S&P Case Shiller: December NYC Metro Area Home Prices

Posted on February 24, 2009 by grim

Updated the S&P Case Shiller Home Price Index graphs with the December release data. These graphs show all indicies for the NY Metro Commutable Area. As the name implies, this price index covers regions that are within commutable distance to New York City and does include other states. New to the series is the condo index, which has been added to the graphs.

The aggregate index shows home prices in this region peaking in June of 2006. The total price decline to date in the aggregate index is 14.98%. The tiered price index gives us a bit more visibility into the price movement of different categories of homes.

Low Tier (Under $320407) – Peaked in October 2006 and is down 17.21% from peak

Mid Tier ($320407 – $476338) – Peaked in September 2006 and is down 15.50% from peak

High Tier (Over $476338) – Peaked in June 2006 and is down 11.77% from peak

Aggregate (Overall Market) – Peaked in June 2006 and is down 14.98% from peak

The first graph is the year over year change in the index.


(click to enlarge)

The second graph is straight index value.


(click to enlarge)

It is still too early to be calling for any kind of bottom in the region. Unlike other regions that show home price declines beginning to slow, the declines appear to be accelerating in our region. In fact, the most recent data point is the steepest decline since the last cycle. The rate of decline peaked at 8.9% in March of 1991. See below:

S&P CS NY Commutable Year over Year Price Change
Jan 07 -0.34%
Feb 07 -0.91%
Mar 07 -0.91%
Apr 07 -1.56%
May 07 -2.35%
Jun 07 -2.94%
Jul 07 -3.20%
Aug 07 -3.35%
Sep 07 -3.60%
Oct 07 -4.09%
Nov 07 -4.61%
Dec 07 -5.48%
Jan 08 -5.80%
Feb 08 -6.70%
Mar 08 -7.48%
Apr 08 -7.98%
May 08 -7.74%
Jun 08 -7.04%
Jul 08 -7.03%
Aug 08 -6.60%
Sep 08 -7.12%
Oct 08 -7.67%
Nov 08 -8.63%
Dec 08 -9.19%

Posted in Economics, Housing Bubble, New Jersey Real Estate | 336 Comments

S&P Case Shiller December Home Price Index

Posted on February 24, 2009 by grim

From MarketWatch:

Home prices off record 18.5% in past year, Case-Shiller says

Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor’s. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December

From Bloomberg:

Housing Prices in 20 U.S. Cities Fall a Record 18.5%

Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.

The decrease in the S&P/Case-Shiller index was more than forecast and followed an 18.2 percent drop in November. The gauge has fallen every month since January 2007, and year-over- year records began in 2001.

Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.

“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.”

Economists forecast the 20-city index would fall 18.3 percent from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 19 percent.

From Reuters:

U.S. home prices drop at record pace in December: S&P

Prices of U.S. single-family homes plunged 18.5 percent in December from a year earlier as the monthly pace accelerated, according to a Standard & Poor’s/Case-Shiller home price index on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas fell 2.5 percent in December from November, compared with a 2.3 percent decline in the previous period, S&P said in a statement.

“There are very few, if any, pockets of turnaround that one can see in the data,” David Blitzer, chairman of S&P’s index committee, said in the statement. “Most of the nation appears to remain on a downward path.”

In a separate index, home prices depreciated at a 18.2 percent pace in the fourth quarter from a year earlier, for the largest drop since the series began 21 years ago, it said. From the housing market peak in the second quarter of 2006, home prices have plummeted 26.7 percent, it said.

Posted in Economics, Housing Bubble, National Real Estate | 354 Comments

Barrons: NYC prices could fall 30%

Posted on February 23, 2009 by grim

From Barrons:

Manhattan on Sale
Manhattan’s luxury real-estate market is rotting, as Wall Street layoffs and tight credit squeeze demand. Why prices could slip another 30%.

ON A RAIN-DRENCHED AFTERNOON LATE last week, Michael Shvo, a renowned megabroker of Manhattan apartments, showed up at 20 Pine Street to answer our questions about the troubled development.

A stone’s throw from the New York Stock Exchange, 20 Pine once seemed a symbol of the area’s post-9/11 renaissance, sprouting Armani-designed apartments with oversized windows, exotic woods and recessed, virtually silent shower heads. Where Chase Manhattan built a vault for its first headquarters, there is now a swimming pool and Turkish bath. But for all its virtues, 20 Pine is starting to look like just another victim of New York’s luxury-housing bust.

Reports have circulated that the owner of the 409-unit building, Boymelgreen Developers, may unload 80 apartments for just $652 per square foot, about half the current asking prices. Shvo, 36 and perfectly coiffed, acknowledged the existence of “20-25 offers from bottom fishers,” some as low as $600 per square foot. But the offers didn’t seem to concern him. “The developer,” he sniffed, “isn’t interested.”

Not yet. First came Miami, Las Vegas and Phoenix. Now Manhattan’s high-end housing market is cratering. With Wall Street firms stepping up layoffs, and money for big-ticket mortgages drying up quickly, prices for new york apartments and townhouses of $5 million or more have been falling and may well drop by another 30% before finally bottoming out. That could help turn the Big Apple into the ugliest housing market in America.
…
PRICE CUTTING HAS BECOME SAVAGE. The 14-room Park Avenue apartment of the late socialite Brooke Astor — which Barron’s highlighted in that earlier story after its price had been cut from $46 million to $34 million — is now down to $29 million and probably has to be cut further.

But even with dramatic reductions like that, the inventory of unsold luxury housing is ballooning. Streeteasy.com, a Website that pulls together listings and insights from a variety of brokers and buyers, now shows 795 New York apartments offered for $5 million or more, up from 518 a year ago.
…
Realty brokers, the industry’s natural cheerleaders, are now unabashedly glum about the high-end market. “The $5 million-and-above market is inventory-rich and buyer-poor,” says Dolly Lenz, a broker to the stars and vice chairman at Prudential Douglas Elliman.

