Northern New Jersey Real Estate Bubble

The NNJBubble Blog Has Moved

2006-10-29T06:13:00.000-05:00

The Northern New Jersey Real Estate Bubble Blog has moved.

You will be redirected to the new website shortly. If, however, you are not directed to the new site automatically, you can find it here:

New Jersey Real Estate Report

See you there!
James Bednar (aka Grim)

We're moving!

2006-09-18T17:02:00.000-05:00

No, not out of state. Well, not yet anyway.

This blog and it's readership have grown tremendously over the past year. This tool is no longer adequate for managing such a large blog, and is becoming more frustrating with every day that passes. We've outgrown this site, so it's time to move to something bigger and better.

The transition is currently taking place and will likely continue until Wednesday. I was hopeful I could get all the data transitioned to the new site last night, but I gave up at 2 am, after 5 straight hours of "geeking". I'm hopeful that we can get the remainder of the data moved and site transitioned later tonite.

The new site is live, so take a look and make a note of the new URL. Unfortunately, I didn't have the foresight to register a domain name earlier on, so we're going to have to pay the price for that mistake now. However, I'm sure the benefits of the new site and blog will far outweigh the temporary hassle of the new URL. Many of you have already taken a peak, but for those who did not:

New Jersey Real Estate Report

Yes, we're no longer the "Northern New Jersey Real Estate Bubble Blog". I thought the name was great, at first, until I realized how incredibly long and cumbersome it was. It was almost as complicated as trying to tell someone the cryptic URL. We needed a new name and URL, and this is what I decided on (http://njrereport.com).

But wait, you say, the word "bubble" is missing from the name. Yes. Yes, it is. I feel that it detracts from the credibility of the site and its members, so the bubble reference is gone. However, the real estate bubble in New Jersey will continue to be the main topic of focus for the blog and forums.

With the new site will come new topics and features. Many of you have already started using the forums (http://njrereport.com/forum). With many topics hitting 100+ comments, it becomes very difficult to follow a conversation or branch off on separate threads. The forum will allow us to keep discussions on topic, as well as provide a forum for general discussion and questions.

I'm looking forward to hearing suggestions and feedback, so let's have it.

Caveat Emptor!
Grim

Can Fannie go bust?

2006-09-18T13:47:00.000-05:00

From Marketwatch:

Fannie Mae could be hit hard by housing bust: Berg

The worst of Fannie Mae's regulatory troubles may be behind it, but one longtime skeptic of the mortgage giant thinks it could face bigger problems from trouble in the U.S. housing market.

Gilchrist Berg, founder of $2 billion Jacksonville, Fla.-based hedge-fund firm Water Street Capital, said in a recent letter to investors that Fannie Mae could lose $22 billion to $29 billion if, as he expects, the housing bubble bursts and foreclosures increase.
...
"We are not sure the folks running the show fully embrace the risk of declining house prices," Berg wrote in the letter, a copy of which was obtained by MarketWatch. If the housing market continues to decline "a major portion of Fannie Mae's value could be wiped out." He declined to comment for this story.

Fannie Mae spokesman Alfred King said the company protects itself from housing-market volatility in many ways, including maintaining a geographically diverse book of business and focusing on mortgages that have a high percentage of equity in them.
...
Fannie has traditionally specialized in higher-quality, fixed-rate mortgages, which are less vulnerable to interest-rate fluctuations and volatility in the housing market.

But the company has been investing more in subprime MBS in recent years. Subprime loans are sold to home buyers who fail to meet the strictest lending standards, so this area of the mortgage market is expected to be hit harder by any housing downturn.

Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, Md.-based publisher that covers the home loan industry.

In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.
...
Given those recent moves, Berg said it's not implausible that 15% of Fannie's mortgage exposure is subprime.

If a housing slowdown causes subprime foreclosure loss rates to rise to between 6% and 8%, Fannie could lose $22 billion to $29 billion, Berg estimated in his letter.

That's more than half of the roughly $40 billion in capital that Fannie had at the end of March, according to Ofheo.

Disclaimer: Under no circumstances does this information represent a recommendation to buy or sell securities.

Home Builder Confidence Hits 15 Year Low

2006-09-18T12:21:00.000-05:00

From the NAHB:

Builder Confidence Slides In August

Reacting to what they perceive as increasing consumer uncertainty regarding the market for new single-family homes, builders tempered their views on current and expected sales activity in the Wells Fargo/National Association of Home Builders Housing Market Index (HMI) for August, released today. The HMI declined seven points to 32, its lowest level since February of 1991. This was the seventh consecutive month in which builder confidence, as measured by the index, has fallen.

“Two big factors are coloring builders’ perceptions of the market right now – rising sales cancellations and substantial growth in inventories of both new and existing homes,” said NAHB Chief Economist David Seiders. “These factors are largely the result of an increasing number of potential buyers adopting a ‘wait-and-see’ attitude because of uncertainty about where the housing market is headed, and record-high energy costs also appear to be weighing on housing demand. We’re also seeing an anticipated withdrawal of investors/speculators from the market, following a major influx in 2004-2005.”
...
All three component indexes declined in August. The component gauging current single-family home sales fell seven points to 36, while the component gauging sales expectations in the next six months and the component gauging traffic of prospective buyers both fell six points, to 40 and 21, respectively.

Regionally, the HMI recorded a three-point decline to 34 in the Northeast, a five-point decline to 15 in the Midwest, a nine-point decline to 41 in the South and a 10-point decline to 42 in the West.

From Marketwatch:

Home builders' confidence falls again in September

The confidence of U.S. home builders fell for the eighth straight month in September, dropping to the lowest level since February 1991, the National Association of Home Builders said Monday. The NAHB/Wells Fargo housing market index dropped by three points in September to 30 from a revised 33 in August, indicating that most builders think the housing market is poor. Economists expected the index to fall to 31. A year ago, the index was at 65. A reading of 50 would indicate builder sentiment was balanced between good and poor. (This is an update to correct how many months in a row the index has fallen.)

Nontraditional Mortgages Increasing

2006-09-18T11:01:00.000-05:00

From the Wall Street Journal:

Use of Nontraditional Mortgages Is Edging Higher, Poll Indicates

Use of several types of nontraditional mortgages has increased among home buyers, according to a Wall Street Journal Online/Harris Interactive personal-finance poll.

The survey found increased usage of three of four types of nontraditional mortgages, which can be riskier for consumers than standard fixed-rate or adjustable-rate mortgages. The survey examined the mortgages used by people who had bought a home within the past three years.

The online poll of 2,790 adults found that 9% of recent home buyers obtained a payment option mortgage, compared with 4% in a survey conducted last year. These loans, also known as option ARMs, give borrowers as many as four payment choices each month, including a minimum payment set once a year, an interest-only payment, and what would be the standard payment on a 15-year or 30-year mortgage.

So-called piggyback mortgages, which combine a standard first mortgage with a home-equity loan or line of credit, were used by 12% of home buyers in the latest survey, up from 10% last year. And the share of home buyers using miss-a-payment mortgages edged up one percentage point to 3%. These loans let borrowers skip as many as two mortgage payments a year and 10 payments over the life of the loan with no impact on credit rating.

The overall use of interest-only mortgages fell to 14% in the latest poll from 17% last year. For homebuyers ages 18-34, though, the percentage rose to 23% this year from 16%, the poll showed.

At the same time, 15% of those who own homes said they had obtained a home-equity loan recently. Just over half of those said the purpose of the loan was to make home improvements, while 38% said it was to pay off credit-card debt and 11% said it was to help finance the purchase of a second home.

Of the 7% of Americans who said they currently own a second home, 40% said they bought it for use on weekends and vacations, according to the poll. Eighteen percent said they use their second home for rental income, while 17% said the second home was an investment and 15% said they would use the home in retirement.

"It's getting scary"

2006-09-18T07:32:00.000-05:00

From Bloomberg:

Housing Slump in U.S. May Lead to First Drop Since Depression

Nancy and Brian Christopherson are asking $389,900 for their eight-room Colonial Revival home in Westford, Massachusetts, featuring a new kitchen with maple cabinets. Even at that price, they'll lose $14,100.

Monthly price reductions since they listed it in May for $429,900 have lured no offers for the house, bought for $369,000 in 2004. ``It's getting scary,'' says Nancy Christopherson.

The sharpest slowdown in U.S. home-price growth in three decades is trapping owners with mortgages they can't afford, pushing unsold homes to a record 4.42 million and gutting profits for builders such as Lennar Corp. and Toll Brothers Inc. The U.S. median home price next year may fall for the first time since the Great Depression, says Gabriel Stein, chief international economist with Lombard Street Research in London.

Economists such as Nobel laureate Joseph Stiglitz warn that the reduced sales may push the world's largest economy into recession, and concern is mounting over economic growth in Europe and Canada. The Federal Reserve will reduce its U.S. benchmark lending rate, says Jan Hatzius, chief U.S. economist with Goldman Sachs Group Inc. Last month, the central bank ended a two-year streak of 17 increases that pushed the rate to 5.25 percent, citing cooling home sales.

``The housing slowdown will be a large drag on economic activity,'' Hatzius says. ``The Fed will cut rates to 4 percent next year as the housing downturn starts to push up the unemployment rate.''
...
``For the next couple of months, we're probably looking at between zero to a five percent drop in prices,'' Lereah says. ``The only way for home sales to come back, and for inventories to start to diminish, is for sellers to start to bring prices down.''

Not all homeowners are willing to accept less. Roxy Allen, 54, listed her four-bedroom house in Littleton, Colorado, for sale in May. She dropped the price once to $339,900 from $352,000 and has refused to go lower. She hasn't received a single offer.

``The Realtor wants you to just make a deal with somebody and sell it for cheap,'' Allen says. ``Why would I sell my house for less and buy one for more?''
...
Some sellers across the U.S. must reduce their expectations, even those who don't move. Edward Brown, 47, a Florida real estate investor, says he's financially overextended and needs to sell a three-bedroom house in Cape Coral, Florida. He's asking $579,000 -- $20,000 less than he paid for the property a year ago.

``No one expected the market to drop so quickly,'' he says. ``There are a lot of people like me who are caught in a pickle.''

A Fallback Plan?

2006-09-18T06:41:00.000-05:00

From the New York Times:

Who Bears the Risk?

The housing boom would never have lasted as long as it did if mortgage lenders had to worry about being paid back in full. But instead of relying on borrowers to repay, most lenders quickly sell the loans, generating cash to make more mortgages.

For the past few years, the most voracious loan buyers have been private investment banks, followed by government-sponsored housing agencies, like Fannie Mae. The buyers carve up the loans into mortgage-backed securities — complex i.o.u.’s with various terms, yields and levels of risk. They then sell the securities to investors the world over, at breathtaking profit. The investors earn relatively high returns as homeowners repay their mortgages.

The process has encouraged homeownership and created wealth. But there is a downside, too, which demands attention.

As the boom thundered on, the pool of available credit grew larger than the pool of creditworthy borrowers, resulting in an explosion of risky mortgages with features like no money down, interest-only payments and super-low teaser rates. Investors — including mutual funds, pension funds, hedge funds, insurance companies and foreign central banks, to name a few — currently hold $2 trillion in mortgage-backed securities from investment banks, triple the amount from three years ago. Investors also own $4 trillion in mortgage-backed securities from government-sponsored agencies.

In a market so vast and dynamic, everyone knows that if mortgage defaults should rise, damage could reverberate throughout the financial system. So far, defaults have inched up. But many homeowners are at a dangerous juncture. Interest rates on adjustable mortgages are rising as home values are weakening, precluding for many the chance to refinance. Economists calculate that $750 billion of outstanding mortgage debt is now at measurable risk of default — about 7 percent of the total.

Exodus from Real Estate

2006-09-18T05:22:00.000-05:00

From Reuters:

Jump ship or pink slip for some realtors

They are jumping ship or receiving the pink slip. America's real estate agents and mortgage lenders, that is.

Now that the glory days of the most recent U.S. housing market are over, its deterioration is taking a toll on employees who profited from its record-breaking five-year run.

With home sales slumping and loan demand diminishing, layoff announcements and resignations have become increasingly common, evidence that the sector's slump is broad.

Carmen Cook, a veteran real estate broker, saw the writing on the wall and decided to retire earlier this year.

"The market changed and my job became more difficult," she said. "I was working just as hard and the income wasn't coming in."
...
"All the brokers are hustling right now, but the income is not coming in the way they are accustomed to," she said.
...
The mortgage lending industry has not fared much better, with layoff announcements totaling 8,513 during the same period, a rise of over 70 percent year-over-year, according to data provided by the company.

Is tax reform even possible?

2006-09-18T04:26:00.000-05:00

From the Daily Record:

Critics say talk bogs down progress; Democratic lawmakers urge patience

So what happens when you put a sacred cow, a third rail and an 800-pound gorilla all on a table?

So far, not much.

Nearly two months into lawmakers' efforts to curb property taxes by tackling some of New Jersey's most politically charged and expensive elements of government -- Gov. Jon S. Corzine lumped together those metaphors in a July speech to lawmakers --committee hearings have mostly resulted in dry, academic discussions that often outline what cannot be done rather than what money-saving options exist.

Some critics are frustrated at the pace of progress on the long-standing issue, but with another two months left until the Democrats' self-imposed deadline to propose their solutions, legislative leaders said last week that they are laying the foundation for reform by closely studying the complex issues involved and expect their plans to take shape over the next month -- even if the hearings might be putting people to sleep, said state Senate President Richard J. Codey, D-Essex.
...
William Dressel Jr., executive director of the New Jersey State League of Municipalities and one of the most vocal advocates for property tax reform, said lawmakers are learning firsthand how difficult the subject is, and he has doubts that they will have meaningful solutions in place by Nov. 15.

"There is no easy solution to dealing with a very complex problem," Dressel said. "I think they realize that there is not going to be a broad-based meaningful property tax relief served to them on a silver tray."

Lowball! Morris County 8/23 - 9/17

2006-09-17T19:21:00.000-05:00

Welcome to another edition of Lowball!

Lowball! takes a look at home sales from a different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales from the past month and pick out the sales that have the highest percentage difference between original list price and selling price.

The purpose of Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, Lowball! offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.

Here is Morris County for the range specified, I'll publish the rest of the counties as time permits.

(click to enlarge)

(click to enlarge)

Caveat Emptor!
Grim

Slowdown

2006-09-17T12:56:00.000-05:00

From PhillyBurbs.com:

Market slowdown

If there's any doubt in your mind that the local real estate market has slowed, ask a seller.

“It seems like people are coming and looking, but nobody's making an offer,” said Terri Kiriakidi, who has been trying to sell her mother's Warminster house since June.

Or a real estate agent.

“I've never seen anything like this in my life,” said Herman Petrecca, a real estate agent with ReMax Associates in Warminster. “I've got a bunch of properties sitting on the market.”

Supporting these anecdotal assessments are cold, hard numbers, mined from the Multiple Listing Service used by real estate agents to track and record home sales and provided by Prudential, Fox & Roach Realtors.

Those numbers — all from the 43 municipalities of Central and Upper Bucks and Eastern Montgomery counties — show that it took 86 percent longer to sell a house in August than it did one year ago. They show that the number of homes sold in August, 521, was off 25 percent from a year ago. And they show that the local inventory of homes for sale hit an all-time high in August of 3,565, almost double December 2004's level of 1,814.

The numbers also show the area's median home-sales price hit an all-time high of $325,000 in August. But that median price was only 1.6 percent higher than the price in August 2005, one of the smallest year-over-year increases in recent memory and well below the year-over-year price increases homeowners enjoyed at the height of the boom. In May 2005, for instance, the area's median home price rose 17 percent from the previous May.

Many descriptive phrases are used to describe the area's current housing market. But all spell one word: slowdown.

Is the media shaping public perception of the bubble?

2006-09-17T06:45:00.000-05:00

From the NY Times:

Someone’s Spoiling the Party, the Housing Market Says

TO hear some people in the real estate industry tell it, one of the biggest problems with the housing market is what is being said about it in the news media.

Agents and industry executives say reporters, editors and news anchors are making a cooling market sound worse than it is. While the number of sales may have dropped from 2005 (which was a record-setting year, the end of a five-year run) and more homes stay on the market longer, real estate professionals note that sale prices in much of the country are still higher than they were a year ago.

Richard A. Smith, vice chairman and president of the Realogy Corporation, the nation’s largest residential real estate broker, said there was a “constant flood of media that is so negative” that it was discouraging many potential buyers and sellers.

“Nobody wants to be foolish in this kind of market,” he said. “No one wants to sell too low or buy too high.”
...
Robert J. Shiller, the Yale economist and author of “Irrational Exuberance,” said the news media played an important role in molding public opinion as markets both rise and fall. But he said he generally approved of the skeptical tone of many news reports about both the real estate boom and subsequent downturn. “The media has been pretty on top of this story, that this might be a psychological event,” he said.

“You have wrought my destruction, too.”

2006-09-17T06:41:00.000-05:00

From the NY Times:

A Fable, Adapted From Aesop

THERE is an Aesop fable about a man — Greek, of course — who sees a swallow fluttering about on an unusually warm winter day. Leaping to the conclusion that summer has arrived, the man sells his only coat to buy himself a good time.
...
Some economists say you merely need to replace the Greek with an American, and the coat with a house or condominium to understand the force powering the American economy during the recent housing boom.

In this updated version of the fable, Americans were intoxicated by the leaps in the value of their real estate. Assuming the good times were here to stay, they were unable to resist temptation, impulsively calling the mortgage broker to get another loan to pay for the plasma TV set, the Caribbean vacation and the three-burner barbecue grill.
...
Between the third quarter of 2005 and the first quarter of this year, home equity withdrawals were running at an annual rate of more than $850 billion, according to the Federal Reserve, and amounted to about 9 percent of disposable personal income. The personal savings rate declined into negative territory last year for the first time since 1933. And the economy surged.

In Aesop’s world, winter set in again, the swallow died and the coatless man blamed the bird for his misfortune: “By appearing before the springtime you have not only killed yourself,” he moaned, “but you have wrought my destruction, too.”

Development Watch

2006-09-17T03:50:00.000-05:00

From the Star Ledger:
New life for old factories in Orange

The boarded-up factories where John B. Stetson and his family built a thriving hat manufacturing business in Orange's Valley section may be transformed into lofts and retail space for artists.

That's the goal for the Stetson family's long-abandoned No Name Hat Factory complex, off Mitchell and South Jefferson streets. It is at the northern end of what used to be Orange's hat manufacturing district.

The Orange City Council recently made a deal with developers to breathe new residential and retail life into that site as well as into two adjacent properties: the one-time Monroe Calculating Co. and the Harvard Press building.
...
The initial redevelopment plan calls for the creation of 100 residential and retail spaces where artists will live and work, Morrissy said.

"There will be artist live-work lofts, artist retail spaces, artist studios, and art program spaces," Morrissy said. "The project will include a new pedestrian entrance to the Valley, along the east branch of the Rahway River, and another 350 condominium units, in either the old industrial buildings, or new buildings."

