Saturday, May 20, 2006

Two Hour Commute?

From the NY Times:
Bigger Houses, Longer Commutes

"ON weekdays, Julie Kroloff sets the coffee maker for 5:45 a.m., then speeds through her kitchen in Hopewell Junction, N.Y., and grabs a cup to fortify herself for the long drive ahead. If Ms. Kroloff, a self-employed consultant, is on time, she backs out of the garage just before 6 and makes the trip from Dutchess County to her office in Midtown Manhattan in just under two hours. If traffic is heavy, Ms. Kroloff's 54-mile commute can take two and a half hours or more."

"About the same time, in Burlington, N.J., south of Trenton, Ronny Byrd, a vault custodian for the Bank of New York, boards a bus bound for Wall Street. If the New Jersey Turnpike and the Holland Tunnel are not backed up, Mr. Byrd will reach his destination in two hours."

"In Poughkeepsie, N.Y., Atul Ramayani, a computer analyst, boards Metro-North's increasingly crowded 7:10 express bound for Grand Central Terminal. In all, Mr. Ramayani's commute takes close to two hours, including the 20-minute drive to the station and a 10-minute walk from Grand Central before he clocks in for the day."

"Priced out of an increasingly expensive real estate market in close-in areas like Westchester, Bergen and Nassau Counties, some workers are pushing their commutes up to the two-hour mark, and even beyond."

""In essence, what this group of commuters is doing," Mr. Pisarski explained, "is contributing to their house payment with travel time.""

"With the cost of residential real estate rising sharply in recent years, the geographical boundaries of the New York metropolitan area are being redrawn. Bulldozers are clearing farmland once considered too far away for a commute to Manhattan, real estate agencies are opening offices in outlying areas, and elected officials in once-rural communities are being pressured to contain the encroaching sprawl."

"In New Jersey, the number of people commuting from Warren County, due west of Manhattan at the Pennsylvania border, was up 39 percent, rising from 539 in 1990 to 748 in 2000."

"Reports of the growth in the number of people commuting from the outer reaches of New Jersey and from Philadelphia are mostly anecdotal — there seem to be few statistics to support what real estate agents and builders are calling a trend."

Judge Strips Bergen Towns Of Zoning Power

From the Star Ledger:
Fed-up judge strips two Bergen towns of zoning powers

"Fed up with two Bergen County towns that failed to meet their affordable housing obligations, a state judge yesterday took the unprecedented step of stripping them of their land-use powers."

"In the 30-year battle between builders and towns, judges have taken strong measures before, including approving large-scale developments over local objections and threatening towns with sanctions."

"But none had gone this far, land-use lawyers said."

"Judge Jonathan Harris ordered that beginning June 1, all land-use ordinances in Carlstadt and East Rutherford would be suspended, and approvals for new construction would have to be approved by a special monitor. He ordered the monitor to push to get housing built for the poor."

""Recalcitrant municipalities, such as the defendants here, should not be allowed to inflict damage to affordable housing opportunities by either their active discouragement of such housing opportunities or by silence," Harris wrote."

"The decision was the result of a long battle by Tomu Development Co., who in November was granted the right to build 840 units on 26 acres along the Hackensack River that straddles both towns. "

""This is the atom bomb," said Jeff Surenian, whose Monmouth County firm represents 40 towns on affordable-housing litigation. "It's overreaching.""

Friday, May 19, 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!

Bonner on Housing

From Lew Rockwell:
Lifting IQs

"Nothing lifts I.Q.s more than a property boom."

"America's real estate bubble has created a whole nation of geniuses...people who think they are smart because their houses have gone up in price. And the smartest of them weren't content to merely watch prices rise; they took advantage of them by leveraging themselves into more and more expensive properties."

""I've watched him over the last few years. He bought one condo before it was built. He flipped it and bought another one. And then, he bought a whole bunch of them. To him, the secret of getting rich seemed so obvious. All you do is buy beachfront condo at pre-construction prices...and then flip them to someone else. And when he asked me about it, I'd just say, 'Well, I don't know how much longer this boom is going to continue.' He must have wondered what was wrong with me. He was making a fortune. I just didn't get it."

"There must be millions of real estate speculators, concentrated in the hot markets on both coasts, in similar situations. They've stretched to buy. Now they're stretched to keep up with maintenance, taxes, condo fees, and interest payments. Their neighbors bite their tongues. "I told you so," they itch to say."

"Don't worry, say the experts. The boom may have peaked out, but there should be a soft landing."

""I'm not so sure," continued our speaker. "People say the property market can't collapse, because houses are tangible and people have to live in them. They compare housing to stocks, for example. The stocks can fall 90%...or even disappear. That doesn't happen with housing."

