Saturday, April 15, 2006

At A Glance: Pequannock, NJ

Listings As of 4/15
Total Active Listings: 85
Up To $500,000: 49
$500,001 - $1,000,000: 34
$1,000,001 And Up: 2

Listing Activity Since 4/1
15 Added
2 Back on Market
10 Price Reductions
7 Under Contract
6 Sold
5 Expired
3 Withdrawn
0 Temporarily Withdrawn

March Sales Activity
Up To $500,000: 6
$500,001 - $1,000,000: 2
$1,000,001 And Up: 0
Sales Prices were on average 3.4% below Original List Prices
(Activity data from GSMLS)

Friday, April 14, 2006

Townhomes and Condos for Glen Ridge?

From the New York Times:

A Rare New Project for a Genteel Town

IN a remarkable development for this peaceful little town, there is development going on.

Under the boughs of the graceful old oaks and sycamores, illuminated by the glow of gaslights that line every street and lane, a boxy old commercial building is being transfigured. It will emerge later this year as an elegant condominium complex.

Nobody seems to remember when a multifamily development last happened in town. "Not in recent memory" is the best several officials had to offer. Michael Richman, one of the principals of the based Pegasus Group, which is behind the project, said jokingly that local planners seemed to be working with the "latest master plan from 1913." (Actually, Glen Ridge adopted a new plan in 1997.)

Still, the developers said they felt their proposal to create the Reserve at Glen Ridge, with 32 apartments and five town homes to be marketed at prices of $475,000 to $1.82 million, had been given a warm welcome by both officials and residents.
In this, the Reserve will be competing directly with a similar, albeit larger scale, project now under construction in downtown Montclair. The 101-unit Siena being built on the site of the former Hahne's department store is also expected to open for occupancy later this year, with condos priced similarly to those at the Reserve.
The views from homes at the Reserve will not entirely vanish into the night, either. The entire property is to be ringed with the traditional gaslights, Mr. Richman said.

"I wish I had priced it lower from the beginning"

From the Wall Street Journal:

Where the Buyers Aren't

As real-estate prices surged across most of America, some of the biggest gains swept coastal resorts. Now there are signs the tide has finally turned.

In Naples, Fla. -- a year ago the fastest-appreciating community in the country -- prices slipped 1% in February, says the Florida Association of Realtors. In Ocean City, N.J., the median price fell 7% in March from a year before, according to an estimate by the Ocean City Board of Realtors. Most other places nationwide have yet to show a fall in median prices, which typically lag a sales slowdown by several months.

Sellers in Ocean City, a densely populated barrier island with a long boardwalk and broad beaches, have cut prices as their properties languish. Bill Beible had listed his four-bedroom, two-bath condominium for $1.35 million last spring. Mr. Beible, a manufacturing executive who bought the place in 2003 for $725,000, admits the price was a bit steep, but other homes like his had sold in a matter of days.

Mr. Beible now says he aimed too high. After getting no takers, he cut the price to $1.25 million. A buyer materialized, but asked for concessions -- and then backed out. When Mr. Beible relisted the condo late last year he dropped the price to $1.195 million, but didn't get any offers. So last week he cut again, to $1.059 million -- down 28% from his initial price. "I wish I had priced it lower from the beginning," he says.
Like much of the Jersey Shore, Ocean City was ignored by New York vacation buyers until the early 2000s, when exploding prices in the Hamptons finally persuaded buyers to take a look. Suddenly, prices soared and supply dried up. "Things went through the roof," says Nicholas Marotta, president of the Ocean City Board of Realtors, adding that "we all knew it was going to come to an end."

Both single-family and condominium sales in March fell by two-thirds from a year earlier. Meanwhile, the supply of homes on the market mushroomed. The inventory of single-family homes has more than doubled, while the condo inventory nearly tripled.

Broker Mark Grimes says many sellers are trying to unload properties they bought only two years ago, when prices were rising rapidly. "Now they're going the other way, and they're thinking 'This could get worse,'" he says. Some sellers aren't waiting for that to happen, and are cutting prices drastically -- last week, one of Mr. Grimes's clients dropped his listing 20% to $1.995 million. Others, like respiratory therapist Gabe Dunn, whose three-bedroom furnished condo is on the market for $499,000 -- $110,000 more than he paid last June -- are advertising for summer rentals as a hedge against a softening market. "Sellers have to be flexible," he says. (Emphasis added)

Caveat Emptor!
(Thanks to everyone that either sent this link or gave me a heads up)

Affluent Households Not Interested In Increasing Real Estate Investments

From Realty Times:

Affluent Often Don't Boost Realty Investments

The booming second home market is helping the greater housing market continue rolling like thunder, but most affluent investors are adding quieter investments to their portfolios.

Last year, the median price of investment homes increased by 24 percent -- twice the rate of resale homes, more than three times the rate of new homes and easily more than many other non-real estate investments -- but most affluent investors aren't adding property to their portfolios.

Apparently they have good reason.

Among the 42 percent of affluent households looking to make net increases to their investment portfolios in the next three months, only 21 percent of them will increase real estate holdings, according to Phoenix Marking International.

(If my math is correct, that means only 8.8% of affluent households are interested in increasing holdings of real estate at this time -grim)

Much larger shares are going to retirement accounts, deposit accounts, mutual funds and stocks, according to Rhinebeck, NY-based Phoenix, a marketing research and consulting firm.

Almost as interesting.. Does this mean that 58% of affluent households polled are not looking to make net increases, or are decreasing, their current investment holdings?

Caveat Emptor!


Tax Abatements Galore In Jersey

From the Jersey Journal:

Wary council backs abatement for American Can condo plan

In a 7-1 vote that appeared more negotiating stance than firm commitment, Jersey City council members introduced an ordinance Wednesday night granting a 30-year tax abatement for a condo development proposed for the old American Can building on Dey Street.
But even the council members who voted for the abatement said they have several problems with the project, including its lack of affordable housing and open space. But they also pointed out that nothing's final until the ordinance is adopted in a second reading, which would take place in two weeks.

