Saving Paris Orange

From the NY Times:

Dissecting the ‘Heart of Orange’

A GLOBAL economic crisis provides the perfect opportunity to rethink the design of an old city — be it Paris or Orange — said a French urbanist who has been engaged in doing that recently, both there and here.

“Cities have this time to consider intelligently what they are going to be in the future,” said the urbanist, Michel Cantal-Dupart, through an interpreter, as he conducted a walking tour on a rainy day in early April along the streets of Orange’s mostly dreary downtown section. “Then, when things improve,” he said, “the cities will know what to do.”

Mr. Cantal-Dupart recently served on a team of architects and planners commissioned by the French government to re-envision the master plan for Paris, which at the age of 2,000 faces special challenges in becoming a “sustainable” city of the future. The team’s proposals were unveiled in March.

This month, he was asked to help to do something similar for 200-year-old Orange, at the behest of a nonprofit development corporation called Hands Inc. Harnessing federal, state and private grant money to rebuild troubled neighborhoods in Essex County, the group has been based here since the early 1980s.

Until now, it has relied mostly on a strategy of “finding the worst houses on the block, and turning them around one by one,” said Patrick Morrissy, the group’s executive director.

In fact, several days before the activity in Orange, Hands expanded on its primary strategy with the announcement of a nonprofit alliance to buy 47 abandoned and neglected houses in Essex County — all foreclosure properties owned by the former Washington Mutual Bank.

The houses are in Orange, West Orange, Newark and Irvington, all communities hit especially hard by foreclosures.

“We have to keep up this critical work,” Mr. Morrissy said, “because the current crisis is threatening the impact of all we have done in the last 25 years.”

Posted in Economics, New Development, North Jersey Real Estate | 365 Comments

Weekend Open Discussion

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 | 317 Comments

Philly area home prices fall 7.4%, sales fall by more than a quarter

From Prudential Fox & Roach:

Greater Philadelphia Housing Prices Decreased 7.4 Percent in the First Quarter of 2009; (no link)

reater Philadelphia region* median home sale prices decreased 7.4 percent to $199,000 in the first quarter of 2009, according to Prudential Fox & Roach, REALTORS’® HomExpert Market Report©. The median sale price in the first quarter of 2008 was $215,000. The region’s median sale price decreased 8.7 percent compared to the first quarter of 2007 when the median sale price stood at $218,000.

In the first quarter of 2009, the region saw 9,162 homes sold, a 26.2 percent decrease, compared to 12,408 homes sold in the first quarter of 2008. The region decreased 45.7 percent compared to the first quarter of 2007 when 16,883 homes sold. The average number of days a home remained on the market increased from 81 days in the first quarter of 2008 to 95 days in the first quarter of 2009. In the first quarter of 2007, homes remained on the market for an average of 70 days. Additionally, monthly average inventory for the first quarter of 2009 was 54,891 compared to 58,553 in the first quarter of 2008 and the first quarter of 54,833 in 2007.

Delaware County performed the best in the region with a 3.1 percent decrease in median sale price in the first quarter of 2009. The county median price of homes sold fell from $194,950 in the first quarter of 2008 to $188,875 in the first quarter of 2009. Philadelphia County and Gloucester County median sale prices both fell 3.7 percent to $128,500 and $192,500 respectively. With a 16.3 percent decrease in median sale price, Mercer County saw the region’s largest decrease in the first quarter of 2009 falling to $220,000, compared to $262,825 in the first quarter of 2008. Burlington County saw the region’s largest decrease compared to the first quarter of 2007, falling 14.9 percent to a median sale price of $199,900 in the first quarter of 2009.

Center City median home prices decreased 18.2 percent to $326,000 in the first quarter of 2009, compared to the median sale price in the first quarter of 2008, which stood at $398,750. In the first quarter of 2009, Center City saw 149 homes sold, a 50 percent decrease, compared to 298 homes sold in the first quarter of 2008.

The average number of days a home remained on the market increased from 109 days in the first quarter of 2008 to 137 days in the first quarter of 2009. Average inventory decreased 4.8 percent in the first quarter of 2009 to 1,634 homes for sale.

Main Line median home prices decreased 13.7 percent to $309,500 in the first quarter of 2009, compared to the median sale price in the first quarter of 2008, which stood at $358,575. In the first quarter of 2009, the Main Line saw 344 homes sold, a 22.5 percent decrease, compared to 444 homes sold in the first quarter of 2008.