""No, it doesn't happen the same way, but a much smaller decline in housing prices can have a much bigger impact on people like my neighbor. Let's say prices go down just 10%. That's not much. We could expect at least a decline of that much. But a lot of people don't have 10% equity in their houses. They've bought with zero-down mortgages – or maybe 5% – never expecting to have to pay off those mortgages."

""Instead, they were counting on price increases, either to refinance or to sell. If they are forced to pay a mortgage greater than the value of the house, they are going to be in big trouble. And a lot of them aren't going to make it.""

Newark Land Giveaway

From the Star Ledger
Newark leaders do land-office business

"During the last three days, the Newark City Council has considered or approved the sale of land to more than 15 different developers, some with strong political ties to city officials."

"Campaign contributors to Mayor Sharpe James such as developer Jose Lopez, the owner of Don Pepe's restaurant, and developer Will Allen, who has received several parcels of city-owned land over the last few years, were sold land from the city for a minimum of $4 per square foot. That is well below the 2005 average sale price of $29.50 per square foot for privately owned vacant land in the city."

"All of the developers are building two- and three-family homes for sale at market rates, which can range from $300,000 to $600,000 for a three-family home."

"With a little over six weeks until Mayor-elect Cory Booker takes office, and the possibility of up to seven new council members loom ing, Booker said the council should reconsider its actions."

""It's a grave concern of mine that in the final weeks of an administration, there is an accelerated rush to give away land," Booker said."

"WKA Development, owned by politically connected developer Allen, purchased more than 40,000 square feet of property on William, Halsey and Washington streets for $160,000 to build a six-story office building with four levels of parking."

"The Rev. Levin B. West, a supporter of James, is listed as the registered agent for WLB Realty. The company purchased 22,000 square feet for $89,000 to build five two- family and two three-family market-rate homes."

"LT Associates, owned by restaurateur and developer Lopez, plans to build 14 two- and three- family market-rate homes with land purchased at the city minimum of $4 per square foot for $185,595."

"Wayne Garnes, who said he represented Miami Heat basketball star Shaquille O'Neal's companies, was approved to purchase more than 114,000 square feet for $456,990 to build the "Residences at Springfield Avenue." The project also will require the private acquisi tion of land. Garnes said O'Neal, a Newark native, has a long history of helping organizations in the city. "All people have to do is ask," he said."

Thursday, May 18, 2006

Greenspan: Housing Boom Is Over

From Reuters:
Greenspan says US housing boom is over

"Former Federal Reserve Chairman Alan Greenspan said on Thursday that the "extraordinary" boom in the U.S. housing market in recent years is over."

""This has been quite an extraordinary boom," Greenspan told a Bond Market Association dinner in New York. "The boom is over. I think we can safely say that with a strong degree of confidence.""

"Greenspan said there was a "high degree of froth in the system," and that it was clear that home equity extraction and the turnover of home sales was waning."

Price Reduced 5/8 - 5/18

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.

Sorry this took so long, didn't get a chance to get around to it earlier in the week. An incredible number of price reductions over this 10 day period, 2269 to be exact. So because I've waited so long, I'll post double the number that usually get posted.

The list is (mostly) straight off the top this week:

MLS# 2273384 - Chester Twp. (Colonial)
Previous Price: $2,649,900
List Price: $1,995,000 (Price Reduced 24.7%)

MLS# 2259008 - West Orange Twp. (Contemp)
Previous Price: $1,650,000
List Price: $1,299,000 (Price Reduced 21.3%)

MLS# 2269318 - Rockaway Twp. (Colonial)
Previous Price: $189,000
List Price: $149,000 (Price Reduced 21.2%)

MLS# 2233797 - Pequannock Twp. (Colonial)
Previous Price: $2,499,900
List Price: $1,999,000 (Price Reduced 20.0%)

MLS# 2277234 - Sparta Twp. (Colonial)
Previous Price: $1,247,500
List Price: $999,900 (Price Reduced 19.8%)

MLS# 2109600 - Washington Twp. (Custom)
Original List Price: 1495000
Previous Price: $1,295,000
List Price: $1,050,000 (Price Reduced 18.9%, 29.8% off OLP)

MLS# 2208179 - Mendham Boro (Victrian)
Original List Price: 5700000
Previous Price: $5,300,000
List Price: $4,299,000 (Price Reduced 18.9%, 24.6% off OLP)

MLS# 2225166 - Montclair Twp. (Colonial)
Previous Price: $2,950,000
List Price: $2,500,000 (Price Reduced 15.3%)

MLS# 2264812 - Blairstown Twp. (Colonial)
Previous Price: $1,170,000
List Price: $995,000 (Price Reduced 15.0%)