"I have serious reservations," City Council President Mariano Vega said before voting in the affirmative. "But in two weeks, we can discuss with the developer affordable housing, contribution to the city, and open space."

A New York City-based company named Coalco has proposed transforming the massive factory building, located in a no man's land near the Pulaski Skyway, into a condo complex with a minimum of 511 market-rate units.

James McCann, attorney for Coalco president Mikail Kernev, said yesterday he doesn't see much room to negotiate. The $100 million-odd project has already been planned and financed as market-rate housing, he said.
In other business, the council also introduced a 20-year tax abatement for the Shore Club North, the second phase of a 429-condo complex the LeFrak Organization is building on the Newport waterfront.

Tax abatement aim: Keep more $$ in Hoboken

City officials, claiming they're being ripped off by other municipalities not paying their fair share in county taxes, have embarked on a campaign to keep more cash in the city's coffers by increasing the number of tax abatements they give to developers.

Mayor David Roberts contends Hoboken residents pay a disproportionately high amount in county taxes compared to Jersey City - in effect giving a break to taxpayers in Jersey City and other Hudson County communities.

"Hoboken taxpayers are subsidizing the county and other communities, like Jersey City, and why should we sit around and do nothing about that?" Roberts asked.

In response, the Hoboken City Council is granting more and more abatements to property owners and developers. Instead of paying conventional taxes, these properties pay a fixed rate amount per year in payments in lieu of taxes, or PILOTs.

Under a conventional tax allocation, the city has to share revenue with the county and the school district - which, in Hoboken, amounts roughly to 75 cents on every dollar.
Under a tax abatement, the city gets to keep nearly all the PILOT cash for itself - thanks to a court decision several years ago, where Secaucus officials successfully made similar arguments, Hoboken, Jersey City and other Hudson County municipalities must give 5 percent of PILOT payments to the county.

In 1990, the city netted roughly $2 million in PILOTs. Now this year's budget includes more than $10 million in PILOTs, from more than 20 projects throughout the city - and more are to come.

By way of comparison, Jersey City collected $6.6 million in PILOTs in 1990, but today it collects more that $83 million on more than $2 billion worth of property, according to an analysis of the city's budgets.

Thursday, April 13, 2006

Lowball! 4/5 - 4/13

Lowball! takes a look at home sales over the past week from a very 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 over the past week and pick out the sales that have the highest percentage difference between asking 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.

We've got a great list this week..

MLS# 2238846 - Franklin, NJ
List Price $199,900
Sales Price $128,000 (36% Lowball!)

MLS# 2248366 - Elizabeth, NJ
List Price $344,900
Sales Price $250,000 (27.5% Lowball!)

MLS# 2102754 - Jefferson, NJ
Original List Price $485,000
List Price $435,000
Sales Price $340,000 (21.8% Lowball!, 29.9% off Original List)

MLS# 2232898 - Lebanon, NJ
List Price $205,000
Sales price $165,000 (19.5% Lowball!)

MLS# 2241728 - Long Hill, NJ
List Price $1,199,000
Sales Price $999,900 (16.6% Lowball!)

MLS# 2107647 - Morris Plains, NJ
Original List Price $609,000
List Price $459,000
Sales Price $385,000 (16.1% Lowball!, 36.8% off Original List)

MLS# 2110245 - Scotch Plains, NJ
Original List Price $1,300,000
List Price $1,275,000
Sales Price $1,072,000 (15.9% Lowball!, 17.5% off Original List)

MLS# 2110530 - West Orange, NJ
Original List Price $399,000
List Price $349,000
Sales Price $300,000 (14% Lowball!, 24.8% off Original List)

MLS# 2216265 - Nutley, NJ
Original List Price $379,000
List Price $455,900
Sales Price $393,000 (13.8% Lowball!, 18% off Original List)

MLS# 2209672 - Teaneck, NJ
List Price $450,000
Sales Price $390,000 (13.3% Lowball!)

MLS# 2239213 - Tewksbury, NJ
List Price $420,000
Sales Price $365,000 (13.1% Lowball!)

MLS# 2213175 - Harding, NJ
List Price $1,275,000
Sales Price $1,125,000 (11.8% Lowball!)

MLS# 2208391 - Butler, NJ
Original List Price $359,900
List Price $339,900
Sales Price $300,000 (11.7% Lowball!, 16.6% off Original List)

MLS# 2226450 - Warren, NJ
Original List Price $689,000
List Price $625,000
Sales Price $555,000 (11.2% Lowball!, 19.4% off Original List)

MLS# 21110376 - Berkeley Heights, NJ
Original List Price $1,359,000
List Price $1,197,000
Sales Price $1,065,000 (11% Lowball!, 21.6% off Original List)

MLS# 2075136 - Chester, NJ
Original List Price $1,100,000
List Price $899,000
Sales Price $800,000 (11% Lowball!, 27.3% off Original List)

MLS# 2222887 - West Paterson, NJ
Original List Price $385,000
List Price $369,900
Sales Price $330,000 (10.8% Lowball!, 14.3% off Original List)

Caveat Emptor!

Housing Heaven Turns Into Housing Hell


Welcome to Housing Hell
by Richard Benson

For the past decade, homeowners in the United States have been living in “Housing Heaven”. In this heavenly place, profits are always made; prices only go up; interest rates only go down; developers keep building, marketing, and selling megabuck, luxurious spa-like residences, that are all sold pre-construction; property speculators always make money, and pyramid their purchases into owning many properties to flip for a quick profit; and, second-homes are not an expensive luxury, but a wise investment for retirement.

If you really needed to make ends meet while living in this so-called Housing Heaven, all you had to do was buy a vacation home, rental property, or second-home and proceed to “install your own ATM on the side of your financed house” with your bank’s help, of course. Who needs to work, when you can simply go to the bank and rob your own house? It’s easier than robbing the bank! Living this way is fine in Housing Heaven, but not down here on earth. Here’s why.