The average number of days a home remained on the market increased from 82 days in the first quarter of 2008 to 89 days in the first quarter of 2009. Average inventory decreased 0.8 percent in the first quarter of 2009 to 1,687 homes for sale.

New Jersey Shore Counties (Outside the Greater Philadelphia Region)

Atlantic County median home prices decreased 15 percent to $216,700 in the first quarter of 2009, compared to the median sale price in the first quarter of 2008, which stood at $255,000. In the first quarter of 2009, Atlantic County saw 396 homes sold, a 35.3 percent decrease, compared to 612 homes sold in the first quarter of 2008. The average number of days a home remained on the market increased from 110 days in the first quarter of 2008 to 124 days in the first quarter of 2009.

Cape May County median home prices decreased 19.6 percent to $410,000 in the first quarter of 2009, compared to the median sale price in the first quarter of 2008, which stood at $510,000. In the first quarter of 2009, Cape May County saw 152 homes sold, a 32.7 percent decrease, compared to 226 homes sold in the first quarter of 2008. The average number of days a home remained on the market increased by one day in the first quarter of 2008 to 141 days in the first quarter of 2009.

Posted in Housing Bubble, New Jersey Real Estate, South Jersey Real Estate | 314 Comments

FRB Beige Book – NY Area Real Estate

From the Federal Reserve:

The Beige Book – Second District – New York

Construction and Real Estate

Commercial real estate markets in the District were mixed in the first quarter. New York City’s office market continued to deteriorate, with vacancy rates climbing to a 4-year high at the end of March and asking rents on Class A space falling 14 percent from a year earlier. A major commercial broker cites a huge increase in available sub-lease space, mostly from financial service firms. In contrast, office markets in outlying areas were steady to slightly stronger in the first quarter: vacancy rates and asking rents were little changed in northern New Jersey, Westchester and southwestern Connecticut; in Long Island, vacancy rates improved to a 3-year low, while rents edged higher. Similarly, office markets in upstate New York showed resilience: office vacancy rates declined in the Buffalo and Syracuse areas and were little changed in metropolitan Rochester and Albany; rents were little changed across the board. The purchase market, however, is still reported to be exceptionally sluggish throughout most of the District.

The rental market for industrial space was steady to softer in the first quarter, as was the market for retail space. Manhattan’s retail market softened more than others: while vacancy rates were steady at low levels, asking rents declined sharply for the second straight quarter, and a relatively large volume of new retail space is due to be completed in the fourth quarter of 2009, much of it still unleased.

Housing markets have continued to weaken in much of the District since the last report–particularly in the multi-family segment. New York City’s rental market continued to soften in March: asking rents in Manhattan were estimated to be down just 5-6 percent from a year earlier, but with the growing prevalence and size of concessions (waiving of rental fees, 1-3 months free rent, etc.), effective rents have reportedly fallen much more sharply–especially in full-service buildings. The inventory of rental listings has continued to increase, particularly in non-doorman buildings; one large brokerage firm reports that the rental vacancy rate has nearly doubled over the past 12 months. Manhattan’s apartment sales market deteriorated markedly in the first quarter: the median sales price for condo re-sales was down 16 percent from a year earlier, while co-op prices fell 22 percent. The number of sales transactions fell nearly 50 percent from a year earlier, while the inventory (number of units listed) jumped 34 percent. Moreover, an industry contact maintains that there is a sizable “shadow” inventory of apartments–new condo units that are unsold but not yet listed. While quarterly data are not yet available for other parts of New York City, Brooklyn’s market has reportedly slackened to an even greater extent than Manhattan’s, largely due to a huge supply of newly constructed units.

The market for single-family homes has been mixed but generally weaker since the last report. A New Jersey industry consultant notes that resale activity, though still sluggish, picked up a bit in March–even after accounting for seasonality–but only on properties with fairly steep price reductions. However, a real estate broker in northern New Jersey maintains that traffic has been unusually quiet in recent weeks. Both contacts estimate that prices are off about 20 percent from their peaks, on average, and note that much of the activity is in “short sales”, where the mortgage holder agrees to forgive part of the debt to the extent that it exceeds the selling price. Real estate contacts in upstate New York indicate somewhat more favorable market conditions. Home prices in the Buffalo-Niagara Falls area have reportedly remained steady thus far in 2009, though sales activity has fallen roughly 20 percent from 2008 levels. Contacts in both upstate New York and northern New Jersey note that the new tax credit for first-time home buyers has spurred at least some interest among potential buyers. Industry contacts throughout the District indicate that new home construction is running substantially lower this year than in 2008.