From the Star Ledger:
900 housing units plus retail proposed

Another 900 residential units are proposed for the township.

At its Wednesday meeting, the planning board will review an application calling for constructing the homes and a shopping center on 168 acres of farmland that borders School House and Randolph roads. The application, submitted by Summerfields at Franklin, includes plans to construct single-family dwellings, semiattached homes, a clubhouse and a retail center.

As proposed, except for 150 single-family homes, the balance of the community would be age-restricted. One out of every nine units built would be set aside for low to moderate-income housing.

Part of the township's Council on Affordable Housing obligation would be met through two proposed three-story buildings of 50 units each that would be reserved for low- to moderate-income housing.

The project is estimated to take 10 to 12 years to complete. The site is nearby the Canal Walk development and is slated to have more than 1,300 age-restricted units.

From the Jersey Journal:
19 condos on Bergen Ave. hailed as evidence of rebirth

A host of local officials yesterday kicked off the sales of 19 condos on the 600 block of Bergen Avenue in Jersey City, hailing it as a sign of increasing investments in areas of the city other than the Gold Coast.

The family team of Santomauro General Contracting turned two four-story row homes into 19 condominium units.

From the Record:
Condo plan angers neighbors

Proponents of a 196-unit condominium and town-house complex proposed off Palisade Avenue say it would bring tax revenue to the township and raise property values in the surrounding neighborhood.

The Park View development would be built on the site of an old soap factory adjoining Herrick Park. "There are no downsides" to the $92 million complex, said Frank DeVito, lawyer for the developer, Holuba Realty.

Residents in Teaneck and neighboring Bogota view the proposal through a decidedly different lens.

"This is a high-density development in a single-family neighborhood," said Mark Gold of Van Buren Avenue, just up the street from the proposed development. "It's completely inconsistent with the character of the neighborhood."

"We took a lot less than we thought we were going to get"

2006-09-16T17:38:00.000-05:00

From the Asbury Park Press:

Sellers may have to adjust expectations and prices

Sometime after Mel and Hildy Warren agreed to buy a new home in the Four Seasons retirement community in Manalapan about a year-and-a-half ago, they were surprised to find out that a couple also moving there had actually sold their old home right away and moved into an apartment while waiting for their new house to be built.

"Everybody laughed," Hildy Warren said. "We all wondered why they'd sell so soon. It turned out they were right."

The real estate market has changed a lot in the past year. The number of available homes is up and the days when sellers could stick a "for sale" sign on the lawn and name their price are gone, at least for now.

"Prices from last year are not what they are this year," said Iris Lurie, broker/owner of Century 21 Mack-Morris Iris Lurie in Marlboro.
...
"We listed it higher, thinking that was the correct price," Hildy Warren said. "The market was telling us differently."

Over the course of three months, they reduced their initial asking price, which they declined to reveal, in steps. "We weren't getting any offers and we got concerned," Hildy Warren said.

Finally, they cut it to about 10 percent below the initial price. That very day, they received and accepted an offer. They will close on the deal this month.

"We took a lot less than we thought we were going to get," Hildy Warren said. "Buyers are getting very good deals. If we had sold six months earlier, we would have gotten more."
...
The result is sellers are learning to recognize that conditions have changed. "They're slowly accepting it," Appleby said. "No one likes to think they missed the peak of the market."

The result is sellers must be a bit more humble in their asking prices, if they want their homes to sell, Appleby said. They must also put more effort into "curb appeal," sprucing up the home inside and out to make it stand out.

Don't buy stuff you cannot afford

2006-09-16T11:38:00.000-05:00

Came across this poster in the window of a Valley National Bank this morning. What ever happened to paying for things with... money? When did the line between buying and borrowing get so blurred?

A little primer for those who think borrowing against your home to take a vacation is a good idea.

Caveat Emptor,
Grim

Nassau Home Prices Drop

2006-09-16T07:03:00.000-05:00

From Newsday:

Nassau home prices actually drop

For the first time in nine years, Nassau County's closed median home prices dropped over the last year, leaving experts to wonder whether the housing market's downturn could be more significant - and longer-lasting - than first thought.

Adding fuel to the debate, median prices for homes under contract fell in both Nassau and Suffolk counties last month, according to data released Friday by the Long Island Multiple Listing Service. Nassau County's median home price stood at $495,000, 1 percent below last year's median of $500,000. It's a minor dip, to be sure, but it's still relatively early in the market's shift, sources said.

"This is the turn that we've been waiting for for a long time," said Pearl Kamer, the chief economist of the Long Island Association. "This is only the beginning of the downward cycle and only the beginning of the unwinding of the housing bubble. The price declines could continue for a long time."
...
Yet, Suffolk County saw a 1 percent dip in its median price for homes under contract year-over-year, while Nassau County's under-contract drop was 3 percent. Inventory in both counties is approaching record levels, achieved in 1990.

Pep Boys Going Condo

2006-09-16T06:51:00.000-05:00

From the Jersey City Reporter:

67-story tower to overlook Newport Mall

A 755-foot residential tower called the "Metropolitan" is being proposed for land just south of the Newport Mall, at the site of where a Pep Boys Automotive store is currently located.

If it gets its city approvals, the structure at Sixth and Washington streets would be the second largest building in New Jersey. The largest building is already in Jersey City: the Goldman Sachs building at 30 Hudson St. stands at 791 feet.

Within a 10-block radius, there are several condo towers either under construction or that have been approved for construction, including: the 55-story Trump Plaza Jersey City on Washington Blvd. and Bay Street; the 33-story Athena on the corner of Washington Boulevard and Second Street; and the proposed San Remo I, San Remo, and Monaco condo towers located off Washington Boulevard behind the Doubletree Hotel.

The Metropolitan, when completed, will have 809 condominium units, 809 parking spaces on seven floors, and 12,445 square feet of retail space.

The tower is one of several that may be built in that 18-acre shopping area currently anchored by a Shop Rite supermarket and BJ's Wholesale Club. But those shopping stores will still remain.
...
Jersey City attorney Francis Schiller, representing the developers, said the Metropolitan project would be the first phase of a larger development project that would span over 20 years, with retail always having a presence in the plaza. Schiller said there will be a meeting with the city's Planning Department to create a master plan specifically for the plaza.

What prompted G&S Investors to look at a residential component? Lehne said the decision was based on them seeing the continuing development in Jersey City.

Schiller said there is no height restriction in the area, which is governed by the Hudson Exchange Redevelopment Plan. The height of this building, Schiller said, would provide "great view corridors" of the New York Skyline to the east and the Watchung Mountains to the west.

Builders get creative

2006-09-16T03:19:00.000-05:00

From the Wall Street Journal:

New Home-Buying Tricks

Home builders have a new trick to try to sell you a new home: They will help you get rid of your old one.

Faced with falling sales, some builders are helping would-be buyers spruce up their current home by bringing in professionals who advise them on what furniture to get rid of and tell them whether they should rip off the wallpaper. Others are offering to make payments on the buyer's old mortgage (or the new one) in an effort to close the deal.

There is also renewed interest in so-called buyback programs: The builder, or a broker, agrees to buy your current home, for a preset price, if it turns out that you can't sell it.

The offers are coming both from local builders and national firms. For instance, Pulte Homes Inc. recently started pairing its customers with professional "stagers" who sweep in and do things like remove window coverings and touch up the paint, and covering up to $2,000 of the cost of the service. The program is available in about a dozen markets, including Detroit, Indianapolis, Sacramento, Calif., Tampa, Fla., and Washington, D.C.

In Phoenix, Lennar Corp.'s U.S. Home division is offering a program in which customers who sell their homes through Coldwell Banker pay 3% instead of 6% commission on the sale of their current home. (To make up for that, Coldwell Banker is paid a 3% commission for the sale of the new home.) In Detroit, Toll Brothers Inc. will make principal and interest payments of up to $2,500 a month on a buyer's new mortgage for the first six months, or give the buyer a credit equal to that amount at closing.

"Everyone is trying to be creative," says Larry August of Pacific Pride Communities, a central California builder. With so many homes on the market, selling an existing home is a "huge obstacle for anyone looking to purchase a new home." In some cases, Pacific Pride is making mortgage payments on customers' old homes for as long as six months.
...
In the Northeast, K. Hovnanian Homes, a unit of Hovnanian Enterprises Inc., often pays to have a customer's existing home appraised (a move also designed to ensure that the property goes on the market at a realistic price). In some cases, the company will also arrange for the customer to get a lower mortgage rate, pay brokerage commissions on the sale of the existing property or pick up several months of mortgage payments.

Landmark status for Duryea Road estate

2006-09-16T03:14:00.000-05:00

From the Star Ledger:

Landmark status gains for historic estate

The C. H. Huestis House, a 22-room shingle-style Queen Anne Victorian once threatened with demolition, is a step closer to designation as a local historic landmark.

Montclair's council voted unanimously Tuesday night to introduce an ordinance to designate the Duryea Road estate as historic, clearing the way for a Sept. 26 public hearing to give landmark status to a private residence for the first time.
...
In August, Montclair's planning board recommended the designation.

"The board recognizes the significance of this 1888 dwelling and agrees with the Historic Preservation Commission that it should receive landmark status," Karen Kadus, the town's director of planning and development, said in a letter announcing the decision.
...
The estate was first nominated amid fears that a developer intended to tear down the estate and erect two houses. The owner, Jim Van Note, is now expected to restore the estate, but the nomination -- the first the HPC has ever initiated on its own -- nevertheless invoked a 180-day moratorium against any demolition.

Weekend Open Discussion

2006-09-15T17:04:00.000-05:00

Observations about your local areas, comments on news stories or the New Jersey housing bubble, 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 small link on the bottom of each new message that reads "# 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 found at the bottom of the right hand menu and are categorized by week.

Hard Landing Already Here?

2006-09-15T14:46:00.000-05:00

From Comstock Partners:

The Hard Landing For Housing is Already Here

The market is suddenly assuming that since energy prices are declining and mortgage rates are drifting down, consumer spending will pick up and the housing industry decline will end. In our view this outcome is highly unlikely. Our negative outlook for consumer spending is based far more on the end of the housing boom than it is on high oil prices. In turn, it now evident that housing is already undergoing a hard landing that can’t be cured by a downturn in mortgage rates, and that the situation is likely to worsen. Here are some facts to consider.

Ø 32.6% of new mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000

Ø 43% of first-time home buyers in 2005 put no money down.

Ø 15.2% of 2005 home buyers owe at least 10% more than their home is worth.

Ø 10% of all home owners have no equity in their homes

Ø $2.7 trillion in loans will adjust to higher rates in 2006 and 2007.

Ø 70% of borrowers who took out pay-option ARMS in the past year have loan balances larger than their initial loan.

Ø Homeowners face higher payments as mortgages are reset. Generally, monthly payments rise between $200 and $500 depending on the size of the mortgage.

Ø According to Reality Trac, August foreclosures were up 23% over July and 53% over a year ago.

Ø The number of homes for sale is at record highs, and inventories are 59% higher than a year earlier.

Ø New home sales are down 22% and existing home sales down 11%.

Ø The NASB housing market index has recorded an all-time decline.

Ø The housing affordability index is at a 15-year low.

Ø The house price-to-income (rents) ratio is off the charts. According to HSBC, in 18 states accounting for over 40% of national home values, the price-to-income ratio is 3.6 standard deviations above the mean.

Ø The OFHEO index of house prices deflated by the consumption price deflator has soared to a record high of 350 from 250 in 2001. From 1976 to 1996 it never was above 220.

Ø According to the NAR the year-to year prices of existing homes are now flat. A short time ago they were rising at a yearly rate of 16%.

Ø Nationally, home prices have not declined on a year-to-year basis since 1933. Recently, however, prices have been dropping in the North East, West and Mid-West.

Ø Sales incentives are now estimated at 3% to 7% of selling prices.

Property Tax Watch

2006-09-15T11:49:00.000-05:00

From the Star Ledger:
More aid is needed for building of schools

New Jersey's school construction program needs an infusion of $3.25 billion to address a backlog of projects built up over the past two years during an overhaul of the program, a task force analyzing the school building program told Gov. Jon Corzine yesterday.
...
Lawmakers did not embrace the call for new funding.

"The first problem we have to face is changing the inflating cost of property taxes," said Senate President Richard Codey (D-Essex) "After that, we can focus in on this."

From the Jersey Journal:
Budget is up $13M - with $9M hole city is hoping to fill

Jersey City's 2007 municipal operating budget is $148 million - an increase of $13 million over last year's $135 million figure, according to city officials.

The Jersey City City Council voted Wednesday night unanimously and without comment to introduce the budget, even though Jersey City Business Administrator Brian O'Reilly said it includes a $9 million shortfall.
...
Last year, the city closed a $25 million shortfall in the 2005-2006 budget by raising property taxes 18 percent - increasing property taxes from $19.30 per $1,000 of assessed valuation to $22.85 per $1,000.

O'Reilly said he is hopeful of finding additional revenues to forestall another tax increase.

From the Cherry Hill Courier Post:
Trenton mulls regional property taxes

In a move that would significantly change how property taxes are collected in New Jersey, state lawmakers Thursday debated whether the state should move away from having each town collect property taxes.

An interfaith group that seeks to resolve inequality in New Jersey communities and a Minnesota law professor suggested that the state shift to regional property taxation, which they argued could help most homeowners and end competition for commercial development.

"It creates a community of interest," Myron Orfield, an associate law professor at the University of Minnesota, told a special committee considering New Jersey property tax changes as he detailed how the Minneapolis-St. Paul area has used regional property taxation for 25 years.

Assemblyman John Burzichelli, the committee co-chairman, said he found the testimony "very interesting," but didn't know if the idea would work in New Jersey.

"The issue is very engaging," said Burzichelli, D-Gloucester.

From the Home News Tribune:
Revamped property tax won't fix inequities of a flawed system

Yesterday, a group of them sitting on a committee considering changes in the state's tax structure, spent time listening to a recommendation that the property tax be collected by the state on a regional basis rather than by each municipality.

This approach, according to its proponents, would reduce property taxes for a majority of towns — meaning, of course, that it would increase property taxes for a minority.

And that shift, ostensibly, would correct some of the inequities in the way the tax is levied now.

The concept of a statewide property tax has been raised in New Jersey before, and it has gotten a rude reception from the public and from many folks who depend on the public for votes.
...
Those in government can't avoid that reality just because it's perceived to be politically unpopular.

But a statewide property tax is not the answer.

From the Herald/Record:
Public workers' benefits to be aired

The Joint Legislative Committee on Public Employee Benefits Reform will hold a public hearing Tuesday in Clifton on the potential for cost savings in pensions and health benefits provided to government workers.

The bipartisan panel is one of four commissioned by the Legislature to study ways to rein in property tax increases. Others are focusing on consolidation of local government services and public-school funding reform.
...
"We have spent more than a month gathering information from various experts and professionals from across the country," said Assemblywoman Nellie Pou, D-Passaic, a co-chairperson of the joint committee. "Now New Jersey taxpayers and residents will have the opportunity to air their ideas and opinions on pensions and benefits reform."

First Time Buyer or F'ed Borrower?

2006-09-15T05:17:00.000-05:00

From the Asbury Park Press:

First-time buyers face hurdles in real estate market

Michael Knapp was eager to be the first person in his family to buy a home, but first he had to make a few concessions.

He settled for a townhouse, because he couldn't find a single-family home for less than $200,000 that didn't require a complete overhaul. He extended part of his mortgage from 30 years to 40 years. He needed roommates to help pay the mortgage, and so recruited his girlfriend, Trish Maas, and his friend, Jason Reineke, to join him.

"I could probably afford it on my own," Knapp, 24, said of the $187,000 townhouse in Brick. "But I wouldn't know where my next gallon of milk would be coming from."

After a run-up in prices, first-time home buyers in Monmouth and Ocean counties are encountering major financial hurdles in their bid to own a home. Their incomes, for example, haven't kept up with escalating home prices.

It's forced hopeful home buyers such as Knapp to lower their expectations and take greater financial risks. And even then they have to worry about their finances once they get into the home, experts said.
...
"It is really, really tough," said Drew Anlas, senior vice president of Select Mortgage Corp. in Brick. As a rule of thumb, buyers take three to three-and-a-half times their annual income to figure out how much they can afford. "If you're making $60,000 a year, that's $180,000 to $210,000. What's out there for $180,000 to $210,000?"

These days, not much. During the second quarter of 2006, the median price of a home in New Jersey was $373,900 and the average 30-year fixed-rate mortgage was 6.5 percent. That means the monthly payment on a median-price home, including principal and interest, was $1,891, according to the National Association of Realtors.

To afford that, the association said, families need to make $90,768 a year. The median family income in New Jersey during that time: $81,309.
...
He turned to a townhouse instead and began the process of getting financing. He had no savings and no equity built up from a previous house, so he signed for an unconventional loan to make his initial payments manageable.

He borrowed 80 percent of the purchase price and will pay only the interest for three years, after which the principal will be included and the monthly payment will climb. He borrowed 20 percent of the purchase price with a 40-year payout, instead of the traditional 30 years.

The hope is that prices will continue to rise, interest rates will remain reasonable and Knapp can refinance under more favorable conditions.

Rough ride ahead

2006-09-15T04:05:00.000-05:00

From the WSJ Real Estate Journal:

Foreclosure Figures Suggest Homeowners in for Rocky Ride

By any measure, things are getting tougher for American homeowners.

Online foreclosure-data service RealtyTrac of Irvine, Calif., said yesterday 115,292 properties nationwide entered some stage of foreclosure last month, a rise of 24% from July and nearly a 53% increase from a year earlier.

Also yesterday, Foreclosure.com of Boca Raton, Fla., which also tracks foreclosures nationwide, said new residential foreclosures fell by 6.7% in August from July to 26,255 nationwide. The company's figures, however, show that foreclosures are up 7.3% compared to August 2005.

The divergent results can be explained by the way each company counts foreclosed properties. RealtyTrac data includes properties in the early stages of a foreclosure proceeding, even before the bank actually owns those properties. About 60% of these get remedied or the properties are sold before they get to the auction stage, said Rick Sharga, vice president of marketing for RealtyTrac.

A spokesman for Foreclosure.com said it only reports properties officially foreclosed and in the hands of the banks.

The trend is supported by data collected by the Mortgage Bankers Association, which reports the number of U.S. households late on mortgage payments fell slightly in the second quarter, but that a modest rise in delinquency and foreclosures is expected going forward.

The delinquency rate for residential mortgages was 4.39% in the April-June period, down from 4.41% in the previous three months, the MBA said in a survey that included 42.5 million loans. Home mortgages in foreclosure made up 0.99% of total mortgages at the end of the quarter, up from 0.98% three months earlier.
...
"With home-price appreciation continuing to decelerate," he said, August's "increase could be the beginning of an upward shift in the foreclosures market."

Foreclosure.com President and CEO Brad Geisen said while the company has continued to see fluctuations in month-to-month data, "as we near the end of the third quarter, most housing and economic indicators point to a sustained period of increased new foreclosure activity across the country."

