Saturday, June 17, 2006

More on the 40-Year

From the NY Times:

Payments That Last a Lifetime

WITH the recent climb in housing prices, more buyers than ever have been faced with a dilemma: swallow a monstrous monthly payment and risk financial ruin, or settle for a less desirable, more affordable home.

But bankers say homeowners need not face that choice as long as they are prepared for the possibility of spending their retirements paying off their mortgages.

The 40-year mortgage, often a cameo player during real estate booms, is once again on stage, as middle-income families look to cut a few extra dollars from their monthly outlay. For many, the prospect of such a protracted payment schedule is less daunting than an adjustable mortgage, which in a climate of rising interest rates can be scary.
Month to month, the difference between 30- and 40-year fixed mortgages can be significant on a tight budget. A $300,000 loan at 6.5 percent, amortized over 30 years, costs about $1,896 per month, while the payment for a 40-year loan is $1,756.

But since rates on 40-year mortgages generally run one-eighth to one-quarter of a percentage point higher, recalculating that 40-year loan on the same property at a more realistic 6.75 percent results in a monthly payment of $1,810.

Age-restricted only for Wall?

From the NY Times:

Where Town Homes May Soon Be Rare

AS public opinion has generally turned against sprawl in New Jersey, big-lot residential zoning has mostly fallen out of favor in towns around the state.

Admittedly, there are still exclusive enclaves where one- or two-acre lots are the rule, and semirural areas where a four-acre lot, or even a six-acre lot, is the required minimum for a single house. But the New Urbanism style of building multiple units in clusters on smaller parcels in more densely populated areas is the trend most planners and developers are focusing on these days.
Here in the small town of Wall, there is a project that aims to install a New Urbanist design right in the midst of a six-acre-lot neighborhood.

Since most of the land available for development in Wall consists of eight small lots on the periphery, or land that lies within the central part of the community that is zoned for six acres per residential unit, Cedar Hollow's town houses may be a vanishing breed hereabouts.

"We think this is going to be the last one, except for the age-restricted projects that are under way here," said Paul R. DeBellis Jr. of Franklin Development Group, the West Paterson company building Cedar Hollow.

Mr. DeBellis, who is a principal of Franklin Development along with his father, Paul R. DeBellis Sr., said his company had vied to build more such projects on other sites, but found itself stymied by the six-acre-per-unit rule governing the available land in the central part of Wall Township. "We want to preserve the character of that part of town," said the township's planner, John Hoffmann.
There are more than a dozen age-restricted and assisted-living developments under construction in Wall; some have only a few units, others are larger, and two have more than 100 units, he said. These projects were approved over the last decade in a concerted effort to meet the township's state-mandated affordable housing requirements.

Friday, June 16, 2006

Biggest Housing Boom In Over 100 Years

From Marketwatch:

U.S. housing boom is biggest since 1890

The recent housing boom is the biggest the United States has ever seen, but its underlying reasons may have been psychological, economist Robert J. Shiller said on Friday. New data also suggest the market might be at the end of a cycle, he added.

The only time since 1890 that compares to the recent residential real estate market is just after World War II, the Yale University professor said during a presentation on U.S. home prices, held at Standard & Poor's in New York and broadcast to journalists on the Web.

"After World War II, the soldiers came back and they wanted houses and started the baby boom. And when you had babies, you wanted houses with at least two bedrooms -- and that wasn't so common back then. They went on a buying spree and it pushed home prices up," he said.

The recent boom, however, doesn't have the same fundamental variables causing prices to soar, he said, adding that variation in such things as building costs, population and interest rates doesn't adequately explain the reason for the housing boom.
"I don't see why home prices should be shooting up that strongly," Shiller said, adding that speculation may have played a role. "It's a sign of concern."
During a question-and-answer session, he said that the stabilization of home prices could also have some effect on consumers' means of gaining equity. Low interest rates inspired people to refinance their homes, and the increasing value of their houses allowed them to pad their pockets with spending money; consumers will now have to turn to other means for financing, including credit, he said.

Rutgers to sell land to coach

From the Star Ledger:

Rutgers approves land sale to Schiano

Rutgers University's governing board approved an unusual deal yesterday to sell a portion of the school's ecological preserve to its football coach to build a house.

