A look back at the 2007 market

Posted on December 30, 2007 by grim

From the Home News Tribune:

State homeowners “coped with the bursting of the housing bubble”

In June, Mary Lou Mangarella listed her New Brunswick home with discount real-estate broker Foxtons, in a move that unwittingly placed her smack dab in one of the biggest business stories of the year.

With the housing market in a steep decline, West Long Branch-based Foxtons went out of business in September. Her home sat for three more months until her Foxtons contract expired. And she finally sold it for 16 percent less than she originally asked.

“It was a nightmare,” said the 77-year-old Mangarella, who moved to Milltown in Middlesex County.

She summed up 2007 for many. Thousands of New Jersey homeowners coped with the bursting of the housing bubble. Home builders and real-estate agencies struggled sometimes futilely to stay in business. And the economic impact reverberated to local banks and retailers.

Through it all, the economy managed to stay afloat. New Jersey added jobs, albeit slowly. A regional mall lifted the curtain on a giant expansion. And telephone, cable and Internet companies slugged it out for customers with mixed results.

“The good news is we didn’t slip into a no-go mode,” Rutgers University economist James W. Hughes said. “The bad news is, we didn’t rev up to a go-go mode either.”
…
The housing market, which lost steam in 2006, fell into an outright slump in 2007. The median price of an existing single-family home in the region that includes Monmouth and Ocean counties was $391,000 during the third quarter, down 5.7 per-cent from the same quarter a year ago, according to the National Association of Realtors.

Analysts said the prior growth in the price of homes outpaced wages, setting the stage for a steep correction that played havoc with homeowners, companies and investors.
…
The real-estate downturn caught up with other companies in 2007.

Foxtons, which made its name by offering discount com-missions, closed in September after it ran out of money. It laid off more than 300 workers and filed for Chapter 11 bankruptcy with a reported $488,000 in as-sets and $40.9 million in liabilities.

Metro Homes, a Hoboken developer, halted construction in December on its 224-unit Esperanza high-rise in Asbury Park, citing poor real-estate conditions.

“We are convinced that the national mortgage crisis now impacting real-estate markets around the country represents a temporary setback, and we remain fully committed to Asbury Park and its rebirth,” Dean Geibel, president of Metro Homes, told the Asbury Park Press.

A quick real-estate recovery didn’t materialize.

One reason: With home prices climbing beyond their reach earlier this decade, many consumers needed to resort to unconventional financing, including subprime loans. Some of those buyers had poor credit histories. Others didn’t have money for a down payment.

The loans, which carried high interest rates, were affordable in the beginning. But after a year or two, the interest rate ad-justed. The payments rose. And many homeowners had to default.

Posted in Housing Bubble, New Jersey Real Estate | 81 Comments

Tips for navigating the market in ’08

Posted on December 30, 2007 by grim

From the Record:

Laying the foundation for a deal

Heading into 2008, the outlook for housing is more promising for buyers than sellers. Most analysts expect home sales to be slow, with flat or declining prices. But whatever happens, both buyers and sellers can increase their chances of getting what they want by making the right moves. Here are our best tips:

– Become a better borrower. The mortgage industry has tightened lending, and buyers now need better credit histories, and more income and assets.

– Build a bigger down payment — preferably at least 10 percent. The no-down-payment loans that were so prevalent a couple of years ago are scarce these days.

– Shop around for the best housing fit. A few years ago, buyers had to bid on homes as soon as they saw them, or risk losing out. In today’s slower market, there’s a lot of inventory to choose from and buyers can take their time. Take photos and keep records of homes you’re interested in. The more homes you see (especially new construction), the harder to remember which was which.

– Shop for the best mortgage deal. There are still plenty of mortgages out there, averaging less than 7 percent, for qualified buyers. Check regional banks and savings and loans, mortgage bankers and mortgage brokers. Don’t go with the first company you talk to, and don’t just go with your real estate agent’s recommendation.

– Don’t be shy about negotiating; many sellers will accept offers below asking price. But be diplomatic. Realtors say many buyers are coming in with offers so low that they upset the seller.