Consumer debt is up to $2 trillion (not including $440 billion of revolving home equity loans and $600 billion of second mortgages). Not only do consumers owe a whopping $9 trillion in mortgage debt, but home equity extraction has reached $600 billion annually. Homeowners have basically received, and spent, in excess of $2 trillion that they never earned. (Just take a look at the increase in total mortgage debt in the Federal Reserve’s Flow of Funds Data since 2000).

So, welcome to Housing Hell. Now that buyers are willing to wait one or more years before buying, there are more sellers than buyers. Interest rates, in the meantime, continue going up. Let’s also not forget the Existential Equity Extraction. With $700 billion of sub-prime mortgages written (of which 10 percent could default), $2 Trillion of ARMs set to reset, and mortgage delinquencies near 5 percent, equity to extract is vanishing.
Our estimate is it will take about six months for sellers – particularly speculators who never intended to live in their properties but whose sole intention was to “flip” them for a profit – to realize they are toast.

Over the past 30 years, the United States has seen a Housing Hell scenario a number of times. In 1980-82, property values declined significantly each year. In ‘90, prices fell painfully again for five straight years in a row. There was a slight recovery in ’95, but prices fell again in ’96. When you look back, you will realize that the housing markets that suffered the most (particularly the Northeast and California), took almost 10 years to recover from the downturn. You may also remember when homeowners lost money every month and were forced to rent out their properties at a loss because they couldn’t sell them. Perhaps you know one of these homeowners.

Based on the logic of history, those who rent for a few years, rather than buy, will be rewarded the most (even though rents should increase with general inflation). Yes, the day will come again when it will, indeed, cost less to buy than it does to rent. When that day comes, it will signify the return, once again, of Housing Heaven.

Caveat Emptor!

Philadelphia Fed Sees Housing Slowing

The Philadelphia Federal Reserve Bank released the 2006 Q1 Highlights report today:

Regional Highlights (PDF)

Economic activity in the tri-state region (Pennsylvania, New Jersey, and Delaware) continued to expand in the first quarter. Manufacturing increased, building on the gains of the fourth quarter of last year. Retail sales of general merchandise rose slowly during the quarter. Healthy sales growth in January was followed by sluggish growth in February and March. However, sales growth is expected to pick up with warmer spring weather. Auto sales were up a bit from the fourth quarter of last year. Residential building activity eased, and demand for existing homes moderated. Commercial real estate markets continued to firm as the amount of space leased increased and rents rose. Employment in the three states of the region increased, although growth rates varied among the three states. The Philadelphia Fed is forecasting continued job growth in each of the three states, and a slight improvement in the region’s overall unemployment rate.

Residential building in the region slowed further in the early months of 2006, as the decline in home building that began in mid-2005 continued. On a seasonally adjusted basis, the number
of housing permits issued in the three states as a whole declined in February (latest available data), as it did in the nation. The three-month moving average in total permits—to smooth monthly volatility—reflects drops in Pennsylvania and Delaware and virtually steady permit issuance in New Jersey (Chart 5).

Sales of existing homes in the region have also been slowing. The downward trend in sales noticed in the fourth quarter of 2005 continued into the first quarter of this year. Although there was an increase in sales nationally in February attributable to warm weather, sales in the region did not strengthen appreciably. So far this year the inventory of existing homes for sale has been rising both nationally and locally, and the average amount of time homes are on the market has been increasing, suggesting that the downward trend in sales will continue.
Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year. Recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading indicate that slower price appreciation is probably setting in.

From Reuters:

Philadelphia Fed sees housing slowing, jobs solid

The Philadelphia Federal Reserve Bank said on Thursday the regional job market is set to show continued solid growth this year, while the housing market is likely to slow significantly.
The regional Fed bank report covered economic activity in Pennsylvania, New Jersey and Delaware.

The report said slower growth in house prices has probably set in, citing recent signs that a growing proportion of existing houses are selling for less than the asking price and that new home price increases are fading.

"Homebuilders and real estate agents in the region expect price appreciation to slow significantly this year," the report said.

Caveat Emptor!

3,404 Luxury Condos Proposed for Rutherford

More on the Highland Cross project in Rutherford, NJ.


Builders try to sell town on proposal for condos

Developers are projecting that new students would overflow the school district's facilities with or without their controversial proposal to build what some regard as an "entire new city" on a vacant industrial site along Route 17.

But during a public meeting Monday, residents questioned the projected increases in student populations and continued to rally against the development of high-end condominiums, retail stores and hotels.

More than 200 people packed Borough Hall to attend the third public presentation by developers Lincoln Equities Group LLC and Tarragon Corp., which seek to build 3,404 luxury condos on a 52-acre parcel known as the Highland Cross Redevelopment Area.

10Y Yield Hits Key Psychological Barrier - 5%

From Bloomberg this morning:

U.S. 10-Year Note's Yield Rises to 5%, Highest Since June 2002

U.S. 10-year Treasury note yields rose to 5 percent for the first time since June 2002, a harbinger of higher borrowing costs for everything from home loans to corporate bonds.
``It's an important psychological level and the risk is rising yields won't end anytime soon,'' said Michael Rottmann, head of fixed-income research at HVB Group in Munich. `This could ultimately translate to further pressure on Treasuries.''

The 10-year note's yield rose 2 basis points, or 0.02 percentage point, to 5 percent at 6:48 a.m. in New York, according to Cantor Fitzgerald LP. The yield is up from 4.39 percent at the end of last year and 4.69 percent when the Fed began lifting borrowing costs in June 2004.
`This is a very important level'' for the 10-year note, said Paul McCulley, a managing director at Newport Beach, California-based Pacific Investment Management Co., which manages the world's biggest bond fund, in an interview on April 7. ``How far it will go above five I don't know. Markets have a tendency to overshoot.''
Ten-year Treasury yields may be headed for 5.5 percent as investors break through important support levels, said James Bianco, president of Bianco Research LLC in Chicago, in a conference call with clients on April 6.

