New Jersey Real Estate Report

From Bloomberg:

U.S. Economy: Home Resales Unexpectedly Increased in February

Sales of previously owned homes in the U.S. unexpectedly increased in February as record foreclosures pushed down prices and lured first-time buyers into the market.

Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.
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Economists forecast resales would fall to a 4.45 million annual rate, according to the median of 65 projections in a Bloomberg News survey. Estimates ranged from 4.26 million to 4.75 million. Sales were down 4.6 percent compared with a year earlier.

First-time buyers accounted for about half of all sales last month, led by growing demand for lower-priced properties, said the realtors group’s chief economist Lawrence Yun. That’s contributing to the drop in values, he said.

The median price of an existing home decreased to $165,400 from $195,800 in February a year earlier, the group said.

Lower prices have drummed up enough demand in some of the most distressed areas of the country to allow values to stabilize. In California, median listing prices rose last month for the first time in three years, Yun said.

“Part of the market-clearing process is that distressed properties must be sold, so the fact that this is occurring is good,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, said in a note to clients. “Still, it certainly depresses prices, and there are plenty more foreclosed — or soon to be foreclosed — homes in the pipeline.” He said values will therefore keep falling.
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The number of unsold homes on the market at the end of February represented 9.7 months’ worth at the current sales pace, the same as in January. The group has said a five to six months supply is usually consistent with a balanced market.

Resales of single-family homes increased 4.4 percent to an annual rate of 4.23 million. Sales of condos and co-ops climbed 11.4 percent to a 490,000 rate.

All four regions showed an increase in sales last month, led by a 15.6 percent gain in the Northeast.

From the AP:

February existing home sales rise by 5.1 percent

Sales of previously occupied homes jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.
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Prices, however, are expected to keep falling well into the year. Tens of thousands of homes reman tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.

“The four-letter word in the housing market is ‘jobs,'” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “If you’re worried about having a job tomorrow, you’re not likely to buy a home now.”

The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
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The median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record and prices are now off 28 percent from their peak in July 2006.

From Bloomberg:

Lost Bonuses Mean Manhattan Home Prices to Drop Most Since ‘80

Manhattan apartment sales declined 23 percent last year as the Dow Jones Industrial Average fell the most since the Great Depression. Now co-operative and condominium prices are dropping as Wall Street firms cut the bonuses that contributed to the property market boom of the past decade.

A 50 percent reduction in bonuses would push down prices by about 24 percent from their peak through mid-2010, said Sam Chandan, chief economist at property research firm Real Estate Economics LLC in New York. That would mark the biggest slide since 1980 when appraiser Miller Samuel Inc. started tracking Manhattan prices.

“This will probably be the worst price correction the city has seen,” said Marisa Di Natale, senior economist at Moody’s Economy.com in West Chester, Pennsylvania.
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“If bonuses next year are expected at or below the current level, then prices will slide,” Miller Samuel President Jonathan Miller said.

Sales of Manhattan condominiums and co-ops priced at $10 million or more fell 60 percent in the fourth quarter from a year earlier, the New York City’s Independent Budget Office said. Transactions involving Manhattan apartments valued at $1 million or more dropped 21 percent in the same period.
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Apartment prices have dropped 15 percent in Manhattan and may fall another 11 percent to a median of about $820,000 in the next 12 months, said Chandan of Real Estate Economics. If bonuses are eliminated, prices would slump by another 20 percent to 24 percent to a median of $730,000, he said.

“If there’s a shock to income in the city or a shock to employment, that changes the demand side in the short term and prices adjust to that,” Chandan said.

From Inman:

Fannie, Freddie REO inventory swells

Fannie Mae and Freddie Mac boosted loan modifications by 76 percent in the last three months of 2008, but nearly doubled their inventories of real estate-owned properties over the course of the year as the companies eschewed short sales and seized properties faster than they could sell them.
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During the last three months of 2008, loan modifications were approved for 23,777 loans owned or guaranteed by Fannie and Freddie, a 76 percent increase from the previous three months.

But over the course of the year, the mortgage giants repossessed about eight homes for every short sale they conducted.

Fannie and Freddie’s loan servicers agreed to 16,718 short sales in 2008, while the companies repossessed 145,183 homes, their annual reports showed.

By the end of the year, the companies were saddled with real estate-owned (REO) inventory of 92,884 homes — nearly twice the 48,123 properties on hand at the end of 2007.

Although Fannie Mae was able to sell 64,843 repossessed homes in 2008, it acquired 94,652 through foreclosure, leaving it with REO inventory of 63,538 homes at year end — an increase of 152 percent from the end of 2006.

Freddie Mac sold 35,579 homes in 2008, but repossessed 50,531. The company’s REO inventory ballooned from 14,394 homes at the beginning of the year to 29,346 homes by year end — a 334 percent increase from the end of 2006.

From the NYT:

Baby Boomers ‘Under Water’

A RECENT report suggests that the housing-market slump is hitting baby boomers particularly hard: many middle-aged homeowners had been so seduced by the rising prices of years past that they failed to save for retirement and may now owe more than their homes are worth.

The Center for Economic and Policy Research in Washington, which released the report last month, estimated that 30 percent of homeowners aged 45 to 54 were in this predicament, known as being “under water.” (About 15 percent of older baby boomers, 55 to 64, fell into that category as well.)

So, if these people were forced to sell their homes now, they would have to bring cash to the closing.

The center’s report also found that baby boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400.

While the drop partly reflected the meltdown of Wall Street, Dean Baker, the co-director of the Center for Economic and Policy Research, said that conservative estimates showed that home equity accounted for about $20,000 of the net income figure.

Another factor that has led to a decline in personal wealth is what the report calls “the near zero level of savings nationally” from 2004 to 2009.

“As a result of the bubble-inflated values of their homes, tens of millions of families opted not to save during what would typically be their peak saving years,” the report said.