MLS# 2256953 - Mountainside Boro (Ranch)
Previous Price: $675,000
List Price: $575,000 (Price Reduced 14.8%)

MLS# 2213142 - Mendham Boro (Custom Home)
Previous Price: $2,795,000
List Price: $2,395,000 (Price Reduced 14.3%)

MLS# 2242466 - Riverdale Boro (Colonial)
Original List Price: 729900
Previous Price: $699,900
List Price: $599,900 (Price Reduced 14.3%, 17.8% off OLP)

MLS# 2250819 - Montclair Twp. (Colonial)
Previous Price: $1,195,000
List Price: $1,025,000 (Price Reduced 14.2%)

MLS# 2253675 - Lincoln Park Boro (Colonial)
Previous Price: $539,000
List Price: $465,000 (Price Reduced 13.7%)

MLS# 2257583 - Newark City (HighRise)
Previous Price: $469,000
List Price: $405,000 (Price Reduced 13.6%)

MLS# 2241746 - Rockaway Twp. (Colonial)
Previous Price: $2,200,000
List Price: $1,900,000 (Price Reduced 13.6%)

MLS# 2267697 - Bernards Twp. (Contemp)
Previous Price: $1,150,000
List Price: $999,999 (Price Reduced 13.0%)

MLS# 2262451 - Chatham Boro (Colonial)
Previous Price: $1,149,000
List Price: $999,750 (Price Reduced 13.0%)

MLS# 2255980 - Montville Twp. (Custom)
Original List Price: 2400000
Previous Price: $1,600,000
List Price: $1,399,999 (Price Reduced 12.5%, 41.7% off OLP)

MLS# 2272848 - Mount Olive Twp. (Ranch)
Previous Price: $325,000
List Price: $285,000 (Price Reduced 12.3%)

MLS# 2272421 - Plainfield City (CapeCod)
Previous Price: $340,000
List Price: $299,000 (Price Reduced 12.1%)

MLS# 2255345 - Hardyston Twp. (Colonial)
Previous Price: $795,000
List Price: $700,000 (Price Reduced 11.9%)

MLS# 2263846 - Livingston Twp. (RanchExp)
Previous Price: $1,249,000
List Price: $1,100,000 (Price Reduced 11.9%)

MLS# 2266302 - Rutherford Boro (Colonial)
Previous Price: $749,000
List Price: $659,900 (Price Reduced 11.9%)

MLS# 2264085 - Rockaway Boro (OneFloor)
Previous Price: $260,000
List Price: $230,000 (Price Reduced 11.5%)

MLS# 2271390 - Kinnelon Boro (Contemp)
Previous Price: $789,900
List Price: $699,000 (Price Reduced 11.5%)

MLS# 2275975 - Chester Twp. (HalfDupl)
Previous Price: $869,000
List Price: $769,000 (Price Reduced 11.5%)

MLS# 2238423 - Bloomfield Twp. (Colonial)
Previous Price: $359,900
List Price: $319,000 (Price Reduced 11.4%)

MLS# 2260160 - Montclair Twp. (Colonial)
Original List Price: 1495000
Previous Price: $1,295,000
List Price: $1,150,000 (Price Reduced 11.2%, 23.1% off OLP)

MLS# 2269980 - Union Twp. (AFrame)
Previous Price: $405,000
List Price: $359,900 (Price Reduced 11.1%)

MLS# 2255151 - Essex Fells Twp. (Colonial)
Previous Price: $1,349,000
List Price: $1,199,000 (Price Reduced 11.1%)

MLS# 2264926 - Pompton Lakes Boro (TwnIntUn)
Previous Price: $539,900
List Price: $479,900 (Price Reduced 11.1%)

MLS# 2255894 - Morris Twp. (Ranch)
Original List Price: $699,000
Previous Price: $674,999
List Price: $599,999 (Price Reduced 11.1%, 14.2% off OLP)

MLS# 2265183 - Peapack Gladstone Boro (Colonial)
Original List Price: $925,000
Previous Price: $899,000
List Price: $799,900 (Price Reduced 11.0%, 13.5% off OLP)

Caveat Emptor!

Holy Housing Jersey City

From the NY Post:

"Jersey City is about more than office parks these days. The city across the Hudson from Manhattan is seeing a residential construction boom and soon might be known for its abundance of new condos and rental buildings."

"According to the Jersey City mayor's office, 24 residential projects have recently been completed, another 21 are under construction and 23 more have been approved."

""We're riding a tremendous wave of investment," says Mayor Jerramiah Healy."