Coach Greg Schiano will buy a wooded parcel near the Raritan River in Piscataway for "market rate," according to the agreement. Though the appraisal is not complete, Schiano is expected to pay Rutgers between $200,000 and the low $300,000s for the 0.85-acre tract, campus officials said.
The coach, who has wanted to move closer to Rutgers Stadium for years, will build a house for his family on the hilltop property near the corner of Logan Lane and Hillcrest Drive. The lot is less than a mile from the Scarlet Knights' facilities.
Schiano's new seven-year contract includes a provision requiring the university to help find the coach new housing, said Jonathan Alger, Rutgers' vice president and general counsel.
The university bought the undeveloped tract from the Piscataway Charter Realty Corp. in 1945.

Some environmental activists are upset about the potential sale, which was approved by the Rutgers board with no public debate.

"I'm outraged. There is no respect for this ecological preserve," said Sue Kozel, a Rutgers alumna who hikes in the preserve.

Not the market you wish it to be

From Realty Times:

"Losing" on Real Estate Price a Matter of Perspective
by M. Anthony Carr

When it comes to pricing your house when you’re ready to sell it, keep in mind you must sell in the market you’re in today. It doesn’t matter what your former neighbor got six months ago, or what properties are listed for now. All that matters is this -- whatever the last sale price in your neighborhood of your model -- that’s probably your sale price now.

When you’re looking at what you’ll gain on the sale of your house, let’s keep it in perspective. If house prices increased year after year at 4 percent per year and then suddenly people were selling their houses for 1 percent less than last year’s asking price, would that be reasonable? If so, then when property is moving up at 20 percent per year for several years and then suddenly you have to sell it for 5 percent less than the prices last year, would that be reasonable? The challenge is when we move from percentages to dollar amounts. If 5 percent represented $5,000, most people wouldn’t blink. It’s when 5 percent represents $25,000 that sellers start to freak.
However, there are stories from the field on how sellers are defending their prices as if their lives depended on it. While sellers are sitting on hundreds of thousands of dollars of equity, they can’t stand the idea of dropping their price by $25,000 or $50,000 to sell it today. The house that was $260,000 in 1999, is now selling for $569,000 today. But some sellers now want that same type appreciation and can’t imagine selling it for less than $589,000. Bringing it down the $20,000 or $40,000 to sell the property seems, well, just not fair.

What’s even scarier are the agents who are defending their prices in a correcting market. I have to keep in mind that nearly half the agents in the country (as well as here in the Capital region) were not in business five years ago. They’ve just now entered a market where prices have to be corrected, dropped -- improved, as it were.
Keep in mind, the market is the market. When it’s time to buy, buy. When it’s time to move, then sell. Work with the market you’re in, not in the market you wish it would be.

Thursday, June 15, 2006

Exodus From Jersey

From the News & Observer:

Dollars follow white collars

More white-collar jobs are moving to North Carolina to take advantage of the state's lower-cost professionals.
Executives with technology and financial service companies say they can slash wage expenses by moving from more-expensive markets in the Northeast and on the West Coast.

For example, this year the American Institute of Certified Public Accountants is moving about 400 positions to Durham from New Jersey and New York.

The move will save an estimated $11 million annually on labor and, to a lesser extent, rent, said Tony Pugliese, who heads the group's new Durham office.

Other companies drawn by skilled and affordable labor include Headway Corporate Resources, a national staffing firm that moved its headquarters to Raleigh from New York City this year, and Arysta LifeScience, a Tokyo company that moved its North American headquarters to Cary this year from San Francisco.

"The New York market was just too inflated because of competition for employees," said Pugliese, who also heads finance and operations for the 340,000-member accountants group. "We had bidding wars to attract workers, and that's just not a healthy environment for a nonprofit like us to be in."
Driving the state's low-cost advantage is cheap housing, relative to major U.S. markets. And that lowers living costs and makes it easier for companies to hold down salaries.

According to, someone earning $93,000 in San Francisco would need to earn just $50,000 in the Raleigh-Cary metropolitan area to maintain the same standard of living. The same goes for a person earning $73,000 annually in the Bergen-Passaic area of New Jersey, part of metropolitan New York. The calculation is based largely on home prices, but it also factors in services and other costs.
The accountants group jobs pay an average annual salary of $53,500, compared with about $66,875 for the same positions in New York and New Jersey. The jobs include accounting, computer programming, database management and editorial positions. In Durham County, the average annual salary is $32,864.
Since 1999, average management wages rose 43 percent in North Carolina, compared with a 32-percent rise in New Jersey and a 37 percent increase nationally, statistics from the Bureau of Labor Statistics show.