The price of a property, she says, “has to be 25% off the last sale for it to be a bargain. People have no sense of urgency. A sense of urgency is what the real-estate market needs as a stimulus.”

In short, the market is almost unrecognizable from a year ago. “People used to call and say ‘I have a Russian,’ and that meant you were supposed to drop everything,” says Leighton Candler of Corcoran Group, another top broker. That’s changing: The ruble buckled and so did oil. And the dollar is up sharply, making U.S. prices all the more expensive.

Says marketing chief Louise Sunshine of the residential developer Alexico Group: “We have definitely noticed a switch from international buyers to more of a U.S.-based and local purchaser base.”

The damage in Manhattan is spreading well into the suburbs-from Saddle River, N.J., to Greenwich, Conn., to South Hampton, N.Y.
…
The high end of the greater New York market “has been holding up better than that in many of the larger metro area markets,” says Celia Chen, the housing economist at Economy.com. But she sees continued drops ahead for luxury and other housing in and around the city.

“House-price depreciation in New York will likely be greater than the national average this year, as the impact of the lost jobs on Wall Street hits” the local economy, Chen says.

Indeed, Ivy Zelman, a former Credit Suisse analyst who was among the first to call a national housing bust, figures that the New York housing market is headed straight down.

“When we look at New York City, we look at a price-income ratio that historically has been four times income, versus three times nationwide,” says Zelman, who now runs her own firm. At 7.7 today, that ratio is “significantly higher than normal” because prices have only started falling. “If you want simply to get back to the median, it would be a 46% correction,” says Zelman.

She adds: “If I had to pick one market in the country with the most challenge and the most substantive rate of decline [ahead], it’s New York City. It has the greatest number of job losses among the higher earners.”

Posted in Economics, Housing Bubble, National Real Estate, New Jersey Real Estate | 141 Comments

Property Tax Appeal Surge Expected

Posted on February 23, 2009 by grim

From the Herald News:

Taxing times for homeowners

Homeowners will likely file a mountain of tax appeals this year, hoping the real estate crash will provide a silver lining — relief from the nation’s highest property taxes.

But they shouldn’t count on winning.

Although home prices in North Jersey dipped 11 percent in the last year alone, proving in tax court that your home is overassessed is another matter.

The burden is on homeowners to use data to show their home value, as of October 2008, is too high based on other sales. That could be hard in a year when sales were few and far between, providing little evidence for homeowners to make their case.

“We’re anticipating a substantial number of tax appeals,” said Louis Izenberg, an appraiser who represents towns and large property owners. “Having said that, at the end of the day, the New Jersey Tax Court relies upon evidence, and for the first time I can recall, we really don’t have an abundance of data.”

And some towns — which have a 15 percent margin of error on home assessments — have already adjusted for softer market prices. In addition, an analysis by The Record of 25 North Jersey municipalities found that 19 met a key state test measuring whether property taxes are distributed fairly among homeowners.

Homeowners could actually take an extra hit this year if failing businesses win their tax appeals, shifting the town’s overall tax burden from commercial to residential owners.

Still, there are some signs this year could be better for homeowners than years past.

While the percentage of winning tax appeals statewide hasn’t climbed much since the market peaked in 2006, the number of settlements — deals cut before a decision is reached in tax court — have steadily increased to 35 percent.
…
Some of the strongest candidates for reductions are homeowners whose towns last did property assessment updates around the height of the housing boom, and owners of high-end properties, experts say.
…
A massive drop in value is what drove more than 100 residents of Winston Towers, a condominium development in Cliffside Park, to file appeals. The luxury apartments — which offer New York views and use of an Olympic-sized pool — went for $740,000 at the height of the market. They are now selling for about $500,000.

No one knows how many appeals will be filed this year because the deadline is April 1. But county and local officials are expecting an increase, and tax lawyers and personal appraisers are reporting a spike in client interest.

“We have currently about 2,500 appeals pending, and we’re ready to file about 1,000, and I’m going to see another 1,000 after that,” said Livingston property tax attorney Lee Holtzman. “They’re coming out of the woodwork here. Everyone’s complaining.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 435 Comments

“Home prices are falling and will continue to fall.”

Posted on February 21, 2009 by grim

(Note: 46 Windermere was featured in Comp Killer in early February, you can find the details here.

From the NY Times:

A Market Going Downhill Fast
By ANTOINETTE MARTIN
Published: February 19, 2009

Montclair

IN the heady real estate days of the summer of 2005, a well-maintained house in a decent school district would not last long on the market. That was when a three-bedroom ranch house at 46 Windermere Road here achieved its peak-value moment.

The red-brick ranch sold that July for $709,000 — fetching $50,000 over asking price — after just 10 days on the market.

Fast forward to the spring of 2008, and a market gone slack, not just in Montclair or Essex County, but in all 21 counties of the nation’s second-wealthiest state. The brick ranch was for sale again, and had been, on and off, for more than a year. The owner had given up on getting his price, and moved out. The bank had agreed to a “short sale” in which it would recover less than it was owed. The asking price was reduced to $599,000.

“That seemed like a really good price when we first saw it,” said John Strong, who finally bought the house with his partner, Heather Carter. “But there were no lights in the house — the electricity had been turned off — and later we could see there were problems, because it had been empty and not kept up.” The final price at the closing last month: $528,110.

Over the course of three and a half years, the New Jersey residential market has headed downhill fast. In September 2006, Jeffrey G. Otteau, whose Otteau Valuation Group gathers data on the residential market for many builders and brokers, said there were 68,000 houses sitting on the market unsold for a month or longer, more than he had ever seen in his experience in this market. By spring 2007, there were 71,000 unsold houses, his firm reported, and by May 2008, that number had climbed again, to 74,000.