– Choose your real estate agent with care. There are many who have had no experience in dealing with a housing slump. According to a survey by the National Association of Realtors taken at the peak of the market in 2005, just over half of its members had four years’ experience or less. The last big slump was in the early ’90s.

– Price your home correctly. In a market in which no one is sure whether prices have bottomed out or when it will happen, this is like trying to shoot a moving target. Yet this is the most important part of the sales process.

“Everything in this market is pricing; location is second,” said Antoinette Gangi of Re/Max Real Estate Associates in Woodcliff Lake. “Everyone wants a good price, a steal. If we’ve got a great location, we can hold out a little bit on price. If you have a location near a main road, or there’s a stream or easements on the property, you may have to adjust the price.”

– Prepare your house for sale. You need to de-clutter and de-personalize your space. Think “homey” in a “model-home” kind of way.

– Finally, repeat this mantra often: The first offer may be the best offer. “Usually, your first offer is your best offer,” said Ann Murad of Re/Max Real Estate Associates in Woodcliff Lake. “I put a home on the market in February. It was listed at $469,000, and the sellers got an offer for $445,000. They didn’t take it. Every single offer they got after that kept coming in $5,000 lower increments. They wound up selling the house for $410,000. They said to me, ‘Ann, we should have listened to you.’ “

Posted in New Jersey Real Estate | 2 Comments

Weekend Open Discussion

Posted on December 28, 2007 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 260 Comments

November New Home Sales

Posted on December 28, 2007 by grim

From Bloomberg:

U.S. November New-Home Sales Probably Fell to Near 11-Year Low

Sales of new homes in the U.S. fell in November, approaching an 11-year low and signaling no end to the housing recession that’s threatening to stall growth in 2008, economists said before a report today.

Purchases fell to an annual pace of 717,000, according to the median forecast in a Bloomberg News survey of 68 economists, from 728,000 in October. The 716,000 pace reached in September was the lowest since 1996.

The residential real-estate slump, already the deepest in 16 years, shows no sign of ending as discounts fail to lure buyers and mounting foreclosures swell the glut of unsold properties. Falling property values may cause consumer spending to cool, boosting the odds the expansion will come to an end.

“The housing recession continues to grind away,” said Brian Bethune, U.S. economist at Global Insight Inc. in Lexington, Massachusetts. “Imbalances in the housing market overall are being exacerbated by a rising number of homes being reverted to the market due to foreclosures.”

Economists’ forecasts ranged from 685,000 to 750,000. The Commerce Department report is due at 10 a.m. in Washington.

The housing recession has deepened since the August turmoil in subprime mortgages led to a worldwide credit shortage. Stricter borrowing standards and a freeze on lending to borrowers with poor credit put mortgages out of reach for more potential buyers. That’s driving home prices lower, weakening sales as people hold out for even bigger reductions.
…
Sales of new houses will probably tumble 8.9 percent in 2008 after a 25 percent drop this year, according to a Dec. 13 forecast from Fannie Mae, the largest mortgage buyer. Sales of new homes in October were already down 48 percent from their July 2005 peak.

Posted in National Real Estate, New Development | Comments Off on November New Home Sales

“We are in uncharted territory”

Posted on December 27, 2007 by grim

From the NY Times:

Home Prices Fell Faster in October

The decline in home prices accelerated and spread to more regions of the country in October, according to data released Wednesday.

Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor’s/Case-Shiller indexes, compared with a 4.9 percent decline in September. On a monthly basis, prices fell 1.4 percent in October, the fastest they have declined in at least the last seven years.
…
During the boom, rising home prices increased consumer spending because people felt more wealthy and were able to borrow against their new home equity. Now that process is reversing itself, said Patrick Newport, an economist at Global Insight, a research firm outside Boston. “And the foreclosure rates are going to go up a little more. If prices are falling, you are more likely to default” because the house may be worth less than the mortgage on it.
…
“It has been surprisingly resilient,” Robert J. Shiller, the Yale economist and a creator of the home price indexes, said about the economy. He added that it was difficult to determine what impact the weakness in housing would have on the economy going forward.