Wednesday, June 14, 2006

Core CPI Higher Than Expected

From Bloomberg:

U.S. May Consumer Prices Rise 0.4%; Core Rises 0.3%

Rising gasoline costs and rents propelled U.S. consumer prices higher last month, increasing speculation that Federal Reserve policy makers will raise interest rates later this month.

Prices paid by Americans rose 0.4 percent after April's 0.6 percent increase, the Labor Department said in Washington. Excluding food and fuel, so-called core prices rose a larger- than-forecast 0.3 percent for a third straight month. Core inflation over the last three months was the highest since 1995.

``The implication now is that we could see people start to be concerned about further rate hikes moving forward,'' said Jason Schenker, economist at Wachovia Corp. in Carlotte, North Carolina. ``It looks like we could see higher fed funds rates potentially moving forward.''
Economists expected a 0.4 percent increase in the consumer price index, based on the median of 77 forecasts in a Bloomberg News survey. Forecasts ranged from increases of 0.2 percent to 0.6 percent. Core prices were forecast to rise 0.2 percent.

Could the correction be even more severe?

From U.S. News:

Housing bubble correction could be severe

Contrary to popular belief, the housing market hasn't cooled off that much. In fact, residential real estate prices continue to soar in a number of key metropolitan areas, according to a new study released this week.

That's a good thing, right? Actually, no–because the froth building in housing prices raises the distinct possibility of significant corrections to come in many of those regions.

In the first quarter, home prices nationwide rose an additional 7.3 percent, according to a joint study by the financial services firm National City Corp. and the research firm Global Insight. As a result, there are now 71 metropolitan areas–representing nearly 40 percent of all single-family homes–that can be classified as "extremely overvalued," according to the study. By comparison, only 64 metro regions were considered frothy at the end of last year and only 1 percent were classified as such in the first quarter of 2004.
Under normal circumstances, the fact that housing prices are continuing to rise would be something to cheer. But the housing boom has been going for most of this decade. And housing markets can't be overvalued for too long, as imbalances in residential real estate prices will eventually lead workers to relocate to more affordable cities.

The bottom line: Real estate prices eventually correct themselves. And unfortunately for homeowners, it often takes years before home prices start to rise again, especially after a big run up.

National City recently studied 66 major metro regions over the past 21 years that suffered through a 10 percent or greater decline in prices for at least a two-year period of time. It found that home prices, once they begin to correct, tend to decline 17 percent on average before markets heal themselves.

"And the average duration of these adjustments is 3.5 years," says DeKaser.

So what about families who recently bought into one of these "extremely overvalued" markets in hopes of turning a fast buck? "I extend them my deepest sympathies," says DeKaser.

Is Any Land Sacred?

From the Star Ledger:

Developer agrees to fix collapsed Newark graves

Jewish leaders said yesterday they have worked out an agreement with a Newark housing developer to fix collapsed graves in a 126-year-old cemetery adjacent to a South Orange Avenue construction site.

The leaders said they were satisfied with the developer's promise to finish rebuilding a retaining wall whose collapse likely caused the graves' ruin. So they won't seek a stop-work order from the city.
The graves drew attention from devout Jews Monday after a rabbi from the Brooklyn-based burial society Chesed Shel Emes spied fresh dirt and tumbled tombstones near the edge of Ortiz's construction site, which is at the corner of South Orange Avenue and South 19th Street. Members of the society called it a clear case of desecration, and called police, who sent a crime scene investigator. Television crews showed up, and by day's end the cemetery was crawling with people.

Late Monday, volunteers from the Chesed Shel Emes said they found bones from one of the collapsed graves, which they immediately placed back into the earth.
Ortiz, who started building 13 three-family homes at the site in March, said he's been dealing with the cemetery's caretaker, Sanford Epstein, from the get-go. But he promised to proceed cautiously.

NJ Unemployment Dips In May

From the Star Ledger:

Garden State growing jobs

New Jersey employers created 6,900 jobs in May as the unemployment rate declined from 5.1 percent to 5 percent, state labor officials said Tuesday in an upbeat jobs report.