The rise in 10-year yields may have caught most economists off guard. The median estimate of 70 economists surveyed by Bloomberg News from Feb. 27 to March 7 was for the yield to end this quarter at 4.80 percent, and peak this year at 4.90 percent.

Hovnanian To Redevelop Sussex Zinc Mine

From the NJ Herald Online:

Franklin pursues downtown upswing

FRANKLIN — More than 50 years since businesses started closing down, Joe Bene can tell you exactly how a bustling Main Street once looked.

Ida's beauty parlor was over there, and Davenport's drug store was farther down the block. Mrs. Goldstein's five-and-dime was a popular spot, and Mrs. Bennett's Hershey Ice Cream shop was the place to get candy before seeing a show at Franklin Theatre.

Sitting inside Weiss Department Store, one of the few remaining businesses from the street's heyday, Bene last week summed up the current state of commerce in downtown Franklin: "All gone."
Franklin is one of several municipalities in Sussex County that have considered downtown redevelopment projects over the last few years, said Tammie Horsfield, president of the Sussex County Economic Development Partnership, which has been assisting Franklin officials in their search for potential Main Street developers.
Kistle said the current revitalization proposal has a better shot of going through, given a new addition to the project: Builder K. Hovnanian has agreed to purchase and redevelop the vacant zinc mine site, which is seen as the Main Street plan's centerpiece.

"It's like the start of everything," Kistle said. Hovnanian is expected to build a mixed residential and commercial development, while also preserving the site's historic Change House.

Aside from Hovnanian, which has yet to submit a formal application, BEBP Development Co. of East Rutherford is before the borough Zoning Board of Adjustment on its proposal to build 94 housing units on Mill Street near Main Street, said Jim Kilduff, the borough's planning and community development director.

Weekly Home Mortgage Rate Survey

From Bankrate:

Weekly Home Mortgage Rates

Average mortgage rates for single-family homes in the 10 largest metropolitan areas as of Apr. 12 as compiled by The rates are for 30-year, fixed-rate mortgages for 80 percent of the value of the house. A point is a one-time fee equaling one percent of mortgage.

Apr. 12 Prev. Wk

Boston 6.56 + 0.26 6.51 + 0.21
Chicago 6.69 + 0.10 6.65 + 0.06
Dallas 6.58 + 0.48 6.51 + 0.45
Detroit 6.62 + 0.00 6.59 + 0.00
Houston 6.55 + 0.55 6.49 + 0.52
Los Angeles 6.59 + 0.50 6.55 + 0.39
New York 6.62 + 0.21 6.45 + 0.20
Philadelphia 6.39 + 0.70 6.42 + 0.40
San Francisco 6.63 + 0.26 6.59 + 0.22
DC Metro 6.41 + 0.87 6.35 + 0.71
National Avg 6.55 + 0.39 6.51 + 0.32's national average for a 5-year adjustable mortgage, based on a 30-year loan for 80 percent of the value of a single-family house.

Apr. 12 Prev. Wk

Average 6.25 +0.38 6.17 +0.35

Wednesday, April 12, 2006

Dentist Indicted in New Jersey Mortgage Scam

From the Mortgage Fraud Blog:

Indictment of Dentist and Former Employee in New Jersey Mortgage Fraud Scheme

A Staten Island, New York, dentist and a former employee were indicted in New Jersey federal court on conspiracy, wire fraud and money laundering charges for operating a scheme to fraudulently obtain $1.36 million in mortgages and spending the proceeds on luxury items including the purchase of a 46-foot yacht, a North Carolina residence and a GMC Yukon Denali.
The Indictment describes a scheme in which the defendants used fraudulent documents, made false statements, established fictitious companies and opened back accounts in the companies’ names to fraudulently obtain mortgages secured by a property at 412-414 Commerce Lane, West Berlin, New Jersey. (the “Commerce Lane property”).
The defendants are each charged in Count One of the Indictment, which alleges a conspiracy to commit wire fraud, which carries a statutory maximum penalty of five years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendants. Counts Two through Four charge both defendants with wire fraud, which carries a statutory maximum penalty of 30 years in prison and a fine of $1 million. Count five charges the defendants with conspiracy to commit money laundering, which carries a statutory maximum penalty of 10 years in prison and a fine of $250,000. Counts Six through 23 charge both defendants with money laundering, which carries a statutory maximum penalty of 10 years in prison and a fine of $250,000.

Caveat Emptor!

Time To Rethink Those Real Estate "Investments"

From the Wall Street Journal (Thanks to chicagofinance for the link):

When to Sell an Investment Property In a Cooling Market for Real Estate

It's time to skip town.

As many real-estate markets soften, speculators are finding they can't flip their investment properties for a quick gain. That leaves them with a tough decision: Should they hang on and rent or should they bail out, possibly at a loss?

Got caught up in the real-estate fever? Let's start with the painfully obvious: If you have no choice but to sell, then you ought to sell -- and you should probably sell quickly.

To find out if you're in the "no choice" camp, simply run the numbers. Take the rental income on your investment property and subtract your costs, including the mortgage, property taxes, insurance and maintenance. If the house or condominium is a sizable cash drain and there's no way you can keep covering the shortfall, you've clearly got a problem.
And don't kid yourself: If you have a cash-flow problem now, it could get a lot worse. What if you have trouble finding tenants, or your tenants stiff you on the rent? If the property is already a cash drain, imagine how grim things could get without any rental income coming in.
True, the property market could perk up again, allowing you to unload at a profit. But that doesn't look likely. Chris Mayer, a real-estate professor at Columbia University's business school, notes that home sales are slowing. That usually foretells a period of stagnant or falling house prices.
Indeed, this reluctance to sell at a loss helps explain why a slowdown in home sales typically precedes a price decline. Homeowners have a target selling price -- it might be the price they paid, or the price they could have got at the market peak -- and they initially refuse to accept anything less.

But waiting to "get even, then get out" could be a huge mistake. Not only will you have to cope with the property's monthly cash drain, but also you could be hit with leveraged losses. If you bought that Florida condo with 5% down, all it takes is a 5% price decline to wipe out your equity.

