New Jersey Real Estate Report

Now Open, Part II!

Prior weekend thread closed due to comment overflow

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.

From the Press of Atlantic City:

Real estate agents debate local statistics

The latest positive numbers for home sales and prices have divided real estate agents, ordinarily a group uniformly upbeat about the housing market.

Some doubt the numbers, even though they’re from their own association, and say it’s making it tougher to get home sellers to reduce their prices to more realistic levels.

Kevin Dawe, a real estate agent with Balsley Losco Real Estate in Northfield, said last week’s report that the median home price in the Atlantic City area rose 4.8 percent in the first quarter didn’t match what he’s been seeing.

In particular, Dawe said the figures from the National Association of Realtors, and other information gathered from state and local Realtor groups, seemed to disagree with what the Multiple Listing Service showed.

“As we talk to our sellers about the declining market we are actually facing and the fact that they have to be aggressive in pricing their homes if they expect to find a buyer, the statistics in your article are baffling and impact our credibility with customers,” Dawe said.
…
Bruce E. Breunig Jr., broker at Century 21 Alliance in Margate, admitted that “we Realtors remain part of the problem. We blame the media for fueling the downturn and try to counterbalance it with our own positive spin.”

Breunig had a theory as to why the NAR survey shows rising prices locally that real estate agents aren’t seeing.

The Realtor survey tracks median home prices, the price at which half of all sales were for more, half for less.

The subprime mortgage crisis and subsequent credit crunch have made it far more difficult for low-end buyers to get a mortgage, he said, which has reduced the number of low-end sales. The homes that sell are then disproportionately from the upper half of the market, artificially raising the median price.

From Reuters:

Housing Crunch: Return of the Big Downpayment

As U.S. banks mop up the mess from billions of dollars of bad home loans, buyers are finding the days of cheap money are over and, in many cases, tougher versions of old lending rules now apply.

People of modest means have seen the American dream of home ownership move further out of reach. Even affluent buyers, who took advantage the last decade’s low interest rates and looser lending standards to move up to more expensive homes or to buy investment properties, are seeing their options evaporate.

Gone are the days when almost anyone could get a loan with a down payment of less than the traditional 20 percent.

“The clock is rolled back about 20 years,” said Lou Barnes, co-owner of Colorado-based Boulder West Financial Services and publisher of Mortgage Credit News.

Such obstacles to obtaining a mortgage are among the actors keeping the depressed U.S. housing market from recovering, which in turn is having a dampening effect on the broader economy.

“You definitely need more money to buy a house than you did a few years ago,” said Guy Cecala, publisher of Inside Mortgage Finance. “The days of putting no money down are gone.”
…
These days, lenders are balking at anything other than “plain vanilla” loans to would-be buyers with stellar credit histories, significant downpayments and income that can be verified with government tax forms.
…
For example, interest rates on jumbo mortgages — or loans above $417,000 — remain higher than for other loans, despite a relatively low rate of default.

“The market is so skittish right now. (Lenders have) been so burned by their inability to understand the risk of subprime loans that they’re translating that to the rest of the market,”
Cecala said.

From the APP:

Pennacchio: Block “gentlemen farmers” from property tax break

U.S. Senate candidate Joseph Pennacchio Monday criticized Republican opponent Dick Zimmer for making use of a property tax break by selling hay from his Hunterdon County home.

Pennacchio pledged to write new laws in the state Senate banning “gentlemen farmers” from the Jersey landscape.

“Here is a guy who is asking to represent the people of New Jersey, yet he takes advantage of them to have them subsidize his estate. That’s unfair, ridiculous and selfish,” said Pennacchio, a Republican state senator from Morris County, at a Statehouse news conference.

Zimmer, a Washington lobbyist who maintains homes in the capital and in Delaware Township, receives a tax break on most of his 24.5-acre Hunterdon County property under a 1964 state law intended to help struggling farmers and preserve farms and open space.

Zimmer’s home is on one acre, assessed at $353,900, on which he paid $7,212 in property taxes last year. His other 23.55 acres are assessed at $8,300, and on that property he paid $169 in taxes in 2007.
…
The state legislation promised by Pennacchio would mandate anyone getting the tax break live in New Jersey and increase the minimum amount of money gained from the land — needed to become eligible for the break — from $500 a year to $1,250.