The unemployment rate was higher than the national rate of 4.6 percent. But the pace of job creation was stronger in the state than in the nation in May, when the United States added just 75,000 jobs.

"This is an encouraging number, particularly given the weak gains that the national economy had in May," said Joseph J. Seneca, a Rutgers University economist and chairman of the state Council of Economic Advisers.

"Four straight months of job gains and record-high employment levels are good signs for our economy," said David J. Socolow, acting commissioner of the state Department of Labor and Workforce Development.

Economists were especially encouraged that all of May's job gains came in the private sector. Those jobs are considered more valuable because they create tax revenues, rather than use them, and they are considered a better barometer of overall economic health than government jobs.
Jobs also were added in education and health services, as well as in leisure and hospitality. Manufacturing, which has lost hundreds of thousands of jobs over the past several decades, continued to slide.

Government jobs fell by 800 and information jobs declined by 500.

Construction was unchanged. Higher interest rates have cooled a red-hot housing market, putting the lid on construction hiring.

Tuesday, June 13, 2006

Core PPI Rises

From Reuters:

Producer prices up more than expected

U.S. producer prices excluding energy and food rose faster than expected last month and high gasoline prices boosted otherwise tepid retail sales, the government said on Tuesday in reports that signal inflationary pressures.

U.S. producer prices rose just 0.2 percent last month as food costs fell, but prices outside of food and energy rose a steeper-than-expected 0.3 percent. Retail sales in May rose just 0.1 percent, matching Wall Street expectations, with declines in auto, furniture and building material sales.

Analysts said the rise in core producer prices shows the risk that rising prices may be working their way from producers to consumers.

"Pipeline inflation pressures continue to build, and that impression was not dispelled by today's release," said William O'Donnell, head of U.S. interest rate strategy and research at UBS in Stamford, Connecticut.
The producer price report "supports the idea that (the Federal Reserve) will raise rates another 25 basis points on June 29, and the dollar has reacted positively to that," said Alex Beuzelin, foreign exchange market analyst at Ruesch International in Washington.

The consumer price report for May will be released on Wednesday, providing a much broader outlook on inflationary pressures. Analysts expect the 0.4 percent rise in the CPI, while the core rate is expected to rise on 0.2 percent.

State of Housing 2006

For your reading pleasure, from the Joint Center for Housing Studies of Harvard University:

The State of the Nation's Housing 2006

The housing boom came under increasing pressure in 2005. With interest rates rising,
builders in many states responded to slower sales and larger inventories by scaling back on production. Meanwhile, the surge in energy costs hit household budgets just as higher interest rates started to crimp the spending of homeowners with adjustable mortgages.

Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.

Keep in mind these are major assumptions on which to base predictions. To me, this looks like a typical CYA position. Should job and household growth slow, rental markets stay flat, and price appreciation falter, the slowdown will be anything but moderate..

Some other assumptions that the JCHS makes when giving these predictions are strong in-migration, no major loss of employment, and little overbuilding.

Lastly, consider the source. The study is sponsored by some major players in the real estate industry. Fannie Mae, Freddie Mac, the National Association of Realtors, the National Association of Homebuilders, etc.

Unfortunately, I'm on my way to the airport, I'll be out of the country for the next few days. I wish I could have posted something a bit more in-depth on this, but it's 5:20 and the car will be here shortly.

Caveat Emptor!

Monday, June 12, 2006

We Will See A Decline In Home Prices

Interesting piece from NJBiz, a somewhat in-depth discussion with Mr. Jeffrey Otteau:

Housing’s Summertime Chill
A stagnant market for homes could send prices downward
By Shankar P.

If anyone doubted that the state’s runaway housing market of recent years has turned into the Big Slowdown, the latest data from industry watcher Jeffrey Otteau should put such ideas to rest. His Otteau Appraisal Group reported last week that there were 71% more homes on the market in New Jersey at the end of April than at the same time last year. That left the state with a seven-month supply of unsold homes, more than twice the inventory on hand a year ago.

“Even I was surprised,” says Otteau, whose East Brunswick consulting firm has tracked the state’s housing market for 30 years and provides data to clients ranging from banks and Fortune 500 companies to local governments and relocation specialists. “The numbers do cause concern,” he says, “and if they continue, we will see a decline in home prices.”
According to Otteau, 62,000 homes were listed for sale in the state on April 30, compared with 36,000 a year ago. While his data show a 10% increase in median home prices since April 2005, all of it came in the second and third quarters of 2005. Since then, “Home prices have been flat for the past nine months,” Otteau says.