At the same time, the pace of sales kept lagging, sometimes erratically, but always headed down, according to monthly reports from Mr. Otteau’s firm, based in New Brunswick. Each December, on a line graph depicting month-by-month sales during the year, the squiggly line ended in a deeper valley than it had the previous year.

More than a year ago, Mr. Otteau announced that his calculations indicated there would be a long wait before prices returned to 2005 levels. Not until 2014, he said at the time — and that prediction was made well before Wall Street quaked, the mortgage lending market foundered and unemployment statistics started to skyrocket.
…
As of January, the state had a 17-month supply of houses on the market, according to Otteau Group figures. That means that even if no other houses were put up for sale, it would still take 17 months to sell those already available, under current market conditions.

In Bergen County, it would take an estimated 15 years and 4 months to sell all the houses now on the market priced at $2.5 million or more. In Morris County, for homes priced from $1 million to $2.5 million, it would take seven and a half years, and in Warren County, for homes priced from $600,000 to $1 million, five years and one month.

With unsold-house inventories like those, and the probability that the economic malaise will continue for some time, Mr. Otteau’s most recent prediction is that New Jersey home prices will continue to drop.

Prices have declined by an average of 15 to 20 percent in every county in the past three and a half years, contract sales data indicates. At the start of 2009, some real estate professionals said they had noticed a few sellers starting to “see the light” and agreeing to slash asking prices by 10 to 20 percent, sometimes even 25 percent.

James Bednar, who writes the real-estate blog njrereport.com, said last month that it was high time for both buyers and sellers to face reality. He proposed a new mantra for them: “Home prices can fall. Home prices can fall. Home prices can fall further than I believe possible. Home prices are falling and will continue to fall.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 531 Comments

Trapped? Or just unwilling to sell?

Posted on February 20, 2009 by grim

From the NY Times:

Trapped in Their Own Homes
By MARY JO PATTERSON
Published: February 19, 2009

ON May 1, 2007, a very different economic era, Janet Faello put her former marital home on the market for $829,000. She and her husband were divorcing.

“It’s not the Taj Mahal, but it’s a nice, well-maintained home,” said Ms. Faello, a 53-year-old massage therapist with two daughters in college who remains in the house, which she and her ex-husband still jointly own. Her ex-husband lives elsewhere. “I haven’t been entertained once with an offer, and I’m still not getting any bites.”

With the house unsold, Ms. Faello said she and her ex-husband are struggling to meet expenses. Taxes alone are $13,860 a year.
…
Would-be sellers in New York City’s suburbs understand her pain, whether they are trying to sell a Cape Cod for $300,000 or a center hall Colonial for $1 million. In a housing market characterized by eroding home values, high inventory and tight credit for borrowers, many feel stuck in a place they don’t want or can’t afford. As the recession becomes more severe and unemployment mounts, they fret each week their properties remain unsold, and fear losing equity. While buyers hunt for exceptional values, sellers feel like hostages. And their pain is sometimes drawn out when deals that seem to be done blow up just before the closing.
…
Nevertheless, all the reporting agencies are concluding that the number of sales of single-family homes in 2008 was down from 2007 in the New York metropolitan area, and prices in general were down. The median price for a home sold in the metropolitan area was $458,600 in the fourth quarter of 2008, down 11.7 percent from a year earlier, according to the National Association of Realtors. Those figures reflect the agency’s tracking of sales in Bergen, Hudson and Passaic Counties in New Jersey; and the Bronx, Kings, Putnam and Westchester Counties in New York.
…
A seller’s anguish may not be as sharp as the pain of a homeowner facing foreclosure. But the situation can alter life plans and jettison hopes.

Some sellers are losing hope.

Consider Mary Beth Lang of Shelton, Conn. She is 62, with grown children and a husband who retired as a buyer for a technology company. Her dream went like this: sell the house and move to their new custom home in Kentucky.

Her five-bedroom, four-bath house went on the market for more than $1 million in 2006. The price has since slid to $875,000, but there are no takers. Repainted, with many personal effects removed to look less cluttered, it no longer feels like home. The Kentucky house? It’s for sale, too.
…
James Bednar, a real estate agent representing buyers at DRI Real Estate Company in Ridgewood, N.J., said many sellers overvalue their homes.

“The industry has nailed into people’s minds that their houses are worth a certain amount,” said Mr. Bednar, who blogs about the New Jersey market at njrereport.com. “Sellers remember what neighbors sold their houses for two years ago and hold on to those unrealistic comparables. They need to accept the current reality of the market.”

Mr. Bednar said he knows that sellers do not always have the leeway to drop their price. Others will be asked to pay a steep price for features buyers consider undesirable.

“In a boom time, buyers tend to overlook things like a high tension line that’s a little close to the house, a street that’s a little too busy or an odd layout,” Mr. Bednar said. “In a down market like this, those preferences are magnified.”

JONATHAN GREENBERG paid $792,000 for a lake house in Montville, N.J., in 2005, attracted by its unusual architecture and striking views. Then he invested nearly $100,000 in improvements. At the time he was single, but is now married and a father. With its steep slopes and 30-foot drop to the lake, the property is not “kid-friendly,” said Mr. Greenberg, who sells investment properties for a living. He listed the house a year ago for $930,000. The price is now $670,000.

“People say they love it, but it doesn’t have some of the fundamentals families are looking for,” said Mr. Greenberg, 41, whose wife, Malu, is expecting a second child. “It’d be perfect for New Yorkers who need some kind of getaway. It’s stressful. We do feel stuck.”

