Saturday, June 03, 2006

Price Reduced! 5/19 - 6/3

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.

I really should be doing this more often, I had to scan through close to 3,200 price reductions over this time period. The average price reduction was 4.2%. The total dollar reductions, for those of you who like large numbers, was $78,287,862.

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

MLS# 2273597 - East Orange, NJ
Previous Price $279,000
List Price $209,000 (Price Reduced 25.1%)

MLS# 2280783 - Jefferson, NJ
Previous Price $278,000
List Price $209,900 (Price Reduced 24.5%)

MLS# 2273449 - Glen Ridge, NJ
Previoius Price $499,000
List Price $389,900 (Price Reduced 20.1%)

MLS# 2216089 - Franklin, NJ
Original List Price $1,300,000
Previous Price $1,231,000
List Price $991,000 (Price Reduced 19.5%, 23.8% off OLP)

MLS# 2259487 - West Milford, NJ
Previous Price $197,000
List Price $159,900 (Price Reduced 18.8%)

MLS# 2271647 - Morris Twp, NJ
Previous Price $1,199,000
List Price $974,900 (Price Reduced 18.7%)

MLS# 2276318 - Millburn, NJ
Previous Price $4,500,000
List Price $3,725,000 (Price Reduced 17.2%)

MLS# 2268887 - Hoboken, NJ (Shipyard)
Previous Price $879,900
List Price $729,900 (Price Reduced 17%)

MLS# 2273695 - Morristown, NJ
Previous Price $2,399,900
List Price $1,999,000 (Price Reduced 16.7%)

MLS# 2270364 - Roselle, NJ
Previous Price $480,000
List Price $399,900 (Price Reduced 16.7%)

MLS# 2273412 - Roxbury, NJ
Previous Price $369,900
List Price $309,900 (Price Reduced 16.2%)

MLS# 2279220 - Hillside, NJ
Previous Price $285,000
List Price $240,000 (Price Reduced 15.8%)

MLS# 2247285 - Upper Saddle River, NJ
Original List Price $1,475,000
Previous Price $1,299,000
List Price $1,099,000 (Price Reduced 15.4%, 25.5% off OLP)

MLS# 2273386 - Millburn, NJ
Previous Price $2,349,000
List Price $1,995,000 (Price Reduced 15.1%)

MLS# 2254916 - Hope, NJ (The Inn At Millrace Pond)
Previous Price $3,500,000
List Price $2,975,000 (Price Reduced 15%)

MLS# 2263625 - Allendale, NJ
Previous Price $1,600,000
List Price $1,375,000 (Price Reduced 14.1%)

MLS# 2256260 - Delaware Twp, NJ
Previous Price $1,500,000
List Price $1,295,000 (Price Reduced 13.7%)

MLS# 2253808 - Belvidere, NJ
Original List Price $245,000
Previous Price $219,900
List Price $189,900 (Price Reduced 13.6%, 22.5% off OLP)

MLS# 2228485 - Montville, NJ
Original List Price $1,695,000
Previous Price $1,495,000
List Price $1,295,000 (Price Reduced 13.4%, 23.6% off OLP)

MLS# 2270471 - Nutley, NJ
Previous Price $379,000
List Price $329,000 (Price Reduced 13.2%)

MLS# 2272070 - Union, NJ
Previous Price $449,000
List Price $390,000 (Price Reduced 13.1%)

MLS# 2280444 - Denville, NJ
Previous Price $489,000
List Price $425,000 (Price Reduced 13.1%)

MLS# 2101240 - Hopatcong, NJ
Previous Price $459,900
List Price $399,900 (Price Reduced 13%)

MLS# 2264433 - Tewksbury, NJ
Previous Price $1,149,900
List Price $999,900 (Price Reduced 13%)

MLS# 2267697 - Bernards, NJ
Previous Price $1,150,000
List Price $999,999 (Price Reduced 13%)

MLS# 2264469 - Piscataway, NJ
Previous Price $629,900
List Price $550,000 (Price Reduced 12.7%)

MLS# 2273572 - Somerville, NJ
Previous Price $789,900
List Price $689,900 (Price Reduced 12.7%)

MLS# 2276430 - Bloomfield, NJ
Previous Price $799,000
List Price $699,000 (Price Reduced 12.5%)

MLS# 2260160 - Montclair, NJ
Original List Price $1,495,000
Previous Price $1,295,000
List Price $1,150,000 (Price Reduced 11.2%, 23.1% off OLP)

Caveat Emptor!

Friday, June 02, 2006

The Gentrification of Orange?

From the NY Times:

Bringing Life to a Factory Graveyard

"Now in its 200th year of existence, Orange recently adopted a sweeping master plan for development that would sharply increase the number of homeowners within its boundaries and remake a vast elephant's graveyard of abandoned factories into a lively arts district."

"Orange's stated ambitions for self-improvement include everything from creating 4,000 new owner-occupied homes to re-establishing the downtown shopping district. Other projects include improving city sewers, repairing chipped public statues, establishing a system for preserving historic buildings and expanding its stately public library."

"Developers have been selected for redevelopment projects that will provide an infusion of 2,200 market-rate condominium and town house units in three run-down or vacant areas: the eastern end of Main Street, the Central Valley neighborhood and central Orange."

"The proposed addition of so much new housing in a town where nearly half of the existing houses were built before 1940 — and one in eight is overcrowded — would be "huge just by itself," the mayor noted. In the past 10 years, only about 100 units have been added in Orange, which has 33,300 residents, according to the most recent census figures."

"One big residential project will situate 350 condominium units in traditional-looking four-story brownstone buildings to be built at the eastern end of Main Street, along the East Orange border."

"Meanwhile, the townwide effort to transform deteriorated sites has already blossomed in a few areas. For example, 70 new town house units for mixed-income tenants — ranging from very low to moderate income — have replaced the Father Rasi high-rise housing project, formerly known as the most crime- and drug-infested place in the city."

Mixed Picture on Jobs Growth

From the AP:

Payroll growth stalls with 75,000 new jobs

"Job growth faltered in May, with employers boosting payrolls by just 75,000. Yet the nation's unemployment rate dipped to 4.6 percent, the lowest since the summer of 2001."