"When prices start to fall, they usually continue to fall for a while," Prof. Mayer warns. "You want to be aggressive in setting a price that allows the property to sell, rather than slowly lowering your asking price and following the market down."

Caveat Emptor!

Northern New Jersey Residential Inventory Update

Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)
4/4 - 14,470
4/12 - 14,812 (2.4% Weekly Increase, ~34% Since January 1st)

Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)
4/4 - 7,133
4/12 - 7,259 (1.8% Weekly Increase. ~35% Since January 1st)

Single Family Homes, Condo, Coop
(Hudson County)
4/4 - 2,094
4/12 - 2,225 (6.3% Weekly Increase, ~28% Since January 1st )

Drop In Mortgage Apps Signal The End Of Spring Bounce

The past three weeks saw an increase in mortgage and refinance applications, however this week saw a sharp dropoff that begs the question, "Could this mark the end of the spring bounce?"

Home loan demand falls for 1st time in 3 weeks

U.S. mortgage applications fell for the first time in three weeks, an industry trade group said on Wednesday, as a near four-year high in interest rates dissuaded consumers from taking out home loans.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended April 7 decreased 5.5 percent to 579.4 from the previous week's 612.8.
The MBA's seasonally adjusted purchase mortgage index fell 4.7 percent to 417.7 from the previous week's 438.2.

The index -- considered a timely gauge of U.S. home sales -- was also below its year-ago level of 474.5.

The group's seasonally adjusted index of refinancing applications decreased 6.6 percent to 1,532.4 compared to 1,640.8 the previous week. A year earlier the index stood at 1,899.6.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.50 percent, up 0.01 percentage point from the previous week, its highest level since the week ended June 14, 2002 when it reached 6.53 percent.

The 30-year fixed-rate mortgage, the industry benchmark, was also substantially above its 2005 low of 5.47 percent in late June of 2005 and above last year's high of 6.33 percent in the week of November 11.
Fixed 15-year mortgage rates averaged 6.17 percent, up from 6.15 percent. Rates on one-year adjustable-rate mortgages increased to 5.97 percent from 5.96 percent.

Caveat Emptor!

NJ's Waterfront Businesses Squeezed By Eminent Domain

From the Star Ledger:


Lighthouse Bay and Amboy Aggregates are neighbors on the Raritan Bay waterfront.

One is an upscale South Amboy community where homes sell for more than $1 million. Homeowners want to be by the water, and pay a premium for the privilege.

The other is a company that processes sand dredged from the ocean into construction material, a holdover from the industrial days of the North Jersey waterfront.

As waterfront property in New Jersey becomes increasingly valuable, companies like Amboy Aggre gates are discovering they are no longer wanted. The city has plans for an expansive waterfront office and hotel complex and is trying to seize the property through eminent domain.

But unlike other companies that are forced to move to make way for gentrification, businesses that need to be on the water have no place to go in New Jersey.

Other water-oriented companies along New Jersey's coast from the George Washington Bridge to the Raritan Bay face the same pressures.

In Perth Amboy, Tri-State Dry Dock was forced out of business after the city threatened to seize its waterfront land to make way for a $600 million residential and retail development.

Union Dry Dock, an old shipyard and barge maintenance facility in Hoboken, is one of the few businesses left on the city's Hudson River waterfront, but company officials are constantly worrying about how long it will be before they are squeezed out.
Officials in cities that still have industrial waterfront businesses, or have condemned industrial land, say the companies are skeletons of what they once were. The land is underused, they say, and could be put to greater public good with pretty waterfront walkways and ritzy housing.

Caveat Emptor!

760 Condos Planned for E. Orange & Bloomfield

From the Star Ledger:

Big condo project for GE factory site

Plans to create a 760-unit condominium development, on the former General Electric industrial site that straddles the East Orange and Bloomfield borders off the Garden State Parkway, will be the subject of an East Orange zoning board meeting this evening.

Prism Capital Partners, the applicant behind the huge Parkway Lofts housing community planned on a 20-acre site that shares the dual addresses of 545 North Arlington Ave. in East Orange and 5 Lawrence St. in Bloomfield, is one of eight cases being heard.

"The applicant is proposing to convert the existing (six story, brick) structure to a loft condominium development of approximately 340 residential units," according to this evening's agenda. "The balance of the site will be demolished and configured into a total of 760 residential units."
The plan calls for a six-story main building, featuring one-, two- and three-bedroom residences, including five penthouse units; 12 garden apartment buildings; one cluster of 16 townhouses; a second cluster of 10 townhouses; and a combined total of 1,160 underground parking spaces
Right now, the access roads are North Arlington Avenue, a residential East Orange thoroughfare that cuts through tree-lined neighborhoods filled with large houses and lawns, and Bloomfield's Lawrence Street and parallel Arch Street.

Caveat Emptor!

Tuesday, April 11, 2006

Spring isn't thawing the chilly Northeast Market

From Inman News (and a hat tip to Ben Jones at The Housing Bubble Blog):

A housing chill in the Northeast

Only a few months ago, at midnight on Dec. 31, Joseph and Kianna Jackson gently clicked their champagne glasses together in their New Jersey apartment and made a resolution for the coming year: They vowed to make an offer on their first home by March 15 -- their daughter's second birthday.

But like so many other New Year's resolutions, their promise has so far been unkept. As mortgage rates crept higher in the first two months of 2006 and sales in their local market slowed, the Jacksons decided to postpone their home-buying plans because they think prices could be a lot lower in the summer or fall than they are today.

"A year ago, the market was super-hot and it was hard to find a Realtor or builder who would even return our calls," says Joseph Jackson, a self-employed computer-programmer.

"But now, I'm getting a couple of calls a week from people who want to sell me a home," Jackson says. "I just tell them to call back in a few months, and I'll let them know whether I'm interested in buying again."