(emphasis added)

Posted in Economics, New Jersey Real Estate | 48 Comments

NJ Unemployment Rises to 8.3%

From the NJ Department of Labor and Workforce Development:

New Jersey Unemployment Rate at 8.3 Percent in March; Employment Down by 17,200 Over the Month

New Jersey’s labor market continued to tighten in March as employment fell for the 14th consecutive month. The state’s unemployment rate moved slightly higher to 8.3 percent in March, up by 0.1 percentage point from February’s 8.2 percent. New Jersey’s unemployment rate was below the U.S. rate of 8.5 percent in March.

According to preliminary estimates from the New Jersey Department of Labor and Workforce Development’s monthly survey of employers, nonfarm wage and salary employment in the Garden State decreased by 17,200 jobs in March, to a total of 3,956,100. All of the loss occurred in the private sector (-17,400) as public sector employment rose by 200. Based on more complete reporting, the previously released February estimate was revised higher by 5,200 to reflect a January-to-February loss of 14,500, rather than the 19,700 originally reported.

Job losses in March were recorded in eight of ten supersectors. The largest contractions occurred in leisure and hospitality (-5,900), professional and business services (-4,600), manufacturing (-3,700), and trade, transportation and utilities (-1,800).

The loss in leisure and hospitality was mainly in the accommodations and food services component as hotels and restaurants have felt the squeeze from reduced consumer spending during the recession. Casino hotels in Atlantic City have been especially hard hit by the economic slowdown leading to layoffs and other staff reductions.

All three categories of professional and business services were lower over the month with the largest losses in administrative support, waste management/remediation (-2,700) as companies trimmed payrolls of temporary support workers in an effort to cut costs. Professional, scientific and technical services (-1,300), and management of companies (-600) also saw losses.

Modest gains were recorded in the construction (+500) and education and health services (+400) supersectors.

Posted in Economics, New Jersey Real Estate | 182 Comments

So much for that decline in foreclosures

From the Wall Street Journal:

Banks Ramp Up Foreclosures
Increase Poses Threat to Home Prices; Delinquent Borrowers Face New Scrutiny

Some of the nation’s largest mortgage companies are stepping up foreclosures on delinquent homeowners. That will likely lead to more Americans losing their homes just as the Obama administration’s housing-rescue plan gets into gear.

J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums which temporarily halted foreclosures.

Some mortgage companies had stopped foreclosing on borrowers as they waited for details of the Obama administration’s housing-rescue plan, announced in February, which provides incentives for mortgage companies and investors to reduce borrowers’ payments to affordable levels. Others had temporarily halted foreclosures while they put their own programs in place, or in response to changes in state laws.

Now, they have begun to determine which troubled borrowers are candidates for help, and to move the rest through the foreclosure process.

The resulting increase in the supply of foreclosed homes could further depress home prices and put additional pressure on bank earnings as troubled loans are written off.

Foreclosure sales had dropped in the second half of 2008 as mortgage companies delayed taking action against delinquent borrowers. But sales have been edging up this year, according to LPS Applied Analytics, which tracks loan performance. Foreclosure-related filings increased by nearly 6% in February from the month earlier, and were up almost 30% from February 2008, according to RealtyTrac. The backlog of seriously delinquent loans has been growing.

J.P. Morgan Chase has increased foreclosure actions since the expiration of a moratorium on new foreclosures that began on Oct. 31, and a later moratorium put in place at President Obama’s request.

Citigroup Inc. says it stopped all foreclosures until March 12, at the Obama administration’s request, on loans serviced for Fannie and Freddie. Since then, says a spokesman, it has “reverted to our previous business-as-usual moratorium.”