Posted in Economics, Housing Bubble, New Jersey Real Estate | 486 Comments

NJ’s 3.6 Billion Dollar Hole

Posted on February 19, 2009 by grim

From Bloomberg:

New Jersey’s Budget Shortfall Widens to $3.6 Billion

New Jersey’s budget shortfall for the current fiscal year widened to $3.6 billion from a projection of $2.1 billion a month ago, prompting Governor Jon Corzine to call for unpaid days off to help close the deficit.

State revenue collections fell $526 million short of budget estimates last month, Treasurer David Rousseau said in a statement today. Through January, total revenue is $1.33 billion under target for fiscal 2009, which ends June 30.

“We are flat-lining with regard to revenue,” Corzine, 62, said to reporters in Trenton. “We’re going to have to make some substantial adjustments” to the state budget, he said.

Corzine said his administration has identified $472 million in additional spending cuts to help balance the budget. Those reductions include forcing state workers to take two unpaid days off in May and June, for savings of $35 million, he said. He also said the state will conduct a $100 million “tax amnesty” to entice delinquent taxpayers to settle up.

The governor said the shortfall includes a $2.8 billion deficiency in revenue and an additional $800 million in spending needs. Among those needs is a replenishment of the state’s unemployment benefits fund to prevent a statutory tax increase on employers, he said. The state will put $270 million into that fund to cover increased claims, Corzine said.

Rousseau said the state won’t sell any debt to fill the deficit, refinance bonds or miss payments.
…
For January, revenue totaled $2.4 billion, which is nearly 18 percent under target, Rousseau’s statement said. The gross income tax was $229.9 million, or 13.8 percent, below projections, the sales tax was $119.9 million, or 20 percent, below estimates, and corporation business tax collections totaled only $13.7 million, which is $111.2 million, or 89 percent, under projections, the statement said.
…
“The national recession has delivered another punch to New Jersey’s gut,” Louis Greenwald, a Cherry Hill Democrat who chairs the Assembly Budget Committee, said in a joint statement with Assemblywoman Nellie Pou, a Paterson Democrat. “We are going to make the tough decisions to keep the current year’s budget balanced without the need for tax increases.”

Posted in Economics, New Jersey Real Estate, Politics | 384 Comments

Painful cuts for NJ budget

Posted on February 18, 2009 by grim

From the Record:

State weighs drastic cuts

Governor Corzine wants state workers to take unpaid furloughs as part of a new plan to offset a recession-fueled budget deficit now projected to grow to nearly $3 billion.

The governor on Tuesday put forward another revised budget, his second since January, that shows his plan to deal with a combination of declining tax collections and an increasing demand for services such as unemployment benefits.

These latest fiscal steps — designed to meet the state’s balanced budget requirement — include using $850 million in just-approved federal stimulus money, redirecting $157 million from some state trust funds and taking $179 million more from already raided state surplus funds.

An additional $100 million would be raised by offering an amnesty program to those who owe the state tax revenue.

The state would also save $35 million by forcing state workers to take two unpaid furlough days before the end of the current fiscal year, in June.

Corzine said at an afternoon news conference in Trenton that the furloughs are necessary and legal.

“We are adjusting almost everything else in the budget,” he said. “We think we need to have some fair sharing of this [from the employees].”
…
Total state tax collections are now $1.3 billion behind original revenue estimates for the fiscal year that began on July 1, 2008, said state Treasurer David Rousseau.

In January, Corzine proposed $812 million in spending reductions when the revenue shortfall was projected to be $1.7 billion.

At that time he also proposed using more than $475 million in surplus funds to plug the budget hole.

Now the shortfall is expected to grow to $2.8 billion by the end of June, with some revenue sources, including corporate and income taxes, off by more than 10 percent, Rousseau said.

“Our revenue collections reflect the pervasive impact from the global economic crisis,” he said.
…
So far the total impact of the troubled economy on the New Jersey budget — in increased aid to help stem its impact and in falling tax revenues — is $3.6 billion.

Some of the new moves proposed by Corzine, such as redirecting money from state trust funds, will have to be cleared by the state Legislature. Lawmakers, however, have yet to approve the $812 million in spending adjust-ments the governor put forward last month.

“One thing is certain: The next few months will not be easy,” said Senate Budget Committee Chairwoman Barbara Buono, D-Middlesex.

Posted in Economics, New Jersey Real Estate, Politics | 436 Comments

Builders hope for a remodeling recovery

Posted on February 17, 2009 by grim

From the Record:

Stimulus, warm weather could spur home repairs

With remodeling in a slump, home improvement companies reached out to potential customers Sunday at the annual New Jersey Home Show at the Meadowlands Expo Center.

“It’s been slower for sure,” Gary Griffith, vice president of Roofing Sales Co. in East Rutherford, said at the show. “Contractors say they have a lot of estimates out there. People are thinking about having work done, but I don’t think they’re ready to let go of the money.”

Roofing Sales Co., which sells building supplies to contractors, recently laid off three workers — the first layoffs in its 87-year history.

The company’s experiences are being repeated around the nation. Spending on home renovations dropped around 12 percent in 2008, according to a recent study by Harvard’s Joint Center for Housing Studies, which predicted that spending will continue to decline this year.

“Uncertainty in the housing market continues to stifle spending on homeowner improvements,” said Nicolas P. Retsinas, the center’s director. “In light of escalating job losses, consumers are reluctant to undertake major remodeling projects.”

“People are holding on to their money,” agreed Hector D. Castro, sales manager of Professional Carpet Co. in Hackensack and Wayne, which also exhibited at the show.

Customers who might have spent $2,000 to $3,000 to replace their carpet are now spending $500 to $600 to clean it instead, he said.

The steep decline in the number of home sales — down almost 40 percent in New Jersey since the peak in 2005 — also means a big drop in the number of carpets being ripped up and replaced, Castro said.

“Anytime the housing market suffers, everything inside the house suffers,” he said.