"In the big - extremely big - category is Trump Plaza Jersey City, a two-tower, 860-unit development planned for 88 Morgan St. When completed in fall 2007, the two towers, clocking in at 50 and 55 stories, will be the tallest residential buildings in New Jersey. Prices will likely range from $400,000 to $4 million. The Trump Organization and Hoboken-based Metro Homes are the developers."

"Metro Homes is also behind the 431-unit Gull's Cove condominium at 205 Luis Munoz Marin Blvd. in the Liberty Harbor North redevelopment area. Open for sales three weeks ago, prices start in the high-$200,000s for 500-square-foot studios."

"Of course, the "instant neighborhood" idea in Jersey City was spearheaded by the Manhattan-based LeFrak Organization, the developer behind Newport, a sprawling, 600-acre development on the Hudson River. Known as a rental community, Newport is adding more sales buildings, including the 220-unit North Tower of the Shore Club at 580 Washington Blvd. Construction will begin this June."

"Off the water, adjacent to the Grove Point PATH station, construction has begun on Grove Pointe, a 67-unit condominium and 458-unit residential building located at 102 Christopher Columbus Drive, which opened for sales three weeks ago and is 25 percent sold. Prices start at $495,000 for a 750-square-foot one-bedroom. The development will house 20,000 square feet of ground-floor retail space."

"In Jersey City's historical Hamilton Park District, construction will begin this summer on the 225-unit Hamilton Square, a partial conversion of the St. Francis Hospital at 25 McWilliams Place. The condo building is being developed by Jersey City-based Exeter Property Company, which has restored many historical buildings in Jersey City."

"Exeter is also behind Schroeder Lofts, a 60-unit loft building just outside of the Hamilton Park district, at 242 10th St. The building is 40 percent sold since opening for sales in February. Prices for 930-square-foot one-bedrooms start at $414,000."

"In Jersey City's Powerhouse Arts District, an eight-block historical area, Hoboken-based developer Fields Development Group is planning to break ground on The Hudson, a 260-unit new construction/conversion loft building planned for 10 Provost St., in July. The sales office is expected to open in October."

"Fields Development is also behind Waldo Lofts, an 82-condominium conversion located at 159 Second St. Half of the units have sold since the sales office opened in February - prices start at $390,000 for a 700-square-foot loft."

Mortgage Delinquencies Rising

From the Wall Street Journal
May 18, 2006; Page D1

"Soaring housing prices and aggressive mortgage lending have saddled home buyers with ever greater levels of debt, and early signs are now emerging that more people are unable to keep up with their monthly mortgage payments."

"Recent studies by several Wall Street firms point to rising delinquency rates on home mortgages that were issued last year, a period when lenders were pushing hard to keep business going as interest rates and home prices were rising. The increase in late loan payments comes as more buyers have been forced to stretch financially to afford ever costlier houses in recent years, and many homeowners have increased debt by tapping their home's equity. Analysts say that laxer lending standards on the part of mortgage lenders also resulted in higher debt loads, which some borrowers are now struggling to repay."

"Mortgage delinquencies historically peak around three years after loans are made, which means some of the more aggressive loans made last year might experience their biggest problems in 2008. However, some borrowers with adjustable-rate mortgages could see problems sooner. Others, who took out exotic mortgages such as interest-only loans and option ARMs that hold down monthly payments in their early years, could run into trouble later, when payments reset. Still, there are early signs that even some of these non-traditional mortgage loans are starting to be squeezed by rising interest rates."

"Borrowers who took out mortgages in the past two years are likely to be more vulnerable should home prices fall because they could wind up owing more than their home is worth. Twenty-nine percent of borrowers who took out mortgages last year have no equity in their homes or owe more than their house in worth, according to a study completed this year by Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, a unit of First American Corp. That compares with 10.6% of those who took out loans in 2004."

"An analysis by Bear Stearns found that delinquencies on loans originated in 2005 were in most cases far higher than on loans issued in previous years at the same point in their life cycle. "The numbers are clearly worse," says Gyan Sinha, a senior managing director at Bear Stearns. The reason: Lenders were "able to generate a lot more volume in the face of rising rates" by loosening lending standards, Mr. Sinha says. "More aggressive lending was clearly taking place," he says."

"A separate study by Credit Suisse reached similar conclusions. That study looked at borrowers with good credit who were at least 90 days late on their mortgages. Credit Suisse found that borrowers who took out adjustable-rate mortgages in 2005 were three times as likely to be delinquent on their payments after the first year as those who took out ARMs in 2003 and 2004. Payments on ARMs can adjust after as little as a month, or after several years, depending on the terms of the loan. (The study didn't include borrowers with option ARMs.)"