Agent misrepresented Towaco home

2006-09-15T02:23:00.000-05:00

For those following the Towaco case. From the Daily Record:

Jury: Nothing wrong with a house in Towaco

A Superior Court jury decided Tuesday that a Weichert Co. real estate agent misrepresented the location of a Montville home and the school the buyers' son might attend, but said that the act did not cause the family a measurable loss.

The jury agreed with homeowners Theodore and Frances Vagias that the failure of real estate agent Gabrielle Dingle to use the "T-word"-- Towaco --when describing the location of the home, constituted an "affirmative misrepresentation" under the Consumer Fraud Act.
...
Dingle had testified that she was not aware until after the sale was completed that the home was in the Towaco section, and that she never specified which elementary school the child might attend.

The jury declined to rule that the misrepresentation they assigned to Dingle caused the Vagiases a substantive, measurable loss. If a loss had been determined, the Consumer Fraud Act calls for up to triple damages.

The Vagias' attorney Keith Harris told the jury in his closing that the loss suffered by the family was the 10 percent extra they paid for the home, as measured by a real estate appraiser he put on the stand, because they believed the home was in the Montville section of the township, and not Towaco. Harris placed the loss at $70,000.

Making room for strangers

2006-09-15T00:33:00.000-05:00

A Letter to the Editor published in the Jersey Journal:

We're being pushed out

Enough with condo conversions in Jersey City. Out-of-town developers are pushing good people, who were born and raised in Jersey City, out of their homes in order to bring in a new crop of people who want to live in high-rise apartments surrounded by cement and glass, and who do not care to have neighbors.

We have neighbors and friends. These developers have a lot of nerve calling our homes and neighborhoods "blighted" - simply because we do not have money to make our homes look like a fairytale gingerbread house, but they are clean and comfortable and more importantly, they are home to us.

Why do we have to be pushed out to make room for strangers?

Down payment? Charge it.

2006-09-14T15:12:00.000-05:00

From the WSJ Real Estate Journal:

AmEx Makes Room on Its Cards For Down Payments on Condos

Coming up with the money for a down payment on a new condominium may soon be as easy as charging it: American Express Co. is expected to announce today that it will allow some customers to use its cards to make condominium down payments.

For now, the service appears to be limited to a select few: luxury-condo buyers in Manhattan. American Express is rolling out the program with New York real-estate firm Moinian Group, for one of its properties currently under construction -- the Atelier condominium in Midtown Manhattan. Both companies say they plan to expand the service to other properties and partners.

For condo buyers, the deal will allow them to earn reward points or frequent-flier miles on big transactions, while extending the amount of time they have to meet the down-payment requirements and eliminating the hassle of getting certified checks. Buyers will earn one point for every dollar charged.
...
Bill Glenn, American Express's head of merchant business, says the move is part of the company's efforts to expand the ways its clients can use its cards. The companies didn't disclose the terms of the agreement, although Moinian will pay American Express a fee on each transaction. The condo buyer won't be charged an additional fee.
...
Siva Tayi, a potential Manhattan condo buyer from Houston, plans to charge the 10% down payment on a $1.2 million two-bedroom unit in Moinian's Atelier condo on his Platinum card. "I thought it was a good idea to use the [card] and gain the points," says Mr. Tayi, who runs an information-technology staffing and outsourcing company. Not only does it eliminate the hassle of writing a check or having to wire money, he says, but with the 120,000 points he expects to get -- combined with the 300,000 points he has already accumulated -- "I can probably make a trip to India."

Five Stages of Grief

2006-09-14T09:42:00.000-05:00

From Realty Times:

Realty Reality: "Five Stages" Applies to Realtors Too

The first stage, Denial, is similar to that observed in terminally ill patients. It is the first reaction of agents. They refuse to accept the diagnosis. They reject the data, no matter how carefully it is presented. While in the denial stage they will clutch at straws, often looking for second, third, and even fourth opinions. They will exaggerate the importance of even the slightest bit of good news.
...
After Denial comes Anger. Here there are important differences between real estate agents and terminally ill patients. The latter are inclined to be angry with God or some vague forces such as Fate. The anger of agents, however, tends to be directed toward some tangible being, such as the broker. It is the broker's fault that there are no good leads, no phone calls, etc.

The direction of anger will vary depending on the level of abstraction with which the agent is working. If it is the agent's personal lack of activity, then the broker is the likely target. However, if the agent really does perceive the problem to be larger, e.g. to be a local, regional, or even national phenomenon, then the agent may direct his anger to such entities as nay-sayers in the newspaper, economists, or even "the government."
...
After Anger comes the Bargaining stage. Here, the real estate agent is more like a terminally ill patient in that his bargaining is liable to be directed to some outer force (God, Fates, Forces of the Universe). This takes the form of, "If only something good will happen, I will do such and such." Those of us who have been around long enough to remember the early nineties will recall the Realtor's prayer, "Dear Lord, if you will give me just one more good market, I promise not to %&!* it all away the next time." That is bargaining.

Next, Depression is experienced. This is unlike the well-known inchoate clinical depression for which the sufferer cannot name a cause. The depression that characterizes the fourth stage is understood as a result of some reality. It is the depression experienced when one realizes that the days of big bucks are over, that it won't be possible to make the lease payments on that fancy car, that there won't be anymore $200 golf rounds, etc. It is depression with a focus.
...
Kubler-Ross observed a final fifth stage among terminally ill people, which she called Acceptance. But this should not be thought of as a happy or benign state. Rather, it is a giving up, a ceasing to struggle. It happens to real estate agents as well. Having recognized the reality of a dying market and after being depressed about the personal results thereof, the agent surrenders and stops struggling

Potential buyers wait to be "priced-in"

2006-09-14T05:19:00.000-05:00

Great piece this morning from the Wall Street Journal:

How Low Will Home Prices Go?

Recently she's seen reasons for hope: Far more homes were showing up in their price range, and others she'd seen a year ago were being relisted at reduced asking prices. Melissa decided it was time to look around again, and last weekend she asked me to come along on a tour of open houses in her price range. My sister had a list of homes she'd found online, but I suggested we tour as many open houses as we could to get a feel for the market.

What we saw was bleak news for sellers in our region, but good news for buyers like Melissa and Joe: block after block of open-house signs. In fact, we were hard-pressed to find a street that didn't have at least one home for sale -- and many had more than one. What's more, most of the 20 or so homes we visited were vacant -- a sign that homeowners have moved on and are motivated to sell, or that speculators are looking to unload properties before prices go any lower. (Asked why one home was vacant, one agent said frankly: "This was a 'flip' that flopped.")

Though some of the agents we encountered continued to promote their "charming" homes as "a steal," a surprising number were more candid. "The owner way overpriced this home," said one. "I bet if you offered $30,000 less they'd jump at it." We believed her, because she was running the open house as a favor for another agent.

Another sign of a turning market: We saw very similar houses with prices all over the map -- ranging from the low $200,000s to $270,000. That's evidence that sellers aren't sure what houses are worth these days, with some reluctant to accept that market dynamics have changed.

"They look at home-price comparisons from a year ago when there was far more demand than supply," says Pat Lashinsky, senior vice president of Emeryville, Calif., real-estate firm ZipRealty. Now that there's excess supply, he says, sellers need to be more willing to negotiate.
...
After our exhausting open-house blitz, Melissa asked for my thoughts. Though I'm too young to have experienced the 1980s real-estate market implosion, something told me that things are going to get a lot worse for sellers before they get better. To get an expert's take, I asked Robert J. Shiller, a Yale economics professor, for his insight on where the East Coast real-estate market may be headed.

"We don't know exactly what's going to happen because we've just experienced the biggest housing boom this country has ever seen," he says. In addition to homeowners struggling to sell existing homes, construction is at near-record levels: The last time this much inventory entered the market was 1950, when builders were building suburban homes for soldiers returning from war, he says.

Parsippany superintendent spoof

2006-09-14T05:00:00.000-05:00

From YouTube:

From the Daily Record:

Parsippany superintendent lampooned in YouTube video

Incoming Schools Superintendent LeRoy E. Seitz will not start until Oct. 2 but he is already the subject of an anonymous, "Saturday Night Live"-style spoof on the hugely popular YouTube Internet site.

Seitz' $192,000 annual salary and benefits are being lampooned in a fake TV ad that utilizes music and images from Bud Lite's iconic "Real Men of Genius" commercials.
...
Board president Robert Perlett, who had not seen the video, was not amused.

"I think that it's cowardly. It's also childish," Perlett said.

The producer, identified only as Parsippany Lampoon, did not return an e-mail sent Wednesday through the YouTube site. The video was posted on Tuesday.

It is unclear whether the same person is responsible for several other recent videos on YouTube mocking Lake Parsippany members, Council Vice President James Vigilante and others.

Very significant reforms?

2006-09-14T04:11:00.000-05:00

From the Asbury Park Press:

Panel eyes "significant" changes to state benefits

Lawmakers continued batting around ideas Wednesday about how to tackle two of the largest expenses that help drive the state's notoriously high property taxes — bureaucracy and worker benefits — though without concrete action.

One Democrat heading the committee examining public worker benefits promised "very significant" reforms after a briefing on the growing costs of public employee health coverage but was not specific.

Lawmakers are examining the costs of New Jersey's many levels of government and employee benefits as part of four committees searching for ways to reduce property taxes.
...
Beaver said the state could save nearly $500 million by requiring all state employees to pay 10 percent of their health care premiums, as was suggested in a December report by the Benefits Review Task Force appointed by then-Gov. Codey.
...
"I think ultimately we're going to be looking at some very, very significant reforms," Pou said.

The Ballad of Eminent Domain

2006-09-14T02:25:00.000-05:00

From the Star Ledger:

The eminent domain outlaws

Songwriter Woody Guthrie, who chronicled the injustices of the 1930s, wrote in "The Ballad of Pretty Boy Floyd": "Some will rob you with a six gun ... And some with a fountain pen ... And as through your life you travel ... You won't never see an outlaw drive a family from their home."

Those words embody the horror of eminent domain abuse. Under the guise of "economic redevelopment," politicians and their developer friends are stealing people's homes and businesses. These modern outlaws are armed with bogus "studies." Fast-talking politicians are promising communities riches, but they are abusing the law to enrich only themselves and their friends. Entire communities, from trailer-park residents in Bergen County to business owners in New Brunswick to families in Long Branch, are facing upheaval just so bankers and developers can make millions on property they have no right to own.

Politicians in Trenton are deaf to the pleas of people like the Halpers in Piscataway, who lost their farm, and Lou and Lil Anza lone, an 89-year-old couple in Long Branch who are losing the place they have called home for half a century.

In 70 years, apparently not much has changed in America.

-- Ed Mueller, New Brunswick

The writer's property in New Brunswick has been condemned.

Bye Bye A.C.!

2006-09-13T20:38:00.000-05:00

Something a bit more lighthearted. From The Record:

Monopoly outgrows A.C.

Goodbye, Boardwalk. Hello, Broadway!

On Tuesday, Hasbro, the maker of Monopoly, revealed its latest version of its most popular board game – a more contemporary edition that abandons the Atlantic City streets featured on the game's board since 1935 in favor of more-recognizable landmarks from 22 cities across the country.

After an Internet vote that drew more than 3 million ballots from consumers, New York's Times Square earned the coveted Boardwalk spot and will cost – reflecting the changes since the game's first edition – a cool $4 million. (In a twist sure to roil some New Yorkers, Park Place has been replaced by Boston's Fenway Park.)
...
The inflated prices are one of several changes that Hasbro believes will make the new version more relevant to today's consumers. Players can go to jail, or perhaps a white-collar, minimum-security prison, for infractions such as insider trading.

Game pieces now include a box of McDonald's fries, a Motorola cellphone and a cup of Starbucks coffee (monopoly, indeed). Some of the classic pieces have given way to more modern interpretations: The Scottish terrier is now a Labradoodle. The open-cockpit race car becomes an environmentally friendly Toyota Prius. And a speedy jet replaces the plodding battleship. None of the companies paid for inclusion in the new edition, Hasbro officials said.
...
Not everyone was quite as excited about the changes, however. In Atlantic City, the Convention and Visitors Authority's executive director, Jeffrey Vasser, sent a letter this spring asking Hasbro to reconsider, and thousands of residents signed a protest petition. The game's use of Atlantic City points to the city's popularity in the 1930s, when it was sometimes called "The World's Playground."

On Tuesday, Vasser said assurances that the original game would survive, along with the new Community Chest card that gives out $1 million for winning at Atlantic City casinos, have muted the complaints; many residents, he said, had mistakenly believed the new game would replace the old one.
...
The game's predecessor was invented by Elizabeth Magie, Orbanes said, who intended it to warn against the excesses of unrestrained capitalism. Ironically, once a man named Charles Darrow popularized the game now known as Monopoly using Atlantic City properties, it became a celebration of materialism.

Northern New Jersey Weekly Inventory Update

2006-09-13T11:16:00.000-05:00

GSMLS - http://www.gsmls.com
(Garden State Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)

9/6 - 18,687
9/13 - 18,886 (1.1% Increase)

NJMLS - http://www.njmls.com
(New Jersey Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)

9/6 - 9,119
9/13 - 9,184 (0.7% Increase)

MLSGuide - http://www.mlsguide.com
Single Family Homes, Condo, Coop
(Hudson County)

9/6 - 2,683
9/13 - 2,705 (0.8% Increase)

Home Prices Expected to Fall for Remainder of 2006

2006-09-13T10:51:00.000-05:00

From the National Association of Realtors:

NAR: Home Prices Expected to Fall for Remainder of 2006
(full text posted)

Housing prices are expected to continue to have a limited fall throughout 2006, according to testimony submitted by the National Association of Realtors at today's Senate Banking Committee hearing, titled the Housing Bubble and Its Implications for the Economy. In addition, NAR noted that the sellers' market is transitioning to a buyers' market, which can be healthy for some local economies.

"For the past five years, the housing market has been a steadfast leader in the U.S. economy," Thomas M. Stevens, president of NAR, told the Senate Subcommittee on Housing and Transportation and the Senate Subcommittee on Economic Policy. "After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers," said Stevens.

Stevens said that with the falling demand and increased supply, home prices still realized slight appreciation though it was less than 1 percent, where over the past few years homes were appreciating at double-digit rates. "While recent developments raise concern, it is important to remember that the housing market varies significantly across the country," said Stevens. One-third of the country (by population) is still seeing rising home prices, including Alaska, New Mexico, Vermont and many states in the South, excluding Florida. States that experienced the greatest increases in home prices in recent years are experiencing significantly lower sales, such as Arizona, California, Florida, Nevada and Virginia.

"Contrary to many reports, there is not a 'national housing bubble,'" said Stevens. "We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment." Also contributing to the cooling housing market is an increase in mortgage rates of nearly one point, speculative investors pulling back and first-time buyers being priced out of the market.

Adjustments to the housing market are not unique and can often times be necessary, said Stevens. In addition to the rapid appreciation of years past, the rise in mortgage rates affects a homebuyer's ability to finance and purchase a home. "Pressure is being felt in the housing market due to rising mortgage rates," said Stevens. "With rising interest rates, homebuyers have become exhausted financially which explains why sales have tumbled in higher-priced regions of the country."

NAR forecasts a drop in home sales of around 8 percent in 2006, followed by another 2 percent decline in 2007. These numbers are based on the stabilizing of mortgage rates and modest expansion of the economy. Also predicted is that home price growth will be minimal-less than 3 percent in 2006 and 2007. However, NAR warns that a significant shift in interest rates or a change in the economy would change this forecast. NAR notes that a soft landing is possible under the right circumstances and affordable mortgage financing is an important component in achieving this.

"Because the housing market strongly supports the economy and drives consumer spending, it is imperative that the Congress adopt policies that encourage homeownership and make purchasing a home obtainable for the millions of families who desire to own a home of their own. NAR stands ready to work with Congress to continue to open the door to the American dream of homeownership," said Stevens.

In 2005, the housing sector directly contributed more than $2 trillion to the national economy, accounting for 16.2 percent of the economic activity, according to testimony by the National Association of Realtors.

Lowball! Bergen & Passaic 8/23 - 9/13

2006-09-13T07:54:00.000-05:00

Welcome to another edition of Lowball!

Lowball! takes a look at home sales from a different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales from the past month and pick out the sales that have the highest percentage difference between original list price and selling price.

The purpose of Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, Lowball! offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.

Here are Bergen and Passaic for the range specified, I'll publish the rest of the counties as time permits.

Bergen:

(click to enlarge)

Passaic:

(click to enlarge)

Sorry about the images, it's just much easier for me to post these as graphics.

Caveat Emptor!
Grim

NJ jobless rate ticks higher

2006-09-13T06:19:00.000-05:00

From the Asbury Park Press:

N.J. jobless rate higher in August

New Jersey's economy didn't add enough jobs in August to keep up with the number of people entering the work force, the state's Department of Labor and Workforce Development reported Tuesday.

The Garden State added 400 jobs, but its unemployment rate rose to 5.4 percent from 5.1 percent in July. That made for tough odds for workers seeking new jobs.

"More (difficult) than I thought initially," said Peter Burnett, 42, a retail manager from Carteret, who was at a job fair at the PNC Bank Arts Center in Holmdel on Tuesday looking for a job that would pay more. "I gave myself four months (to find a job), and it's been nine months."

The report was the latest evidence that New Jersey's economy isn't keeping pace with that of the rest of the country. The United States added 128,000 jobs in August and had a nationwide unemployment rate of 4.7 percent compared with 4.8 percent in July. Because New Jersey represents about 3 percent of the nation's employment, it should have gained 3,840 jobs.

Inventory Up, Prices Down

2006-09-13T06:11:00.000-05:00

From the Wall Street Journal Online:

Rising Inventory of Unsold Homes Is Likely to Put Pressure on Prices

A continued rise in inventories of unsold homes in August is likely to put more downward pressure on home prices in parts of the U.S.

Inventories of homes in 18 large metropolitan areas across the country expanded by 4.7% in August from a month earlier, according to data compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data are based on single-family homes and condos included in local multiple-listing services of homes for sale.

The biggest increases -- 16% in the Dallas area and 13% in Seattle -- came in markets that have been relatively strong recently. A sharp rise in inventories in those areas is likely to help restrain price increases. Other sizable increases came in Orlando, Fla. (8%), San Francisco (6.1%) and Miami (5.6%).
...
Home sales have plunged over the past year in many areas where prices had soared over the preceding five years, notably in California, Florida, Arizona, Massachusetts and the Washington, D.C., area. Many potential buyers are waiting for prices to come down further. The persistent weakness in these markets has prompted many housing experts to say prices will have to decline more to revive sales.
...
Ivy Zelman, a housing analyst at Credit Suisse Group in Cleveland, estimates that prices of newly built homes in San Diego, Sacramento, Calif., Phoenix, northern Virginia and southwest Florida already are down as much as 10% to 15% from a year ago. That estimate includes "concessions" from builders, such as upgraded kitchens or help with closing costs, which are disguised price cuts. But Ms. Zelman still sees more price declines ahead. "We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop," she says.