"The latest snapshot, released by the Labor Department on Friday, offered a mixed picture of the jobs climate. Wage growth, meanwhile, slowed, a development that should ease concerns about inflation getting out of hand."

"The count of new jobs generated last month — 75,000 — was the smallest since October, when hiring practically stalled as companies were jolted by fallout from the Gulf Coast hurricanes. Job gains for March and April turned out to be weaker than previously reported."

"On the other hand, the unemployment rate dropped a notch from 4.7 percent in April to 4.6 percent in May, the lowest since July 2001."

However, somewhat more intesting, it seems like the payroll data may have been leaked early.

From Reuters:

Market moves before jobs report raise suspicion

"A group of well-timed trades raised eyebrows on Friday after stock futures and Treasury bond prices jumped and the dollar fell sharply in the seconds before the U.S. Labor Department officially published its May nonfarm payrolls report."

"The Labor Department's Bureau of Labor Statistics said it did not release the key data on the Internet before embargo time. "There were no timestamps between June 1, 8:30 a.m. (when revisions to first-quarter productivity data were released) and June 2, 8:30 a.m.," said Gary Steinberg, a bureau spokesman."

"Steinberg said earlier that the carefully controlled release of the numbers to reporters had proceeded as normal."

"In the 15 seconds before the 8:30 a.m. Friday official release, the yield on the 10-year Treasury note fell 3.5 basis points to 5.072 percent."

"As for the dollar, the euro gained 0.15 percent against the greenback in the 12 seconds leading up to the release."

"The S&P 500 index futures jumped 0.4 of a point six seconds before, at 8:29:54 -- the biggest absolute change in price on the contract in a single move in the minutes leading up to the release of the data."

"'It was either great anticipation by traders or someone had the number early,' said Phil Flynn, senior market analyst at Alaron Trading Corp."

Scrubbing Scrubbing Everywhere, But Not A Dime To Save

From the Record/Herald News:

A call to cut state workers' perks

"Three South Jersey lawmakers demanded Thursday that unionized state employees give up raises, scale back benefits and work longer hours with fewer holidays to help balance the budget and avoid tax increases."

"The legislators, led by a powerful senator who is also a prominent labor union boss, openly derided Governor Corzine and legislative leaders for lacking the will to challenge the unions and their members even as they cut programs for the poor and raise taxes."

"'We're scrubbing and scrubbing everywhere we possibly can to find savings so we don't have to do a tax increase, and this big pool of money is on the table and we're not even taking a look at it,' said Sweeney, the business manager for Ironworkers Union Local 399 and chairman of the Senate Labor Committee."

"Sweeney pointed out that state workers enjoy a range of concessions that many private-sector employees only dream of – a 35-hour workweek, 17 paid holidays on top of their paid vacations and retirement eligibility at 55 with complete health benefits for life."

"He said the state should raise the retirement age, cut the number of holidays and ask workers to stay longer than their seven-hour day. Union members should also pay more for health care benefits, he said."

"Those moves could save the state at least $700 million over time, Sweeney said."

"Yet, in New Jersey, the state's 70,000 union workers now enjoy salaries, benefits and other perks that far outstrip those of their counterparts in the private world, the lawmakers said."

Schering-Plough Eliminates 500 New Jersey Jobs

From the Star Ledger:

Pharma firm axes 500 jobs in N.J.

Schering-Plough yesterday eliminated the jobs of 1,100 manufacturing workers -- including 500 full-time employees in New Jersey -- in the single largest job cut by the drugmaker in recent years.

The Kenilworth company cast away about 3 percent of its workforce by cutting jobs in Union and Kenilworth and at two sites in Puerto Rico, at an expected savings of $100 million annually beginning next year.

The job reductions, effective immediately in New Jersey, follow a pattern of belt-tightening in the Garden State's pharmaceutical industry. They also come at a time of high profits on strong sales of the cholesterol drugs Vytorin and Zetia and the rheumatoid arthritis treatment Remicade, which Schering-Plough markets overseas.

"Schering-Plough had 32,600 employees worldwide before yesterday's layoffs. It will now have about 7,000 workers in the Garden State, where the company makes the Asmanex asthma drug, the Nasonex allergy medicine and an over-the-counter Claritin pill."

"'It's more of a shift, putting their people where they are needed,' Philip Kirschner, president of the New Jersey Business and Industry Association, said of the layoffs. 'They need to create blockbuster drugs, which will create a need for more manufacturing jobs at some point.'"

New Buildings For Newport

From the Star Ledger:

Developers plan to bolster Jersey City waterfront

"Nearly two decades to the day after they broke ground on a questionable gamble to transform Jersey City's waterfront, members of the LeFrak and Simon families un veiled plans yesterday for four more buildings in the Newport complex."

"LeFrak said he and his sons, Jamie and Harrison, intend to double the number of residential units to roughly 9,000 and will add 11 acres of parkland, another 1 million square feet of office space and amenities including an ice-skating rink."

"He said $2.5 billion in private capital has already poured into the site, and the new buildings represent an investment of another $750 million. New construction includes three residential high-rise towers and a Westin hotel and conference center."

"The jewel will be the Ellipse, a 460-foot tower of steel and glass that will contain 325 apartments."

"The complex also benefited from tax abatements and, most recently, state legislation that will allow the LeFraks to recoup up to $20 million from an environmental cleanup fund that didn't exist when they were building the development."

"Corzine said public investment is justified, because Newport has become an economic engine and job creator that has benefited the entire state."

Thursday, June 01, 2006

Homeowners May Find Themselves Underwater... Literally

From the New Jersey Public Interest Research Group:

NJPIRG Releases NJ’s Coastal Treasures at Risk from Global Warming; Calls on Governor Corzine to Take Action

"New Jersey Public Interest Research Group released New Jersey’s top five coastal treasures threatened by under water submersion and chronic flooding as a result of global warming and related sea level rise. The areas of the state most at risk are the Meadowlands, Atlantic City, Cape May, Long Beach Island and the Delaware Bay Shore."