"Overall, roughly 4.7% of residential mortgages were delinquent in the fourth quarter, the Mortgage Bankers Association says. Excluding the effects of Hurricane Katrina, delinquencies were 4.55%. That is up from 4.44% in the third quarter and 4.38% at the end of 2004, it says."

"Mortgage lending standards tended to be looser in 2004 and 2005 than in the previous three years, according to surveys done by the Federal Reserve Board. One example: Piggyback loans have become more common, enabling borrowers to use as much as 100% debt to finance a home purchase."

"And with competition for borrowers increasing and profit margins shrinking, the move toward looser standards is continuing. Roughly 10% of mortgage lenders said they had eased credit standards in the three months ended April, according to a Fed survey released this week. Only one of the 53 banks surveyed reported any tightening of standards."

"Highlands Act confiscates the value of my property"`

From the Times Trenton:

Restrictive Highlands Act
A Letter From Constance Bartel

"The Highlands Act confiscates the value of my property, and I strenuously object. The sanctity of private property is a cherished American principle. It is at the heart of the famous American Dream -- the house, the home unquestionably owned and controlled by the family who earned it, paid for it and protected it. The words "No Trespassing" make the point."

"But it is the Highlands Act itself that is trespassing. Its restrictions on what a land-owner can do on his property, its rules, fees, penalities and labyrinthine procedures are so extreme -- so cut-and-slash -- that many New Jerseyans simply don't take it seriously. The reaction is automatic: "That can't be constitutional, can it?" " What is this -- Russia? China?," etc."

Wednesday, May 17, 2006

Critical Eye Required When Looking At Housing Data

This post is a reply to the anonymous person that posted the following comment today:

Most of the ppl reading this blog are just praying for a good deal cause they got screwed out of the boom for the last 10 years.

I mean, do people really believe there's going to be fire sales based on housing's track record?

Aside from a small blip in 91-93, which quickly recovered in 94, there has been no real prolonged downturns.

If this were a stock, I'd say the performance were pretty damn good.


The anonymous poster points to data available on the National Association of Homebuilders website as an indication that housing has traditionally been a "good investment".

Fair enough anonymous, unlike most others here, you actually provided a reference to some publically available data to make your point.

But let's take a good look at that data before we jump to the obvious conclusions. The NAHB data available at that link are annual median and average prices of a new home in the United States. The source of the data is the Census department, I have no reason to not believe those numbers, so we'll just take them as is.

However, the numbers provided are not "real". No, I don't mean that those numbers are somehow being faked, but they have not been adjusted for inflation. Inflation is real, it exists, and it erodes the value of your dollars. A 1980 dollar is a very different thing than a 2006 dollar. Let me show you what I mean.

This chart shows the median new home price from 1980 to 2005. Wow, it certainly does look like new homes are a great investment, the price has consistenly gone up, year after year. However, what happens if we make dollar from 1980 worth the same amount as a dollar from 2005? If we do that, then we can compare apples to apples, so to speak. Using the inflation calculator found here ( I adjusted the median home price for inflation. This was a simplistic approach, and yes let's just believe the CPI numbers to be true, but it serves the purpose. So lets see what happens to the chart above when we adjust the values.

Ok, so now that we level out the playing field with regards to the value of a dollar. The picture begins to become a bit clearer. The decline in housing after the bubble burst in the late 80's becomes more obvious. It's no longer just a little blip on the way up. It should be obvious to you now why industry sources don't adjust their values for inflation.

There is another aspect we just can't neglect here. What about the change in quality and size of homes from 1980 until today? Homes today are much larger than in 1980. In fact, in 1980 the median home was approximately 25% smaller than the median home was in 2005 (1595 sq/ft versus 2140 sq/ft). Since the size of the home affects it's price, we're again comparing apples and oranges. We certainly can't compare a smaller and less ornate home built in 1980 with the larger and more elaborate home built in 2005. So what do we need to do? Adjust the values so that we can make a comparison. In order to do this, we first need to find out the median size of a home over the same time period. Luckily, the Census department makes that data available online. You can find it here ( In order to adjust I simply created an index that compared each year with 2005. I than multiplied the price of the home each year with the index in order to normalize prices across all years. So lets see what happens when we make both 1980's dollars and homes equal to the same in 2005.

Indeed, a much different picture from the simplistic view we initially took when looking at the data. My adjustment only takes into account the change in square footage, a very simplistic approach. It's arguable that changes in quality of fixtures should also be included. That aside, the data now tells a much different story. Great gains? Hardly, especially once you factor in the cost of upkeep and repairs over 20 years.

Also keep in mind that we're talking about the median price of a home in the United States. This is more of an economic indicator than some kind of insight into the house price movements of local markets. The midwest likely saw less of an impact during the last bubble collapse. Thus, the national median doesn't reflect price changes in smaller markets.