While real estate agents from Brooklyn to Boston say that the Northeast's housing market will remain strong, it's the decisions made by families like the Jacksons that will ultimately determine whether the region's sales and prices gains simply moderate or come to a screeching halt.
With inventories nearing 10-year highs in some Northeastern markets, "buyers are reclaiming some of the bargaining power that they had lost as prices soared over the past several years," says Lawrence Yun, an NAR economist and managing director.
"The most softness in values will be felt in the priciest markets, like Boston and New York City," the economist adds. "Those are the areas most at risk from rising interest rates -- their prices are already so high that a lot of buyers who could qualify for a mortgage at 6 percent won't be able to qualify as rates move toward 7 percent later in the year."

As price gains cool, a handful of Northeastern markets have found themselves at the top of some dubious lists.
Like many real estate analysts, Dreier said it was "too early to tell" whether the recent slowdown in sales represented a mere pause in housing's long run-up or the start of a long-term decline.

"The year," said Dreier, "is going to depend on what we sell from March to July."

This goes out to Joseph and Kianna. Congratulations on your decision to wait, Lord knows it was a tough one to make. Don't give in to market pressures, you've made the right move. Stay strong, hold tight, and don't lose those champagne glasses. You'll need them to celebrate a purchase made under your own terms.

Caveat Emptor!

Buy A Clifton Townhouse, Get A BMW

Just came across this listing on Craigslist. I've heard of this kind of thing happening out in Las Vegas or L.A., but certainly not in Clifton, N.J.

$479000 - Beautiful Townhouse w/great views and options!! @LOOK@

2 Bedrooms, 2.5 Bathrooms
2 Floors
1500 Square Feet
Beautiful townhouse in Clifton, NJ with spectacular views! House w/$30,000 in upgrades!

(A pretty standard listing so far - grim)

If you need a mortgage please let us know. We can provide you with any type of mortgage. We can work out a deal.

(Starting to get odd, the seller wants to play mortgage broker as well)

WE ALSO HAVE A 1999 BMW 528i for sale w/70k asking $15k or B/O. We can work a deal out for both. At the above price we MIGHT include the car in the garage!!

(So there you have it, possibly the first "Car Included!" deal in Clifton)

Caveat Emptor!

Seneca And Hughes Brief NJ Senate Budget Committee

From the AP courtesy of the Record/Herald:

Experts say state losing key jobs

New Jersey's economy has been expanding more slowly and weakly than the rest of the nation as the state loses key, high-paying jobs, two Rutgers University economists told state senators on Monday.

Rutgers professors Joseph Seneca and James Hughes told a Senate budget committee it must consider how its tax and spending decisions influence the economy as lawmakers mull Governor Corzine's nearly $31 billion budget proposal and its $1.9 billion in proposed tax increases.

"The new millennium has not been particularly kind to the New Jersey economy," Hughes said.

Seneca and Hughes told senators how the state, once a leader in telecommunications and pharmaceutical fields, is losing vital jobs. Increased taxes could cause businesses and high-wage earners to pack their bags, the men said.
"The testimony this morning is nothing short of devastating," said Senate Minority Leader Leonard Lance, R-Hunterdon. "New Jersey is in a terrible economic situation."
Seneca said statistics that show New Jerseyans are among the highest earners in the nation mask income gains in other states, expensive state housing and unappealing job trends. For instance, he said the state in recent years has lost 118,000 high-paying jobs and replaced them with 113,000 average-paying jobs in education, health care and food services.

"A very lopsided and undesirable trade-off," Seneca said.
"We can no longer take our economic and technological well-being for granted," Hughes told senators.

Lax Lending Standards Feed Critical Mass

From Realty Times:

Easy Mortgage Money Gets Even Easier

As interest rates rise, as homes get more expensive and as more and more buyers seek high-leverage, higher-risk mortgages, instead of tightening credit, lenders are taking steps to keep the easy money easy.

Federal regulators now fear that lenders are attempting to maintain profit levels by easing lending standards at a time when they should be tightening them.
The practices threaten borrowers with the potential for defaults on loans they couldn't really afford and, if too many borrowers default, lenders could also face collapse, according to
John M. Reich, director of the Office of Thrift Supervision, speaking recently before the New York Bankers Association.
"I am concerned that there has been an overall slippage in underwriting due to increased competition in certain markets segments and areas. Specifically, my examiners have noted examples where loan pricing misaligns with credit risk solely due to competition and the desire for loan volume. We are also seeing an increased liberalization of terms by some institutions in order to maintain their loan volume. This is particularly troubling as institutions are effectively taking on greater risks with less vigilance regarding their overall program requirements," Reich said.
To that end Reich said regulatory examiners are now "digging deeper" into loan portfolios to learn the level of risk lenders are facing. Examiners will scrutinize loan documentation, pricing, loan-to-value ratios, and overall underwriting standards.

Caveat Emptor,

Hovnanian Plans Jersey City Hi-Rise

From the Jersey Journal:

Hovnanian, partner buying Hartz land, plan to build two residential towers

K. Hovnanian and Equity Residential will pay more than $65 million to buy land on the Jersey City waterfront for two residential towers, two officials with knowledge of the deal said yesterday.

The deal to buy the land at 77 Hudson St. from Secaucus-based Hartz Mountain Industries and build two 48-story buildings is the latest in a series of major residential projects for the Jersey City waterfront.

It marks a major shift for Hovnanian, which has built thousands of houses and smaller, multifamily developments but never a major tower like the ones planned for Jersey City.
"It represents how K. Hovnanian remains young by taking on new markets," said Doug Fenichel, a company spokesman. "This is the largest thing we've done in the Northeast."
Planning documents show the towers proposed by Hovnanian and Equity would total 925,000 square feet and have 901 units.

An East Tower would have 420 condominiums, including studios and one-, two-and three-bedroom apartments. A West Tower would have 481 rental apartments, including studios and one-and two-bedroom apartments.

There will also be a parking garage with 896 spaces and about 20,000 square feet of retail space.

This seems like a major transition for Hovnanian. They are likely following the lead of Toll Brothers whose developments on the Gold Coast were successful. However, this development project has an interesting twist, it's more than 50% rental. With 481 rental units available in the West Tower, the condos in the East Tower may have less appeal to investors or speculators.