Both Griffith and Castro said they hope business will pick up in the spring, a traditionally busy time in the home renovation industry. They also said they hope the economic stimulus package will make Americans less anxious about spending.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 490 Comments

Worst yet to come for NJ?

Posted on February 16, 2009 by grim

From the Home News Tribune:

Rutgers report warns of continuing job losses, recession into 2010

Job losses will continue to mire the economy in coming months and the recession may stretch into 2010, according to a report released by two Rutgers University economists.

The quarterly Sitar-Rutgers Regional Report says 1.9 million jobs were lost across the country in the last four months of 2008, the worst year for private-sector job losses since the United States began compiling such statistics in 1939.

“This reflects a serious economic meltdown,” Bloustein School of Planning and Public Policy Dean James Hughes and Rutgers University Professor Joseph Seneca wrote. “And it appears that the worst is yet to come.”
…
“Consider (2002) the start of American’s great consumption bubble,” the report says. “We went on the greatest spending spree in the history of the planet. But that level of consumption is not sustainable. It was achieved only by spending every dollar of the paycheck, by depleting home equity, and overdosing on credit.”

When the economy turns around, Hughes and Seneca expect the consumption rate to decline and the savings rate to rise.

But in New Jersey and across the United States, a shrinking job market through 2008 suggests that for the next year, at least, households will continue struggling to pay the bills — much less save money.

New Jersey lost 63,000 jobs between December 2007 and December 2008, according to preliminary employment numbers from the Department of Labor and Workforce Development. That’s the most significant decline in New Jersey since 1991, when 80,800 jobs were lost.

Posted in Economics, New Jersey Real Estate | 228 Comments

A bird after my own heart

Posted on February 15, 2009 by grim

I admit, I hadn’t heard of the Circling Vulture Blog before Ms. Martin asked me about it, but after a few clicks I knew that I was in love. Didn’t know how I could have missed it, but I’ll tell you that I’m sorry I had. Piss off an entire town’s worth of real estate agents? Kudos my friend, kudos! Reminds me of some of the enemies made during the early days of this blog, when we ran under the “Northern New Jersey Real Estate Bubble Blog” title. I sure miss some of the battles we fought back then.

One of the primary reasons for starting this blog back in 2005 was because of the lack of access to real estate data. Market and property information, critical to a buyer, were closely guarded by the real estate industry and only doled out in carefully calculated servings, and even that rare. As a buyer during this period, this refusal to open up market data to the public infuriated me. The reason was simple, information asymmetry, the party with less perfect information in any market is more likely to be on the losing end of a transaction. This was especially important during the Summer of 2005, when the New Jersey real estate market began to deteriorate. Market statistics began to show a weakening market, an alarm bell for both buyers and sellers. Instead, the industry continued to spin, ignoring the negative data and instead only focusing on those dwindling indicators still left showing some signs strength. Just as I’m accused of cherry picking today, the real estate industry cherry picked overpriced sales during the 2006 market in order to continue the cheer leading. The result? Agents persuaded buyers to pay more for properties than they could afford, planting the seeds of the mortgage crisis. Likewise, agents convinced sellers to hold on to exorbitantly high asking prices, while the market fell apart around them, leaving them unable to sell. The goal was simple, do whatever necessary to maintain the illusion of rapidly rising prices.

When I came across C.V.’s comments on Zillow, it reminded me of just how critical that market information is. Realize folks, this uproar by Short Hills real estate agents isn’t because of a few snarky comments, it’s because someone is making data available to the buyers. Once the data is public, it becomes impossible to use that data to persuade buyers. Just look at the outrage caused by someone making a few numbers public? Just as the financial media today talk about transparency being necessary for a functioning market, these agents would prefer to operate in their own mark-to-myth world where only they know the state of the market, and can profit from that.

Just a quick aside regarding the hacker label, I assure you it was nothing of the sort and a bit of the story was lost in translation (my fault, no doubt). As a geek who grew up watching War Games, while the title is one of nerdy honor, I lack the skills necessary to pull off such a feat. Oh I admit, I could get into the role of a spandex-clad Robin Hoodesque super hero stealing information from the evil real estate empire and providing it to the poor, the reality is much less romantic. Someone inside (whether at the MLS, or at the company that writes the software) had set up a set of web links that simply wouldn’t ask you to log in. Not really hacking at all, I mean, they just never asked you to log in. The links were available to the public and were widely know before I came onto the scene in 2005. Unfortunately, for the public, they no longer exist. When you read that paragraph, I’ll ask that you use an alternate form of the definition, “one who is technically proficient at solving problems”, where the problem is lack of market information and transparency. I never intended to become a real estate agent when I got my real estate license.. I did it so that I could gain access to that data, and make it public here for other buyers like me. Of course, after 3 years immersed in the world of real estate, I realized that I could provide a service and a sense of trust that many buyers find valuable.

Ok, maybe it wasn’t so quick at all, so back to the point. Information. This kind of data is critical to a well functioning market. Sidelined buyers are refusing to get into the market because they no longer trust the market and it’s participants, and rightfully so. The real estate industry threw buyers under the bus over the past few years. Sure, you can blame the bankers, the lenders, and Wall Street, but I don’t think there is enough blame being put on real estate agents for facilitating the mania that precipitated this crisis. When I say there is a strong anti-Realtor trend developing, I mean it. Fixing the very broken real estate market is going to require rebuilding trust and enhancing market transparency, and this means visibility into numbers. Spin and manipulation will not fix the market, sellers and buyers do not need to be lied to. All this does is extend the pain, longer than necessary, as the industry tries its damnedest to keep the market from finding it’s natural bottom.

Kudos to CV for pissing off the Realtors. Well done!

Caveat Emptor!
grim

From the NY Times:

A ‘Vulture’ Preys on Short Hills
In the Region | New Jersey
By ANTOINETTE MARTIN
Published: February 13, 2009

THERE is a Circling Vulture casting its shadow over Short Hills real estate — virtually speaking, at least.