My only advice is to be careful when someone presents you with data, especially those who have a vested interest in your actions as a response to that data. The NAR paint a very rosy picture and love to quote unadjusted median home prices. Those numbers don't tell the real story.

Home prices do fall.

Caveat Emptor!

Getting Rich In Real Estate

From Money Magazine:

Can you still get rich in real estate?

"Home sales are slowing. Condo prices are slipping. Sellers can't get their asking prices."

"And even real estate bulls are now waving the caution flag."

"If you're expecting a short-term gain, "you should be looking elsewhere," says Christopher Mayer, a Columbia University economics professor who not long ago argued that land shortages and rising populations would translate into ever-rising prices in "superstar" cities like New York and San Francisco."

"Clearly, it's time for a re-think, whether you're mulling over buying, selling, refinancing or remodeling a home or investment property. Or if you're just wondering, Is our house still worth what we think it is?"

"The short answer: It depends on where you live. If you reside in one of the past decade's boom markets along the coasts or in the Southwest, brace yourself. Prices there were powered by two kinds of fuel: low interest rates and the willingness of buyers to pay up for the American dream."

"That tank is almost empty."

"Mayer thinks that, with fewer people buying but plenty still hoping to cash out, prices in the most expensive markets could drop 15 percent in the next year, if mortgage rates rise another point. The forecasters at Fiserv Lending Solutions and Moody's, who crunched the numbers for our 12-month nationwide forecast, aren't so pessimistic, but they're hardly Pollyannas."

"Prices will flatten in most ex-boomtowns this year, and next year will be worse, says David Stiff, Fiserv's chief economist. "A lot of markets - particularly those where prices have increased dramatically compared with income - will see drops by late 2007," he says."

Northern New Jersey Residential Inventory Update

Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)

5/10 - 16,539
5/17 - 16,846 (1.9% Weekly Increase)

Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)

5/10 - 8,101
5/17 - 8,217 (1.4% Weekly Increase)

Single Family Homes, Condo, Coop
(Hudson County)

5/10 - 2,351
5/17 - 2,344 (Flat)

Will Transit Villages Outpace Adult Housing?

From the Times Trenton:
Study finds transit village brings far fewer children

"A study conducted by Rutgers University may answer the question of whether residential developments planned near train stations in several townships in the state, including Hamilton, will attract families with large numbers of children who end up overburdening local schools."

"The study, completed by researchers at the Edward J. Bloustein School of Planning and Public Policy shows what supporters of the so-called "transit village" concept have long preached: the villages produce far fewer children -- an average of two per 100 homes -- than similar-sized housing farther from a transit hub."

"The study, which, according to a summary in the report, was paid for by the state Office of Smart Growth, looked at developments surrounding several existing transit hubs throughout the state, including projects in South Orange, New Brunswick, Morristown, Metuchen and West New York."

"The battle over the number of school children who will eventually live in transit villages has raged since the concept was introduced at the beginning of the decade."

"The long-awaited Rutgers study bolsters township officials' claims that transit villages create a positive tax revenue with little or no negative impact on the schools."

""It's part of the nature of the setting that is being created at the transit village that few children will live there.""

"A spokesman for NJ Transit, which owns the land surrounding the station and is developing 300 of the 980 homes, said the study should help put fears to rest."

Not Only Prices, But Jobs To Fall As Well

From CNN/Money:
Housing slowdown to be widely felt

"You don't need to be in the market to buy or sell a home to be affected by the cooling housing market."

"Economists, investors and the Federal Reserve are watching home building and home sales carefully because the sector has reached so far throughout the economy in recent years, lifting all manner of consumer spending and economic activity."

"Even if prices don't fall, even if there is no housing bubble about to pop, the cooling real estate market will be felt by many of those who may not be thinking about real estate prices."

""It's going to be very similar to the stock bubble, but even more so. Many who didn't own stock lost their job when the market plummeted," said Dean Baker, co-director of the Center for Economic and Policy Research, and one of those who believes housing prices have resulted in an asset bubble ripe for a correction."

"Even those who believe that real estate prices are not in any danger of collapsing agree with Baker that the reach of real estate extends far beyond those actually building, buying or selling homes."

"Jeoff Hall, the chief U.S. economist for Thomson Financial, said that for every 1,000 single-family homes built, there are about 2,500 full-time jobs created, $80 million in payroll and $45 million in local, state and federal taxes paid."

"That means that if the National Association of Homes Builders is correct and there are 150,000 fewer new home sales this year compared to the 2006 record, that's 375,000 fewer construction jobs, or the equivalent of about three companies the size of General Motors."