"According to research conducted by Professors Michael Oppenheimer, Matthew Cooper and Michael Beevers of Princeton University, if we continue our current trend of global warming pollution, sea levels off the Atlantic Coast will rise 2-4 feet (0.61-1.22 meters) by 2100, noting that over 80 percent of the New Jersey coast is either highly or very highly vulnerable to sea level rise. The report also found that 9 percent of the state’s total landmass would be subject to chronic flooding as a result of a 2 foot sea level rise. Sea level rise would also allow salt water to permeate fresh water sources, contaminating drinking water supplies."

"Huge swaths of the Meadowlands, a 30.4 square mile area composed of 14 Bergen and Hudson County communities, including Jersey City, would be under water or flooded out. In addition to employing over 80,000 people, the Meadowlands is home to 8,400 acres of open space, wetlands and waterways, more than 265 species of birds and is recognized as a major migratory fly-over and resting preserve."

"Cities and towns that fuel New Jersey’s economy would also be subject to water submersion, including the northern port cities of Bayonne, Jersey City and Hoboken, Perth Amboy and South Amboy, Woodbridge, Rahway, Linden and Elizabeth, central coastal cities of Keyport, Union Beach, Keansburg and numerous shore towns, including Point Pleasant, Toms River, Barnegat, Little Egg Harbor, Ocean City, Sea Isle City, Stone Harbor and Wildwood. New Jersey’s coastal counties make up approximately 60% of the state’s population."

Their map is available here:

New Jersey's Coastal Treasures at Risk for Flooding (PDF)

Odd Use Of Eminent Domain

From the Star Ledger:

A twist on eminent domain: Taking farmland for wetlands

"The state will use eminent do main to seize more than 17 acres of a working farm in Washington Township to offset wetlands lost because of road projects miles away in Sussex County."

"The township's mayor and county officials have questioned the plan to turn farmland into wet lands and have written letters to the state raising concerns in recent weeks."

"Department of Transportation officials said they will take parts of Steven Linz's 154-acre Harvestone Farms on East Avenue in Morris County to compensate for destruc tion of wetlands during four road construction projects in Sussex County."

"Washington Township Mayor Tracy Tobin said taking part of a working farm to offset road work many miles away is 'strange.' He said the area's strong farming heritage should be protected."

"'The state has poured millions of dollars into farmland preservation,' Tobin said. 'Why in the Lord's name would they turn around and attack a working farm?'

Sellers Living With Last Year's Expectations

This one goes out to all the real estate agents that peruse the blog from time to time. We would love to hear stories about what has been going on in your local areas and offices (post anonymous if necessary).

From RealtyTimes:

Getting the Listings Sold

"In many parts of the country, the inventory has increased and it is taking longer for homes to sell. For many who were in a very fast seller's market, these conditions are requiring a shift in strategies for them to have the success they want this year."

"Are your listings sitting on the market longer? In many price ranges, if your property isn't in the bottom 25 percent, it's just going to sit there. What's an agent to do?"

"First and foremost, the communication with your sellers is critical to their understanding of the new marketplace dynamics. Most sellers are living with last year's expectations, i.e. that they'll get 10 percent above the last sale, whereas in many places, it may well be that they will get 10 percent less! Your ability to educate them and help them modify their expectations to the new realities will keep them loyal and appreciative of your efforts."

"It is very important to avoid becoming adversarial in giving them the bad news. People get attached to their opinions and will dig their heels to defend their point of view. Instead of trying to convince them you are right and they are wrong, bring empathy and understanding into your conversations. Let them know you understand why they would think the way they are, and then say that the updated information on the market is telling us something else."

"Next, show them the facts regularly. This would include a weekly or monthly CMA report, the market absorption numbers, average days on market, and the amount they are losing each month the house doesn't sell. Then let them decide. It's their house, after all. This information sometimes takes a while for them to digest, but you are planting the seeds for them to make the decision that is right for them."

Caveat Emptor!

Turn Off Those Lights! NJ Electric Rates Rise Today.

I'd suggest that everyone become a bit more energy conscious this afternoon, because living in New Jersey just got a little bit more expensive:

From the AP:

NJ electric bills to go up at least 12 percent

"New Jerseyans are about to see a big jump in their electric bills."

"New rates, effective today, will increase bills for residential customers by at least 12 percent statewide."

"Rockland Electric customers will see the smallest increase - 12 percent, while the 13.7 percent hike at PSEG is the biggest."

Caveat Emptor!

April Pending Home Sales Drop 11.7% YOY

From Marketwatch:

U.S. April pending home sales fall 3.7%
By Rex Nutting

"Pending home sales fell in April for the third straight month, further evidence the housing market is cooling rapidly. The pending home sales index dropped 3.7% in April, the National Association of Realtors said Thursday. The index is down 12.8% from its peak in August and is down 11.7% from a year ago. "I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year," said David Lereah, chief economist for the realtors. "Over time, homeownership remains the best investment a family can make." The index fell 9.8% in the West, 5.6% in the Midwest and 5.5% in the Northeast. The index rose 1.4% in the South."

From the NAR:
April Pending Home Sales (PDF)

Unadjusted Year over Year Changes
U.S. -12.8%
Northeast -10%
Midwest -18.4%
South -7.7%
West -18.7%

Newark Land Sales Halted

From the Star Ledger:

Judge suspends bargain sales of Newark's land

"In response to a lawsuit from Mayor-elect Cory Booker, a Superior Court judge barred Newark yesterday from selling city-owned land, saying sales since the May 9 election "squander public property and resources to benefit private interests.""

"Judge Patricia K. Costello, sitting in Newark, prohibited all non-auction sales of publicly owned land until June 15, when Booker and attorneys from the city are scheduled to appear in court."

"The city also was prohibited from finalizing the handover of land sold since May 9, according to the restraining order."

"The city council, acting on proposals from the administration of Mayor Sharpe James, has approved at least 15 proposals to sell land at the city minimum of $4 per square foot, well below market value, since Election Day."

"Many of the developers are supporters of James and the council, and some have contributed money to the campaigns of the mayor and various council members."

Dwek's Empire Of Debt

From the Asbury Park Press:

Creditors: Dwek owes $298.1M

"Eleven banks along with 42 businesses, partners, investors and others say Solomon Dwek's real estate empire owes them $298.1 million."