Last spring, a blogger by that name set up a nest at the real estate Web site Zillow.com, and started posting reports about declines in asking prices and unraveled deals. Short Hills is a community where such things were once unheard of (and still are not much spoken about, at least by real estate agents promoting properties for sale).
…
The Vulture has his facts straight, according to those who know — that is, the licensed brokers with access to multiple-listing-service data.

But several agents from Short Hills insisted in telephone interviews that the mysterious C.V. presents a warts-only picture of the local market, which is actually “slow, but not dead,” as Marc Paolella, a Century 21 broker and appraiser, put it.

Furthermore, declared Karen Eastman Bigos of the Towne Realty Group, “this C.V. person is just plain mean” toward real estate professionals.

The blogger — who did not reveal his or her identity, or comment for this article — indisputably employs a mocking tone. Written under a picture of a buzzard on the Web site is the motto “Capitalizing on the greed and stupidity of others.” In the Q. and A. section of the site, C.V. tartly advises home shoppers, “Remember: always offer full asking price so as not to ‘insult’ the seller.”

Such snarkiness is emblematic of a rising “anti-Realtor movement,” said another blogger about New Jersey real estate, James Bednar. Known online as Grim, Mr. Bednar blogged about the real estate “bubble” before it burst, and currently provides gimlet-eyed market commentary at njrereport.com.

“This provides counterpoint to the entire spin of the real estate industry,” he said after a look at the Vulture’s work.

Mr. Bednar said he began blogging after becoming disillusioned during a house hunt in Montclair in 2005 and 2006, when bidding wars would break out on houses with already inflated asking prices.
…
Several Short Hills brokers theorized that C.V. is motivated by spite, perhaps stemming from a bad experience trying to buy into one of New Jersey’s most exclusive communities.

Short Hills, part of Millburn Township, is a well-established haven for the well-heeled. For decades it has been popular with Wall Street professionals, because of its easy train commute to Manhattan, not to mention the fact that it offers top-rated schools and a glittering temple of fashion, the Mall at Short Hills.

Of course, Wall Street is not supplying as many well-heeled buyers these days. It is still too early to judge the extent of the impact on the Short Hills real estate market, analysts say.

So far, median home prices have fallen about 15 percent since the boom times of three or four years ago, according to Mr. Paolella. But Ms. Bigos, who has been selling real estate in Short Hills for 24 years (following in her mother’s footsteps), conceded that the last quarter of 2008 was “by far the worst” that she had ever seen.

Posted in Housing Bubble, New Jersey Real Estate | 126 Comments

February Comp Killer!

Posted on February 13, 2009 by grim

Here are a sampling of properties that have closed across Northern NJ over the past 20 days or so (excludes Morris, see the Morris Comp Killer by clicking the “Comp Killer” shortcut on the right). It might help to read about what a comp killer is. Realize that I’m not trying to say that these properties are “good deals”, many of them are not. But what they do show is that prices can, and will fall, no matter what price range, style, or geographic area that home is in.

Make no mistake, we are nowhere near a market bottom. Prices will continue to fall over the next year. This isn’t to say there aren’t some opportunities in this market, there are, but they are rare and difficult to find. The majority of homes on the market today continue to be wildly overpriced.


23 Whittredge Road, Summit NJ
Purchased: 6/23/2000
Purchase Price: $1,145,000

MLS# 2572707
Original List Price: $1,850,000 $1,975,000 (2005)
Sold: 2/12/2009
Sale Price: $1,100,000
(4% under the 2000 purchase price and 44% below the original 2005 list price)


275 East Bradford Ave, Cedar Grove NJ
Purchased: 12/13/1991
Purchase Price: $1,450,000

MLS# 2509082
Original List Price: $2,995,000 (2007)
Sold: 2/5/2009
Sale Price: $1,450,000
(No, this is not a misprint, short sale, sold at the 1991 purchase price, 51.6% under the 2007 original list price. This is why you do not buy properties during bubbles.)


902 Highland Ave, Westfield NJ
Purchased: 6/7/2006
Purchase Price: $1,450,000

MLS# 2588015
Sold: 1/28/2009 (close enough)
Sale Price: $1,250,000
(13.8% under the 2006 purchase price, a loss of more than $250,000 factoring in commissions)


12 Wadsworth Court, Teaneck NJ
Purchased: 6/15/2001
Purchase Price: $400,000

MLS# 2825917
Sold: 2/10/2009
Sale Price: $370,000
Owner facing foreclosure, lis pendens filed for $531,000. Short sale.
(7.5% under the 2001 purchase price!)


38 Newell Place, North Arlington NJ
Purchased: 5/26/2006
Purchase Price: $470,000

(Foreclosed, December 2008)

MLS# 2851963
Sold: 2/4/2009
Sale Price: $297,900
(36.6% under the 2006 purchase price)


24 Semel Ave, Garfield NJ
Purchased: 12/20/2005
Purchase Price: $500,000

(Foreclosed, October 2008)

MLS# 2851923
Sold: 2/9/2009
Sale Price: $192,000
(61.6% under the 2005 purchase price)


354 Hickory Street, Washington Twp NJ
Purchased: 11/10/2004
Purchase Price: $459,900

MLS# 2842917
Sold: 2/6/2009
Sale Price: $430,000
(6.5% under the 2004 purchase price)


54 Silver Birch Ave, Oakland NJ
Purchased: 11/18/2005
Purchase Price: $392,000

MLS# 2822610
Sold: 2/2/2009
Sale Price: $340,000
(13.3% under the 2005 purchase price)


24 Zuegel Court, Bergenfield NJ
Purchased: 3/31/2006
Purchase Price: $500,000

MLS# 2852261
Sold: 2/6/2009
Sale Price: $326,300
(34.7% under the 2006 purchase price)