He says they could start to fall this summer if the inventory of unsold homes continues to swell. Price erosion is already setting in at the higher end of the market. “The more expensive homes will stay longer on the market and [when sold] will lose value over the next five to six years,” Otteau says.
Adding to high-end inventory is the fact that about 25% of all new home construction in the state is priced at $1 million and above, according to Otteau. However, he notes, the state has lost 119,000 high-paying jobs over the past five years. “Our economy is no longer creating those upwardly mobile, 35-year-olds with large salaries to buy these homes,” he says.
Markets with the largest inventories of unsold homes include Cumberland, Middlesex, Somerset and Cape May counties. Cumberland had a five-year supply of homes priced from $600,000 to $1 million. Bergen, Burlington and Atlantic counties comprised the next largest tier of areas with unsold up-scale homes.

Otteau says homes priced in the $600,000-to-$1 million range have an average of 10 months of inventory across the state, while those above $1 million have an inventory of 14 months. For homes priced below $600,000 the supply of unsold units averages about six months.
Otteau doesn’t foresee a repeat of the 1989 to 1991 housing bust when home prices fell an average of 15% statewide. If jobs and incomes grow, he says, home prices should stay unchanged over the next three years. But without such gains, he adds, prices could drop from 5% to 10% over the period.

Caveat Emptor!

Northern New Jersey May Residential Sales

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

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

The second graph displays the same sales data (2003-2006) for the first four months of the year. Again, please not the y-axis, this time it does cross at zero.

For those who prefer the hard numbers:

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

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

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

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

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

Data above is GSMLS Sales for Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, and Warren Counties.

Caveat Emptor!

New Taxes For Jersey City

From the Jersey Journal:


Hudson County's Assembly delegation wants to help Jersey City's ailing budget by giving city officials the power to create new taxes, including a controversial 1 percent city payroll tax aimed at companies with 100 or more employees.

The other revenue-generating proposals included in two bills introduced in the Assembly on June 1 would allow Jersey City to charge a 1 percent real estate transfer fee on all homes sold in the city, and would establish a hotel occupancy tax.
The two bills, A-3190 and A-3191, are aimed at cities with at least 150,000 residents, which includes just Jersey City and Newark.

Mayor Jerramiah Healy, who initially pushed for the bills, called the hotel tax and the real estate transfer fee "no brainers" Friday, but stayed away from discussions on the payroll tax.
Healy claims the real estate transfer fee and the hotel tax would each generate roughly $3.5 million annually, and he calls those estimates conservative.

Currently, the state imposes a 5 percent real estate transfer fee, with roughly 20 percent of the proceeds going to the county and the rest to the state coffers. The proposed bill would allow Jersey City to increase the transfer fee from 5 percent to 6 percent and allow it to keep 1 percent of the revenue.

"It is not a fee, it's a tax," said Joe Hottendorf, executive director of Liberty Board of Realtors. "This is directly aimed at homeowners in Jersey City. Why go after people that are bringing ratables to the city? It just doesn't make sense."

Hovnanian To Build 97 Hackensack Homes

From The Herald/Record:

Hackensack OKs town houses

97-unit town house development will be built along River Street on property that's been used by All American Ford car dealership.

The project calls for the one-story building on the property to be razed to make room for 18 residential buildings. Those will consist of two-bedroom town houses with parking garages. The development also will have a clubhouse with a swimming pool.
"Added ratables are always welcomed," Schatz said. "If only all applications could be approved so quickly.''

The application by M&M Investments of Hazlet, a K. Hovnanian company, was sent to the city's construction office in February. A hearing was scheduled in April but was postponed until May 10.
The developer was seeking site-plan approval and exceptions to zoning rules to build the project on the 7.38-acre property. The site fronts River and East Berry streets. The Hackensack River runs along the north and east side. Foschini Memorial Park borders the land on the southeast.
According to paperwork submitted to the construction office, the Riverview Townhouses development will consist of 36 units with 1,986 square feet and 61 units that will be 2,348 square feet.