"The 53 claimants range from a lawn care company seeking $5,949 to Dwek's uncle, Joseph Dwek, who says he is owed $60 million, according to a Superior Court accounting released Wednesday."

"At the head of the list is PNC Bank, which filed a lawsuit May 3 that led to a flood of claims against Dwek, 33, of Ocean Township. The bank is seeking $21 million."

"The 11 banks and a mortgage company claim $149.6 million in debt, while others say they're owed $148.5 million."

"The topmost claim of $60 million from Joseph Dwek, 54, of Brooklyn is followed by Amboy National Bank, which claims $51.7 million."

"Last week, Lomurro released a list of more than 350 properties owned by Solomon Dwek, his wife Pearl, or companies he has an interest in. Robert A. Weir Jr., Dwek's attorney, has said his clients' properties are worth an estimated $300 million."

"Last month, Dwek asked the court to allow him to withdraw $23,070 a month from his assets to cover his living expenses. That amount includes $18,000 to pay three mortgages on his home, according to his request."

"Although the house was assessed in 2005 at $1.2 million, public records show the mortgages on Dwek's Crosby Avenue house total $2.4 million. That includes $850,000 in two mortgages issued by Community Bank of New Jersey in 2001 and 2004. The bank was bought by Sun National Bank."

"Washington Mutual Bank issued a third mortgage on the house for $1.5 million this January to Pearl Dwek, Solomon Dwek's wife."

We Don't Need No Education

From the Star Ledger:

Just listed: A 4-year degree in real estate

"Julius Kislak learned the real estate business the old-fashioned way: He sold his father's house in Hoboken in 1906, then sold a few more and kept selling until he built one of the largest real estate businesses in the state."

"But Kislak, who trained a generation of employees, would have appreciated the idea of a four-year college major devoted solely to real estate, his son Jay said."

"The Kislak family will mark the 100th anniversary of the company's founding by donating $2 million to Monmouth University to help start New Jersey's first undergraduate major in real estate. The gift, due to be announced today on the West Long Branch campus, will be the second-largest in the private school's history."

"With the property market booming, the university is banking that real estate will be the next hot college major. The idea is to take what has been regarded as a trade and make it a legitimate scholarly pursuit."

"Monmouth University plans to start its major in the fall of 2007. Students will take classes on real estate law, eminent domain, finance, development, construction, affordable housing and other topics."

"In the future, the undergraduate degree may include a course to help graduates get their real estate licenses. But the major is not designed to train future Realtors. Graduates probably will end up as developers, lawyers or executives in corporations in the real estate field, school officials said."

Wednesday, May 31, 2006

New Jersey & The World - Perfect Together?

From the Star Ledger:

N.J. has place in globalization history

"Globalization has a long history in New Jersey: It was building fortunes on the banks of the Raritan River long before it became the anxious buzzword for modern international competition. The state's citizen-of-the-world legacy was the subject of a recent Rutgers University symposium that looked at the Raritan Valley's past as a microcosm of globalization, and its implications for New Jersey's uncertain future in the world economy."

"But will New Jersey keep its technological edge in a modern world that ignores traditional barriers of country and culture and instead spins people, patents, money and manufacturing across the globe in pursuit of lower costs and higher profit?"

"Rutgers economist James Hughes said New Jersey is an expensive place to do business and he warned there is no guarantee the state will be a key player in the future of pharmaceuticals or any other knowledge-driven enterprise."

""Until the 21st century, New Jersey actually thrived with globalization but there are gathering storm clouds suggesting this is no longer the case," Hughes said, noting that New Jersey lost 9,800 high-tech jobs from 1990 to 2004, while the nation gained 1.3 million."

"He advocates visionary public policy, backed up with public money, to keep New Jersey in the high-tech game, "but stimulating and shaping our economic future has never been a state public policy priority; proposed public investments to support the future high tech economy usually succumb to immediate political exigencies. This era does not favor New Jersey: a global economy with an abundance of low-cost, highly educated knowledge workers is going to turn out to be a challenge of unprecedented complexity.""

May FOMC Minutes

The FOMC Minutes are out!

Minutes of the Federal Open Market Committee - May 10, 2006

"The underlying pace of residential activity seemed to moderate in the first quarter. After unseasonably warm weather allowed a high level of single-family housing starts in January and February, starts fell in March to their lowest level in a year. New permit issuance for single-family homes also fell in March, continuing its downward trend. Multifamily starts recovered a bit in March from their low rate in February but remained well within their historical range. Home sales also declined, on net, in recent months. Although sales of existing single-family homes edged up in February and March, the level of sales for the first quarter as a whole was notably below the record high in the second quarter of last year. Sales of new homes also moved up in March, but their average in the first quarter was down substantially from the peak in the third quarter of last year. House price appreciation appeared to have slowed from the elevated rates seen over the past summer. Growth in the average sales price of existing homes in March, versus a year earlier, decelerated sharply, and the average price for new homes in March fell compared to a year earlier. In addition, other indicators, such as months' supply of both new and existing homes for sale and the index of pending home sales, supported the view that housing markets had cooled in recent months."

"Although the Committee discussed policy approaches ranging from leaving the stance of policy unchanged at this meeting to increasing the federal funds rate 50 basis points, all members believed that an additional 25 basis point firming of policy was appropriate today to keep inflation from rising and promote sustainable economic expansion. Recent price developments argued for another firming step at today's meeting. Core inflation recently had been a bit higher than had been expected, and several members remarked that core inflation was now around the upper end of what they viewed as an acceptable range. Moreover, a number of factors were augmenting the upside risks to inflation: the surge in energy and commodity prices, some recent weakness in the foreign exchange value of the dollar, and the possibility that the apparent increase in inflation expectations could, if it persisted, impart momentum to inflation. In addition, the economy appeared to be operating at a relatively high level of resource utilization and had been growing quite strongly, and whether economic growth would moderate to a sustainable pace was not yet clear. At the same time, members also saw downside risks to economic activity. For example, the cumulative effect of past monetary policy actions and the recent rise in longer-term interest rates on housing activity and prices could turn out to be larger than expected. Still, it seemed most likely that, with modest further policy action, including a 25 basis point firming today, growth in activity would moderate gradually over coming quarters, pressures on resources would remain limited, and core inflation would stay close to levels experienced over the past year."