“We are in uncharted territory,” he said. “This was the biggest housing boom we have ever seen.”
…
Edward E. Leamer, an economist at the University of California, Los Angeles, said the declines in Seattle and elsewhere should not be surprising because they were also caught up in the housing boom that was fueled by low interest rates and lax lending standards.

“Finance is not local,” he said as a counterpoint to the maxim that real estate is local. “The availability of mortgages at extremely easy terms affected every home in the United States.”

Posted in Economics, Housing Bubble, National Real Estate | 142 Comments

A necessary adjustment

Posted on December 27, 2007 by grim

From the Wall Street Journal:

Pace of Decline
In Home Prices
Sets a Record
By JAMES R. HAGERTY and KELLY EVANS
December 27, 2007

A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.

Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor’s. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession.
…
The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans’ ability to pay. The market is working its way “back to reality,” says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.

Some other economists say that might not happen before 2010. “The housing shock is only about halfway over, and housing prices will continue to fall well into 2009,” says Lehman Brothers economist Michelle Meyer.

During the housing boom in the first half of this decade, fast-rising home prices made it easy for homeowners to take out home-equity loans or refinance their primary mortgages to extract some cash. That helped sustain consumer spending, which accounts for about 70% of U.S. economic activity.

Economists now worry that falling home prices will prompt consumers to pull back on spending enough to slow growth or even tip the economy into recession. “Eventually what’s happening in the housing market is going to catch up with us,” says Patrick Newport, an economist at research-firm Global Insight Inc.
…
The S&P/Case-Shiller index showed that some of the fastest declines in home prices are in metropolitan areas that were among the hottest during the housing boom. Prices were down 12.4% from a year earlier in Miami, 11.1% in San Diego, 10.7% in Las Vegas and 10.6% in Phoenix.

Home prices are still up from a year ago in some cities, such as Seattle and Charlotte, N.C. And people who bought their homes several years ago still are sitting on sizable gains in most of the country.

The boom more than doubled prices in many populous areas near the coasts. The run-up was fueled in part by unusually low interest rates, which slashed the cost of monthly mortgage payments. In addition, in the wake of the technology-stock bubble, many Americans viewed real estate as a safer investment than stocks, and so poured increasing sums into second homes and rental properties. Home sales began to slow in mid-2005. Prices leveled off and then started declining in 2006. Over the past year, mortgage defaults have soared, leading to rapid growth in foreclosures.
…
But the recovery of the housing market is likely to be a gradual process. That’s partly because the boom left prices so far out of whack with incomes. As measured by the S&P/Case-Shiller national index, home prices jumped 74% in the six years through 2006. During the same period, U.S. median household income rose 15%. (Neither figure is adjusted for inflation.) That made housing unaffordable for many Americans.

For a few years, lax lending standards — some loans required no down payments and offered low introductory interest rates — meant borrowers could buy more expensive houses than they could really afford. But lenders have been burned by a surge in defaults that started in 2006, and such mortgages generally are no longer available. That means house prices will have to fall to a level potential buyers can afford.

Mark Zandi, chief economist of Moody’s Economy.com, a research firm in West Chester, Pa., predicts that on average U.S. house prices will decline about 12% by the second quarter of 2009 from their peak in the second quarter of 2006. He expects household income to rise by about the same amount over that period.
…
The mortgage market also needs to adjust further. Most of the funding for home loans comes from investors who buy securities backed by bundles of mortgages. Since August, many of those investors have shunned the market amid fears of rising defaults. As a result, lenders generally are focusing on loans that can be sold to government-sponsored investors Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration. So-called jumbo loans — those above $417,000, too big to be sold to Fannie or Freddie — have grown much more expensive, deterring buyers in high-cost areas.

The current scarcity of funds available for mortgage lending creates a chicken-and-egg situation, says Prof. Leamer. Investors who provide funding for home loans don’t want to commit more money until they believe the housing market is getting better. But it’s hard for the housing market to rebound as long as mortgage credit is tight. Lower prices eventually will break this impasse, by luring buyers back into the market and reassuring investors that the market is finding a bottom, he says.