Bergen Wants Xanadu Sales Tax Dollars

From the Star Ledger:

Bergen asks tax bonanza from Xanadu

Several state lawmakers from Bergen County want to keep a big chunk of the sales tax dollars generated by the Meadowlands Xanadu complex in their neighborhood.

A bill scheduled to be considered by the Senate Transportation Committee today would reserve 60 percent of the sales taxes generated at the shopping and entertainment complex for improvements to Route 3 and Route 17 in Bergen County.

For Bergen County, the plan would mean almost $17 million a year in dedicated funds to help bankroll improvements to local highways in danger of being overwhelmed by new traffic headed to the Xanadu mall.
But critics say that money will come at the expense of residents in other parts of the state, and amount to little more than an additional public subsidy for a project that is already scheduled to benefit from public land and financing, as well as a $150 million rail line.
"This is a terrible bill," said David Pringle, director of the New Jersey Environmental Federation. "Xanadu was labeled a boon to the state economy, now they're going to take money out of the state treasury to help pay for it."
Tittel said he is concerned that if the Xanadu proposal succeeds, lawmakers and builders all over the state will seek to have tax revenues from their projects reserved for improvements that support their developments.

"This is a potato chip," Tittel said. "You can't have just one."

Sunday, June 11, 2006

Weakness at the Jersey Shore

From the Asbury Park Press:

Signs of weakness

It wasn't a pretty picture when Charles Kovach and his wife, Brenda Connolly, first took a look at an octagonal-shaped house on LaReine Avenue in Bradley Beach, a block-and-a-half from the beach.

The home was run-down. It had no insulation or closets.

"It was a disaster," said Connolly, a real estate agent at Diane Turton Realtors in Avon.

But Kovach, who buys residential properties, fixes them up and resells them — also known as "flipping," — saw something and bought the house for just under $500,000 last August. He spent about $200,000 for renovations and other costs, completely transforming the structure. Now he hopes to sell it for $849,000.

But the house has been on the market for three months. A year or two ago, it probably would have already sold.
Last year, real estate investors accounted for 15 to 20 percent of residential sales in Monmouth and Ocean counties, said Jeffrey Otteau, president of the Otteau Appraisal Group, a real estate consulting company in East Brunswick. This year, he estimates it will be less — about 5 percent.

In the near term, Otteau said, investors will be rushing to the sidelines, hurting the market even more.

"Investors will be looking to liquidate and that is going to bring additional supply onto the market and will further weaken the real estate market," he said.

The conditions under which many investors look to buy and sell single-family homes are just no longer present, Otteau said. Typically, they hope that prices will rise quickly and until they can sell, they expect to cover their carrying costs with rents.

Neither is expected to happen. Otteau said the rise in home prices has peaked and will, at best, remain flat for the next three years.

1,100 Historic Condos For Jersey City

From the Star Ledger:


For decades, life and death dramas echoed through the giant buff brick buildings of the old Jersey City Medical Center.

There were the first squalls of 350,000 babies born in the Margaret Hague Maternity Hospital from 1931 to 1979.
Today, the sounds of the city are back.

This time, it's the roar of cranes and shouts of workers restoring the 10 high-rises in what is, by several measures, the largest historic preservation project in state history.

Manhattan developer Metrovest Equities has begun converting the first two buildings of what eventually will become a mini-city of 1,100 condominiums, apartments, shops and restaurants renamed The Beacon.

Listed on the National Register of Historic Places, the medical center is considered the state's largest and most detailed example of art deco architecture, with facades, lobbies and other historically significant areas protected by state law. Developers must restore, not alter them. They are eligible for tax breaks in return.
The $350 million project has plenty of competition in Jersey City. Several towers rising along the city's waterfront are offering buyers new luxury condos a short commute from Manhattan.
The project is the largest ever approved by the state for a 20 percent federal tax credit under the Federal Historic Rehabilitation Tax Credit program, Guzzo said. The credits cannot be used for condos, so Filopoulos said they will be applied to the cost of renovating public and commercial space.
To start, Metrovest is focusing on two buildings, a 22-story building renamed the Capitol and the 21-story Rialto, the former Building B, which served as the hospital's main entrance. The two buildings will contain 315 units.

Units in two more buildings go on sale in September. Sales of the condos, which range from $350,000 for a one-bedroom to $2.3 million for a penthouse with a 4,000-square-foot terrace with wraparound views are brisk, Filopoulos said.