Northern New Jersey Weekly Inventory Update

(Garden State Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)

5/24 - 17,138
5/31 - 17,345 (1.3% Weekly Increase)

(New Jersey Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Passaic Counties)

5/24 - 8,465
5/31 - 8,563 (1.2% Weekly Increase)

MLSGuide -
Single Family Homes, Condo, Coop
(Hudson County)

5/24 - 2,419
5/31 - 2,406 (0.5% Weekly Decrease)

Mortgage Applications Drop 1.9% - Index Hits 4 Year Lows

From Reuters:

US home loan demand falls as interest rates climb
By Julie Haviv

"U.S. mortgage applications fell last week, reflecting a decline in home refinancing loans as interest rates climbed, an industry trade group said on Wednesday."

"The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 26 decreased 1.9 percent to 541.9 from the previous week's 552.6."

"Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, and matching a four-year high touched two weeks ago."

"The MBA's seasonally adjusted purchase mortgage index fell 0.2 percent to 395.5."

"The purchase index -- considered a timely gauge of U.S. home sales -- was also below its year-ago level of 462.7."

"The group's seasonally adjusted index of refinancing applications decreased 4.8 percent to 1,409.0. A year earlier the index stood at 2,142.1."

"Fixed 15-year mortgage rates averaged 6.22 percent, down from 6.23 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.09 percent from 6.02 percent."

"The ARM share of activity edged up to 30.7 percent of total applications last week from 30.5 percent the previous week. It was the highest ARM share since late January."

Shaq To Build Luxury Condos In Newark

From the Star Ledger:

Newark set to sell historic site

"Another piece of Newark's history may fall victim to a wrecking ball in the name of redevelopment."

"Once known as Malt House Number 3, the oldest remaining structure from the Peter Ballantine & Sons Ale Brewery in Newark has been home to Science High School for 23 years."

"A company owned by NBA star and Newark native Shaquille O'Neal wants to buy and demolish the historic school building at 40 Rector St., in the Central Ward, and build a luxury high-rise condominium complex."

"The city is ready to sell -- at far below market value."

"Today, the City Council will consider a resolution authorizing the sale of the property for $2.75 million. The building and land on which it sits have a combined market value of $6.5 million, according to city records."

"The Science High building is the oldest and largest remaining structure from the Peter Ballantine & Sons Ale Brewery. Built in 1860, it was taken over by the former Dana College in 1933. When Dana College was absorbed by Rutgers University in 1945, the building was used as a chemistry lab. Essex County College leased the building for several years before the Newark Board of Education took it over in 1983."

"Because the building is located in the Military Park Commons Historic District and has been listed on the state Register of Historic Places, the city needs state approval before it can sell it."

Tuesday, May 30, 2006

Confidence Falls - Fewer Buying Homes

From Bloomberg:

U.S. Economy: Confidence Fell By Most Since September

"Rising energy prices drove U.S. consumer confidence down in May by the most in eight months, pointing to weaker spending and economic growth in the second half of the year."

"The Conference Board's confidence index fell to 103.2 from a four-year high of 109.8 in April. The New York-based business group also said the number of people expecting to pay higher prices in the next 12 months rose to the highest since October."

"The data point to an environment of slower economic growth and rising inflation expectations that confronts Federal Reserve policy makers as they debate whether to raise interest rates next month. The proportion of consumers expecting their incomes to increase in the next six months fell to the lowest in almost three years, today's survey showed."

"The share of consumers planning to buy a home in the next six months fell to 2.8 percent in May, the lowest this year, from 3.1 percent. The proportion who said they plan to buy a car fell to 6 percent from 6.8 percent."

"Optimism about consumers' present situation fell to 132.5 from 136.2 in the prior month. The gauge of expectations for the next six months fell to 83.7, the lowest since October, from 92.3."

Sharks, Vultures, or White Knights?

From the Wall Street Journal:

Slower Home Sales Open Up a Market For Some Investors

"The cooling market for real estate brought Michael Termine and Uso Mbanefo together."

"Mr. Mbanefo, a 43-year-old entrepreneur struggling to launch a clothing-design company, had fallen behind on his mortgage payments. He needed to sell his four-bedroom house here quickly to avoid losing it in a foreclosure. That's when Mr. Termine, a 32-year-old novice real-estate investor, stepped in."

"One afternoon in early April, Mr. Termine visited Mr. Mbanefo's office in a strip mall and offered to pay $400,000 for his house. Mr. Mbanefo showed Mr. Termine fliers for nearby homes offered at $600,000 or more. Mr. Termine pointed out that the inventory of unsold homes here, as in many parts of the country, has nearly doubled over the past year. Even so, Mr. Mbanefo said that he might be able to refinance his home, spruce it up and sell it for $500,000."

""I don't see it at 500," said Mr. Termine. "I think the magic number to move that house fast is 475." Before leaving, he reiterated his offer. "I have $400,000 waiting for you, in cash.""

"The slowdown in housing sales, after five years of frantic buying, has ended the party for many real-estate investors. But the cooler market is welcome news for a subset of investors -- those who target homeowners facing foreclosure."

"One of the best-known buyers of homes from distressed owners is HomeVestors of America Inc., a franchising company based in Dallas that helped found the trade group headed by Mr. Grant. After paying an upfront fee of $49,000, franchisees receive two weeks of training, and can tap into leads generated by the company's ads. HomeVestors, known for big yellow billboards proclaiming "We Buy Ugly Houses," has 250 franchisees in 31 states and the District of Columbia, up from 43 at the end of 2000."

"The company says its franchisees typically offer about 65% of the estimated market value of homes, minus renovation costs. Such a deal, it says, can benefit people who lack the time or inclination to fix up and sell a home themselves."

Morris Freeholder Candidate Housing Views

From the Daily Record:

Freeholder candidates take stand on housing

"The Housing Alliance of Morris County asked the 13 freeholder candidates on the June 6 primary ballot to explain their positions on affordable housing. Ten replied."