First Suburbs Unite

2006-09-13T05:29:00.000-05:00

From the Star Ledger:

'First suburbs' are finding strength in numbers

They are described as the "first suburbs," towns that sprang up along the borders of New Jersey's cities in the past century and a half.

They include West Orange, Caldwell, East Orange, Maplewood, Rahway, Franklin, Parsippany and over 90 others. Half of the state's population lives in these towns or in the neighboring cities.

Most are fully developed and tax-stressed. Their school systems are financially strained, their housing, roads and sewers are aging, their business districts fading and their population is becoming increasingly diverse racially and economically.

What they do not have, in the view of people who want to see these towns prosper, is one voice. A voice that can shout for the attention of the state and federal government and business.
...
"For decades, the state has concentrated on developing rural and exurban areas and on redevelopment in urban areas," said Michelle Loxton, an OPEN Society spokeswoman. "Comparable public sector reinvestment has not been focused on older developed communities."
...
He said first suburbs cannot dig themselves out or stop the cycle of decline once it begins.

"They simply do not receive the attention the center cities have justifiably deserved in this country for sometime," Puentes said. "They do deserve attention because they do need assistance."
...
Among the towns that are either joining the coalition or have been asked to consider it are: Belleville, Bloomfield, Glen Ridge, Maplewood, Montclair, Nutley, South Orange, West Caldwell, Highland Park, Spotswood, Clark, Cranford, Fanwood, Garwood, Kenilworth, Plainfield, Roselle, Roselle Park, Scotch Plains, Springfield, Hamilton, Hightstown, Hopewell Borough and Pennington.

What about South Jersey?

2006-09-13T05:27:00.000-05:00

From the Courier Post Online:

Study: S.J. good place to live

South Jersey is one of the best places in America to relocate -- but not retire, according to a study by the Retirement Solutions Foundation.

Based on a healthy job market, relatively affordable housing and good quality of life, the area ranked third, behind Phoenix and Orlando, Fla. Three of the six areas on the list are in Florida. Madison, Wis., rounds out the picks.

The rankings were based on statistics from the National Association of Realtors, the Places Rated Almanac and the Milken Institute, a California-based economic think tank.

Jane White, president of the Morris County-based foundation, said people who live in the six markets will do well to sell their homes when they stop working and move somewhere less expensive.

"These aren't places to retire -- they're places you live and work now so you'll have a market for your home when you're ready to retire," she said.
...
"Housing has been appreciating at a good pace yet but isn't overpriced," she said. "But a lot of people won't be staying here when they retire because of the taxes."
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Hamilton plans to travel to France and then likely to Charlotte, N.C., when she retires.

"People can use the equity they have in their homes and wind up with a good quality of life," she said.

City residents better off?

2006-09-12T20:18:00.000-05:00

From Newsday:

Report: NJ cities in better shape, but not their residents

Many of New Jersey's cities have seen an increase in jobs and property values over the last 10 years, but the changes are not bettering the lives of their residents, according to a report released Tuesday.

The study by the Housing and Community Development Network of New Jersey found housing prices, property values and job growth in 30 cities have outpaced the rest of the state since 1999.

But it found long-term city residents can neither afford the new homes nor qualify for new jobs. The survey also shows that nearly half of city children live in single-parent households.

"New Jersey cities are doing better today than they were 10 years ago, but unfortunately the residents of the cities aren't faring quite as well," said Staci Berger, advocacy director for the network.

The report also questioned whether the positive gains in cities would continue, citing concern about inflated real estate prices, and unpredictable state aid and tax incentives.
...
"The cities have become an economic engine for New Jersey," said Alan Mallach, the report's author and a former Trenton housing and development director. "They are no longer what people consider to be a drag."

Lawmakers to meet on housing bubble

2006-09-12T17:19:00.000-05:00

From Reuters:

Lawmakers to probe housing "bubble," mortgages

U.S. lawmakers will question some leading government and industry economists about the perils of a possible 'housing bubble' in a Wednesday hearing.

Lawmakers wanted the session "because we've heard a great deal about the possibility of a housing bubble for several years now," said Sen. Wayne Allard, a Republican from Colorado.

The hearing, "The Housing Bubble and its Implications for the Economy," will be held in an open session of the Senate Banking Committee at 10 a.m..

Next week, the same committee will hold a hearing on the growth of innovative mortgage products that have mushroomed along with the housing sector.

Lawmakers behind Wednesday's hearing said that they were concerned that a steady flow of soft housing data could put the nation's economy in peril.

House prices increased by their smallest margin in over six years during the second quarter of 2006, a recent government study found. Sales of new and existing homes, too, are much slower than their recent break-neck pace.

"The economy has been buoyed for some time by unrealistic expectations about the appreciation of housing prices," said Jack Reed, a Democrat from Rhode Island, who is helping sponsor the meeting. "Now that the housing market is cooling, the economy may be headed for a bumpy landing."

The lawmakers will hear from several chief economists like Richard Brown of the Federal Deposit Insurance Corporation, Patrick Lawler of the Office of Federal Housing Enterprise Oversight, Dave Seiders of the National Association of Homebuilders and Tom Stevens of the National Association of Realtors.

Where do your tax dollars go?

2006-09-12T09:54:00.000-05:00

From Bloomberg (No Link):

New Jersey, Running Pension Deficit, Tackles Double Dipping

As a municipal court judge in Asbury Park, New Jersey, Mark T. Apostolou spends two days a week settling traffic summonses and disorderly conduct offenses. For that, he makes $52,000 a year.

Add on six municipalities where he sits in a similar capacity, and his earnings balloon to $235,816, based on a list of the 50 highest-paid public employees in New Jersey who have more than one government job. If Apostolou, 52, retired now, he would be entitled to a pension exceeding $80,000 a year, under a formula from the state treasurer's office.

New Jersey leads the U.S. with the most workers receiving incomes or pensions from multiple public jobs, which is banned in many states. For more than 50 years, measures to prohibit the practice have died in the Legislature, where 19 of 120 current members hold another government job. The issue is being revived again as lawmakers seek cost savings after promising to cut property taxes that are the highest in the nation.

``Higher property taxes, lawsuits, bankruptcy, a completely defunct public-employee benefits system and ruined lives'' may result if the system isn't fixed, said Assemblyman Thomas Giblin of Essex County. He is a member of the legislative panel working on the problem.

The state is spending $1 billion this year, out of a budget of $31 billion, to pay pensioners, Treasury spokesman Mark Perkiss said. Governor Jon Corzine and the Legislature authorized putting $1.1 billion into the system for future pension
obligations, about 58 percent of the amount needed.

The system is $18 billion short of being fully funded, after lawmakers tackling budget gaps made only partial payments in recent years. Still, the $1.1 billion contribution is more than in the past 10 years combined. New Jersey, the 10th-most-populous state, has more than $30 billion of debt.
...
In most states, holding more than one public office is illegal, unconstitutional or just not done, said Jon Shure, president of New Jersey Policy Perspective, a nonprofit organization in Trenton that researches state issues. In a June report, the group said New Jersey had the most politicians holding multiple offices.

A 2004 report by the Center for Public Integrity, in Washington, showed that 33 percent of New Jersey legislators received income from another government agency, a third more than the second-ranked state, Delaware, he said.

The decline is just beginning

2006-09-12T07:30:00.000-05:00

From The New York Sun:

Real Estate Recession Coming

Some realtors and economists now argue that the decline in home prices will be modest and is nearly complete.

They are very likely to be mistaken. This decline is just beginning and will become more severe because of a recession that will be triggered by the falling home prices. This in turn will lead to a surge in unemployment and many of the newly-unemployed will no longer be able to afford their homes.

The first factor that led to the unprecedented surge in home prices of more than 50% in the last five years is that the Federal Reserve began to pursue an extremely easy money policy in 2001 to buffer the economy from the implosion of the stock price bubble of the late 1990s.
...
The second factor that drove home prices upward has been the creativity of the lenders in developing new forms of credit. Financial firms became much more creative in designing mortgages that reduced the monthly payment of the borrowers and thus enabled them to buy more expensive properties. More borrowers opted for adjustable interest rate mortgages, or ARMS. Some provided only for interest payments for five or ten years. A recent innovation was the negative amortization mortgage, sometimes called the option ARM. The interest payment that the borrowers made for three or five years was less than the amount required based on the interest rate, and the borrowers' indebtedness increased.
...
The decline in spending that will follow from the combination of the sharp decline in new home construction and the much smaller borrowing against lower home values will lead to a sharp increase in the unemployment rate. Foreclosures and price drops will follow.

The decline in household wealth that will follow from lower home prices is likely to be comparable to the decline in 2000, 2001, and 2002 that followed from the lower stock prices. Moreover the sharp slowdown in the rate of economic growth is not good news for corporate profits.
...
The New York area will be sharply affected both by the decline in home prices and in stock prices. Homes in the metropolitan area will remain more costly than in most other parts of the country, but they will become much more affordable than they now.

NJ Homeowners sue real estate agent for fraud

2006-09-12T05:19:00.000-05:00

From the Daily Record:

Jury to decide what's in a name

A Morris County jury is expected to begin deciding today whether a real estate agent's description of a new home as being in Montville constitutes fraud because the new homeowners claimed they later discovered that it is in Towaco --which they claimed was a less prestigious location.

In their lawsuit, Theodore and Frances Vagias claimed in 2001 that they told Weichert Co. real estate agent Gabrielle Dingle that they were seeking a home in a prestigious community.

After looking at about eight homes, they settled on one for sale for $743,435 in a then-new development called Woodmont Court at Montville.

The Vagiases claimed that only after the purchase was completed did they find out that the home they were led to believe was in the Montville section of Montville Township -- which reflected the prestigious address they were seeking -- was in fact in the Towaco section of the township, which they claimed was less prestigious.

The location of the home, the couple claimed, would mean that their son would have to attend a different school than they were seeking -- one with a lesser reputation.
...
The case is being heard before Superior Court Judge Catherine M. Langlois in Morristown after the state appeals court overturned an earlier trial court dismissal of the case.

The Vagiases filed the original lawsuit in 2002 under the Consumer Fraud Act, claiming that Dingle's statements were intentionally misleading.

The trial judge ruled that Dingle's statements were an "omission," not an affirmative misstatement, according to the appeals court decision. The appeals court ruled that the Consumer Fraud Act prohibits both affirmative acts of deception and acts of omission "with intent that others rely on such concealment, suppression or omission."

NJ Government Downsizing

2006-09-12T05:11:00.000-05:00

From the Star Ledger:

Newark considering pink slips for 800

Up to 20 percent of Newark's municipal work force could be laid off due to a "savage structural deficit" in the city's budget, Mayor Cory Booker said.

"There are going to have to be major personnel reductions," Booker said yesterday after a 9/11 memorial service. "We are reviewing every way to recoup money and stop waste. At the end of the day, we have to spend less money, and that's personnel."

Booker said 10 to 20 percent of the city's 4,000-person work force -- between 400 and 800 employees -- could lose their jobs, but a final number won't be determined until several forensic audits are completed and the city embarks on its 2007 budget process.
...
With the 425 layoffs announced by the Newark Housing Authority two weeks ago, the potential for 1,200 layoffs at two of the largest employers of city residents has union leaders concerned.

"This is the middle class in this city. It provides jobs and decent wages and it's about to be hit again," said Rahaman Muhammad, president of Service Employees International Union Local 617. The union represents 600 city sanitation workers, crossing guards and 911 operators.
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"The union's position is that layoffs would not be reasonable," said Mike James, president of Newark Council 21, the union that represents the city's white-collar workers.

Reassessment Angst

2006-09-12T05:09:00.000-05:00

From Courier News:

Franklin residents seeing red over taxes

Some residents of Franklin's age-restricted communities think their homes are assessed too frequently and that errors by the township assessor led to unfairly high assessments.

While complaints about property taxes are nothing new -- especially in New Jersey -- the residents have gained an important ally: the Township Council.

In July, the council asked the Somerset County Board of Taxation for at least a one-year suspension of tax assessor Burnham Hobbs Jr.'s annual reassessment policy and a review of assessment practices within the township.
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Hobbs, on the job about 20 years, has defended his work. So has Franklin Mayor Brian Levine, who was the lone dissenting vote against the resolution. Levine said he supports a one-year freeze on assessments in order to resolve any issues, but he said the township's real issue is high property taxes, which result from high spending.
...
"If we do not reassess each year, you end up transferring real estate taxes," Hobbs said. "They get transferred from neighborhoods that have gone up more rapidly to neighborhoods that have gone up more slowly."

"We make millions of dollars each year for this town on added assessments and omitted assessments," Hobbs said. "And we show the reason why we want to continue making re-inspections of all the properties -- is because things do change. Basements get finished, decks get added, air conditioners get added, without permits, and that's what we find."

A Global Housing Bubble?

2006-09-11T20:35:00.000-05:00

From the Economist:

Checking the thermostat
Property prices are cooling fast in America, but heating up elsewhere

HOUSES are not just places to live in; they are increasingly important to whole economies, which is why The Economist started publishing global house-price indicators in 2002. This has allowed us to track the biggest global property-price boom in history. The latest gloomy news from America may suggest that the world is on the brink of its biggest ever house-price bust. However, our latest quarterly update suggests that, outside America, prices are perking up.

America's housing market has certainly caught a chill. According to the Office of Federal Housing Enterprise Oversight (OFHEO), the average price of a house rose by only 1.2% in the second quarter, the smallest gain since 1999. The past year has seen the sharpest slowdown in the rate of growth since the series started in 1975. Even so, average prices are still up by 10.1% on a year ago. This is much stronger than the series published by the National Association of Realtors (NAR), which showed a rise of only 0.9% in the year to July.
...
Elsewhere, our global house-price indicators signal a cheerier story. House-price inflation is faster than a year ago in roughly half of the 20 countries we track (see table). Apart from America, only Spain, Hong Kong and South Africa have seen big slowdowns. In ten of the countries, prices are rising at double-digit rates, compared with only seven countries last year.

European housing markets—notably Denmark, Belgium, Ireland, France and Sweden—now dominate the top of the league. Anecdotal evidence suggests that even the German market is starting to wake up after more than a decade of flat or falling prices, but this has yet to show up the index that we use, which is published with a long lag (there are no figures for 2006). If any readers know of a more timely index, please let us know.
...
An OECD study published last year adjusted the price/rent ratio for interest rates and other factors, to estimate how overvalued home prices were around the globe. Updating those figures to take account of price rises since then suggests that housing is now 35-50% overvalued in Britain and Australia and perhaps 20% too dear in America. A return to fair value will mean either rising rents or falling prices. If rents continue to rise at today's pace, many years of stagnant prices will be required to bring the price/rent ratio back to its long-term average. Especially after a giddy ascent, it is too soon to talk about a soft landing before a return to firm ground.

Did 9/11 play a role in the housing boom?

2006-09-11T11:39:00.000-05:00

From TheStreet.com:

Housing Rises in Terror's Wake

When the Twin Towers fell on Sept. 11, 2001, a glowing symbol of American capitalism was destroyed. Just a few months later, Americans were already talking about a new symbol of the nation's mighty wealth potential: the U.S. housing boom.

But could there have been a U.S. housing boom without the events of 9/11? It's a matter of much debate. What is clear is that certain factors that would lead to a real estate recovery were already in place before the attacks, most prominently the Nasdaq's plunge earlier that year.

Perahaps it's best, then, to say that without 9/11, there would have been a recovery in the housing market, which was in a funk in 2000 and the first half of 2001. But the terror attacks unleashed a series of policy actions that insted spurred a boom.

Most experts agree that the U.S. housing boom was caused by a confluence of factors set in motion in 2001 -- including very low mortgage rates and a newfound desire for tangible assets like real estate.

"In terms of the nationwide housing market boom, certainly the interest rate declines helped," says Lawrence Yun, an economist with the National Association of Realtors. "But there is also some element that is hard to quantify. In more uncertain times, people prefer having a tangible asset."

It's a mistake, though, to think that 9/11 alone created these factors. In fact, the Nasdaq's plunge in the spring of 2001 first put the ball in motion for the Federal Reserve's rate cuts and the flight to hard assets after millions of Americans saw their paper wealth evaporate in the dot-com bust.

Debt Epidemic

2006-09-11T06:23:00.000-05:00

From the Daily Record:

Debts render many hopeless

It seems that we have an epidemic on our hands.

Recently, Reed Fraasa, a Certified Financial Planner in Riverdale, encountered several new clients who struck him as being at the ends of their ropes.

All of them apparently had made the same mistake: They were overwhelmed by their debts.

No, they had not splurged on their credit cards.

They had refinanced their houses -- and had spent most or all of the money they had withdrawn.

"They had no idea where the money went," Fraasa recalls.

And they were full of despair. They saw that their debts were not going away. And the debts were straining their marriages.

"They felt hopeless," he says.

Where had the money gone?

New, expensive cars -- or new leased cars. Improvements to their bathrooms and kitchens. New furniture. A summer home.

Another wreck on the turnpike?

2006-09-11T06:16:00.000-05:00

From the Record:

Xanadu's likely savior takes risks, reaps rewards

Just a few weeks ago, Meadowlands Xanadu was looking like another wreck on the turnpike.

Years behind schedule, the ballyhooed retail/entertainment attraction was just a steel skeleton sitting forlornly in the parking lot of the Meadowlands Sports Complex. Costs had ballooned to $2 billion and its developer, the Mills Corp., was in financial crisis. Critics wondered if the project was damaged beyond repair.

Then Colony Capital arrived on the scene, announcing a proposal that could jump-start the project. The Los Angeles-based private investment company has a track record that may bode well for the Meadowlands. Its principal, Tom Barrack – described in a recent Fortune magazine cover story as "The World's Greatest Real Estate Investor" – built his fortune with a contrarian strategy of finding opportunity where others see only problems.
...
In its proposal announced Aug, 22, Colony said it would pump in up to $500 million and secure additional financing. Colony, which is known for its resorts and casinos around the globe, would be calling the shots and Mills would fade into the background.
...
"It's like starting on the 50-yard line," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment banking firm. "One of the things they see is that a lot of the work and money has already been spent and they believe the project can be completed."

Even skeptics concede that having a company with Colony's resources and reputation will bring stability and help attract tenants. Mills, on the other hand, is facing liquidity problems, a federal Securities and Exchange Commission investigation and shareholder lawsuits.

Price Reduced $8m

2006-09-11T05:17:00.000-05:00

From the New York Post:

GIMME SHELTER

The real-estate bubble appears to be bursting, or at least deflating, for Eddie Murphy's "Bubble Hill" property in New Jersey.

The comedian, who originally listed the nearby Englewood Cliffs property for $30 million (making it New Jersey's most expensive home) in December 2004, has whittled it down to $22 million.

In August 2005, we reported that Murphy lowered the price of the 32-room, 25,000-square-foot Colonial on 5 gated acres by $3 million, just after his wife, Nicole, filed for divorce.