The first new residents are expected to move in early next year. Developers hope the entire 10 buildings will be completed by 2010.

Lowball! 5/24 - 6/11

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

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

The list is straight off the top this week:

MLS# 2210660 - Roxbury Twp. (Victrian)
Original List Price: $199,000
List Price: $180,000
Sales Price: $94,000 (47.8% Loaball, 52.8% off OLP)

MLS# 2101635 - Newark City (Colonial)
Original List Price: $699,900
List Price: $599,999
Sales Price: $350,000 (41.7% Lowball, 50% off OLP)

MLS# 2254058 - Hillside Twp. (CapeCod)
List Price: $269,900
Sales Price: $185,000 (31.5% Lowball)

MLS# 2248565 - Clifton City (HalfDupl)
Original List Price: $299,000
List Price: $269,000
Sales Price: $190,000 (29.4% Lowball, 36.5% off OLP)

MLS# 2041025 - Nutley Twp. (TwnIntUn)
List Price: $499,900
Sales Price: $360,000 (28% Lowball)

MLS# 2245054 - Linden City (CapeCod)
Original List Price: $319,000
List Price: $279,901
Sales Price: $205,000 (26.8% Lowball, 35.7% off OLP)

MLS# 2112093 - Pohatcong Twp. (Colonial)
List Price: $99,999
Sales Price: $75,000 (25% Lowball)

MLS# 2262368 - Denville Twp. (RanchExp)
List Price: $459,900
Sales Price: $345,000 (25% Lowball)

MLS# 2268442 - Pompton Lakes Boro (HalfDupl)
List Price: $264,000
Sales Price: $200,000 (24.2% Lowball)

MLS# 2265508 - Jefferson Twp. (Bungalow)
List Price: $169,900
Sales Price: $130,000 (23.5% Lowball)

MLS# 2252043 - Jefferson Twp. (Ranch)
List Price: $299,000
Sales Price: $232,500 (22.2% Lowball)

MLS# 2255209 - Raritan Boro (Colonial)
List Price: $257,900
Sales Price: $205,000 (20.5% Lowball)

MLS# 2085529 - North Caldwell Boro (Contemp)
Original List Price: $2,740,000
List Price: $2,499,000
Sales Price: $2,000,000 (20% Lowball, 27% off OLP)

MLS# 2256768 - Sandyston Twp. (LogCabin)
List Price: $135,000
Sales Price: $110,000 (18.5% Lowball)

MLS# 2260721 - Roselle Boro (Colonial)
List Price: $219,900
Sales Price: $180,000 (18.1% Lowball)

MLS# 2234416 - Montclair Twp. (Victrian)
List Price: $1,200,000
Sales Price: $999,000 (16.8% Lowball)

MLS# 2228633 - Clark Twp. (CapeCod)
List Price: $404,900
Sales Price: $340,000 (16% Lowball)

MLS# 2237267 - Belleville Twp. (Colonial)
List Price: $299,999
Sales Price: $252,000 (16% Lowball)

MLS# 2103267 - Andover Twp. (Colonial)
List Price: $589,000
Sales Price: $500,000 (15.1% Lowball)

MLS# 2262395 - Roxbury Twp. (CapeCod)
List Price: $374,900
Sales Price: $320,000 (14.6% Lowball)

MLS# 2230169 - Parsippany-Troy Hills Twp. (RanchRas)
List Price: $334,999
Sales Price: $290,000 (13.4% Lowball)

MLS# 2220948 - Parsippany-Troy Hills Twp. (Bungalow)
List Price: $339,900
Sales Price: $294,500 (13.4% Lowball)

MLS# 2234948 - Lake Mohawk Sparta (Colonial)
List Price: $1,148,000
Sales Price: $995,000 (13.3% Lowball)

MLS# 2206145 - Morristown Town (Colonial)
Original List Price: $1,300,000
List Price: $1,149,900
Sales Price: $999,900 (13% Lowball, 23.1% off OLP)

MLS# 2110458 - Wantage Twp. (RanchExp)
Original List Price: $389,500
List Price: $379,500
Sales Price: $330,000 (13% Lowball, 15.3% off OLP)

MLS# 2250663 - Raritan Twp. (Ranch)
List Price: $250,000
Sales Price: $217,500 (13% Lowball)