""They all showed an understanding of the issues to varying degrees. It was important that the candidates identified that there is a myth about who needs affordable housing. It is needed by students graduating from college, our parents, people we know, care about and need."said Dan McGuire, executive director of the housing alliance."

"Randolph Mayor Gary Algeier, a Republican, said there is definitely a need for affordable housing (but) the word crisis is often overused"

"Wharton Mayor Bill Chegwidden, a Republican, said, "The fact that we are legally bound to provide housing gets my goat to start with. The phase affordable housing seems to stir a vision of poor neighbors moving in next to you and bringing down the value of your home.""

"Denville Mayor Gene Feyl, a Republican said, "The desirability of Morris County's quality of life and economy clashes with restrictive zoning, Highlands legislation and high-end demand to create a shortage."He cited the acceleration of already high land values and regressive property taxes as factors."

"William "Jack" Hartford of Chatham Township, a Democrat, said Morris County is becoming unaffordable for senior citizens, for young people who would like to remain in the towns where they were born, and for public employees and volunteers."

"Freeholder John Murphy of Morris Township, a Republican, said, "there is clearly a shortage of affordable homes in our area. I do not believe the answer is in instituting a government program that is funded by taxpayers (because they have had enough of increased taxes) but a more collaborative effort with nonprofits, private corporations, municipalities and the county government.""

"Dana Wefer of Jefferson, a Democrat, said, "the high cost of Morris County housing drives away young people and senior citizens and makes it difficult for businesses to hire employees. They live farther away and add to an already heavy traffic situation. She called for closer county cooperation with non-profits and bi-annual summits on the issue." The state's property tax system must be changed so that towns do not discourage the creation of housing for families out of a fear of increasing school costs, she said."

Analogies Abroad

From the Wall Street Journal:

Overseas Analogies

"Ever since the U.S. housing slowdown became apparent last year, investors have cast a wistful eye toward the United Kingdom, hoping its soft landing will be a prelude to a similar experience on this side of the Atlantic."

"As in the U.S., Britain's housing market looked like it was overheating a few years ago -- then kept heading up. When the U.K. market stalled last year, the Bank of England took the precaution of cutting its key interest rate, helping to stabilize its housing market. If it happened in the U.K., why couldn't it happen in the U.S.? In a speech earlier this month to bond investors, none other than Alan Greenspan, former Federal Reserve Chairman, pointed to the potential parallel. But the analogy might not be perfectly apt."

"Mortgages in the U.K. are closely tied to short-term interest rates, while U.S. mortgages are generally linked to longer-term interest rates. That gives the Bank of England more direct influence over the U.K. housing market, since central banks control short-term interest rates, while market forces drive long-term rates. The Fed could reduce its short-term lending rate and long-term interest rates could keep rising on, say, mounting inflation worries, putting strain on the housing market."

"Australia's housing market may have avoided trouble for a similar reason -- commodity prices boomed last year, and Australia is above all a commodity producer."

"Finally, while prices in the U.K. may have gotten even more excessive than in the U.S., U.S. households put themselves more at risk than their U.K. counterparts by borrowing against home equity to fuel spending, notes Goldman Sachs economist Jan Hatzius. British households were burned by this in the early 1990s, he says, and thus were more conservative than Americans this time around."

"Of course, this doesn't mean the U.S. housing market is bound for a hard landing. But it does mean investors should be careful about taking too much comfort from analogies abroad."

Anti-McMansion Rules Shot Down In Westfield

From the Suburban News:

Rough reception for new development rules

"After hearing overwhelming opposition from local residents, including numerous members of the real estate industry, the Planning Board last week unanimously recommended that the Town Council not move forward with a proposed ordinance designed to curb overdevelopment."

"At a special meeting on May 18, the board also recommended that the council establish a special committee including local officials, residents and professionals with expertise in the area to further research the issue."

"Though the spread of "McMansions" has been a hot topic in town for years, the residents who attended last week's meeting said emphatically that the draft ordinance, which included changes to floor-area ratio (FAR), height and accessory structures, was a step in the wrong direction."

"About 50 residents came to the meeting, including local architects and planners who said the proposed changes would adversely affect everything from homeowners' rights to property taxes and building design."

"Some residents argued it was unfair to criticize new construction when there are many large older homes in the community that could be considered McMansions. And others said Foerst's committee had not adequately defined the issue it was trying to address."

Is Density The Answer?

From the Asbury Park Press:

High-density communities replacing pricey sprawl
BY JOE RIGGS (FYI: Joe Riggs is affiliated with K. Hovnanian)

"Picture this: You're in a newly built village where you meet your neighbors as you walk down the street to the local hardware store. The home in which you live is one of several styles that accommodate an assortment of people. Your neighbors include a company president and a young woman who works at the beauty salon around the corner."

"Your children can walk safely to the neighborhood park, located right next to their school. And instead of sitting on a highway for two hours every day, you drive five minutes to the train station. Your neighbor walks to his office."

"In more and more places, this is the type of development or redevelopment being proposed. It's what New Jersey needs to help solve its housing issues and address many of its economic woes. But in too many places, neighborhoods like this are bitterly opposed because they require increased density."

"It's ironic that density has become a dirty word. Density could be the solution to other dirty words, such as commute, housing prices and sprawl. It's time to change how we think about density."

"Wiser use of our land could yield more homes, de-emphasize cars, increase municipal revenues, save more open space and help break this downward spiral."

"These neighborhoods also tend to have a strong sense of community, and provide an urgent counterpoint to the practice of putting 5 acres under one home."

"Density, it turns out, isn't a dirty word after all. Properly used, it's a blessing and a key to our future."

Land Hunters

From the Star Ledger:

In Jersey, a little land is big prize for builders

"They are land hunters, on the prowl. Poring over tax maps to eyeball a hot prospect. Getting behind the wheel to scout for the next acquisition. Knocking on doors, hoping to find an owner in the mood to sell."

""It's getting harder and harder to find any place to build in this town," said Orloff, who is building two five-bedroom, 4,000-square-foot houses on Montclair's Valley Road. That deal came after he got a tip. He found the seller, quickly, and started talking."