Posted in Economics, Housing Bubble, National Real Estate | 1 Comment

Shiller: “single-family housing market remains grim”

Posted on December 26, 2007 by grim

From Standard and Poor’s:

Broadbased, Record Declines in Home Prices in October According to the
S&P/Case-Shiller® Home Price Indices (PDF)

Data through October 2007, released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, show broadbased declines in the prices of existing single family homes across the United States, marking the 10th consecutive month of negative annual returns and the 23rd consecutive month of decelerating returns.

The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Indices. The 10-City Composite’s annual decline of 6.7% is a record low. The previous largest decline on record was 6.3% recorded in April 1991. In October, the 20-City Composite recorded an annual decline of 6.1%.

“No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Not only did the 10-City Composite post a record low in its annual growth rate, but 11 of the 20 metro areas did the same. If you look at the monthly figures, every MSA went down in both October and September. Eleven of the 20 MSAs, in addition to the two composites, recorded their single largest monthly decline on record in October. For both the 10-City and 20-City composites this was a decline of 1.4% over September”

Posted in Housing Bubble, National Real Estate | 127 Comments

A return to rational prices

Posted on December 26, 2007 by grim

From the New York Times:

Frozen Rates, Falling Prices

THE Bush administration’s mortgage rescue plan will worsen, not alleviate, the problems in the housing market.

We are suffering from a home value crisis, not simply a credit crisis. If home prices were still rising, defaults would be low, investment returns would be high, borrowers would still be cashing out equity, and lenders would be showering credit on home buyers.

Falling prices reverse this dynamic. A recent study by the Federal Reserve Bank of Boston found that most foreclosures result from falling home prices, not from the resetting of mortgage rates.

And if rates are frozen for some subprime mortgages, standards for most new loans will become increasingly strict. Lenders will have to factor in the added risk of having their contracts rewritten when borrowers default. Higher down payments, mortgage rates and required credit scores — along with lower loan-to-income ratios and perhaps the death of adjustable-rate loans altogether — will further push down home prices.

Whether or not their payment levels are frozen, borrowers with loans that are greater than the values of their homes will have few incentives to keep paying their mortgages or to maintain their properties. Why spend more on a home in which they have no equity and which they may lose to foreclosure anyway?

Having put nothing down or having extracted equity in previous refinances, most subprime borrowers will lose nothing financially from foreclosure. In some cases the low teaser rates allowed them to pay less than what they might otherwise have paid in rent. The real losses are borne by the lenders.

Proponents suggest that a rate freeze will buttress home prices by keeping foreclosed homes off the market. But that is a stay of execution, not a pardon. Most homes temporarily saved from foreclosure will continue to depreciate as new buyers fail to qualify for loans. Lenders will be on the hook for even more losses than if the foreclosures had taken place sooner.

Everyone seems to agree that a return to traditional lending standards is a good idea, but no one seems willing to accept a return to rational prices as a consequence.

Posted in Housing Bubble, National Real Estate, Risky Lending | 24 Comments

Who’s watching the henhouse?

Posted on December 26, 2007 by grim

From the Philly Inquirer:

States, feds must impose tighter lending standards

The Federal Reserve’s proposals last week to address deception and fraud in mortgage lending will all be for naught unless the states, the Fed, and other federal agencies tighten their enforcement of the lending rules.

Lending standards weakened sharply in 2005 and 2006 as home prices soared. Fraud and predatory lending were rampant in the subprime market, which served borrowers with the weakest credit histories.

Yet there wasn’t any federal sheriff. No one made sure that borrowers received complete and clear information from lenders so they would know what they were getting into – and that lenders checked to be sure borrowers would be able to handle the monthly payments. During the housing boom of the early 2000s, lenders were so anxious to write mortgages that information provided was sometimes misleading or fraudulent, and borrowers’ financial backgrounds weren’t verified.

At least eight federal agencies, including the Federal Reserve and even the FBI, have had some oversight responsibility for mortgage lending. Also, mortgage brokers and non-bank lenders are regulated at the state level.

“This does not change the current enforcement scheme,” a senior Fed official acknowledged when explaining the rules proposed by the Fed last week. He was one of a team of officials who briefed reporters on the condition that they not be identified by name.