MLS# 2200943 - Far Hills Boro (CapeCod)
List Price: $1,750,000
Sales Price: $1,525,000 (12.9% Lowball)

MLS# 2266126 - Rutherford Boro (FirstFlr)
List Price: $149,000
Sales Price: $130,000 (12.8% Lowball)

MLS# 2242664 - Bernardsville Boro (Custom)
List Price: $1,525,000
Sales Price: $1,332,000 (12.7% Lowball)

MLS# 2082010 - North Brunswick Twp. (Colonial)
List Price: $599,700
Sales Price: $525,000 (12.5% Lowball)

MLS# 2043004 - Far Hills Boro (Custom)
Original List Price: $3,500,000
List Price: $2,995,000
Sales Price: $2,645,000 (11.7% Lowball, 15.3% off OLP)

MLS# 2092121 - Saddle River Boro (Colonial)
Original List Price: $3,100,000
List Price: $2,995,000
Sales Price: $2,650,000 (11.5% Lowball, 15.3% off OLP)

MLS# 2256331 - South Orange Village Twp. (Colonial)
List Price: $699,000
Sales Price: $620,000 (11.3% Lowball)

MLS# 2258251 - East Hanover Twp. (SplitLev)
Original List Price: $589,900
List Price: $559,900
Sales Price: $500,000 (10.7% Lowball, 15.3% off OLP)

Caveat Emptor!

Worst Market In 10 Years?

It's been a while since we heard anything real-estate related from friend-of-the-blog, Warren Boroson. So this piece, from the Morris County Daily Record, was a bit of a surprise to me.

From the Daily Record:

Sales of homes slow in Morris
By Warren Boroson

May and June are traditionally the best months for real-estate sales, but this May and June have been "very, very slow," says Dan Scher of Ledgewood, who has been selling real estate for 25 years.

It's the worst market he has seen in 10 years, for himself and other agents.

The root of the problem, in his view, is that sellers are stuck in a time warp and refuse to budge from their lofty asking prices.
Times have changed, but many sellers have not.

What has jinxed the market?

Scher says, "The inventory of houses for sale has risen dramatically, interest rates have climbed, gas prices are outrageous and we have a terrible war in the Mideast. The country is in the doldrums."

Then there's the obvious reason: House prices have climbed too high.
Jeffrey G. Otteau, president of the Otteau Appraisal Group, says he has no hard evidence that house prices in New Jersey have declined -- but the latest data aren't in.

His most recent data are for the first quarter of this year, and the next will be for the second quarter -- available at the beginning of July.

But, worrisomely, he points out that the market began slowing in April, at the start of the second quarter. That's when "the bottom fell out of the market." The number of potential buyers declined sharply.
Otteau's latest report, which notes a statewide decline in sales in April, concludes that this is "solid confirmation that the transition to a buyer-controlled market is now complete."
No, the worst won't happen. Frustrated homeowners will NOT be forced to leave their unwanted domiciles to their children because they cannot find buyers. Real-estate agents won't be applying for jobs as greeters at Wal-Mart, competing for positions with journalists who used to write about real-estate activity.

What will happen is: lots more negotiation. That's what is recommended by Keith Gumbinger, vice president of HSH, the mortgage-reporting agency in Pequannock.

I asked him: Why are there some weird people out there gloating over a slowdown? Is it because they are not homeowners and have been choking with envy in recent years at the fortunes that we homeowners have made? (I tell people: "I bought my house for $1.75 and sold it for $4.5 million. Or something like that." Actually, I cleared a mere $500,000.)
Gumbinger acknowledges that it's a different market. "We've passed the peak, we've topped out. There's more room for negotiation now.

"Sellers know that buyers are not lined up 10 deep. And buyers know that while there were once three acceptable houses and 22 bidders, there are now 30 acceptable houses and very few bidders. Instead of asking for 10 percent off, they may ask for 20 percent off.

I thought this was quite fair and balanced, considering the source. However, I do have an issue with the stab, directed at this blog, in this piece. Why Warren? Why lower yourself to insult? Just who are these wierd people choking with envy? Oh, it's us of course! Why don't we just agree to disagree, and stop with the insult and derision?

Even though we've had quite a colorful relationship, Warren, I'm not going retaliate with a volley of insults. Instead, I'm going to thank you. I would like to thank you, publically, for trying to seek more balance in your reporting of real estate.

Caveat Emptor!