Caveat Emptor!

Monday, April 10, 2006

At A Glance: Madison, NJ

Listings As of 4/10
Total Active Listings: 65
Up To $500,000: 12
$500,001 - $1,000,000: 39
$1,000,001 And Up: 14

Listing Activity Since 4/1
13 Added
1 Back on Market
12 Price Reductions
5 Under Contract
6 Sold
2 Expired
4 Withdrawn
1 Temporarily Withdrawn

March Sales Activity
Up To $500,000: 2
$500,001 - $1,000,000: 10
$1,000,001 And Up: 1
Sales Prices were 3.9% below Original List Prices
(Activity data from GSMLS)

New Jersey Loan Fraud

From Inman News:

Four plead guilty to New Jersey real estate loan fraud

A former real estate broker, loan officer, closing attorney and one of their employees pleaded guilty to a conspiracy to "flip" New Jersey properties and defraud the U.S. Department of Housing and Urban Development of more than $300,000, officials said.

Mario Mendoza, 41, of Union, N.J., was formerly a real estate broker with Weichert Realtors in that city; Kenneth DiPrenda, 42, of East Hanover, N.J., was formerly a loan officer at AMS Mortgage in West Patterson, N.J.; attorney Linda Serrano, 44, of Union, is a private-practice attorney; and Myrium Vaca, 45, of Elizabeth, is an Ecuadoran national and worked, at times, for Mendoza, according to U.S. Attorney Christopher J. Christie.

According to the Informations, the conspirators fraudulently induced HUD to insure certain mortgage loans made to unqualified borrowers, enabling Mendoza, DiPrenda, Serrano, Vaca and their co-conspirators to earn hundred of thousands of dollars in profits from the sales of properties financed by the fraudulent loans, officials said.
As part of the alleged conspiracy, the defendants and others solicited and recruited individuals who, with false identification, purchased homes in Union County, N.J., and elsewhere, officials said. Many of the homes were being sold by Mendoza's clients at Weichert, according to officials, and were duped into selling their homes to unqualified borrowers using fake identification.

According to the Informations, DiPrenda, a loan officer, assisted in qualifying the borrowers for HUD-insured loans, officials said. Further, Mendoza, Vaca and others falsified documents for the borrowers' loan files and then submitted the files to banks and, soon thereafter, HUD, officials said. The false documents included gift letters, credit explanation letters, W-2 form and employment records, according to officials.

As part of the conspiracy, Mendoza often told sellers that their properties were being sold for a price that, unbeknownst to them, was far lower – often by tens of thousands of dollars – than the amount that was ultimately financed through the fraudulently secured HUD loans, officials said.

Housing News From DC

This one comes in from David at BubbleMeter:

In DC Proper Median and Average Price Decline Year Over Year

In case you haven't received the memo, the housing boom in the Washington, DC is over. The housing bubble is popping as inventory explodes, sales drop, speculation wanes and prices fall. All these numbers include condo units.

In Washington, DC for the month of March 2006 the median sales price was $397,000 which represents a decline of .75% from March 2005 when the median sales price was 400,000.

The average sales price also fall, in March 2005 it stood at $490,024 which represents a decline of 5.13% from March 2005 when the average sales price was $516,515.

Additionally, the number of housing units sold in DC for the month of March 2006 was 651 which represents a decline of 20.32% from March 2005 when 817 housing units sold.

We have the best chance of seeing YOY declines in Northern NJ in Q3 of 2006, although I believe there to be a chance we'll see YOY declines in Q2. It all hinges on how the remainder of the spring season play out.

Caveat Emptor!

Housing News From LI

From Newsday:

Bloom or bust?

Anna Rajber is willing to wait.

Rajber has been trying to sell her Jericho home since July, even knocking the price down from $769,000 to $739,000. But she's not ready to bend more to make a sale.

"I think the house is still worth the money," she said. "I don't think it's overpriced."
Mauri Chotin-Zemachson and her husband, Scott, are willing to wait, too. The Manhattan couple hopes to move to Roslyn or Jericho, but so far they think the houses aren't worth the prices.

"I'm going to look until I find it," Chotin-Zemachson said. "I don't think I'm going to lower my expectations."

And there's the problem. For home buyers and sellers, this spring is telling a very different real estate story, one the region hasn't seen in nearly a decade. It may be the heart of the selling season, but the frenzy of years past is gone, replaced by a far more tentative market.
In resales, that's even clearer, as buyers spread out among the for-sale signs. Dallow said open houses now have an average of eight or nine attendees, compared with 15 to 18 a year ago.

The number of buyers could decline, as "fringe buyers" - those who could only afford low mortgage rates - will be priced out, noted Martin Cantor, chief economist with Sustainable Long Island, an advocacy group.
Nonetheless, if a weaker spring is followed by an even weaker summer or fall, that may put the market on notice. And that's when the reality check will come, said appraiser Jonathan Miller, with Miller Samuel in Manhattan, because there's seasonal "static" now.

"We're not seeing the gloom and doom at this point that had been anticipated," Miller added. "But we've got rising inventory, and potentially rising mortgage rates, and when you put those things together, that is not a good thing."

Caveat Emptor!

New Jersey Second Home Sales

From the Record by Prashant Gopal:

Rising number of home buyers going back for seconds and thirds

Jim O'Brien purchased a small three-bedroom getaway pad in the Poconos five years ago. Then last year, he bought a larger house right next door.

O'Brien, a 61-year-old Tenafly resident who retired from Merck & Co. two years ago, jokes that the first house, which he opens to his many children and grandchildren, is now the "guesthouse."