But the status-quo enforcement is a problem, given the weak track record on self-regulation by industry and widely varied government enforcement.

“I think, with the subprime blowup, we’ve seen that markets aren’t good at governing themselves,” said Kurt Eggert, a law professor at Chapman University in Orange, Calif.

Eggert, who is finishing a three-year term on the Fed’s consumer advisory committee, credited Fed Chairman Ben S. Bernanke with recognizing the need for tighter enforcement rules. His predecessor, Alan Greenspan, did not.

Posted in National Real Estate, Risky Lending | 3 Comments

“Lending is going to be tight for the next year or two”

Posted on December 26, 2007 by grim

From the Wall Street Journal:

Profit Outlook Darkens for Big Banks
By DAVID REILLY and DAVID ENRICH
December 26, 2007; Page C1

For major banks, the next few years will be a return to a simpler and possibly less-profitable time.

The subprime crisis and ensuing credit crunch have thrown a wrench into the highly profitable bank business model: Make loans that are then sold off to investors while arranging corporate financing through off-balance-sheet vehicles that keep banks’ capital costs down.

Now, banks are holding on to more of the loans they make, as they did years ago. And the off-balance-sheet lending business is crippled. It isn’t clear how long this will last, or how the banking model might evolve in response to the current market crisis. What is clear is that some of the banks’ more profitable lines of business have been shut, either temporarily or permanently.
…
“Banks are going to have to think real hard about what their new business model is,” said Christopher Whalen, managing director at Institutional Risk Analytics, a banking research firm. “It was a different world when they could just set up another [off-balance-sheet vehicle] and put this stuff out there. It gave them unlimited flexibility in balance-sheet management.”
…
The originate-and-sell business model “encouraged reckless lending” that triggered the current mortgage morass, Mr. Cassidy said. Keeping loans on banks’ books will help avoid future meltdowns that could torpedo years of profits.

Meantime, changes being wrought to the banking business model are quickly becoming apparent. Citigroup has seen the amount of loans and leases it holds in inventory — and doesn’t plan to sell to investors — increase to about $697 billion at the end of September, up about 9% over six months, according to data from IRA.
…
Banks are likely to make up for those lost fees by increasing the interest rates they charge on loans, Mr. Poulos added. But that will diminish companies’ ability to take on debt, which could hurt the wider economy.

“Lending is going to be tight for the next year or two,” said David Hendler, an analyst at CreditSights Inc.

Posted in Housing Bubble, National Real Estate, Risky Lending | 2 Comments

“Banks Stole Christmas.”

Posted on December 25, 2007 by grim

From the NY Daily News:

Bank protesters say predatory loans threatening to make them homeless

Gloria Knight hasn’t been able to heat her home to a comfortable temperature this winter.

The 64-year-old Brooklyn woman also keeps her modest, three-bedroom house in East New York dark most nights to save on electricity bills – and has even been skipping meals.

“I’m trying to be very economical and stay within my budget,” she said. “But that means a lot of sacrifice.”

On Monday, Knight joined about two dozen homeowners in a protest outside a Washington Mutual bank branch in Manhattan, where many say they took out predatory loans.

They demanded that bank officials meet with them to restructure their loan packages – and they held signs declaring the “Banks Stole Christmas.”

For Knight, a pastor who relies on Social Security for income, this is a new and harsh reality since the interest rate on her mortgage recently ballooned from 9% to 18%.

She is among the thousands of New Yorkers who fear they will be left homeless because of the subprime mess.

As teaser rates are reset monthly, foreclosures in the city – particularly in low-income parts of Queens and Brooklyn – keep rising.
…
Milagros Munoz, a 46-year-old mother of three from Brooklyn, said she is buckling under the pressure of paying $4,100 a month for two loans on her East New York house.

Munoz said she was initially given low interest rates when her mortgage broker lied on her loan application – stating her monthly income as $14,000 – without her knowledge.

She doesn’t earn anything close to that as a dental assistant.

“I’m on a financial freeze,” Munoz said. “I can’t go anywhere or do anything. When my rate went up, all I kept asking myself was, ‘How am I going to get through today with what I have to pay?'”