"From small-time builders to big-time New Jersey developers, from those eking out a living to those making hundreds of thousands of dollars, it's a cat-and-mouse game to see who can get the precious property first in a land-scarce, densely populated state."

"Anything that can be developed goes. Vacant lots. Sub-dividable double lots. Single homes suitable to be knocked down. Land next to highways, or train tracks, or some other not-quite-as-desirable locales."

"Developers partner with real-estate agents and try to one-up other bidders. Strategies include enticing a seller with a no-contingency deal that makes for a quick closing, or being able to line up financing faster than a competitor."

""It's a lot like being a farmer," he said, "because you invest an entire year of labor and a tremendous amount of capital, and you're pretty much at the mercy of the marketplace and other conditions you can't control.""

Monday, May 29, 2006

"People don't believe in the laws of supply and demand anymore"

From Barrons:

The Big Glut

"IT WOULD SEEM TO HAVE IT ALL: four bedrooms, a guest house, a pool and a rock waterfall. But the vacation home in Naples, Fla., hasn't been drawing much interest from buyers, so the seller recently threw in that most modern of amenities: the $1 million price cut. That's brought the asking price down a full 25%. "If you want to sell, you've got to go back to '04 prices," says Chip Harris of Coldwell Banker Previews International, which is handling the property."

"The market for second homes could use a second wind. After a long string of double-digit annual price increases, a number of second-home meccas across the country are suddenly suffering from plunging sales volume and burgeoning inventories of unsold homes. Result: Naples-style discounting is starting to spread. It hit the town of Pocasset, on Massachusetts' Cape Cod, just as retired executive Jack Reen was trying to sell his four-acre, six-bedroom beachfront home. He cut the price several times, for a total of 42% off the listing price, before striking a deal at $3.95 million. Reen takes a philosophical view of the experience, noting that the original price was set at the top of the market. "Calling the tops and bottoms is impossible," he says."

"Though the official figures on sales prices have yet to reflect the current round of cuts, interviews with real- estate pros and others strongly suggest that the averages are deteriorating in a number of key markets. Just look at green and hilly Litchfield, Conn., about a two-hour drive from New York City. It was a magnet for Wall Streeters during the past five years, and prices climbed accordingly. But in the past 10 months, prices in the lower end of Litchfield's market -- homes of $300,000 to $600,000 -- are down 12%-14%, and volume is falling at the next level up, says Stephen Drezen of the local Portfolio Properties Group."

""People don't believe in the laws of supply and demand anymore," says Alan Skrainka, chief market strategist at Edward Jones. "We're not saying it's a bubble, but we're saying prices are overstated and will likely correct 20% to 25% over four or five years.""

"He rejects a notion advanced by housing bulls that shore communities in Florida and California will be protected because of the limited supply of coastline. "Japanese real estate and land prices went down for 15 years and Japan is an island," Skrainka says."

"On the East Coast, signs of a glut have been turning up all along the coastline of New Jersey. In an effort to move inventory, brokers in the upscale summer resort of Stone Harbor have been sending out postcards to vacation renters, proclaiming a three-bedroom condo to be "the perfect investment opportunity" at just $739,000. That's about what many of the would-be buyers might have paid for their first homes."

""The market is definitely in a correcting phase," says Timothy Richards of Ocean City, N.J., who recently retired as a realty broker and began a second career as a developer. He says buyers are waiting to see what happens with mortgage rates. "Whenever financial markets are in transition, we go into a holding pattern," he adds."

"If I were you, I'd rent for a while"

From the Daily Reckoning:

By Eric J. Fry

"Ben Bernanke and Alan Greenspan both agree that the housing boom is over and that it will begin an "orderly" decline. We agree that the housing boom is over and that home prices will begin to decline, but we aren't so sure about the "orderly" part."

""It seems pretty clear now that the U.S. housing market is cooling," Fed Chairman Ben Bernanke recently remarked. "[But] our assessment at this point ... is that this looks to be a very orderly and moderate kind of cooling." Later the same day, the former Fed chief, Alan Greenspan, observed, "This has been quite an extraordinary (housing) boom. The boom is over. I think we can safely say that with
a strong degree of confidence.""

"However, the famously inoffensive Greenspan continued, "[there is] no evidence that home prices will collapse." Conveniently omitted was the phrase, "...but there is
plenty of evidence that that home prices COULD drop significantly.""

"Home price might indeed dip serenely, like the oars on a lovers' rowboat...just like Ben Bernanke expects. On the other hand, home prices might become as disorderly as stampeding soccer Hooligans...just like your New York editor expects. No one can say for certain. But your editor's recent personal experience provides one unnerving
data point...and suggests that the "less orderly" portion of the housing cycle might be fast-approaching."

"A home is a wonderful thing to own; but it is also a wonderful thing to sell...especially when prices are slumping and buyers are disappearing...and time is of the essence."

""Hey, now that I've sold my house," your editor queried a local real estate agent yesterday, "I've gotta ask; what's really happening in the housing market here?""

""It's not good...It's really not good," came the reply."

""So what type of homes are selling?""

""Not much...A few entry-level homes are selling. But nothing over $1 million. If I were you, I'd rent for a while when you're out in California. This housing market's
gonna get worse all over the place. So I'd just wait it out.""

Buyers Market? No. Sellers Market? No.

From the Palm Beach Post:

It's a renter's market
By Barbara Marshall

"This spring, Michelle Lewis and Rudolph Maragh of West Palm Beach were preparing to buy a condo when they took one last look at the local housing market."

"And decided to rent."

"The couple and their two kids leased a 2,000-square-foot, three-bedroom house in the gated West Palm Beach development of Briar Bay for $1,500 per month — about 40 percent less than the monthly mortgage payments on a comparable home."

""It was the same price as an apartment, so we might as well get the house," Lewis, a registered nurse at Columbia Hospital, said of their decision."

"Welcome to the flip side of the housing boom, where renters can afford brand-new dream homes while landlords struggle to meet their monthly mortgage payments."

"Deals like these changed Twanya Robinson's mind about buying a home."

""I'm approved for a mortgage of $300,000, but I didn't think I was getting enough house for the money" at that price, said Robinson, a controller with a downtown West Palm Beach software company and a mother of three."