Wells Fargo has also increased foreclosure actions since the expiration of its foreclosure moratorium,

Both Fannie and Freddie have stepped up sales of foreclosed properties since their moratoriums ended on March 31

GMAC’s mortgage division, which had temporarily halted foreclosures while awaiting details of the Obama plan, is now reviewing loans to see which ones will qualify under the program. So far, about 10% of borrowers in some stage of foreclosure appear to be eligible for the federal program, a company spokeswoman says.

Many have been “playing for time” while the moratoriums have been in place, he says. But the delays have only increased the amount of interest and fees they owe, making their loans “nonviable in the long run.”

Posted in Foreclosures, Housing Bubble, National Real Estate | 119 Comments

Home prices to fall an additional 15%, stay at bottom for 2 years

From Bloomberg:

New York Area Home Prices to Fall 15%, Rosen Says

Home prices in the New York City metropolitan area will fall as much as 15 percent as Wall Street firms cut jobs and slash bonuses, according to Kenneth Rosen, an economist at the University of California, Berkeley.

Luxury vacation markets such as the Hamptons on the east end of Long Island, New York; Lake Tahoe in California; and Aspen, Colorado will also suffer as the recession deepens, said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics. Prices may fall 20 percent in those areas.

“These declines are happening but aren’t showing up in the data yet,” Rosen said in an interview. “Any place hit by the financial crisis will have substantial declines.”

Across the U.S., Rosen predicted house prices will fall another 7 percent, with parts of California, Florida, Nevada and Arizona posting additional declines of as much as 15 percent as those states absorb record foreclosures.

The housing market’s cumulative price drop from peak to trough will be 25 percent with, a “bottoming” period that begins this year and may last two years, Rosen said.

“Job losses are large and the foreclosure inventory is rising,” said Rosen, who also runs Rosen Real Estate Securities LLC in Berkeley, a hedge fund with about $300 million in assets. “It’s going to get worse before it gets better, even with the best government efforts.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 169 Comments

Rents fall 5.9% across Manhattan

From Bloomberg:

Manhattan Apartment Rents Fall as Unemployment Rises

Manhattan apartment rents fell as much as 5.9 percent in March from a year earlier as a record jump in unemployment damped demand, Citi-Habitats Inc. said.

Average rents declined for apartments of all sizes and the vacancy rate topped 2 percent for the fifth straight month, the New York-based property broker said today in an e-mailed statement.

Demand slumped after New York City’s unemployment rate climbed to 8.1 percent in February, the highest level since October 2003 and the biggest month-to-month increase on record. City Comptroller William Thompson predicted in March that New York City would lose 250,000 jobs before the recession ends.

“There are people who are unemployed, and people not willing to spend the type of money they were willing to spend before and they need to make tough decisions,” said Gary Malin, president of Citi-Habitats.

Rents for studio apartments dropped 2.1 percent to an average of $1,812, while those for one-bedroom units fell 5.9 percent to $2,595. The cost of renting two-bedroom homes declined 2.2 percent to $3,631 and three-bedrooms fell 1.6 percent to an average of $4,670.

The average declines for March don’t reflect concessions offered by landlords, such as a free month’s rent, that lower the overall cost to tenants, Malin said.

“There is a greater degree of price decline than those numbers show,” he said.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 185 Comments

Weekend Open Discussion

Weekend Gossip!

CC’s new digs in Alpine, NJ.

NJMLS# 2908472
Original List Price: $15,000,000
Under Contract Date: 2/24/2009
Closed: 4/8/2009
Sale Price: $14,900,000
Transaction: CASH
Transaction brokered by: PROMINENT PROPERTIES SOTHEBY’S

From the NY Post Page 6:

CC SAFE AT HOME IN JERSEY

YANKEE pitcher CC Sabathia consoled himself after his first abysmal game by spending $15 million on a six-bedroom house in Alpine, NJ, reports The Post’s Jennifer Gould Keil. That’s spare change for the 250-pound, 6-foot-7 ace, who signed a $161 million contract with the team in the off-season. The 12,000-square-foot mansion on 2 acres was on the market for less than two weeks. Sabathia, 28, paid all cash for his dream house, where he’ll live with wife, Amber, and their three kids. The ‘hood boasts neighbors like Sean Combs, Mary J. Blige, Stevie Wonder, Chris Rock and Britney Spears.

————————-

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 | 322 Comments

North Jersey March Home Sales

Preliminary March 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 March 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)

The fifth graph displays the year over year change in inventory on a month by month basis.