Posted in Housing Bubble, National Real Estate, Risky Lending | 27 Comments

Subprime Breakdown

Posted on December 24, 2007 by grim

From the IMF Finance and Development Magazine:

Subprime: Tentacles of a Crisis

How could a modest increase in seriously delinquent subprime mortgages, which amounted to an additional $34 billion in troubled loans, so disrupt the $57 trillion U.S. financial system last summer that worldwide financial turmoil ensued? Lax, if not fraudulent, underwriting practices in subprime mortgage lending largely explain the rise in the rate of seriously delinquent loans from 6 percent to 9 percent between the second quarter of 2006 and the second quarter of 2007. But the impact on financial markets and economies far exceeds any expected losses from mortgage foreclosures.

The answer lies in the evolution of the structure of the home mortgage market. Over the past 70 years, it has changed radically from one in which local depository institutions make loans to one that is centered in the major Wall Street banks and securities firms, which employ the latest in financial engineering to repackage mortgages into securities through credit derivatives and collateralized debt obligations. Today’s mortgage market depends critically on the ability to carve the debt into various risk segments through complex financial instruments and then sell those segments separately—the riskiest segments to high-yield-seeking, and sometimes highly leveraged, buyers such as hedge funds.

To understand how the mortgage market has changed—and to identify where the market broke down, show its structural weaknesses, and explain why the rupture reached across borders to other developed and emerging economies—requires an architectural tour of the U.S. mortgage market.
(snip)

Posted in Economics, National Real Estate, Risky Lending | 126 Comments

“Charmless…soulless…hasty…slick…”

Posted on December 24, 2007 by grim

From the Daily Reckoning:

THE “WOW” FACTOR

Tacky, vulgar and trashy…say good riddance to the Great Rubbish Market of 2001-2007.
…
“The Wow Factor”, it said, in large red letters. We looked beyond the sign to see what the ‘wow’ was all about. The houses were just like all the others built in the last 10 years – with large, fraudulent fronts, laid up in brick, some with tall Tara-like columns…and front windows so large you bend down to look for a stone. You think they might be substantial, handsome houses. And then you see the vinyl siding and small, plastic windows on the side. They only look good from the front. And then only if you don’t look too hard. Charmless…soulless…hasty…slick…they are stacked hard up one against one another like Chinese TVs in a discount mall.

“The ‘wow’ has to come at the very beginning,” explained a real estate developer from Miami. “You bring someone to a house…he’s got to say ‘wow’ in the very first two minutes…or you won’t make the sale.”
…
A couple years ago, he was building $4 million dollar houses on a golf course in the Boca Raton area. What did you get for $4 million in America those days? A lot more than you got in the United Kingdom…but still nothing a person with a sense of dignity would want. The houses were crowded together and then covered in tropical plants so you couldn’t notice how tiny the lots were. Just as with the houses in Maryland, the facades pretended towards substance, but it was substance they most lacked. The fronts were built of stone and marble. Then, you opened the door and the entryway took your breath away. Wow. You felt as though you were in a Florentine palace…or an abandoned bank. The place had so much marble we thought we were inside a quarry. And the ceiling was a good 24 feet in the air…with wide, curved stairs winding to the upper deck; still there was something cheap about it…fake…like a Hollywood set. It was the kind of staircase Rhett Butler might have carried up a checkout girl.

“Wow,” we said. We had never seen a place so extravagantly hideous.

“Yeah…it’s all in the first impression. But so what? That’s what people want. And then it goes up in price…or, at least it used to. I made money. The buyer made money. It was a win-win situation.”
…
Everybody wanted a piece of the action. The gaudy, sensational, trendy, hollow, superficial – it all moved up in price – from the suburban ghettos of Calvert County, Maryland, to the A shares on the Shanghai stock market. And there was no point in arguing with the people who were buying this garbage; they were geniuses and had the money to prove it! Towards the end, you had to be a moron to make money, because it was the worst investments that moved up most.

Posted in National Real Estate, New Development | 20 Comments

Undeserved reputation

Posted on December 24, 2007 by grim

From the Hudson Reporter:

Longtime residents set record straight about 1970s-era Jersey City

Barbara Bromirski, 67, recalls a time when she would take walks from her home on Warren Street to the corner hardware store.

