begin to see some signs of a housing recovery this year, he said.
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“What makes the rising default rates on prime loans so insidious is these are not folks who took out some crazy new type of mortgage,” said Brad Hunter, chief economist at MetroStudy real estate research in West Palm Beach, Florida. “These are people who probably took out what would ordinarily be a responsible mortgage.”

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