""If you're looking for evidence the economy is slowing, it's housing," said Baker. "Everything we've seen the last four to five months shows pretty clearly that housing is slowing.""

Tuesday, May 16, 2006

NJ Housing Losing Sparkle

From the Herald/Record:
Housing losing sparkle

"The pace of single-family home sales slowed in the first quarter of this year as the housing boom lost some momentum, the National Association of Realtors said Monday."

"The pace of sales in the first quarter slowed nationwide to a seasonally adjusted rate of 6.8 million units, a drop of 2.1 percent compared with the same period last year. In the Northeast, the pace fell 2.9 percent to 1.12 million units. In New Jersey, the sales pace dropped 8.1 percent from the first quarter last year."

"Sean T. Shallis, CEO and chief real estate strategist for the Shallis Team of Re/Max Villa Realtors in Jersey City, noted that the NAR data released Monday on real estate closings reflects some deals that were negotiated in November or earlier."

"Shallis said that in more recent negotiations, buyers have had the upper hand. Sellers -- particularly those who are motivated to sell quickly -- have started dropping prices."

""What we're seeing is a softening market," Shallis said."

"Maureen McSpirit, a Realtor with McSpirit & Beckett Real Estate in Tenafly, said buyers are being more selective and deliberative because they now have more homes to choose from. But homes that are priced right are selling, she said."

""Many sellers are willing to drop their prices," McSpirit said. "They're becoming more aware of the change in the market and are making adjustments to reflect that.""

Jersey Housing Market Getting Chilly

From the Star Ledger:
High prices, rising rates cool down home sales
Jersey drops 8.1% in 2006 first quarter

"Warm summer days may be just around the corner, but the housing market is sure getting chilly."

"In its quarterly survey, the National Association of Realtors said yesterday housing sales in many markets have slipped from the blistering pace sellers have come to enjoy these past few years. The numbers show that, nationally, 6.9 million existing single-family homes were sold in the first quarter of this year -- 2.1 percent less than the same period of 2005."

"In New Jersey, existing home sales, which include single-family homes and condos, showed a more dramatic 8.1 percent drop from January through March of this year compared with this same time period in 2005. Home sales in the Northeast declined 2.9 percent."

"Meanwhile, home price appreciation in New Jersey presented an equally mixed bag in the first quarter."

"For example, home prices in the Newark metropolitan region -- a six-county span that includes Essex, Union, Morris, Hunterdon and Sussex in New Jersey and Pike County, Pa. -- rose 6.5 percent in the first quarter of 2006 to $405,300. However that figure has also been on a downward trajectory since hitting a high of $446,800 in the third quarter of 2005."

"The same pattern holds in a four-county span that includes Middlesex, Monmouth, Ocean and Somerset counties. In the first quarter of 2006, the median home price rose 9 percent to $374,100. Back in April 2005, that number stood at $394,100 and has been falling ever since."

Monday, May 15, 2006

Homebuilder Sentiment Falls

From Reuters:
US homebuilder sentiment sinks in May - NAHB

"U.S. homebuilder sentiment slumped in May to its lowest since mid-1995 on rising mortgage rates, declining affordability and the retreat of speculators, the National Association of Home Builders said on Monday."

"The NAHB/Wells Fargo Housing Market index fell six points to 45 in May from an upwardly revised 51 in April, the group said."

"Economists polled by Reuters had predicted the index would drop to 49, which would have been the index's lowest level since a downturn immediately after the September 11, 2001 attacks on the World Trade Center and Pentagon."

""Based on historical experience, particularly the 1994-1995 episode, the pattern of movement in the HMI is not inconsistent with the orderly cooling-down process we're projecting for home sales and single-family housing starts in 2006," NAHB chief economist David Seiders said in a statement."

"The group predicts new home sales will slide 12 percent this year from record sales last year."

New Path Station In Jersey City?

From the Jersey Journal:

"It's been 33 years since the Port Authority of New York and New Jersey built a new station for its Trans-Hudson rail system - a fact that is not derailing Jersey City Mayor Jerramiah Healy in his quest for a PATH station in the Marion section of the city."

""We want to encourage people to use mass transit rather than all these motor vehicles that are clogging the daylights out of the county, the city and the state," Healy said."

"With some 1,000 units of housing slated for the largely residential area, city officials are pushing into high gear to convince the Port Authority to add an above-ground station at the corner of Broadway and West Side Avenue, an idea that the agency is decidedly cool to."

"One official familiar with the project suggested asking developers to pay a portion of the construction cost since a new PATH station would likely add to the value of nearby property."