“The neighbors would have been sitting outside on the stoops. The kids would have been playing. Some of the adults would have been keeping an eye on the kids. Just friends. Everybody knew everybody else that lived in the neighborhood,” she said. “It would take me an hour and a half to walk back and forth to the store because you stop, you talk to this neighbor, you talk to that neighbor. It’s just the way it was. It was warm, it was friendly.”

And when did that charming scene take place? The ’40s? The ’50s?

Try 1974.

The decade that Bromirski and quite a few other longtime residents remember so fondly is at the center of what is often considered the worst era in the city’s history.

Back then, embarrassing stories about vandalism, stray dog packs, and joblessness filled the pages of national newspapers. The city was in the middle of a population freefall in which nearly one-third of its residents fled by the end of the decade. And a federally funded study released in 1975 named Jersey City “the worst large American city to live in.”
…
This is the Jersey City that most outsiders imagine when they hear its name today: the period when the city seemed to slide into the abyss. It’s an image the city continues to struggle to rise above.

Yet many locals who are still around to recall those days said the image is an unfair one. In more than a dozen interviews, these longtime residents described a city that – despite having its share of problems – was never as bad as it has been portrayed.
…
Several longtime residents said the statistics don’t give the whole story. They said there was a sense of community in the 1970s that transcended the problems of that decade.

“The people were all very, very nice. They were hard-working people, they were honest people, and they were a lot of fun,” Bromirski said. “Our area down here was mixed. We were Polish, Irish, Italian, we were black, we were Hispanic, Russian, German. Any nationality you can name, they’ve been through Downtown Jersey City, and they’re all a part of Jersey City.”

The former Greenville resident likewise recalled his neighborhood’s diversity.

“We had a complete melting pot of an older neighborhood, with Italians, Irish, Polish, German – all races and backgrounds,” he said. “It was amazing.”

Posted in New Jersey Real Estate | 1 Comment

Powerhouse legal, financial, and business district

Posted on December 24, 2007 by grim

From the Jersey Journal:

FINDING FEW TAKERS

City officials say they are struggling to find qualified applicants for new affordable or market-rate live/work artist studios in the downtown Powerhouse Arts District.

The problem isn’t a shortage of artists – the city’s Artists Certification Board has 470 on their waiting list for work/live space – but rather, city officials say, they don’t have enough artists who qualify for mortgages or others drop out during the qualification process.

As a result, city officials say, they’re allowing more and more middle-income people from other occupations to live in the developments being built in a six-block area intended to be Jersey City’s haven for the arts community.

But artists and preservation groups say it’s another instance of city officials abandoning the principles outlined in the Powerhouse Arts District Redevelopment Plan it adopted in 2004, and caving into the pressure from big development interests.

It’s impossible to know for certain how many of the 334 market-rate studios in the district have gone to artists, as developers aren’t obligated to report how those units were allocated.

But Robert Antonicello – director of the city’s Department of Housing, Economic Development and Commerce – says that answers from a focus group conducted with artists over the summer revealed that many felt isolated because their neighbors aren’t fellow artists, but rather professionals from the legal, financial and business sectors.

The zoning under the redevelopment plan was designed to create a community of artists within a historical district of former warehouses. Ten percent of the units for new projects were set aside for low-income artists.

The latest development with the Powerhouse Arts District is a proposed high-rise development from Toll Brothers. The developer is asking the city to approve a project with 950 market-rate apartments in three towers, one of which soars to 395 feet.

The developer says it is looking to attract more people from the performing arts, with a plan that includes a 550-seat theater, art spaces and rehearsal rooms – but just 12 live/work artists studios. And only one of the 12 artist units would be considered affordable housing – and if a certified artist didn’t get it, it would go to someone else.

“You can’t leave affordable housing vacant waiting to make it available for someone living outside Jersey City,” Antonicello said. “It is not fair to people who have lived in Jersey City all their lives.”

Posted in New Development, New Jersey Real Estate | Comments Off on Powerhouse legal, financial, and business district