He is part of a growing segment of the real estate market -- people buying second, third or even fourth homes. Such sales have been increasing steadily in recent years, and represented four of every 10 transactions in 2005, the National Association of Realtors said Wednesday.
New Jersey, the Shore is the most popular location for vacation homes. LoanPerformance, a subsidiary of First American Real Estate Solutions, estimated that 38 percent of mortgages last year in Atlantic and Cape May counties were for second homes. Only Myrtle Beach, S.C., and Naples, Fla., had a higher percentage of second mortgages, the company said.
New Jersey, the Shore is the most popular location for vacation homes. LoanPerformance, a subsidiary of First American Real Estate Solutions, estimated that 38 percent of mortgages last year in Atlantic and Cape May counties were for second homes. Only Myrtle Beach, S.C., and Naples, Fla., had a higher percentage of second mortgages, the company said.
Many real estate experts say landlords who plan to hold onto their properties for the long term are relatively safe even if the market tanks. But the experts caution that speculators trying to turn a quick profit are playing a risky game.

The market has already shown signs of cooling. And many people have taken on tremendous debt to cover ever-climbing real estate costs.

Caveat Emptor!

Sunday, April 09, 2006

Weekend Open Discussion

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.

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.

As always, anything goes!

Price Reduced! 4/2 - 4/9

Welcome to another edition of Price Reduced!

For all the newcomers to this blog, Price Reduced! takes a look at a handful of significant price reductions across Northern NJ. The purpose of this exercise is to serve as proof that the Northern New Jersey real estate market has long since been overvalued and has started the long hard decline back to the mean. These listings are in no way an endorsement by myself, nor do I believe they are a bargain or a value. Even reduced, I still believe these homes are still grossly overpriced.

On to the list!

MLS# 2111297 - Boonton, NJ
Previous Price $2,250,000
Current Price $1,796,000 (Price Reduced! 20.2%)

MLS# 2256305 - West Orange, NJ
Previous Price $1,200,000
Current Price $980,000 (Price Reduced! 18.3%)

MLS# 2256651 - Vernon, NJ
Previous Price $799,000
Current Price $659,000 (Price Reduced! 17.5%)

MLS# 2092540 - West Milford, NJ
Previous Price $174,900
Current Price $145,000 (Price Reduced 17.1%)

MLS# 2232407 - Mendham, NJ
Original List Price $2,595,000
Previous Price $2,349,000
Current Price $1,995,000 (Price Reduced! 15.1%, 23.1% off Original List)

MLS# 2256319 - Hillsborough, NJ
Previous Price $336,000
Current Price $289,000 (Price Reduced! 14%)

MLS# 2259042 - Independence, NJ
Previous Price $329,000
Current Price $284,500 (Price Reduced! 13.5%)

MLS# 2244250 - Millburn, NJ
Previous Price $2,299,000
Current Price $1,999,000 (Price Reduced! 13%)

MLS# 2040082 - Montville, NJ
Previous Price $799,000
Current Price $699,000 (Price Reduced! 12.5%)

MLS# 2247285 - Upper Saddle River, NJ
Previous Price $1,475,000
Current Price $1,299,000 (Price Reduced! 11.9%)

MLS# 2071704 - Watchung, NJ
Original List Price $3,800,000
Previous Price $3,400,000
Current Price $3,000,000 (Price Reduced! 11.8%, 21.1% off Original List)

MLS# 2254814 - North Caldwell, NJ
Previous Price $2,250,000
Current Price $1,995,000 (Price Reduced! 11.3%)

MLS# 2224715 - Bloomfield, NJ
Previous Price $479,000
Current Price $429,000 (Price Reduced! 10.3%)

MLS# 2225732 - Nutley, NJ
Original List Price $529,000
Previous Price $495,000
Current Price $445,000 (Price Reduced! 10.1%, 15.9% off Original List)

MLS# 2234405 - Sparta, NJ
Previous Price $2,990,000
Current Price $2,690,000 (Price Reduced! 10%)

The Short List this week will highlight the largest dollar reductions (not included above)
Town/Prev. Price/Curr. Price - $ Reduction
Westfield/$2,600,000/$2,399,900 - $200,100
Summit/$2,100,000/$1,900,000 - $200,000
Millburn/$2,295,000/$2,095,000 - $200,000
Mtn. Lakes/$2,950,000/$2,750,000 - $200,000
Millburn/$3,950,000/$3,750,000 - $200,000
Bernardsville/$2,595,000/$2,430,000 - $165,000
Essex Fells/$3,149,000/$2,995,000 - $154,000
Kinnelon/$1,649,999/$1,499,000 - $150,999
Kinnelon/$1,740,000/$1,599,000 - $141,000
Mendham/$1,835,000/$1,700,000 - $135,000
Watchung/$759,900/$629,900 - $130,000
Montville/$1,625,000/$1,499,999 - $125,001
Morris Twp/$2,495,000/$2,375,000 - $120,000

Caveat Emptor!

Boroson on Morris County

From the Daily Record by Warren Boroson:

Morris housing market cools off

The real-estate market has been slowing dramatically.

In Morris County, sales during the first two months of the year were off 16 percent, according to the Otteau Report, and the inventory of unsold houses leaped 61 percent.

That's in line with figures for the entire state: sales down 14 percent, along with an increase in the unsold inventory of 61 percent.

The Otteau Report is issued by Jeffrey G. Otteau, president of the Otteau Appraisal Group, a real-estate valuation and consulting firm that tracks real-estate trends in New Jersey, New York, Pennsylvania, Delaware and Florida.

It has various offices in New Jersey, including one in Morristown.

Even so, Michael Machinski, an agent at Weichert, Realtors in Ridgewood in Bergen County, doesn't think that a bubble is bursting -- and doesn't believe that there was a bubble.

Still, he acknowledges, the market is changing -- from a seller's market to a more evenly divided market.
Throughout the state, the picture is mixed, according to the Otteau Report.

In Somerset County, the inventory of unsold houses climbed the most, to 103 percent; in Camden, the least, with 32 percent.

The biggest fall in sales: Cape May County, with 41 percent; the least, Cumberland County, with a rise of 34 percent.

The months supply of houses for sale indicates how formidable the inventory may be, and a six-months supply is considered normal.

Morris County has a six-months supply, but Cape May has a 21 months supply, while Camden has only four months. The entire state has seven months.

Caveat Emptor!