"I still think he's going to have to come down lower than $27 million," one local broker told us at the time. "While it is grand, it's also a bit on the gaudy side." Grand it is, with its own screening room, bowling alley, indoor pool, gym, guesthouse and professional music studio. The former "Saturday Night Live" cast member, who went on to become one of Hollywood's highest-paid actors in the 1980s, bought the then-unfinished property in 1986 for a reported $4.5 million. It's where he proposed to Nicole in 1993.

Just who should pay for New Jersey schools?

2006-09-10T18:17:00.000-05:00

From the Associated Press via Newsday:

New Jerseyans without schoolchildren: Why should we fund schools?

George Rogozin's three children have finished public school, but the 78-year-old East Greenwich man still watches much of his taxes go to educate children _ other people's children.

His annual property taxes have nearly doubled in recent years to $5,400, and like all New Jerseyans most of Rogozin's property taxes go to public schools.

"I'm on a fixed income and it's becoming ever so difficult to keep up," Rogozin said. "When I pay my quarterly tax amount that eats up that month's Social Security paycheck."

Rogozin is part of a growing chorus of New Jerseyans wondering why they have to pay property taxes to fund schools if they don't have children using schools.
...
"I am not against property taxes, but why should a person that has owned a property in New Jersey for 13 years with no kids be just as liable for the school tax bills as the parent of the kid that uses the schools?" Anderson asked.

As New Jersey lawmakers consider how to reduce the highest-in-the-nation property taxes, many, particularly senior citizens, hope they consider exempting people without school children from paying school taxes.
...
Jeff Muller, of Mantua, doesn't think people without children should be completely exempt from property taxes "because society benefits from educated children." But he thinks people with children should pay 90 percent of school costs.

"The more school kids you have, the more your tax burden should be," said the 43-year-old who doesn't have children and saw his property taxes rise from $4,000 to $7,000 in recent years.

Buyers sit this round out

2006-09-10T06:22:00.000-05:00

Thought this piece from the LA Times was interesting. Since the North Jersey news is rather light this Sunday, I decided to include it.

Buyers play wait and see

"As much as you read and hear about it, it was still a total shock to see what prices were like and what you get for your money compared to other places," he said.

Swiger, who sold his Louisville, Ky., home for $500,000 and rented a Huntington Beach town home for $3,000 a month, said he plans to hold off and buy this winter.

"I'm going to roll the dice a bit," he said, "and see if prices come down in the next six months."

He isn't rolling alone. Sobered up from frenzied exuberance over last year's housing gains by this year's declining sales, price reductions and increased housing inventory, a growing segment of Southland buyers are waiting on the sidelines for a significant downshift in prices.

Bob Taylor, owner of Bob Taylor Properties Inc. in Highland Park, noticed the change in buyers in May.

"Unless they can get a good offer accepted, about 75% to 80% of my clients are saying they want to wait up to one year for 10% to 15% price adjustments," Taylor said.
...
And they appear to have a reason to wait. DataQuick Information Systems reported that the Southern California median price slipped from $493,000 in June to $492,000 in July. The number of sales dropped to 24,669 in July, down about 27% from 33,561 in July 2005.

With an estimated one-third of Southland properties currently "wildly overpriced," according to John Karevoll, chief analyst at DataQuick, a La Jolla-based real estate research firm, patience could be a home shopper's best virtue.

"If you're a buyer, there's no hurry at all," said Edward Leamer, director of the UCLA Anderson Forecast, which provides quarterly economic projections. "Prices are going to be a little weaker a year from now, and there'll be more listings and more choices."

How much weaker remains to be seen, but Leamer anticipates an annual 2% to 3% drop in home prices for three to five years.

Lack of... Water?

2006-09-10T05:58:00.000-05:00

From the Express Times:

Builder to begin homes project

Developer K. Hovnanian Enterprises had expected to start construction on a 101-home Hunter's Brook complex off Willow Grove Street more than three years ago.

The major homebuilder is now ready to start construction after water was made available from the Hackettstown Municipal Utilities Authority.

The authority had to wait about seven years to get a new well approved, Executive Director Bruce Smith said. Getting a new well is a long process, including well location, drilling, construction and waiting for state approval, he said.

"(K. Hovnanian) knew we didn't have water capacity available at the time," Smith said. "They understood the situation."

Other developments were put on hold by the lack of water, including part of the 700-home Woodfield complex in Mount Olive Township, N.J.

Company spokesman Doug Fenichel said Friday the wait for water was nothing out of the ordinary for the company.

"The long wait is typical of regulatory processes in the state of New Jersey," he said. "Less important than what it means to us is what it means to home buyers. It costs more when you have to (wait)."

Double Whammy

2006-09-10T05:37:00.000-05:00

From the Asbury Park Press:

Falling home sales, rising jobless rate could be a double whammy for economy

WHEN THERE ARE MORE "home for sale" than "help wanted" signs, the U.S. economy may be mired in recession.

Most gauges are confirming that the housing market has hit the brakes and may be in a tailspin. Existing-home sales dropped a more-than-expected 4 percent in July and the number of unsold houses is the largest since 1993. New-home sales fell 22 percent from the same month last year. And construction spending fell the most in five years.

While higher mortgage rates and affordability concerns have been the bogeymen in the current U.S. housing decline, little attention has been paid to the combined demons of unemployment and adjustable-rate mortgages.
...
If job growth and consumer spending shrivel because of a meltdown in housing — an industry that has employed about one in 10 Americans since 2000 — then the trends could fuel each other and create a maelstrom for the U.S. economy.

There's yet one more gremlin: Not only is unemployment above the national average in the sourest housing markets, there are a lot of "subprime" adjustable-rate loans that are due to readjust and sock homeowners with higher monthly payments.
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While buyers will see some heavy discounting if the current slump is prolonged, sellers should beware. More foreclosures put more homes on the market and sink prices further.

Bernards Limits Home Sizes

2006-09-10T05:29:00.000-05:00

From the Star Ledger:

Bernards measure limits size of homes

Homestead Village is a cozy enclave in Bernards Township that sprouted in the late 1930s on what was formerly a peach farm and an estate owned by a descendant of John Jacob Astor, of the wealthy Astor family.

Modest Colonial homes went up in the neighborhood off South Finley Avenue by Homestead Road and Winding Lane until a moratorium on construction was imposed during World War II.
...
In the half-century since then, development has soared and tastes have changed, prompting some to look at the neighborhood with an eye toward demolishing the older homes and building much larger ones some refer to as McMansions or "monster homes."

Mayor John Malay believes something needs to be done about that.

"They are out of character with other homes," he said. "Imagine living in a Cape Cod and a large, 35-foot-tall home goes up next to yours. There's a bit of a disconnect there."

So to address what the mayor called a "very disturbing trend" of so-called "bash and build," an ordinance has been drafted that would restrict the width of homes in the neighborhood.
...
The township committee had earlier considered another version of the present proposed code, but officials said they felt the restrictions on homeowners in the village zones in the neighborhood of Hillside Avenue would be too onerous.

This newer version "goes a long way to set up a guideline" for people who are contemplating tear-downs, Deputy Mayor Donald Cross said.

"We don't want to hinder people to build on their land, but they have to take into consideration their neighbors," he said.

Will immigrants save housing?

2006-09-09T19:44:00.000-05:00

From the New York Times Key Magazine:

The Immigration Equation

It’s often said that immigrants do the jobs Americans don’t want to do. They’ve just been assigned another task: Buy the homes of the baby boom generation. But this task is one that native-born Americans simply can’t do. There won’t be enough of them.

Many of the 78 million boomers, the first of whom turn 60 this year, will sell their property over the next two decades, says George Masnick, a research affiliate with the Joint Center for Housing Studies at Harvard University. Some will move to a smaller home or to their second home, others will move into a managed-care complex. And for some who never moved, it will be their estate making the sale. What many boomers should be asking right now is who will buy their 34 million homes. The buyers may well be immigrants, and not necessarily legal ones (about 12 million of the 35 million foreign-born people in America are illegal immigrants, according to estimates from the Center for Immigration Studies, in Washington).

Demographers say there aren’t enough potential homeowners in the echo boom (the children of the baby boomers) or in the generation that comes after that (still without a catchy name) to soak up that supply, no matter how slowly it goes on the market. (It is presumed that the bulk of the Gen Xers will have done their home buying by then.)

Without sufficient demand, prices will fall. Masnick predicts that as many as 90 percent of the homes will be bought by native-born Americans. “But the last 10 percent is central,” he says. “Without that 10 percent, it will be a buyers’ market.”
...
The good news is that there are enough young first- and second-generation immigrants to do the job. The popular telling of the American dream that has Smith selling to Schmidt who then sells to Shapiro will record the next chapter with Sung and Sanchez doing the buying. Dowell Myers, a professor at the University of Southern California who studies the impact of demography on urban planning, says, “The odds are that a white baby boomer won’t be selling to another white.”
...
But it’s no sure thing that immigrants will save the day. A lot can go wrong. “The danger is downward mobility,” says Fred Siegel, a professor at the Cooper Union for Science and Art, who has studied immigration patterns. “If a significant portion of recent immigrants are downwardly mobile, then that is bad news for the boomers. Who will afford the McMansions?”

Japan's Housing Bubble

2006-09-09T10:54:00.000-05:00

Great narrative of the Japanese housing collapse by Michael Nystrom. Most definately a must-read. Here are a few excerpts from his story:

A Cautionary Housing Tale from Japan

In spite of the booming economy, my uncle, like many Americans today, was shut out of the housing market. Prices always seemed too high, but a pullback never materialized, so he waited until the right time to buy. While he waited, prices spiraled up and away until at last they were hopelessly out of reach. By the time I arrived in 1990, his family was living in a government-owned, rent controlled flat that was, by any standards, small: Two rooms that were each about 12 square feet, a small kitchen and a tiny bath to serve three adults (including his mother) and his two kids. (Japanese rooms are multi-use rooms, so at night when you're done eating and watching TV, the furniture is put away and the futons come out and everyone sleeps together on the floor). His was a unit on the first floor of a huge concrete building that sat in the middle of a sea of identical buildings. The picture below is not his actual building, but you get the idea.
...
By 1994, housing prices continued to drift lower until some units started to become, with considerable stretching and creative financing, affordable. So that year, by taking out a two generation, 60-year mortgage -- with his 16-year old son on the hook for the remaining years that he might not be able to pay -- my uncle bought his first home. The family had to scrimp, and both he and my aunt had to work more hours, but they were finally, proud homeowners. And it was a nice house - larger than their old house (but not much), in a nicer neighborhood, and on a higher floor with a view of the treetops. I even helped them move in. It was a happy day. I don't recall the exact price he paid, but I remember thinking that it sure was a lot! Somewhere north of half a million dollars. Those were the kinds of details were lost on me at that age.
...
I left Japan in 1994, and didn't return again for a visit until late 1998. In the intervening 4 years, housing prices had continued to fall, and fall, and fall to the point where my uncle's house was worth only half of what he had paid for it four years earlier: A couple hundred thousand, up in smoke, just as Japan's economy was mired in a 13-year slump. But he stuck with his loan, hoping the value will come back. And one day, it just might. So he makes his payments each month faithfully, and when he can no longer make them, his son will take over and pay off the remaining balance. And sometime, in the remaining 48 years on the mortgage, the house may once again be worth more than what is owed on it.

Realtors' President Can't Sell Home

2006-09-09T08:42:00.000-05:00

From the Washington Post:

A Humbling Lesson for Realtors' President

He, of all people, should have known better.

The president of the National Association of Realtors, Thomas M. Stevens of Vienna, admits he didn't follow his agents' advice when the real estate market started to cool. That, he says, is why his old house in Great Falls has now been on the market for a year at the price of $1.45 million.

"What I should have done," confessed the senior vice president of NRT Inc., parent of Coldwell Banker Residential Brokerage, "was listened to my agent and cut the price by $50,000 to $100,000 early on, and the property would have sold last October."

Or, even better, he said, "I should have listed it a month earlier," when the market was only just beginning to lose air.

Now Stevens, like so many other home sellers in the Washington area and around the nation, is waiting for a buyer in a market that has totally reversed course since a year ago. With two or three times the number of properties listed this year as last in some neighborhoods, agents are urging sellers to lower their expectations, put on their best face and offer incentives such as closing cost help.
...
"They sent the letter telling me the listing was approaching a year" and that the price needed another look, he said. "They're doing their job as agents. I'm not doing my job as a seller."

But, he noted, in his defense: "Who knew last September how long this down trend was going to continue," after so many years of climbing upward?
...
When asked how long sellers should expect a sale to take these days, Stevens said 40 to 60 days would be typical. And if a house hasn't moved by then, he said, "You need to adjust the price. . . . But I didn't do that. And my house is still on the market."

Lowball Advice

2006-09-09T06:16:00.000-05:00

From Bankrate:

Lowballing in a cool housing market

In the softening real estate market, how much wiggle room is there in negotiating for a house?
-- Kathi M.

I wish to purchase a home soon. My question is what is a reasonable lowball percent to offer on a house? When I ask agents, they are very vague. Is offering 10 percent below or more way off?
-- May in Mizzou

How low can I go without offending the seller?
-- Anthony S.

As markets that were overheated as recently as early 2005 have cooled considerably, this subject has become a hot one. With a temporary overabundance of housing on the market in many parts of the country, low bidders are truly in their element for the first time in about a decade. Offers that were laughed off just 18 months ago by confident sellers are suddenly being considered. Owners who once advised their agents to ignore offers by lowballers no longer have that luxury in most markets.

But don't expect sellers to flat-out panic. Most who bought their homes recently will not let their homes go for much less than they paid for them. On the other hand, owners who have been in their homes awhile and enjoyed a big run-up in value in recent years might be more willing to listen to lower offers because they'll still profit handily on the sale.
...
As always, homes most likely to sell at a big discount are those in dire need of wholesale repairs, preforeclosure homes and those owned by other highly motivated people (transferring out of town, buying another home and not able to afford two mortgages, had recent death in family, investor who bought at the wrong time, etc.). To them, offers of up to 15 percent or more under market are a little more palatable.

Knowing the seller's motives always gives you much more traction with any negotiable purchase -- especially a house.
...
But you have little to lose, currently, by going low. The worse that can happen is that your offer will be flatly rejected. For that reason, your best strategy might be to pinpoint several potential homes, make your low offers and see what sticks -- or at least who is willing to negotiate. In lieu of price concessions, many homeowners are offering to throw in appliances, furnishings and even such items as high-definition TVs. If you do the math, you might come out farther ahead than if you held out for an additional 1 percent or 2 percent.

State To Dwek: Pay Up

2006-09-09T06:14:00.000-05:00

From the Asbury Park Press:

Judge orders state repaid for Dwek's bad tax check

After the state of New Jersey complained that Solomon Dwek's $205,000 income tax check bounced, a Superior Court judge Friday ordered that the full amount be paid from Dwek's frozen assets.

Judge Alexander D. Lehrer also allowed one of Dwek's largest claimants, PNC Bank, to pursue its lawsuit against HSBC Bank, the world's largest bank. Dwek is accused of defrauding PNC of $21 million after he deposited a $25.2 million check that bounced. Dwek spirited away most of the money, leaving PNC with a multi-million dollar shortfall, according to the FBI.

Dwek, 33, of Ocean Township, a major land developer in the area with an empire worth an estimated $420 million, faces federal bank fraud charges in criminal court.

Lehrer, a civil court judge, ordered that the state of New Jersey be paid $205,000 immediately to satisfy Dwek's estimated state income tax for 2005 and the first quarter of 2006.
...
Weir told Lehrer in court Friday that an investigator from the state had arrived at Dwek's house and threatened Dwek's wife, Pearl, "with arrest unless they paid their bill'' immediately.

More than 80 claimants say Dwek owes them $338 million.

Newton Takes Tough Stance On Illegal Immigrants

2006-09-09T06:08:00.000-05:00

From the Township Journal:

Newton proposes tough illegal immigration laws

Following a trend that’s been seen in places like Hazleton and Allentown, Pennsylvania and Palm Beach, Florida, Newton town Councilman Philip J. Diglio proposed the adoption of a new ordinance for the town of Newton that would tighten the town’s immigration laws. The new ordinance contains 2 major parts. The first would make it illegal to hire or rent out to an illegal immigrant, punishing any business or landlord that “aids and abets (i) the hiring of illegal aliens, (ii) providing, renting or leasing real property to illegal aliens and (iii) funding, providing goods and services to, or aiding in the establishment or continuation of any day labor center...” without verifying legal work status. The punishment would be in the form of fines ranging from $1000-$10,000 for landlords. For business owners it would mean being barred from approval of any business permits, including renewals, and any city contracts or grants for 5 years or more.

The ordinance calls for non-US citizens who are legal to register for a permit to work or live in Newton. They would need proper identification, which the town would then use to do a background check to assure authenticity of provided documents. When all is found to be in order, then the non-citizen would be issued a document that they could use to apply for a job or for housing. All landlords and employers would be required by law to ask for this document before renting to or hiring someone.
...
Newton’s proposed ordinance to tighten immigration law has spawned criticism from a variety of groups and peoples. In a statement from Ed Barocas, legal director for the American Civil Liberties Union of New Jersey, he wrote, “If the Newton Town Council adopts this wrong-headed proposal, it will be subject to constitutional scrutiny like the other towns that have passed or plan to pass similar immigrant-exclusion ordinances. We believe these measures will be struck down. We believe this proposed law is unconstitutional and will make every person who looks or sounds foreign a suspect, including those who are here legally. You might as well paint a target on someone who is perceived to be a foreigner and say, ‘Treat me differently.’”

Weekend Open Discussion

2006-09-08T17:01:00.000-05:00

Jump in Non-Prime Mortgages

2006-09-08T16:43:00.000-05:00

From Reuters:

Fed study shows 2005 jump in non-prime mortgages

U.S. mortgage lending data show sharp growth in the use of higher-priced "non-prime" mortgages for home purchases in 2005 over 2004, and even steeper gains in the incidence of such loans among blacks and Hispanics, a Federal Reserve study showed on Friday.

The mortgage data, gathered from lenders under the Home Mortgage Disclosure Act, shows more buyers were pushed out of the most favorable loan categories as they stretched to buy homes at the height of the U.S. housing boom. Home prices in many markets peaked in the third quarter of 2005.

The Fed study showed higher-priced first-lien mortgages, which it described as three percentage points over Treasury yields of comparable maturities, made up 24.6 percent of conventional home purchase loans on owner-occupied homes, compared with 11.5 percent in 2004.
...
The study said the jump in higher-priced lending was driven partly by a flattening of the Treasury yield which pushed up home mortgage rates, particularly for adjustable rate loans.

Consequently, loans with the same risk characteristics would have had higher interest rates in 2005 and more of them would have been categorized as non-prime under the Home Mortgage Disclosure Act.

It also said borrower-specific risks generally increased, pushing more buyers into non-prime categories.

"Evidence indicates that changes in risk characteristics varied across geographic regions, largely because of substantial house-price appreciation in some locals, and likely caused more borrowers to stretch financially to obtain loans," the Fed said.