140 O’Shaughnessy Lane, Closter NJ
Listed for Sale: 5/12/2006
Original List Price: $1,225,000
Reduced to: $995,000
Expired: 9/2/2007
DOM: 479

(Foreclosed November of 2007)

MLS# 2841374
Sold: 2/2/2009
Sale Price: $735,000
(40% under the 2006 asking price)


237 W. Madison Ave, Dumont NJ
Purchased: 10/28/2004
Purchase Price: $375,000

MLS# 2838072
Sold: 2/13/2009
Sale Price: $265,000
(29.3% under the 2004 purchase price)


54 Spruce Street, Farview NJ
Purchased: 11/1/2006
Purchase Price: $373,000

MLS# 2806554
Sold: 2/11/2009
Sale Price: $300,000
(19.6% under the 2006 purchase price)


340 Webster Drive, New Milford NJ
Listed for Sale: 3/6/2006
Original List Price: $689,900
Reduced to: $595,000
Expired: 5/31/2007
DOM: 335

(Foreclosed August of 2008)

MLS# 2845913
Sold: 2/2/2009
Sale Price: $395,000
(42.7% under the 2006 asking price)


535 Fairmont Ave, Westfield NJ
Purchased: 7/8/2004
Purchase Price: $1,375,000

MLS# 2599070
Sold: 2/2/2009
Sale Price: $1,350,000
(2% under the 2004 purchase price)


6 Radcliffe, New Providence NJ
Purchased: 10/28/2004
Purchase Price: $495,000

MLS# 2560642
Original List Price: $549,900 (2006)
Sold: 2/13/2009
Sale Price: $472,000
(4.6% under the 2004 purchase price, 14.2% below the 2006 list price)


46 Broadale Road, Clifton NJ
Purchased: 2/28/2007
Purchase Price: $629,000

MLS# 2615324
Sold: 2/12/2009
Sale Price: $530,000
(15.7% under the 2007 purchase price)


9206 Ravenscroft, Clifton NJ
Purchased: 1/23/2006
Purchase Price: $370,478

MLS# 2578334
Sold: 2/04/2009
Sale Price: $290,000
(21.7% under the 2006 purchase price)


74 Mountainside Drive, Pompton Lakes NJ
Purchased: 3/9/2005
Purchase Price: $382,500

MLS# 2517154
Sold: 2/9/2009
Sale Price: $311,000
(18.7% under the 2005 purchase price)


224 Levinberg Lane, Wayne NJ
Purchased: 10/27/2003
Purchase Price: $593,667

MLS# 2584247
Sold: 2/10/2009
Sale Price: $543,600
(8.4% under the 2003 purchase price)


139 Tooker Ave, Springfield NJ
Purchased: 1/26/2007
Purchase Price: $415,000

MLS# 2534079
Sold: 1/16/2009
Sale Price: $339,000
(18.3% under the 2007 purchase price)


2005 Wood Ave, Roselle NJ
Purchased: 5/11/2007
Purchase Price: $324,600

MLS# 2504184
Sold: 1/29/2009
Sale Price: $230,000
(29.1% under the 2007 purchase price)


773 Amsterdam Ave, Roselle
Purchased: 5/19/2006
Purchase Price: $264,900

(Foreclosed, August 2008)

MLS# 2613603
Sold: 2/2/2009
Sale Price: $178,500
(32.6% under the 2006 purchase price)


1354 Stockton Street, Rahway NJ
Purchased: 7/7/2006
Purchase Price: $347,500

MLS# 2568416
Sold: 1/21/2009
Sale Price: $225,000
(35.3% under the 2006 purchase price)


2 Bujak Court, Bridgewater NJ
Purchased: 8/10/2007
Purchase Price: $690,000

MLS# 2522117
Sold: 2/10/2009
Sale Price: $555,000
(19.6% under the 2007 purchase price)


52 Westgate Drive, Clinton NJ
Purchased: 1/19/2007
Purchase Price: $400,000

MLS# 2562645
Sold: 2/6/2009
Sale Price: $355,000
(11.3% under the 2007 purchase price)


17 Danberry Drive, East Amwell NJ
Purchased: 10/5/2007
Purchase Price: $552,000

MLS# 2549724
Sold: 1/30/2009
Sale Price: $540,000
(2.2% under the 2007 purchase price)


18 Stonehouse Drive, Readington NJ
Purchased: 10/15/2004
Purchase Price: $612,000

MLS# 2517824
Sold: 1/30/2009
Sale Price: $546,000
(10.8% under the 2004 purchase price)

Posted in Comp Killer, New Jersey Real Estate | 361 Comments

North Jersey Home Prices Fall 12%

Posted on February 13, 2009 by grim

From the Record:

Home prices down nearly 12 percent

Home prices in the New York metropolitan area, including North Jersey, were at a median of $458,600 in the fourth quarter of 2008, down 11.7 percent from a year earlier, the National Association of Realtors said today.

The volume of sales in the Garden State has also dropped dramatically. Only 112,600 single-families, condos and co-ops were sold statewide in 2008, down 18 percent from 137,400 in 2007 and down 39 percent from the 184,400 units sold at the peak of the recent housing boom in 2005.

Nationally, existing home prices were down about 12.4 percent, to a median of $180,100, the NAR said.