(click to enlarge)

The sixth graph displays the year over year change in sales on a month by month basis.


(click to enlarge)

The last graph displays the absorption rate (not seasonally adjusted), in months:


(click to enlarge)

Bonus Graphs!

March Sales By County (log scale):


(click to enlarge)

Posted in General | 408 Comments

Propaganda Points

Ever wonder why every Realtor seems to be parroting the same asinine lines? Below is a media talking points document distributed by a local Realtor board. Board details redacted, but you’ll get the point. I’d estimate a good three quarters of Realtors would ever question the statements contained in these documents and would simply repeat them when questions, as directed by the Board.

Posted in Humor, New Jersey Real Estate | 164 Comments

Curb the optimism, this is not the bottom

From Reuters:

Mortgage delinquencies soar in the U.S.

More U.S. consumers are falling behind on their mortgages, an indication that the housing market has yet to hit bottom, a top credit bureau executive told Reuters.

Dann Adams, president of U.S. Information Systems for Equifax Inc, reported that 7 percent of homeowners with mortgages were at least 30 days late on their loans in February, an increase of more than 50 percent from a year earlier.

He also said 39.8 percent of subprime borrowers were at least 30 days behind on their home mortgage loans, up 23.7 percent from last year.

“I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said, despite a recent burst of relatively positive news that has fueled hope that the U.S. housing market has turned a corner.

From HousingWire:

Mortgage Delinquencies Pile Up: Report

Same story, different month: delinquent mortgages continued to accumulate in February, which according to a top credit bureau executive, is an indication that the housing market has not yet seen its bottom.

“I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” said Dan Adams, president of U.S. Information Systems for Equifax Inc.

But Adams told Reuters the continued increase in mortgage delinquencies revealed in his data foreshadows more foreclosures, short sales and home price declines as homeowners default and banks then repossess the homes to sell them at steep discounts.

From CNBC:

Foreclosures Worsen, Blocking Recovery

I said it yesterday, and I’ll say it every day: Until the number of foreclosures in this country starts to go down instead of up, we will not see a full recovery in the housing market; I don’t care how upbeat you are about buyer traffic this spring.

A new report out today shows foreclosures continue to rise.

Equifax, a well-respected credit bureau, found that 7% of homeowners with mortgages that were at least 30 days late on their payments in February, that’s up 50% from a year ago. And close to 40% of subprime borrowers are late, up from 23.7% a year ago.

Not good. With job numbers getting worse, more and more borrowers are going to end up missing payments, and no matter how much the banks and the Obama administration would like to help these folks, you can’t modify a loan down to a zero monthly payment.

Posted in Economics, Housing Bubble, National Real Estate | 101 Comments

Cut, borrow, or tax to bridge the gap?

From the Philly Inquirer:

New Jersey faces “historic” tax-revenue drop

New Jersey is facing a “historic tax-revenue collapse” that could leave the state with a $100 million deficit by the end of the next fiscal year.

That was the assessment of Budget and Finance Officer David Rosen of the nonpartisan Office of Legislative Services, who presented his findings to the Senate budget committee yesterday.

“New Jersey finds itself in the most significant revenue downturn in its modern history,” Rosen said.

Rosen projected that New Jersey would bring in $606 million less in revenue than previously anticipated by the Corzine administration from the current fiscal year through the end of the next on June 30, 2010.

If that estimate holds true, the state would be forced to make more spending cuts or increase revenue to balance the budget, as required by the state constitution.

Rosen said that only twice in the last four decades did the state’s revenue decline from one year to the next. Revenue declined 2.1 percent in fiscal 1975 and 1.9 percent in 2002, he said.

The Office of Legislative Services estimates that revenue for the current fiscal year, which ends June 30, will drop 11 percent from the previous year. For fiscal 2010, OLS projects a decrease of 3.7 percent.

Declining income, sales, and corporate tax revenues helped fuel the projections.

State Treasurer David Rousseau, who addressed the Senate budget committee yesterday afternoon, noted that a difference of $600 million over two years of state revenues amounted to less than 1 percent. But he acknowledged that the difference, if accurate, would affect the budget.

Rousseau said the administration would adjust revenue estimates downward if warranted.

“This administration continues to work to find every dollar of savings we can, and we will not shirk our responsibility to provide additional recommendations to balance the [fiscal 2009 and 2010] budgets if further revenue reductions are warranted,” Rousseau said.

