Winter Comes Early In North Jersey

From the Herald News:

North Jersey feels housing market chill
By HEATHER HADDON

During the past several years of record-low mortgage interest rates, many homeowners secured disposable income to cover their bills or make purchases by refinancing or taking home-equity loans. That money translated into new cars, new decks and extra lines of credit.

But grim new housing statistics released this week have some North Jersey bankers worried that a housing recession could spread to consumer spending.

"The equity line was very helpful in driving a purchase market," said Tom Cosentino, who oversees mortgages for Greater Community Bank in Totowa. "Now people are coming back saying they spent all that money and didn't realize it would stop."
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"It's worrisome," said James Hughes, a Rutgers professor and dean of the Edward J. Bloustein School of Planning and Public Policy who specializes in New Jersey's economy. "It could turn out to be very manageable and put a small dent into economic growth. Or it could be more serious."
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Mercedes Pedrick, who oversees mortgages at Spencer Savings Bank in Elmwood Park, said that luxury homes are still getting snapped up, but sales of single-family homes generally have sagged in Passaic and Bergen counties. "They haven't been moving as much," she said.

Local bankers say that new mortgages -- and the refinancing of existing ones -- have dried up, especially over the past several weeks. "It has been quiet, unfortunately," said Steve Hoogerhyde, a lending officer for Clifton Savings Bank in Passaic.

July is usually a busy time for housing sales, as many families postpone transactions until their children are out of school, Hoogerhyde said. But that hasn't been true this year. "It has been slower than you would expect it to be. There's no question about that," he said.
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Cosentino is particularly worried about young couples who borrowed heavily to make a down payment, along with those who refinanced to stave off financial hardship. "The property values were used to bail out people who were in credit-card trouble," he said.

Several experts said it was too early to say whether the slowdown in housing could result in job losses. But Hughes said if the slowdown continues, "We'll see construction employment decline."
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Pedrick says that prospective homebuyers, especially those in the single-family home market, will continue to sit on the sidelines until the situation stabilizes. "Those people are riding the wave to see how low values will go," she said.