The declining prices are making homes more affordable for buyers, although some buyers are apparently holding back because they think prices may fall further or because they’re worried about their job security in a deepening recession.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 347 Comments

Realtors: Area Q4 Home Prices/Sales Plummet

Posted on February 12, 2009 by grim

From the National Association of Realtors:

Median Sales Price of Existing Single-Family Homes for Metropolitan Areas – Q4 2008

Metropolitan Area Single Family Median Home Price

Atlantic City, NJ
2007 Q4 – $278,800
2008 Q4 – $229,100 (Down 17.8% Year over Year)

New York-Northern New Jersey-Long Island, NY-NJ-PA
2007 Q4 – $457,400
2008 Q4 – $390,400 (Down 14.6% Year over Year)

New York-Wayne-White Plains, NY-NJ
2007 Q4 – $519,200
2008 Q4 – $458,600 (Down 11.7% Year over Year)

NY: Edison, NJ
2007 Q4 – $379,300
2008 Q4 – $343,600 (Down 9.4% Year over Year)

NY: Nassau-Suffolk, NY
2007 Q4 – $461,700
2008 Q4 – $381,300 (Down 17.4% Year over Year)

NY: Newark-Union, NJ-PA
2007 Q4 – $435,800
2008 Q4 – $373,600 (Down 14.3% Year over Year)

From the National Association of Realtors:

Median Sales Price of Existing Condos/Coops/Apts for Metropolitan Areas – Q4 2008

Metropolitan Area Existing Condo/Coop/Apt Median Home Price

New York-Wayne-White Plains, NY-NJ
2007 Q4 – $310,900
2008 Q4 – $292,600 (Down 5.9% Year over Year)

NY: Newark-Union, NJ-PA
2007 Q4 – $315,100
2008 Q4 – $279,300 (Down 11.4% Year over Year)

NY: Edison, NJ
2007 Q4 – $274,300
2008 Q4 – $262,800 (Down 4.2% Year over Year)

NY: Nassau-Suffolk, NY
2007 Q4 – $249,200
2008 Q4 – $231,800 (Down 7.0% Year over Year)

From the National Association of Realtors:

Total Sales: Single-Family, Condos and Co-ops

New Jersey Total Sales – Seasonally Adjusted Annual Rate
2005 – 154,900
2006 – 137,400
2007 Q4 – 119,400
2008 Q4 – 101,100 (Down 15.3% Year over Year)

From CNN/Money:

Home prices in record plunge
National Association of Realtors reports that home prices dropped a record 12.4% in 2008 – the biggest fall in 30 years.

Home prices fell 12.4% during 2008, the largest yearly decline since the National Association of Realtors began keeping comprehensive records in 1979.

The median price for a U.S. home sold during the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007.
…
The vast majority of metropolitan areas, 134 out of 153, recorded price declines compared with the last quarter of 2007.

From Bloomberg:

Home Prices Tumble in 88% of U.S. Cities on Foreclosures

Home prices fell in almost nine out of every 10 U.S. cities in the fourth quarter as foreclosure sales drove down prices.

The median price of a U.S. home declined 12 percent from a year earlier and sales of properties with mortgages in default accounted for 45 percent of all transactions, the Chicago-based National Association of Realtors said today. Prices fell in 134 U.S. metropolitan areas, rose in 18 and were unchanged in one, the biggest share of declines in data going back to 1979.

The worst U.S. housing slump since the Great Depression is deepening as foreclosures drain value from neighboring homes and the economic recession worsens. The number of Americans collecting unemployment benefits rose to a record 4.81 million in the last week of January as companies such as Caterpillar Inc. and Home Depot Inc. slashed jobs. The U.S. lost 2.6 million jobs last year in the biggest workforce reduction since 1945.

U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac Inc. said in a report today.

From the AP:

Median home prices fell nationwide in 4Q

Home prices fell in nearly nine out of every 10 U.S. cities in the fourth quarter of last year as low-cost foreclosures flooded the market and the housing market’s decline spread nationwide.

The National Association of Realtors said Thursday that median sales prices of existing homes declined in 134 out of 153 metropolitan areas compared with the same period in 2007. Sales fell in all but six states.

Nationwide, the median sales price was $180,100, down 12 percent from a year ago. But price declines of 30 percent or more were found in much of California, plus parts of Michigan, Florida, Arizona and Nevada. The biggest drop, of more than 50 percent, was in Fort Myers, Fla.
…
A nasty brew of strict lending standards, falling home values, soaring foreclosures and a severe recession is filtering through the housing market.

Nationwide, more than 274,000 homes received at least one foreclosure-related notice in January, according to RealtyTrac Inc., an Irvine, Calif.-based foreclosure listing service. That was down 10 percent from December, but still up 18 percent from the same month a year ago. The numbers would have been higher if not for efforts to stall the foreclosure process.

More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years depending on the severity of the recession, according to a report last month by Credit Suisse.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 399 Comments

Housing bubble part 2? Don’t hold your breath.

Posted on February 11, 2009 by grim

From HousingWire:

Home Prices to Decline into 2010, Economists Say

Home price declines may continue through 2009 and bottom-out at the end of the year at the earliest, although recovery may not begin until mid-2010 and will take several years, according to one economist that spoke at an outlook panel at the American Securitization Forum taking place this week in Las Vegas. Mark Fleming, chief economist First American CoreLogic, said that in the most optimistic scenario, if the government stimulus took effect today and put the complete brakes on home price decline, the market would still need roughly a year at the very least to display any kind of recovery in home value.

“We’ll have to work our way out,” Fleming said. “Home prices are not like Lamborghinis; they don’t stop on a dime. They’re more like trucks.”
…
Within the same panel, a senior economist at Barclays Capital Inc., Julia Coronado, echoed Fleming’s home price decline forecast, saying prices will not stabilize until well into 2010. As a reaction to the continued pressure on home prices, households will demonstrate a change in spending while the household savings rate will quickly rise and reach into 5.6 percent in 2010, she said.

“We don’t predict another asset bubble to come to the rescue,” Coronado said. “Too much damage has been done to the financial sector…. We’ll have to get out of this the old-fashioned way, by digging our way out — or saving our way out.”

Posted in Economics, Housing Bubble, National Real Estate | 302 Comments