Rousseau is slated to present new revenue figures in late May, which will include critical April tax collections.

Posted in New Jersey Real Estate, Politics, Property Taxes | 183 Comments

March 2009 Warn Notices, 2000+ Jobs Lost

From the NJ Department of Labor and Workforce Development:

2009- March WARN Notice

Company | City | Date | Workforce Affected

ALUMINUM SHAPES LLC DELAIR 9/9/09 182
AMERICAN DISTRIBUTION SERVICE RIDGEFIELD 5/12/09 101
ASCO FLORHAM PARK 5/31/09 350
CATALENT PHARMA SOLUTIONS LLC PENNSAUKEN 5/18/09 132
CENVEO CARLSTADT 5/18/09 46
COLORITE SPECIALTY RESINS BURLINGTON 5/6/09 53
DRUG FAIR SOMERSET 5/16/09 129
ELECTROCHEM TETERBORO 5/31/09 97
FLUOR MT LAUREL 5/18/09 128
GOLDMAN SACHS JERSEY CITY 3/6/09 70
KV PHARMACEUTICAL STATEWIDE 3/6/09 30
PROPAK CORPORATION BARRINGTON 4/17/09 59
STATE STREET BANK & TRUST PRINCETON 6/26/09 80
THE CHILDREN’S PLACE SERVICES CO. LLC SECAUCUS 6/13/09 341
THE HOME DEPOT PARAMUS 4/26/09 106
THE HOME DEPOT BRIDGEWATER 4/26/09 99
WOLFBLOCK LLP STATEWIDE 5/23/09 121
Posted in General | 47 Comments

Affordable housing? Sure doesn’t feel like it.

From the NY Times:

Housing Affordability Improves

TRADITIONALLY, there is happy news about the residential market in springtime — always its busiest season. Here is this year’s bulletin: Home prices have declined so much in the state that average buyers can actually afford to buy houses (if they can get a mortgages, of course).

Also, as of the latest statewide report from the Otteau Valuation Group, there were six towns with less than six months’ worth of unsold inventory. (But there were also six others with enough houses on the market that it would take 99 months — more than eight years — to sell them all at the current pace.)

These tidings may seem underwhelming in their gladness, but they are the most salutary available as prices continue to slide and the inventory of houses for sale blips upward this season, according to the market trend analyst Jeffrey G. Otteau.

House prices right now are descending at the rate of about a percentage point a month, according to Mr. Otteau, whose company is based in New Brunswick. At seminars that he conducted for brokers in March, Mr. Otteau predicted an additional nine point drop in prices by the end of the year, and no likely upturn until 2010.

Back in 2000, the index was pegged at 122 percent, meaning a buyer with the median income earned 22 percent more than needed to own and maintain the median-priced home. This assumes that housing costs 30 percent of income, which is a standard assumption, Mr. Otteau explained in a recent telephone interview.

By 2005, when housing prices were reaching their peak, the median buyer could afford only 92 percent of the cost of owning the median home, he said, and by 2006, it was only 81 percent.

In 2007, when prices fell, “affordability” was back up to 87 percent, and by June 2008, housing was again 100 percent “affordable,” under the formula.

Now, Mr. Otteau said, the market has “overcorrected,” and this will continue. The index is 107 percent and rising.

He also suggested that towns that have commuter rail stations — Montclair, for instance, has three — continue to be in the best position to attract buyers, once the economy improves and the New York metropolitan area stops “leaking jobs.”

ased on the most recent Otteau market report, the six communities in the state with the shortest time frames to sell their inventories — and therefore the healthiest markets — were Midland Park, Fanwood, Dumont, Boonton, Hanover and New Providence. Of those towns, all but Dumont and Hanover have train stations.

The six communities with the 99-month inventories are Alpine, Garfield, Oradell, Avalon, Lavalette and Seaside Heights. They are among the most affluent communities in New Jersey, the nation’s second-wealthiest state, Mr. Otteau noted. “This is understandable,” he added, “because homes that are less affordable, those priced above $1 million, are the ones sitting on the market the longest.”

Statewide, there is a 42-month inventory of homes priced above $1 million; for listings at $2 million or more, there is an 84-month (seven-year) supply, he said.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 235 Comments