Piggy-back lending -- the use of second-lien mortgages to allow buyers to buy homes with down payments less than 20 percent, also grew substantially in 2005 and accounted for more than half the increase in the number of higher-priced loans.

The above mentioned Federal Reserve study can be found here:

Higher-Priced Home Lending and the 2005 HMDA Data (PDF)

Too Little Too Late

2006-09-08T15:00:00.000-05:00

From Motley Fool:

Housing Cheerleaders Losing Pep

I've spent the past few months casting a hairy eyeball at a lot of the pro-housing hypesters out there, the folks I feel have cheered on a dangerous bubble with little regard to the potential dangers to consumers' pocketbooks or the economy at large.

So I want to be sure to offer a golf clap to one of the outfits that's been in my crosshairs, the National Association of Realtors (NAR).

This organization exists to promote the well-being of all those folks out there who collect 6% every time we sell a home. Despite this obvious self-interest, the press out there in TV Land puts great -- to my mind, undue -- faith in the monthly pronouncements on the health of the real estate market that emanate from the NAR's head office. For the past couple of years, these have been positively bubblicious, to put it mildly.

I offer the golf clap because yesterday, for the first time that I can remember, it appears to me that the NAR came clean on the housing bubble, right out in public.

In this press release, David Lereah, the endlessly quoted chief economist for the organization, finally acknowledged openly that sales are tanking and prices going down. He used uncharacteristically firm language, tossing out lines such as,"...people who purchased last year with the intent of flipping are likely to get burned." Good on him, and good on the NAR.

Unfortunately, this may be too little, too late. After all, the NAR has been quietly admitting, for a few weeks now, that things are getting ugly in a lot of markets, and that a correction was necessary. This presentation on the NAR website shows the kind of candor the organization musters, at least when it's not sending out PR to the entire country.

"The housing market is looking sicker by the day"

2006-09-08T09:08:00.000-05:00

From BusinessWeek:

Builders Brace for a Housing Downturn
Even this typically sunny sector is expecting prices to fall as prelude to a prolonged downturn

The housing market is looking sicker by the day. On Sept. 7, the perpetually optimistic National Association of Realtors acknowledged for the first time that housing prices are likely to fall on a year-over-year basis, at least for a time.
...
Mortgage rates, shmortgage rates. No one's paying attention to the cost of borrowing money these days because it seems trivial next to the risk of losing money by buying high and selling low—catching a falling knife, in the Wall Street vernacular.

Ian Shepherdson of High Frequency Economics, an early bear on housing, said in a conference call with clients on Sept. 7 that the housing market is so far gone that "it's not rescuable anymore. The housing market is beyond the control of the Fed." He compared it to a football game played on a mountaintop. Once the football goes off the edge, he said, it doesn't stop until it reaches the very bottom.
...
Even the homebuilders, long an optimistic bunch, are all but throwing in the towel on the current market's condition. "We're running our business today as if we're in a prolonged downturn," CEO Ara Hovnanian of Hovnanian Enterprises told analysts Sept. 6.
...
In boom times, when home prices were rising 16% a year and many buyers expected that pattern to continue, they could borrow at 6% and, in effect, be paid 10% a year for living in their homes. Now that annual appreciation is roughly 0% and interest rates are roughly the same, says Shepherdson, the real cost of living in a house has increased enormously.
...
"The housing market party is over," economic forecaster Global Insight said Sept. 7. While not as bearish as High Frequency, it's predicting that housing starts will fall 10% this year and 13% in 2007. It predicted that second-half 2006 growth will average just above 2%, with housing being the main negative.
...
High Frequency Economics' Shepherdson argues that housing could remain weak for another two or three years. "This," says Shepherdson, "is pretty much an inexorable process."

Exuberance Waning

2006-09-08T05:15:00.000-05:00

From the Philadelphia Inquirer:

Housing decline: How 'temporary'?

You know the boom is over when even the brokers start predicting lower prices. That was true of the stock-market bubble in 2001, and it's true now, as the air comes out of housing.

Yesterday, the National Association of Realtors issued its sales forecast for the rest of this year, saying an "inventory and price imbalance" will likely cause home prices to fall below the levels of a year ago.

Of course, the drop will be only temporary, the brokers' group says, just until "the market works through a buildup in housing inventory."

Anyone who didn't buy a house last year in hopes of "flipping" it for a quick profit should be fine, they assure us. And perhaps they're right.

But as long as "temporary" lasts, we could be in for a bumpy ride.
...
Closer to home, they found house prices in the Atlantic City area rose only 2.6 percent during the first six months of 2006. A year earlier, the same market saw prices rise nearly 8 percent.

But isn't a 2.6 percent increase still an increase? Not necessarily. Houses don't behave like stocks; when the market cools, publicly reported prices are the last thing to change.

First, sales volume slows down. Then sellers start offering "incentives" - discounted add-ons, flexible payment terms or subsidized mortgage deals. The real price can be falling for months before it shows up in anyone's statistics.

That means it could be a while before we know the size of this "correction." And the extent of the fallout - political as well as economic - is anyone's guess.
...
Alan Greenspan once referred to that kind of behavior as "irrational exuberance." The question now is, what happens when it stops?

Nail in the coffin for NJ business

2006-09-08T04:29:00.000-05:00

From the Courier Post Online:

Uniformity under fire at tax hearings

Despite strong testimony against changing the state's uniformity clause, and none for it, lawmakers tasked with lowering property taxes continued lengthy hearings Thursday on the constitutional mandate that all property in a district be taxed equally.

Businesses have led the opposition fearing that removing this protection would lead to higher taxes and devastate an already poor business climate in New Jersey.

"This is not reform, this is shifting dollars," said Thomas A. Bracken, chairman of the New Jersey Chamber of Commerce. "Shifting dollars in this context would be the nail in the coffin for the New Jersey business community."
...
"The property tax burden in New Jersey has reached the point of break for homeowners," Burzichelli said. "And the uniformity clause, at least in the constitution, is the base and foundation that our tax system is built on."

As businesses tried to ward off a potential threat, representatives for farmers, hospitals and colleges lobbied to keep the tax perks that their groups get through exemptions granted from the uniformity clause.

Will A Pause Save Housing?

2006-09-08T04:22:00.000-05:00

From Bloomberg:

Housing Market's Drag on U.S. Economy May Let Fed Stay on Hold

The faltering U.S. housing market will be more of a drag on growth than economists expected a month ago, allowing Federal Reserve policy makers to hold interest rates steady through the first half of next year, according to a monthly survey by Bloomberg News.

Gross domestic product, the sum of all goods and services produced in the country, will expand at an average annual rate of 2.8 percent this quarter and slow to 2.6 percent in the final three months of 2006, according to the median forecast of 81 economists surveyed Sept. 1 through Sept. 7. The fourth quarter estimate is a 10th of a percentage point lower than the prior survey. Growth averaged 4.3 percent in the first half.

Flagging home sales resulting from higher mortgage rates will remove a source of cash that helped drive consumer spending and economic growth during the five-year housing boom, economists said. The Fed's monthly regional survey showed consumer spending last month rose ``slowly'' and growth faded in some areas, strengthening the case for holding rates steady.

The housing market is declining ``a little more quickly than we had expected at the beginning of the year,'' said Scott Anderson, an economist at Wells Fargo & Co. in Minneapolis. ``It's not signaling a recession, but we do see a growth slowdown ahead.''
...
The housing market ``went from overheated to back-to-normal to under-heated,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., said yesterday. Hovnanian, New Jersey's largest homebuilder, said fiscal third-quarter profit fell 34 percent.

The slowdown in housing will leave consumers with less cash from refinancing and home-price appreciation, which lifted spending during the housing boom that ended last year. Higher fuel costs are also pinching consumers.

NAR: Home Prices To Fall, Speculators To Get Burned

2006-09-07T15:16:00.000-05:00

From the National Association of Realtors:

Home Sales Forecast Lowered, Prices To Dip Temporarily

Home sales during the rest of the year will be lower than earlier projections as the market works its way through an inventory and price imbalance, according to the National Association of Realtors®.

David Lereah, NAR’s chief economist, said the most obvious effect in the near term will be with home prices. “A year ago we had record home sales and tight supply with buyers bidding over the asking price,” he said. “This year sales are slowing, homes are plentiful and sellers are negotiating. Under these conditions, we’ll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory.”

“This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms,” Lereah said. “Keep in mind that over time, home prices rise at the rate of inflation plus one-to-two percentage points – buyers in most of the country who plan to stay in their home for a normal period of homeownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned.”

From Marketwatch:

Realtors expect home prices to fall

U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said Thursday.

Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group "as the market works through a build in housing inventory."
Median existing-home sales prices should rise about 2.8% this year and 2.2% next year, the realtors said in their monthly economic outlook. Median new-home prices are expected to rise 0.2% in 2006 and 2.4% in 2007.

"This year sales are slowing, homes are plentiful and sellers are negotiating," Lereah said. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."
Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. Buyers who plan to stay in their homes should see those gains, but "people who purchased last year with the intent of flipping are likely to get burned," he said.

The group is forecasting existing home sales to fall 7.6% in 2006 and a further 1.7% next year. New homes sales are expected to fall 16.1% in 2006 and 7.1% in 2007. Housing starts are projected to fall 9.6% this year and 9.8% next. The forecasts are slightly below the group's projections from a month ago.

Economists Say Selling Prices May Stagnate

2006-09-07T14:24:00.000-05:00

From the Wall Street Journal:

Housing Slowdown Takes Its Toll

Economists believe cooling in the housing market to extend into next year and many forecasters in the latest WSJ.com survey predict no change -- or an outright decline -- in home prices next year.

Twenty-five of the 48 economists who answered the survey's question about housing predicted no change or a decline in a closely watched gauge of nationwide home prices during 2007. The average prediction for next year was for an increase of 0.43%, lifted by five economists who forecast gains of 5% or more.

The average forecast would leave home-price appreciation well below the expected rate of inflation. Just 27% of the respondents forecast an increase in home prices of greater than 2.7%, which was the economists' average expectation of the year-to-year increase in the Labor Department's consumer-price index for May 2007.

The housing market doesn't move uniformly across the country; some regions or individual cities often have price changes decidedly above or below the national average. But the economists' predictions stand in stark contrast to the red-hot price appreciation seen over recent years.
...
"The housing correction is just in its early stages now," said Joseph Carson of AllianceBernstein, who forecast a 5% decline for 2007. "Existing home prices have come down to no-change on a year-to-year basis. For new homes, prices are below year-ago levels when you include added features. The prices will have to go lower to give demand a lift in short term."

Jersey Slowdown Gaining Momentum

2006-09-07T14:20:00.000-05:00

From the Press of Atlantic City:

Slower housing market means fewer demolitions

As tourists stow their beach bags for another year, Ocean City is getting ready for the launch of its second industry: teardowns.

Builders say they are seeing a dramatic slowdown in home construction on the island, reflecting a national trend. That could spell fewer demolitions, new homes and jobs on the island this fall.

“Our busy season usually starts in the fall. I hate to say it, but it's not going to be half as busy as past falls,” said Mark Tietjen, manager of Peter Lumber in Ocean City.

The New Jersey Builders Association said the number of home starts is down 15 percent statewide over last year.

“The slowdown is gaining momentum,” trade group spokesman Patrick O'Keefe said. “The watchword in new home construction is inventory management. Builders are not starting units unless they have firm commitments of sale.”
...
Ocean City builder Halliday Leonard has seen its workload drop off considerably. The company had 80 jobs lined up last fall. It has fewer than 20 planned for this fall.

“I haven't seen this kind of slowing in 16 years,” builder Scott Halliday said. “We're seeing a steep decline in the number of homes under contract or demolished.”

“They're doing 30 percent of the volume of a year ago. I think that's consistent with the information we're getting with building permits,” Mayor Sal Perillo said.

“In the housing market, you have people … betting that by the time the property is completed, it will be worth significantly more than when they started construction,” he said.

But these speculators no longer make up a substantial part of the new construction market.

“They're all owner contracts, not speculator contracts,” Halliday said.

As a result of the slowdown, his building company plans to give fewer jobs to subcontractors.

“We're going to do a lot of the work ourselves, keeping the work in-house,” Halliday said.

New Homes Market Continues To Weaken

2006-09-07T06:29:00.000-05:00

From Reuters:

KB warns, Hovnanian quarterly earnings fall

A rapidly deteriorating U.S. housing market prompted KB Home to cut its forecast on Wednesday and luxury home builder Hovnanian Enterprises Incto report earnings and orders that fell for the second straight quarter.

After the close of the market, KB, the fifth largest U.S. home builder, cut its forecast for the fiscal year ending Nov. 30 and said fiscal third-quarter orders fell 43 percent, based on preliminary numbers.

Hovnanian, one of the largest luxury home builders, reported fiscal third-quarter net income that fell about 36 percent, while orders declined 26 percent.

"I think you'll expect more pre-announcements, more lowering of guidance, more missing estimates, orders coming in below expectations, yada yada," said JMP Securities analyst Alex Barron. "It's just starting. It's only the 3rd inning of the downturn."
...
"We do not know how long the elevated levels of resale listings will persist and it is equally difficult to predict what events might cause a reversal in buyers' sentiment," Ara Hovnanian, president and chief executive, said in a statement.
...
Since the U.S. home-buying market began its slide in about September 2005, home builders have felt the pain more sharply as they were in the hottest markets that had seen the greatest fall off in demand for new homes.

From the AP:

KB Home Lowers 2006 Earnings forecast

"Our earnings expectations for the third quarter and full year reflect an increasingly challenging housing market, where the supply of new and resale home inventories has built up in recent months in markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years," said Bruce Karatz, chairman and chief executive.
...
The company said preliminary net orders for the quarter were down 43 percent from the prior year to 5,989, as cancellation rates have shot higher. Gross unit orders and traffic to new home communities each slid 11 percent in the third period.

Update

From BusinessWire:

Beazer Homes Updates Fiscal Year 2006 Outlook

Beazer Homes USA, Inc. oday announced that it is revising its outlook for fiscal 2006 diluted earnings per share to be in a range of $8.00 - $8.50, compared to its previous outlook of $9.25 - $9.75. The Company expects to close fewer homes in the fourth fiscal quarter than previously forecasted, as net sales through the two months ended August 31 were 49% below prior year levels and cancellations of existing contracts rose to 50% from 26% in the same period in the previous year. As compared to prior years, a higher percentage of home closings are being deferred or cancelled, immediately prior to closing in many cases, due to worsening buyer sentiment and the inability of buyers to sell their existing homes. This revised outlook also contemplates potential charges to exit non-strategic land positions currently under review.

Disclaimer: The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities.

Consolidate Jersey School Districts?

2006-09-07T05:20:00.000-05:00

From the Star Ledger:

Maryland may show Jersey the way to pare school costs

New Jersey spends 10 percent of its school dollars -- $1,235 per student -- on administrative costs. In Maryland, the figure is less than 3 percent.

Whether looking at average per-pupil spending or the percentage of property taxes that go to fund schools, New Jersey outspends Maryland by a significant amount for one key reason: New Jersey has 611 school districts; Maryland has 24, one for each county.

The crash course on how Maryland operates its schools was provided to the Joint Legislative Committee on Government Consolidation and Shared Services in Tren ton yesterday by Maryland Assistant State Superintendent of Education Mary E. Clapsaddle via videoconference.

It delighted Sen. Bob Smith (D- Middlesex), the panel's co-chairman, who wants to create 21 coun tywide school districts to oversee local schools, eliminate hundreds of high-paid administration positions and consolidate purchasing and transportation.
...
When told by Assemblyman Jo seph Malone (R-Burlington) that New Jersey spends 10 percent of its school funding on administrative costs, Clapsaddle replied, "That is alarming." Maryland spends 2.68 percent -- or $240 per student -- on administrative costs, she said.

New Jersey spends $12,567 on average to educate a child, compared with $9,200 in Maryland.

New Jersey taxpayers see an average of 51 percent of their property taxes go toward school funding. In some school districts, it is as high as 88 percent. In Maryland, 24.6 percent of property taxes is used to finance schools.

"Finally, consider yourself warned."

2006-09-06T19:09:00.000-05:00

From SmartMoney:

What Now for Real Estate?

SEPT. 11 TRIGGERED a chain of events that fueled the biggest real estate boom in American history.

To be fair, the foundation was already set. After the technology bubble popped in 2000, investors grew wary of the stock market and started considering real estate as an alternative investment. Then after 9/11, equities became even more volatile. The Federal Reserve aggressively dropped interest rates to historic lows. Lenders loosened lending guidelines. And folks were fearful of travel and stayed home to nest instead.

Indeed, nervous Americans took their travel budgets and money earmarked for the stock market and shifted it into either the purchase of larger homes or renovations, says Celia Chen, director of housing economics for Moody's Economy.com. As a result, real residential investment (both renovations and home purchases) increased as much as 40% over the past five years surpassing levels seen during the last real estate boom of the late 1980s, according to the Economic Policy Institute, a Washington, D.C.-based nonprofit think tank. Those who rode the real estate market were well rewarded. Home prices jumped 47% over the past five years while the S&P 500 increased nearly 19%.

But just as the memories from Sept. 11 are beginning to fade, so is the strength of the real estate boom. The National Association of Realtors reports that in July existing home sales decreased 11% compared with the prior year and existing home prices increased less than 1% during the same time frame. And anyone who isn't well diversified is likely to get hurt.

"Many of the drivers that had supported the housing market during the last five years have retreated," says Chen. "Now we are in the midst of a downturn and will be seeing more softening for at least the next year."
...
Finally, consider yourself warned. Recall the most important lesson investors learned back in 2000: All cycles come to an end. So it's time for all those novice speculators to reconsider investment properties in places like Miami and Southern California. Those who hang on trying to squeeze every last bit of profit out of the real estate market may get burned just like all those stock market investors did back when the technology bubble burst.

NJ economic growth rate at 5 year low

2006-09-06T17:03:00.000-05:00

From the AP via the Morris Daily Record:

NJ economic growth rate lowest in 5 years

Economic growth in New Jersey has declined to its slowest rate in nearly five years, hobbled by increasing initial unemployment claims and falling housing permits, the Federal Reserve Bank of Philadelphia reported today.

The regional bank's latest monthly forecast projected modest economic growth of 0.6 percent through the spring.

The nine-month growth rate has not been so low since 0.4 percent was projected in November 2001, when the economy was emerging from a recession but still reeling from the terrorist attacks two months earlier.

The bank's nine-month forecasts, issued each month, have been steadily declining since a 2.5 percent projection in January.

"This is certainly consistent with the employment growth data that we've seen in New Jersey. We've had a pretty dramatic decline in private-sector job growth in the state," said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
...
"Corporate America is not about to pack its bags and leave this state," he said. "But when it has decisions about where to expand, New Jersey is not on the radar screen," he said.

New Jersey is on pace to add about 34,000 jobs this year, less than half the 75,000 it should, and over one-third of the new jobs are in government even though that sector accounts for less than one-fifth of all jobs, Hughes said.

The diminished growth rate indicates that New Jersey's economy is slowing along with the national economy, said economist Ted Crone, a vice president at the Philadelphia Reserve.