"Instead of buying, she rented a new 2,100-square-foot house for $1,650 per month. With four bedrooms, the house in the gated Lakes of Laguna development of West Palm Beach is big enough for her children to have their own rooms. Purchasing the house would have cost $350,000 — or about $2,300 a month after plunking down a $70,000 down payment — more than Robinson can afford."

"Discussion of the strong rental market makes some real-estate agents uneasy. Several refused to comment publicly, fearing it would further erode sales in an already slow market."

"Terrence McManus, president of Florida RentFinders, said now that the interest-only periods have ended on many investors' mortgages, "they're trying to get income out of their houses any way they can.""

"McManus said that most of the landlords he works with are renting at a loss."

""None of them is cash-flow positive," he said."

"The situation is creating sleepless nights for investors, such as Dena Webster of Wellington, who hasn't been able to sell any of the 14 houses that she purchased at the peak of the boom. Eleven are in Olympia, a Wellington development where houses routinely carry price tags of more than a million dollars, but where rents are in the $1,800 to $3,000 range."

""I'm upside-down on every one of them," Webster said of her properties."

""I'm not sleeping," she sighed."

"Renters such as Michelle Lewis and Twanya Robinson, on the other hand, are slumbering soundly."

Sunday, May 28, 2006

High Taxes Will Send Owners Packing

From The Record/Herald:
Assessing the damage

"PEQUANNOCK -- Property owners here are finding out that when it comes to what their holdings are worth -- and taxed -- there's just no predicting the effect of real-estate market whims."

"This year, a 60-year-old widow living in the flood plain is likely facing an above-average property tax increase. Across town, a 39-year-old homeowner is looking at a similar whack because his street has seen tear-downs and additions galore. But between them is a Route 23 business owner who has better news coming when his tax bill arrives this summer."

"They're just a few of the residents, landlords and merchants affected by a revaluation last year in this eastern Morris County township that adjusted the value of all properties -- commercial, residential and vacant -- to market levels."

"The revaluation -- the first since 1985 -- most notably recorded that just as in North Jersey at large, the housing boom sent residential values soaring in comparison to those of commercial and industrial holdings. That shifted more of the tax burden onto homeowners. With new values on official tax books for 2006, homeowners in general will take a hit, while business owners will get a break."

"How big or small? That question can't be answered in dollars until tax rates are finalized. But a Record analysis allows Pequannock landowners to get an idea before they receive their tax bills this summer."

"Owners of commercial properties will get a break compared with homeowners in the form of smaller increases, and even some tax cuts, because their values haven't risen as steeply as residential property since the last revaluation. The assessment on the typical commercial property rose 76 percent, while it jumped 145 percent for homes."

"Lower-end homes will take the biggest hit of all because their assessments went up the most, while those on higher-value homes went up less. Assessments on the most valuable homes generally rose 125 percentto 135 percent, while those on the least valuable homes shot up 160 percent to 180 percent."

N.J. - Third Worst Drivers

(some humor for this weekend)

From the Daily Record:
Rules of the road: Few driving geniuses in N.J.

Reading about the study ranking New Jersey 48th in the nation for driving knowledge, my first reaction was amusement.

Yet another thing people will use to poke fun at the state, I thought.

Then I saw that New York, where I grew up and learned how to drive, came in 47th.

It can't be so! Or, just maybe, the truth hurts.

Here we are, New York and New Jersey, battling over the Jets, Giants and Statue of Liberty, archrivals throughout the decades --and it turns out we just might be soulmates when it comes to obnoxious, ill-informed driving.

Which is not to say the results of the second annual GMAC Insurance National Drivers Test, released Friday, should be taken too literally. The state with the most knowledgeable drivers, according to GMAC, is Oregon.

No offense, but we are we really supposed to believe that drivers in Oregon are that much better than us?

Let them try to navigate a Jersey jughandle, Route 80 in rush hour, or a back road in Mendham Township at night, and see how well they do.
An uniformed driver is a bad thing anywhere, but the risk rises in more populated areas. As the nation's most densely populated state, New Jersey can ill-afford motorists unsure when to use their headlights or how to handle a sharp curve (such as at the nasty exit ramp from Route 287 North onto Route 80 West in Parsippany, scene of numerous rollovers).

Ground Rules

I'm going to keep it short and to the point.

Personal attacks, inflammatory comments, and off-topic arguments will not be tolerated. Take these discussions off-line.

Foul language, racist, sexist, or any other defamatory remarks will not be tolerated.

Messages that violate these rules will be deleted.

The housing bubble is an emotionally charged topic, and I understand that our discussions get heated at times. We don't need to add any more fuel to this fire.

Please help me to keep our discussions on topic and professional.

Caveat Emptor!

Highlands Cash Going Quick

From the Star Ledger:
N.J. pays top dollar for bits of Highlands
Analysis of 8 deals finds cash going fast

"The worst fears of property owners in the northern Highlands aren't being realized. At least not yet."

"The state, in its first eight land purchases since a sweeping 2004 preservation act clamped down on development in the region, has kept its promise that property owners would not suffer financial harm."

"While eight sales is a small sample -- accounting for just 265 acres in a vast seven-county region -- state land-acquisition officials so far are paying prices that recognize the value of the land before the stringent restrictions were in place, according to a Star-Ledger analysis of those purchases."

"To assuage fears that the bill would harm land values, lawmakers inserted a provision requiring the state to reimburse property owners at pre-law prices. Now, when the state buys land in the region, two appraisals are done -- one using older comparable sales to determine the pre-law price, and another based on the current value with development restrictions."

"In six of the first eight sales, owners received the exact amount of the pre-law appraisal or slightly more; one received slightly less than the higher appraisal; and, in another case, the state split the difference, according to state records."

"If all 145,000 acres of privately owned restricted land were purchased at $12,500 an acre -- the average in the first eight deals -- the cost would come to $1.8 billion. Yet the state has only $225 million left from a bond sale, approved by voters in 1998, that raised about $2.15 billion for open-space and farmland purchases around New Jersey."

""They don't have nearly enough money," said Deborah Post, a landowner in Chester who is critical of the act. "In my opinion, they know that.""