From the Record:

Houses owned by banks may be bargains

Vincent and Kerri Bagnaturo had been looking to trade up to a bigger place in Ridgewood for almost two years when they came upon the house they felt was the right fit for them.

It was a spacious 4-bedroom, 3-bath house with a large family room, on a 200-foot deep property in the sought-after Willard School neighborhood.

The home also was an REO. Short for real-estate-owned, REO means a home has been through foreclosure, has failed to be sold at auction and has been repossessed by the bank holding the mortgage. Banks wants to get these properties off their books, and get them sold.
…
In New Jersey, REOs are more prevalent — and generally more of a mess — in urban neighborhoods hit by the subprime crisis.

“The homes in Essex County, Newark, Jersey City, Paterson can be the worst,” said Derek Eisenberg, who specializes in REO appraisals for banks through his company, Continental Real Estate Services. “I’ve had to ask for a police escort to go into crack houses where the plumbing’s been ripped out, the windows have been ripped out, the properties became vacant and got looted.”

But he’s also appraised REOs in much nicer locales, such as Saddle River and Alpine.

The Bagnaturos first saw their home — a bank-owned property in Ridgewood — late last fall, right after it came on the market.

“It was listed at $1.89 million,” Vincent Bagnaturo said. “Way out of our price range.”

The Bagnaturos made a bid of under $1 million in November. The bank countered by lowering the price $80,000.

“We just sat tight,” Bagnaturo said. “They [the bank] sat tight and we sat tight. My assumption is that, over the course of time, they realized they were well overpriced.”

At the end of January, the bank lowered the asking price to $1.4 million. The Bagnaturos bid again, and, after a series of negotiations, won the house for $1,050,000.
…
The last big surge of bank-owned properties on the market was in the early 1990s during the savings and loan crisis, Eisenberg said.

Real estate agent Mole bought an REO herself in the early ’90s.

“In those days, foreclosed houses never made it to the Realtors or to the Multiple Listing Service,” Mole said.

“You had to watch the sheriff’s auctions or you had to know somebody at the bank. I knew the guy at the bank. I had gotten divorced and my salary was low at the time. I said [to the banker], ‘Would you give me a mortgage?’ He said, ‘I’ll not only give you a mortgage, I’ll sell you a house.’ He got me into a beautiful house that I was able to buy for much less than its assessed value.”
…
REO specialist Stajek believes North Jersey will see even greater numbers of REOs for sale in the near future.

“The country as a whole has not yet seen what is going to happen with REOs,” Stajek said. “Inventory is going to double. In Bergen County, we’ve just barely scratched the surface.”

Now Open, Part II!

Prior weekend thread closed due to comment overflow

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.

From the Wall Street Journal:

Will Upgrading Your Home Help You Sell It?
Big-Ticket Renovations Lose Value Amid Market Slump; Investing in Curb Appeal
By M.P. MCQUEEN
May 15, 2008

If you’re putting your home on the market anytime soon, you may want to rethink those plans to bump out the kitchen or add an extra bath.

During the housing boom, such ambitious projects would recoup as much as 90 cents on the dollar. Not today. The resale value of improvements in general is sliding, according to experts. In a departure from recent trends, homeowners are getting the best payback from relatively mundane improvements, such as sprucing up the exterior of their house or putting in new windows.

After spending $400,000 remodeling the suburban East Greenwich, R.I., home he bought for $820,000 in 2002, Jonathan Salinger learned he probably couldn’t sell it for more than $1.1 million in today’s market. That’s after posh additions that included landscaping, a pool, an outdoor kitchen, first-floor laundry and mud rooms, and custom cabinetry. As a result, the 45-year-old district manager for a mortgage lender recently decided not to list his house for sale and scratched plans to move the family closer to his children’s private school in Providence.

The slumping housing market has made remodeling much trickier. When house prices were climbing ever higher, buyers knew they could spend big bucks to expand their homes and still make a profit when it came time to sell. But today, a buyer who spends unwisely on remodeling may be simply digging a deeper hole when it comes time to move.