Northern New Jersey Weekly Inventory Update

2006-09-06T14:01:00.000-05:00

GSMLS - http://www.gsmls.com
(Garden State Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)

8/30 - 18,743
9/6 - 18,687 (0.3% Decrease)

NJMLS - http://www.njmls.com
(New Jersey Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)

8/30 - 9,170
9/6 - 9,119 (0.6% Decrease)

MLSGuide - http://www.mlsguide.com
Single Family Homes, Condo, Coop
(Hudson County)

8/30 - 2,661
9/6 - 2,683 (0.8% Increase)

Beige is the new black

2006-09-06T13:33:00.000-05:00

The Federal Reserve released the September Beige Book this afternoon. The full report can be found here:

Summary of Commentary on Current Economic Conditions

Second District--New York

Economic activity in the Second District has shown signs of decelerating since the last report, though business contacts generally report that the labor market remains steady and strong. Manufacturers report widespread increases in input prices; they also note further deceleration in business activity and are a bit less optimistic about the near-term outlook. Retailers indicate that sales were on or close to plan in August, while prices were relatively flat. Tourism activity was mixed around generally robust levels: New York City hotels continue to report strong revenue growth, but Broadway theaters report that attendance, though still high, retreated in July and August.

Both new home construction and the home purchase market continued to slacken in July and August, but Manhattan's apartment rental market reportedly strengthened further. Office markets across the New York City metro area were steady to stronger in July and August while the market for industrial space was mixed. Activity in the securities industry activity is reported to have weakened across the board in July and August. Finally, bankers again report widespread slackening in loan demand, somewhat tighter credit standards, and little change in delinquency rates.

Construction and Real Estate
The region's housing market has slackened further since the last report, with the notable exception of Manhattan's rental market. Housing permits have weakened markedly in recent months, with July particularly soft. Based on the first seven months of the year, single-family permits in the New York-New Jersey region are on track for their weakest year since 1996. Multi-family permits, though down in recent months, remain at relatively high levels. More currently, New Jersey homebuilders report that the inventory of homes on the market continued to increase in August, and that market psychology has worsened. Builders have begun advertising price reductions on new properties instead of merely offering concessions. Nonetheless, an industry expert notes an increasingly large gap between asking prices and offers, which has caused inventories to swell.

Manhattan's co-op and condo market slowed further in July and early August. The inventory of homes on the market is reported to have risen noticeably, and units are staying on the market for longer. Both the number of transactions and total sales volume were down from a year earlier in August; the high end continues to be the most active market. At the same time, Manhattan's rental market was characterized as increasingly robust in July and August, across the board, but especially at the high end of the market: The inventory of available units has continued to shrink, rents are up, and prospective renters are signing leases more quickly than in the recent past.

Post-9/11 Economic Recovery

2006-09-06T10:21:00.000-05:00

From the Record:

N.J.'s post-9/11 boom has abated

Five years ago, after the Twin Towers fell, New Jersey seemed the logical landing place for many of the displaced companies.

It happened -- for a short while.

American Express, Merrill Lynch, Morgan Stanley and Lehman Bros. all shifted employees to New Jersey in the scramble for office space after 9/11.

But the flow soon fizzled, and some companies moved back to New York.

State Labor Department statistics show that while the number of New Jersey-based financial services jobs jumped by 15,000 immediately after the attacks, 5,000 of them were gone a year later.

Some companies stayed, among them Garban Intercapital, an electronic stock brokerage now based in Jersey City, and Marsh & McLennan, which moved 1,100 employees to Hoboken.

New Jersey is now seeing a second surge, largely into Jersey City, fueled by New York's economic good times, which have pushed up the cost of office space in the midtown and downtown markets.

N.Y.C. proves pessimists wrong, remains heart of financial world

At the time, observers said the attacks would accelerate the economic downturn already under way and trigger mass layoffs and widespread business closures. They wondered if residents and companies alike would flee New York for the suburbs. They suggested that downtown Manhattan might lose its position as the center of world capitalism.

Though some of those things happened, the worst-case scenarios didn't. To the contrary, the metropolitan region – especially New York -- has returned to health, and remains a global finance center, though lower Manhattan still has a ways to go toward full recovery.

An analysis by The Record shows that 18 of the 32 larger tenants at the World Trade Center based on office space moved to midtown Manhattan.

Another 12 stayed downtown, while other prominent companies that were not tenants in the Twin Towers, such as Goldman Sachs and American Express, also stayed.

More important for New York, only a few WTC tenants fled permanently for the suburbs.
...
Yet employment figures in both New York and New Jersey are now close to the pre-attack levels.

New York City's workforce, at 3.66 million, is about 32,000 lower -- less than 1 percent -- than on 9/11, and New Jersey has 91,000 more jobs than five years ago.

"I think it proves how resilient the economy is," said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "You put New York and New Jersey together; you have got close to 8 million jobs. That's a huge, huge enterprise. So it takes a lot to derail it."

Prices Fall In 87 Metro Areas

2006-09-06T05:21:00.000-05:00

From the NY Times:

Home Prices Fall in Nearly One-Fourth of Metropolitan Regions

Prices of traditional single-family dwellings fell in 87 of the nation’s 379 major metropolitan areas from the first quarter to the second, the government reported yesterday, as the overall value of homes leveled off across the country.

On a quarterly basis, prices were lower in Boston, Sacramento, Pittsburgh and much of the Midwest, where the loss of manufacturing jobs has hit the housing market hard.
...
Price declines are spreading to more parts of the country. The 89 areas affected in the second quarter compares to 66 metropolitan areas where prices fell in the first three months of the year. In the fourth quarter last year, only 29 areas reported such declines.

Prices were lower in five states — Michigan, Massachusetts, Maine, Ohio and Indiana — though the declines were less than 1 percent. Just one state, Iowa, had a price decline in the first quarter and none did in the fourth quarter last year.

“The slower sales get, and given where inventory is, it is going to require sellers to cut prices in certain markets,” said Celia Chen, director of housing economics at Moody’s Economy.com.

Ms. Chen noted that the index showed that prices were still rising in much of California, Arizona and Florida, states that experienced some of the biggest rises during the recent boom. But that may be in part a result of the fact that the government’s home price measure does not include homes with mortgages greater than $417,000.

By comparison, data from the National Association of Realtors showed that the national median home price for existing homes, the price at which half sold for more and half for less, increased 0.9 percent in June from the same month a year ago. That measure, however, is not adjusted for changes in the quality and size of homes sold from one year to the next, which the government index does take account of.

New Jersey Losing High Tech Jobs

2006-09-06T05:08:00.000-05:00

From the Star Ledger:

N.J. losing technology 'toddlers' to other states

A report from the Stevens Institute of Technology warns the state is fast losing its telecommunica tions expertise to hungry states such as Texas and California. So unless New Jersey spends half a billion dollars during five years on grants and tax breaks for "toddlers," the state will miss out on jobs and revenue from the next wireless revolution, Stevens said in a 58-page proposal.

"The technology is growing. It's not a shrinking pie. But New Jersey's slice of this pie continues to diminish," said Stevens professor M. Hosein Fallah, a former Bell Labs engineer who authored the paper for the Hoboken school.

The pitch follows a state-spon sored study last year that traced New Jersey's loss of thousands of high-tech jobs, a major source of tax revenue. Stevens said more research jobs may be lost through the proposed merger of telecom giants Alcatel and Lucent Technologies, parent of Bell Labs in Murray Hill. State policy should encourage laid-off researchers to start companies here, Fallah said.
...
New Jersey must do something to create high-tech jobs, said Rutgers University economist James Hughes.

"Other states are being very aggressive," said Hughes, citing Pennsylvania's investment of a portion of its tobacco industry settlement in tech ventures.

New Jersey has lost 14 percent of its high-tech jobs since 2000, across a range of sectors including telecom, according to a state study co-authored by Hughes last year. While only 7 percent of the state's 4 million workers hold high-tech jobs, those jobs account for almost a third of the state's income tax revenue.

Steps Towards Fiscal Responsibility For NJ?

2006-09-05T20:19:00.000-05:00

From the Star Ledger Online:

Panel OKs higher medical co-payments for teachers, state workers

More than 200,000 teachers, local government workers and government retirees face higher co-payments for doctor’s office visits and prescription drugs, under a policy change approved over the vocal opposition of organized labor today.

With two union representatives opposing and others union representatives deriding the plan from a packed hearing room floor, the State Health Benefits Commission voted, 3-2, to raise the co-payments.
...
Altogether, the changes are scheduled to save the state about $74 million a year. The massive opposition they generated served notice of the difficulties lawmakers can expect as they consider wholesale changes to the benefits program to help rein in property taxes.

Under the new provisions adopted today, teachers and other local government employees enrolled in the State Health Benefits Program will see the co-payment for a doctor’s office visit rise from $5 to $10. The co-payment on most prescription drugs also would rise from $5 to as much as $15.

Representatives of the state teacher’s unions promised to challenge the changes in court, saying the higher payments would violate the terms of negotiated labor contracts.

Cutting School Aid a Solution for High NJ Taxes?

2006-09-05T18:47:00.000-05:00

From Newsday NY:

Democrats push to end special treatment for poor, urban schools

Lawmakers plan to develop a new school funding formula that ends special treatment for poor, urban schools, two Democrats said Tuesday as legislators continued debating how to cut New Jersey's highest-in-the-nation property taxes.

Such a plan would end years of disputes over state funding disparities between suburban, rural and city schools, but also would have to pass muster with a state Supreme Court ruling that has demanded equality between poor and wealthy schools.

Sen. John Adler and Assemblyman Herb Conaway, co-chairmen of a special committee mulling school funding as part of property tax reform talks, said their goal is to develop a funding formula that can imposed upon every school district, no matter its locale.

"It doesn't seem like a crazy idea to treat people fairly wherever they live," said Adler, D-Camden.
...
"We could move to a unified system, but in order to do that the Legislature has a very heavy burden," Sciarra said. "They're going to have to come up with proof it will deliver the level of resources needed by all students in the state."
...
Those districts have about 22 percent of the state's student population, but they get about 55 percent of all state school aid.
...
"We'll treat kids fairly no matter where they happen to live," Adler said. "That's at least an achievable goal. That's all the courts have been telling us to do for a long time."

The Supreme Court ruling stems from concerns that children in poor city schools don't receive the same quality of education as those in wealthy suburban schools.

It requires the state to provide substantial aid to 31 districts designated as needing special help so their funding is equal to the state's richest school districts.

Northern New Jersey August Residential Sales

2006-09-05T09:26:00.000-05:00

Preliminary August sales data for Northern New Jersey is in..

The first graph plots the unadjusted sales data (closed sales) for the counties listed. Please note the lower bound of the graph, it is set to 1000, not to zero. I do this to emphasize the seasonal nature of the Northern NJ market.

(click to enlarge)

The second graph displays the same sales data (2003-2006) for the first four months of the year. Please note that this graph does cross at zero.

(click to enlarge)

The third graph displays only August sales, 2000 to 2006 YOY.

(click to enlarge)

The last graph displays YOY August sales, broken down by county.

(click to enlarge)

The numbers:

January
Average Sales (2003-2005): 2000
2005 Sales: 2013
2006 Sales: 1705
(Down 15.3% Year Over Year)

February
Average Sales (2003-2005): 1583
2005 Sales: 1578
2006 Sales: 1395
(Down 11.6% Year Over Year)

March
Average Sales (2003-2005): 2193
2005 Sales: 2256
2006 Sales: 2033
(Down 9.9% Year Over Year)

April
Average Sales (2003-2005): 2322
2005 Sales: 2383
2006 Sales: 1817
(Down 23.8% Year Over Year)

May
Average Sales (2003-2005): 2615
2005 Sales: 2725
2006 Sales: 2298
(Down 15.7% Year Over Year)

June
Average Sales (2003-2005): 3486
2005 Sales: 3682
2006 Sales: 2911
(Down 20.9% Year Over Year)

July
Average Sales (2003-2005): 3495
2005 Sales: 3338
2006 Sales: 2428
(Down 27.3% Year Over Year)

August
Average Sales (2003-2005): 3661
2005 Sales: 3668
2006 Sales: 2599
(Down 29.1% Year Over Year)

Caveat Emptor!
Grim

Q2 OFHEO Home Price Index

2006-09-05T06:30:00.000-05:00

From OFHEO:

HOUSE PRICE APPRECIATION SLOWS (PDF)

U.S. home prices continued to rise in the second quarter of this year but the rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one percentage point from the previous quarter and is the lowest rate of appreciation since the fourth quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning of OFHEO’s House Price Index (HPI) in 1975. The figures were released today by OFHEO Director James B. Lockhart, as part of the HPI, a quarterly report analyzing housing price appreciation trends.

“These data are a strong indication that the housing market is cooling in a very significant way,” said Lockhart. “Indeed, the deceleration appears in almost every region of the country.”

From Marketwatch:

U.S. 2Q OFHEO home price index up 4.7% annualized

U.S. home prices were appreciating at a 4.7% annual rate in the second quarter, the slowest gains since 1999, the Office of Federal Housing Enterprise Oversight said Tuesday. In the past year, home prices are up 10.1%. The purchase-only index is up 8.3% in the past year. The deceleration in OHFHEO's home price index is the fastest in the three-decade history of the index. "These data are a strong indication that the housing market is cooling in a very significant way," said James Lockhart, OFHEO director. In the first quarter, home prices had risen at an 8.8% annualized rate, with prices up 12.8% year-over-year.

A Tooth-Rattling Plunge?

2006-09-05T06:15:00.000-05:00

From the IHT/NY Times:

America's housing slump

With economic signals flashing that America's housing boom is over, speculation has now turned to how deep the slump will be and how long it will last, with predictions ranging from a smooth descent to a tooth-rattling plunge. Come what may, conventional wisdom holds that as long as you don't plan to sell your house any time soon, you'll be all right. The downturn is unlikely to wipe out all of your accumulated gains - the thinking goes - so you can cash in later.

Or can you?

The downturn in housing is overlapping with the retirement of the baby-boom generation, which starts officially in 2008, when the first of 77 million boomers become eligible for Social Security. Most of them are homeowners, and many of them will presumably want to sell their homes, extracting some cash for retirement in the process. Theoretically, that implies a glut of houses for sale, which would surely mitigate an upturn in prices, and could drive them ever lower. The result would be less housing wealth for everyone and less to live on for those who had planned to retire on the house.

Still, no one can be sure what will happen. Economists agree that the retirement of the baby-boom generation will influence housing prices, but differ over how powerful the effect will be. But one thing is reasonably certain. The question would not be such a burning one if Americans, especially those near retirement, had adequate savings to see them through. Even before the personal savings rate went negative last year, Americans were meager savers.

The housing bust may be what it takes to reverse that. Even a shift from profligacy to thrift would not be entirely good news, however. For an economy based on consumption, the change to less free-spending ways could be excruciating.

The house party is over, but Americans don't yet know how bad the hangover is going to be.

Affordable Housing Deed Restrictions To Expire

2006-09-05T05:10:00.000-05:00

From the Star Ledger:

Affordable housing in N.J. nears its 'sunset'

As part of a sweeping national trend, New Jersey could soon begin losing tens of thousands of affordable housing units built decades ago with either federal housing subsidies or financial incentives offered by state judges.

Private developers, who agreed to keep the units affordable for between 10 and 30 years in exchange for the breaks, are being tempted to sell or convert the buildings by soaring condo prices and a hot rental market.
...
"Many deed restrictions will continue, either because of the nature of the owners or the nature of the market," said DCA Commissioner Susan Bass Levin. "But the potential number of deed restrictions expiring over the next 10 years could be upwards of 50,000."
...
The problem is magnified in New Jersey because 35,000 affordable units built by private developers came with similar "sunset provisions" that remove controls in 10 to 30 years. Nearly all that housing was built after a landmark 1983 state Supreme Court decision, which offered builders density bonuses in exchange for setting aside some units for the poor.

The first of those units began to expire in recent years, catching tenants and even some politicians by surprise. The housing is scattered statewide, from the poorest cities to the wealthiest enclaves.

New Jersey, Still Open For Business?

2006-09-05T05:01:00.000-05:00

From the Express Times:

Valley's space to grow lures companies

Beth Gorin's journey from northern New Jersey to the Lehigh Valley is a microcosm of a bigger picture.

Hailing from the hustle-bustle of Bergen County's fast-moving suburbs, the new head of Lehigh Valley Economic Development Corp. sees uncharted waters here.

At first glance, the business climate of Bergen County, a densely populated region just west of Manhattan supported by a highly skilled work force, appears unbeatable.

But Gorin, who headed the Bergen County Economic Development Corp. for three years, witnessed frustration beneath the surface.

"Within the state of New Jersey - we always hear the phrase location, location, location - but there is no available space that businesses need to grow," Gorin said.

New Jersey's neighbors have taken notice of that discontent, which stems from a built-out landscape and a tax and regulatory framework many business leaders say is burdensome.

"Other states are throwing incentives, left and right, at New Jersey corporations," Gorin said.

Flip over to the Lehigh Valley, where developable land is not scarce, real estate costs less and many entrepreneurs say they find a more welcoming atmosphere, enhanced with cost-saving programs.

It's that receptiveness that lured Gorin here.

"My tagline in Bergen County was Bergen County is open for business," said Gorin, who began her job with LVEDC on Aug. 7. "Believe me, Pennsylvania is much more open for business."

Housing Down For The Count?

2006-09-04T20:20:00.000-05:00

From RealtyTimes:

Housing Market On The Ropes

A flurry of economic reports unleashed in August left the national housing market reeling and on the ropes as it headed into the final round of what is typically the heavy buying season.

With each month like another grueling round for a pugilist in dire need of a cut doctor, the housing market is sweating prices and bleeding sales as it faces the grim possibility of going down for the count.

Yet, even with the wind all but knocked out of the housing bubble and hopes for a comeback slim, some experts hesitated calling the fight after more than a month of mortgage interest rate declines put some punch back into buying power.
...
The Standard & Poor's/Case-Shiller Home Price Index of 10 major metropolitan areas reported in August that single-family home prices revealed zero appreciation from May to June, after only a 0.5 percent gain from April to May as the market braced for price depreciation.
...
"Home prices are clearly decelerating," said Yale University economist Robert Shiller, the chief economist at MacroMarkets LLC, who has warned of a house price bubble going bust. Shiller predicted the tech-sector driven stock market bust more than half a decade ago and co-developed the index with S&P.
...
Six of the 10 metro areas showed a month-over-month decline from May to June, with Boston reporting the largest monthly loss and an annual price loss of almost 2 percent, the index revealed.
...
John Burns Real Estate Consulting reported 84 of 100 of the nation's largest housing markets are overpriced with only 13 markets below historical median affordability levels and three at their historical affordability level.

Burns said in nine markets, prices are so high the markets were worse off in August in terms of affordability than in the early 1980s when interest rates were 18 percent or more. They were New York; Washington, D.C.; Los Angeles; Seattle; Portland; Baltimore; Edison; , Nassau; and Naples.