"Roughly 500 units are in the works for the American Can site on Dey Street and 239 condominium units are planned for the old Volkswagen showroom on Kennedy Boulevard."

"But both Lipski and Healy oppose the idea of asking developers to contribute to mass transit projects."

New Jersey Low-Cost Coastal Housing

From the Asbury Park Press:
N.J. may ease way for low-cost homes in coastal zones

"New Jersey wants to ease the way for affordable housing projects in some coastal centers by temporarily relaxing some environmental limits, under a proposed rule to be published today."

"Such projects would still have to meet wetlands and other environmental rules, said Ruth Ehinger, who heads the state Department of Environmental Protection's Coastal Management Program."

""This is a very important rule," said Rabbi Shmuel Lefkowitz, president of N.J. Housing and Neighborhood Development, a nonprofit seeking to build more than 400 affordable housing units in Lakewood. "There is a great need for affordable housing.""

""We're not affecting anybody, we're helping people," Lefkowitz said. "We help the community. It's a win-win situation. No one gets hurt here.""

"But Tim Dillingham, executive director of the American Littoral Society, a Sandy Hook-based coastal conservation group, said the DEP, instead of trying to ensure that affordable housing projects protect the environment, is "creating loopholes and exemptions that will encourage towns to site affordable housing projects in environmentally sensitive areas.""

Sunday, May 14, 2006

Foreclosures Hit New Jersey

From the Star Ledger:
Rise and fallout: Real-estate professionals adjusting to new reality

"Joyce Aponte has spent the past 20 years selling single-family homes and properties repossessed by lenders after their mortgages have gone sour -- and she is concerned about what she is seeing these days."

"Families who bought houses with cheap, teaser-rate mortgages a few years ago, when interest rates were at rock bottom, are falling behind on their monthly payments."

"When I started doing this in 1988, we were in urban areas. We were in Newark. We were in Paterson, Jersey City," said Aponte, who for the past four years has worked from Better Homes VRI Realtor's Hazlet office. "Now we are talking $900,000 houses. $700,000 houses. It runs the gamut. We'll go from Newark to Holmdel to Upper Saddle River."

"Nationally, the number of mortgage loans that entered some stage of foreclosure -- the process by which banks can ultimately take back the properties that secure mortgages -- stood at 101,597 in March, a 63 percent increase from March 2005."

"Here in New Jersey, the numbers have been steadily climbing during the past 12 months, as well."

"During the first quarter of 2005, 6,482 properties entered into some stage of foreclosure, according to Realtytrac. By the end of the fourth quarter, that figure had climbed to 13,487."

"In March, 3,708 properties entered some stage of foreclosure -- or one out of every 893 homes -- a 13 percent increase from the previous month."

Wealthy Fleeing New Jersey

From the Philadelphia Inquirer:
How far can N.J. push its richest?

"Real estate baron Alan Sagner may be one of New Jersey's most valuable endangered species."

"His accountant keeps a running tally of how much money he could save by retiring to another state. Many of his friends have already left, for climates both warm and tax-friendly."

"But this is one Jersey millionaire who is staying put, "millionaire's tax" and all."

""My life here is a more important investment for me than saving a few bucks," said Sagner, 85, who started selling homes in Livingston in 1947."

"Not every member of his tax bracket feels the same way."

"In the two years since then-Gov. Jim McGreevey slapped an 8.97 percent income tax on the 30,000 taxpayers who earn more than $500,000 a year, Haddonfield accountant Jim Evans has advised dozens of rich New Jerseyans poised to flee."

"The problem, State Treasurer Brad Abelow said, is that the state counts on this wealthy 1 percent of taxpayers to fund a whopping 42 percent of the state budget - up from 29 percent before the millionaire's tax."

"Some wealthy New Jerseyans have already been pushed to Pennsylvania, where they can pay the state's 3.07 percent flat income tax and keep their summer home at the Shore, said Reynold Cicalese, a Cherry Hill accountant."

"Other New Jerseyans move to Florida, which has no state income tax - and no estate tax, either. It's a long-standing tradition for New Jerseyans to move to Florida as they retire, but accountants such as Haddonfield's Smith say rich residents are now moving at earlier ages."

Lowballing Becomes A Popular Sport

Just a quick quote for the lowballers. From the Arizona Republic:
Resales taking a tumble

"Home sales are plunging in metropolitan Phoenix, even as record numbers of people decide to put their houses on the market."

"For now, the median sales price is holding firm. But with the number of for-sale signs dotting yards across the Valley, no one expects that to last."

""Buyers think, 'Why should I buy today? It will be less expensive in a month or three weeks.' Every listing agent I talk to is getting ridiculous lowball offers," said Diane Watson, a Realty Executives agent in north Scottsdale."