Further complicating the equation: Even though housing prices are slumping, construction prices have continued to climb. That means adding that new bath will cost more, even as it contributes less to the resale value.
…
Nationally, returns for all major home-improvement projects are fetching 70 cents on the dollar, according to a Remodeling magazine survey of real-estate professionals conducted late last year. That’s down from 80 cents in 2004. Back then, a minor kitchen remodel cost an average $15,300 and recovered an estimated 93% if the home was resold within a year. Today, a similar remodel costs $21,100 and would recoup only about 83%.
…
Some elaborate remodels, though, may actually make your home harder to sell, says New Mexico builder Lonny Rutherford. He notes that lenders are nixing higher-than-normal appraisals, and that many buyers are looking for a deal. Even if someone wanted to pay extra, they “would have a hard time financing the house unless they have a lot of cash,” he says.

Inferior remodeling work may be worse than none at all. Cheap cabinets and poor workmanship won’t fool buyers as they might have a few years ago, when many had to make snap decisions about buying a house, says Anslie Stokes, a real-estate agent in Washington, D.C.

“Buyers can spot shoddy renovations, and they aren’t willing to pay for it anymore,” Ms. Stokes says.

From the NJ Department of Labor and Workforce Development:

Employment Relatively Unchanged in April Unemployment Rate at 5.0 Percent for the Month

In April, New Jersey payrolls increased by 1,000 and the state’s unemployment rate edged higher by 0.2 percentage point to 5.0 percent equaling the United States rate which was down slightly from 5.1 percent in March.

Over the first four months of 2008, employment in New Jersey has followed the national trend, decreasing by 9,900 jobs; whereas nationally employment has declined by 260,000.

According to preliminary estimates from the New Jersey Department of Labor and Workforce Development’s monthly survey of employers, total nonfarm employment in the Garden State increased by 1,000 in April to 4,072,700. Based on more complete reporting, the previously released March estimate was revised downward by 1,200 to 4,071,700, to reflect a loss of 200 jobs in March.
…
While April’s overall employment level was flat, there were notable job gains within individual supersectors. On the positive side, job gains were recorded in professional and business services (+2,800), education and health services (+1,500) and information (+900). The advance in professional and business services was mainly due to hiring in the administrative support/waste management/remediation component, which added 2,500 jobs over the month. In education and health services, gains were recorded in both major sectors, health care and social assistance (+900) and educational services (+600).

April’s employment figures showed downward movement in the following supersectors: trade, transportation and utilities (-1,400), manufacturing (-1,200), and construction (-800). The majority of the loss in trade, transportation and utilities occurred in the retail trade component (-1,000), while the loss in manufacturing was mainly felt in the durable goods sector (-900). The job loss in construction continues to be reflective of the slowdown in the residential housing market.

From Bloomberg:

U.S. Foreclosures Rise 65 Percent as Vacated Homes Add to Glut

U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as rates on adjustable mortgages increased and vacated homes added to a glut of unsold homes, RealtyTrac Inc. said.

More than 243,300 properties, or one in every 519 households, were in some stage of foreclosure, the highest monthly total since RealtyTrac, a seller of default data, began statistics in January 2005. Nevada, California and Florida had the highest rates. Filings rose 4 percent from March.

Properties in foreclosure “contribute to already bloated inventories of homes for sale, and put downward pressure on home values,” RealtyTrac Chief Executive Officer James Saccacio said today in a statement.

The collapse of the U.S. housing market, the worst since the Great Depression, is contributing to the economic slowdown and may push the economy into a recession. Median prices for a single- family home fell 7.7 percent in the first quarter, the biggest drop in 29 years, the National Association of Realtors reported yesterday. There were 4.06 million U.S. homes for sale at the end of March, 40,000 more than the prior month, the Realtors association said in an April 22 report.

“Inventory levels have soared to unprecedented levels” Brian Fabbri, chief North American economist for BNP Paribas, said in an interview. “Builders and homeowners have to lower their prices significantly to sell that inventory out.”
…
Foreclosure filings in New York were up 39 percent from a year ago and up 12 percent from March. The state ranked 29th with 5,696 filings.

In New Jersey, foreclosure filings ranked 15th at 5,143, up 65 percent from a year ago and up 15 percent from March.