Who's on first?

2006-09-04T17:13:00.000-05:00

From the Record:

Lou's on first, but never lived in Wayne

Did Paterson native Lou Costello build the white stucco Spanish-style villa that's for sale on Hamburg Turnpike in Wayne?

The real estate agent who listed the house at $870,000 thought so, and advertised it that way.

But the comedian's daughter said: No way.

"I can tell you assuredly and with 100 percent certainty that my father never lived in Wayne or built a house there," said Christine Costello, reached at her home in Los Angeles.

The listing for the house, still up on the Coldwell Banker Web site Thursday evening, says it was "originally built in 1925 by Lou Costello in replica of his own Hollywood mansion."
...
How the name of Lou Costello came to be attached to the house is a bit of a mystery. Robert Lindsay, the listing agent with Coldwell Banker, said the story came from the house's owners, who said the previous owner had a plaque that mentioned Costello. (Neither of these owners could be reached by The Record, and the plaque – if it existed at all – is apparently lost to history.)
...
He said Thursday that he would remove the Costello reference from the Internet listing.

In any case, he said, the house is under contract, commanding the full asking price to a buyer who plans to turn it into an office building. Costello's name was not an attraction for the buyer, and Lindsay said he never thought it would be a key selling point -- just an unusual feature that was worth mentioning in the listing.
...
State Real Estate Commission spokesman Marshall McKnight said he could not comment on this case, but e-mailed language from the New Jersey real estate advertising rules, which bar "false, misleading or deceptive claims."

Lowball! 8/22 - 9/4 (Sussex, Somerset, Union)

2006-09-04T06:53:00.000-05:00

Welcome to another edition of Lowball!

Lowball! takes a look at home sales from a different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales from the past month and pick out the sales that have the highest percentage difference between list price and selling price.

The purpose of Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, Lowball! offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.

Here are the lowball sales for Sussex, Somerset, and Union Counties from 8/22 through 9/4. Sorry, but I'm a bit pressed for time this morning, so counties were combined and presented as images.

Lowball! Greater than 15%

(Click to enlarge)

Lowball! 10% to 15%

(Click to enlarge)

New Jersey Job Growth

2006-09-04T05:59:00.000-05:00

From the Daily Record:

Work is changing

Some records show that nineteenth century union leader Peter J. McGuire was the first to suggest a day honoring those "who from rude nature have delved and carved all the grandeur we behold."

Nowadays, so many of us who labor have little in contact with "rude nature."

Manufacturing jobs in New Jersey declined by 6,000 this year through July and overall private sector employment in the state rose by a mere three tenths of one percent during the same time period. Total private-sector employment in New Jersey -- at 3,433,000 jobs --is now only 3,000 jobs above the peak reached six and a half years ago, according to the New Jersey Business and Industry Association.

Where are jobs being created? The answer is in government.

Since December 2000, public-sector employment in New Jersey has expanded by a net 53,200 jobs, a 9 percent increase. Virtually all of that increase has been in state and local government; federal government employment has remained largely stable. Thus, over the last six and a half years, state and local governments have added more jobs than the private sector (a net gain of 53,200 vs. 3,000), and over the same period they have achieved a much higher rate of job growth (9 percent vs. one-tenth of a percent).

It is naturally better for people to have jobs than to be unemployed. Still, on this Labor Day, it is noteworthy that government expansions are responsible for more and more of the jobs New Jersey residents hold. That would be a mere economic footnote if not for the fact the state is in property tax crisis. Clearly, all of those public jobs -- and the generous benefits that accompany them -- need a lot of financial support. And a lot of that support is coming from property taxes.

It is a proper government function to provide services to people. Employees are needed to do that. At the same time, you wonder how long a state can be viable when government is creating so many more jobs than private industry is.

If America sneezes, the rest of the World catches a cold

2006-09-04T05:50:00.000-05:00

From The Globe and Mail (Canada):

The housing collapse heard round the world

Real estate agent Andrea Gaus knew the market was out of whack when the price of a typical four-bedroom house near good schools in the leafy Maryland suburbs of Washington shot past the $1-million (U.S.) mark.

“It got to the point where appreciation was so high that it priced people out of the market,” Ms. Gaus said.

But the peak has passed, and the consequences of the deflating bubble are buffeting the housing market, in Washington and across the United States.
...
“Look how fast prices were going up. The same thing is happening on the way down,” observed Ms. Gaus, who's been selling homes in Potomac for 16 years.

“It's a very tough market.”

The once red-hot housing market has fizzled. And the topic du jour among economists, investors and policy makers is whether the end of the housing boom signals the beginning of the end of a long run for the world's mightiest economy, and by association, the rest of the planet.

The U.S. housing crash may prove to be the economic equivalent of the canary in the coal mine — a warning of impending danger in an economy that has surged too far, too fast. Many experts are now openly speculating about a possible U.S. recession next year, brought on by consumers reacting to the shrinking value of their nest egg. If they're right, the fallout could prove to be far nastier than the collapse of the technology bubble at the start of the decade.
...
Think it all doesn't matter to you? Think again. For nearly a decade now, the United States has been the economic driver for much of the world — Canada included. The United States has been sucking up excess savings and consuming everything in sight, from cars to homes and everything that goes in them.

“It's hard to imagine that a U.S.-centric global economy wouldn't be at risk in the aftermath of a bursting of the U.S. housing bubble,” warned Morgan Stanley chief economist Stephen Roach, one of Wall Street's most outspoken worrywarts.

“The non-U.S. world remains heavily reliant on selling exports to wealth-dependent American consumers. As the United States comes to grips with the aftershocks of another post-bubble shakeout, so too must the rest of the world.”

As he put it: “If the American consumer sneezes, countries in both the developed and the developing world could easily catch a cold.”

Lowball! 8/22 - 9/3 (Essex and Morris)

2006-09-03T06:48:00.000-05:00

Welcome to another edition of Lowball!

Lowball! takes a look at home sales from a different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales from the past month and pick out the sales that have the highest percentage difference between list price and selling price.

The purpose of Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, Lowball! offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be 'hot'. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.

Here are the lowball sales for Essex and Morris Counties from 8/22 through 9/2:

Essex:

MLS #	Town	Original List	List Price	Sale Price	% Off OLP	% Off LP
2256064	South Orange	$419,000	$329,000	$315,000	24.8%	4.3%
2259008	West Orange	$1,650,000	$1,299,000	$1,250,000	24.2%	3.8%
2263846	Livingston	$1,249,000	$1,100,000	$960,000	23.1%	12.7%
2223589	Newark	$350,000	$289,000	$270,000	22.9%	6.6%
2232630	Montclair	$1,675,000	$1,399,000	$1,300,000	22.4%	7.1%
2244382	Newark	$179,900	$169,000	$140,000	22.2%	17.2%
2246224	Livingston	$989,000	$799,000	$780,000	21.1%	2.4%
2270543	Maplewood	$255,000	$240,000	$206,000	19.2%	14.2%
2271873	Millburn	$1,999,000	$1,825,000	$1,625,000	18.7%	11.0%
2276200	North Caldwell	$950,000	$799,000	$780,000	17.9%	2.4%
2229906	Newark	$295,000	$295,000	$245,000	16.9%	16.9%
2205447	Cedar Grove	$1,499,000	$1,399,000	$1,250,000	16.6%	10.7%
2268595	Caldwell	$779,000	$724,000	$650,000	16.6%	10.2%
2271420	Bloomfield	$419,000	$399,999	$350,000	16.5%	12.5%
2275929	Ciry Of Orange	$299,000	$259,000	$250,000	16.4%	3.5%
2260357	Livingston	$749,000	$675,000	$626,460	16.4%	7.2%
2272607	Caldwell	$220,000	$199,000	$185,000	15.9%	7.0%
2254624	Verona	$649,900	$574,999	$550,000	15.4%	4.3%
2260030	East Orange	$399,900	$349,000	$339,000	15.2%	2.9%
2242960	West Orange	$499,000	$459,900	$425,000	14.8%	7.6%
2245789	Montclair	$1,349,000	$1,199,000	$1,150,000	14.8%	4.1%
2226471	Bloomfield	$250,000	$230,000	$215,000	14.0%	6.5%
2280617	West Caldwell	$715,000	$648,000	$617,500	13.6%	4.7%
2249151	Livingston	$489,900	$449,900	$425,000	13.2%	5.5%
2262358	Bloomfield	$224,500	$219,000	$195,000	13.1%	11.0%
2268729	Livingston	$1,175,000	$1,175,000	$1,025,000	12.8%	12.8%
2206228	Montclair	$675,000	$619,900	$590,000	12.6%	4.8%
2248270	West Orange	$399,900	$359,900	$350,000	12.5%	2.8%
2254743	Montclair	$445,000	$399,900	$390,000	12.4%	2.5%
2256178	West Orange	$489,000	$449,000	$429,000	12.3%	4.5%
2266858	Livingston	$449,500	$399,000	$395,000	12.1%	1.0%
2282335	Maplewood	$1,045,000	$949,000	$920,000	12.0%	3.1%
2242217	Livingston	$524,900	$469,900	$462,500	11.9%	1.6%
2260946	Nutley	$495,000	$454,900	$437,500	11.6%	3.8%
2271546	Glen Ridge	$599,000	$569,000	$530,000	11.5%	6.9%
2272873	Newark	$200,000	$200,000	$178,000	11.0%	11.0%
2273497	North Caldwell	$1,095,000	$1,095,000	$975,000	11.0%	11.0%
2257120	Bloomfield	$415,000	$399,000	$370,000	10.8%	7.3%
2277164	Glen Ridge	$649,000	$579,000	$579,000	10.8%	0.0%
2264981	South Orange	$949,900	$899,900	$850,000	10.5%	5.5%
2281870	West Orange	$519,000	$465,000	$465,000	10.4%	0.0%
2264331	Nutley	$445,000	$429,900	$399,000	10.3%	7.2%
2256797	East Orange	$249,900	$249,900	$225,000	10.0%	10.0%

Morris

MLS #	Town	Original List	List Price	Sale Price	% Off OLP	% Off LP
2201178	Mendham	$1,395,000	$1,075,000	$990,000	29.0%	7.9%
2101890	Rockaway	$599,000	$450,000	$450,000	24.9%	0.0%
2244146	Morris	$330,000	$299,999	$250,000	24.2%	16.7%
2257336	Montville	$776,000	$669,000	$600,000	22.7%	10.3%
2252531	Mountain Lakes	$2,099,000	$1,699,000	$1,625,000	22.6%	4.4%
2249917	Rockaway	$1,250,000	$1,250,000	$1,000,000	20.0%	20.0%
2285434	Chester	$1,199,000	$1,040,000	$995,000	17.0%	4.3%
2282092	Montville	$1,529,900	$1,345,900	$1,272,550	16.8%	5.4%
2219907	Denville	$389,000	$349,900	$325,000	16.5%	7.1%
2280444	Denville	$489,000	$425,000	$410,000	16.2%	3.5%
2263490	Morris	$425,000	$399,000	$360,000	15.3%	9.8%
2251289	Morris	$424,900	$374,900	$360,000	15.3%	4.0%
2263054	Boonton	$399,000	$349,000	$339,000	15.0%	2.9%
2280010	Morris	$699,000	$599,900	$595,000	14.9%	0.8%
2246110	Mount Olive	$465,000	$399,999	$399,000	14.2%	0.2%
2267571	Morris	$539,900	$489,900	$465,000	13.9%	5.1%
2264420	Butler	$369,900	$329,900	$319,000	13.8%	3.3%
2105005	Jefferson	$219,900	$219,900	$190,000	13.6%	13.6%
2280059	Mount Olive	$335,000	$299,900	$290,000	13.4%	3.3%
2290899	Jefferson	$369,000	$325,000	$320,000	13.3%	1.5%
2255996	Kinnelon	$1,000,000	$929,000	$870,000	13.0%	6.4%
2259094	Rockaway	$399,900	$369,900	$350,000	12.5%	5.4%
2273187	Florham Park	$769,900	$699,900	$675,000	12.3%	3.6%
2255567	Butler	$454,900	$409,900	$400,000	12.1%	2.4%
2251263	Morristown	$829,000	$749,900	$729,000	12.1%	2.8%
2280014	Boonton	$509,900	$464,500	$450,000	11.7%	3.1%
2268185	Rockaway	$459,900	$425,000	$406,000	11.7%	4.5%
2268528	Denville	$619,000	$575,000	$547,500	11.6%	4.8%
2271390	Kinnelon	$789,900	$699,000	$699,000	11.5%	0.0%
2249362	Florham Park	$565,000	$545,900	$500,000	11.5%	8.4%
2277795	Morris Plains	$439,900	$399,900	$390,000	11.3%	2.5%
2296914	Chatham	$799,000	$735,000	$710,000	11.1%	3.4%
2220084	Parsippany-Troy Hills	$329,900	$329,900	$293,400	11.1%	11.1%
2261720	Jefferson	$364,900	$335,000	$325,000	10.9%	3.0%
2300701	Mountain Lakes	$594,500	$594,500	$530,000	10.8%	10.8%
2275365	Butler	$353,000	$329,900	$315,000	10.8%	4.5%
2260916	Rockaway	$559,900	$519,000	$500,000	10.7%	3.7%
2266877	Morris	$950,000	$899,000	$850,000	10.5%	5.5%
2246665	Jefferson	$529,900	$499,900	$475,000	10.4%	5.0%
2238490	Montville	$534,900	$489,000	$480,000	10.3%	1.8%
2272369	Morris	$639,900	$599,900	$575,000	10.1%	4.2%
2230668	Florham Park	$1,250,000	$1,199,000	$1,125,000	10.0%	6.2%

Caveat Emptor!
Grim

Jerseyfication

2006-09-03T06:00:00.000-05:00

From the Express-Times:

Jerseyfication? It's too late to gripe about it

No more outsiders.

It's a standing joke among those of us who live in houses built on former farm fields.

The fumes from the moving van are still fresh in the air. The new macadam is shiny black. The freshly-seeded lawns are nowhere near maturity. The sign posts for our new streets stand straight and colorful with names such as Lily Lane, Woodcrest Ridge, Farmview Road, and Pheasant Run. The pheasants are gone, no farms are in sight and the crest is no longer wooded, but these street names hint at what once was.

Yet shortly after we've unpacked and found our way around outdated roads and byways, we've decided that we've had enough.

No more outsiders.

It doesn't work out that way, of course, and there is no real way to measure an outsider against those who really "belong" here. Our tax money spends the same. You can live here for 20 years and still be considered a carpetbagger, but newbies and oldheads alike all have one thing in common.

It's getting crowded around here.
...
One of the favorite targets of people around here is all the "Jersey people" moving in -- Jerseyfication, some call it. Even people in Phillipsburg complain about all the "Jersey people" who want to live here and drive to their jobs in New York and northeastern New Jersey. You know what they mean.

The End Of Real Estate As We Know It?

2006-09-02T18:57:00.000-05:00

From the New York Times:

The Last Stand of the 6-Percenters?

Redfin and other innovators, including ZipRealty and BuySideInc.com, are using technology to reduce costs and to save time for their brokers. Agents don’t find and recommend homes — customers do that on their own, using Internet listings — and that enables agents to charge less for the services they do provide, chiefly handling the paperwork and negotiations.

The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change — and protected its commission structure — by controlling the information on its Multiple Listing Service database of properties for sale.

“You can find out more on the Internet about an eBay Beanie Baby than you can about a $1 million house,” said Glenn Kelman, chief executive of Redfin, a licensed broker in Washington State and California.
...
Traditional agents still firmly control the M.L.S., which allows all participating brokers, including Redfin, to view almost every home for sale in a particular area, even those being offered through competitors’ agencies. But the typical 6 percent commission, paid out of the seller’s proceeds and split between the seller’s and buyer’s agents, is under attack because, as economists note, it does not serve consumers well.
...
In many cities, real estate agents have tried to restrict access to M.L.S. information or to limit its use on the database. Some have asked state legislatures to pass laws forcing brokers to offer certain levels of service, a move that Mr. Kelman sees as intended to squeeze out discount brokers. “It’s a thousand tiny shackles on innovation,” he said.
...
The Justice Department and the Federal Trade Commission have fought these tactics in Texas, Kentucky, Tennessee and Oklahoma, among other states, and the department is suing the National Association of Realtors, the powerful trade group of agents and brokers, over what it calls anticompetitive rules.

“Where it comes to our attention that significantly anticompetitive state laws or regulations are under consideration, we approach state officials to advocate that they take into account the benefits to consumers of a more competitive approach,” said J. Bruce McDonald, deputy assistant attorney general for the antitrust division of the Justice Department.
...
Buyers also enter details of their offers — the price they want to pay, the size of the deposit they are willing to put up and, for example, whether they will pay for the termite inspection. Then they click on “Submit.” A Redfin agent checks everything with the customer before passing along the offer to the seller.

“It took eight minutes,” said Perry Webster of Des Moines, a suburb of Seattle, who bought a new four-bedroom house through Redfin. “But it didn’t really matter that it was online. We just liked the business model.” He asked, “Is it really worth $10,000 to ride in a real estate agent’s Lexus?”

Deferred Property Taxes For Seniors

2006-09-02T12:06:00.000-05:00

From Newsday:

Florida property tax deferrals catch Jersey's attention

Lou Albright has had enough.

Retired after working for Verizon for 35 years, the Gloucester Township man has seen property taxes on his two-bedroom home increase 12 percent in recent years, to $7,400 annually.

Albright, 64, wonders how senior citizens in other states can stay in their homes. Faced with the nation's highest property taxes, many New Jerseyans are struggling to afford retirement, he said.

"New Jersey has become a work-only state," Albright said.

Albright is intrigued by an idea that will soon receive attention in New Jersey _ a Florida program that allows senior citizen homeowners to defer annual property taxes.
...
The Florida law was recently amended. As of Jan. 1, it will allow homeowners at least 65 who meet income qualifications to defer property taxes until the home is sold or ownership is transferred, said Kathy Henley, a Florida state property tax administrator. Under the law, deferred taxes can accrue as much as 7 percent interest.

Robert F. Williams, a Rutgers University-Camden constitutional professor, told New Jersey lawmakers a law like Florida's might allow them to bring property tax reform to the Garden State without complicated constitutional revisions that need voter approval.

"You might be able to solve part of the problem without any huge structural changes," Williams said.

But not everyone is convinced it's right for New Jersey.

Albright likes the idea, but is worried it could make selling a home more difficult in a sluggish housing market.

Cy Thannikary, chairman of a citizens property tax reform group and an Upper Freehold resident, said deferring property taxes wouldn't solve the state's heavy reliance on property taxes to pay for local government and schools.

"It simply postpones the misery of ever-increasing property taxes to a future date or to the next generation," Thannikary said.

Labor Day Weekend Open Discussion

2006-09-02T11:15:00.000-05:00

Observations about your local areas, comments on news stories or the New Jersey housing bubble, 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 small link on the bottom of each new message that reads "# 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 6 months. The archives can be found at the bottom of the right hand menu and are categorized by month.