Saturday, June 24, 2006

Minnesota on Jersey

This one comes to us all the way from the Grand Forks Herald:

Cooling off on the Jersey shore

When it gets hot in Minnesota, people head to the lake. When it gets hot in New York City, the masses head to the Jersey shore.

When visiting friends in New Jersey this week, we decided to take a Sunday drive to the shore where many New Yorkers have gone to cool off for the past couple of centuries.

No wonder the shore was popular before air conditioning and is still popular today. The temperature was in the mid-90s and the air was stagnant inland, but at the shore it was a perfect 80 degrees and breezy.

The Jersey shore experience is different than going to the lake. The shoreline is about 125 miles long, but every inch of it has been discovered, exploited, developed and fenced off.

Parking near the beach? $20. Purchasing the bracelet that allows you to actually walk on the beach? $7 per adult. Thirsty for something wet? Get out $10.

Boardwalks, restaurants, boutiques, marinas and dance halls dot the beach side of the street while enormous 19th century houses with big wraparound porches, some converted into bed and breakfasts, others into restaurants, line the shore side.

Jammed for blocks behind the enormous homes are rows of wanna-be beach homes within walking distance of the shore. The farther you get from the shore, the smaller the homes get, until they are darn near shacks.
Enormous gut? Let it hang out. Swimming suit three sizes too small? No big deal. Nice tan? Fine, but not necessary. You paid your $7 dollars, show your leg dimples to the world!
The ocean is still beautiful, despite the crowds. Big breakers ebb and flow. Nobody swims, but there is a lot of playing in the big waves. If you walk out in the water a ways, you can for a moment enjoy some unadulterated natural beauty.

Until you look up 500 feet over the water. There, a fleet of airplanes patrols the shore dragging banners behind: "Save on insurance." "All-U-Can Eat Crablegs, $24.95." "Find your dream home today!"

Lowball! 6/11 - 6/24

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# 2258143 - Wayne Twp.(Ranch)
Original List Price: $65,000
List Price: $59,900
Sales Price: $3,5000 (41.6% Lowball, 46.2% off OLP)

MLS# 2225085 - Washington Twp.(Colonial)
List Price: $199,900
Sales Price: $140,000 (30% Lowball)

MLS# 2094182 - Franklin Twp.(Custom)
List Price: $1,299,000
Sales Price: $1,025,000 (21.1% Lowball)

MLS# 2257947 - Bloomingdale Boro(Colonial)
List Price: $379,000
Sales Price: $300,000 (20.8% Lowball)

MLS# 2261675 - Franklin Lakes Boro(Colonial)
List Price: $1,249,000
Sales Price: $999,900 (19.9% Lowball)

MLS# 2099342 - Sandyston Twp.(Ranch)
List Price: $159,900
Sales Price: $130,000 (18.7% Lowball)

MLS# 2052707 - Irvington Twp.(Ranch)
Original List Price: $225,000
List Price: $199,900
Sales Price: $164,500 (17.7% Lowball, 26.9% off OLP)

MLS# 2249227 - Hackensack City(Colonial)
List Price: $439,000
Sales Price: $370,000 (15.7% Lowball)

MLS# 1598757 - Harding Twp.(Custom)
List Price: $6,250,000
Sales Price: $5,272,000 (15.6% Lowball)

MLS# 2277394 - Newark City(Colonial)
List Price: $310,000
Sales Price: $262,500 (15.3% Lowball)

MLS# 2211310 - Millburn Twp.(Custom)
List Price: $2,250,000
Sales Price: $1,950,000 (13.3% Lowball)

MLS# 2250843 - Hope Twp.(Ranch)
List Price: $149,900
Sales Price: $130,000 (13.3% Lowball)

MLS# 2260725 - Bernards Twp.(Colonial)
List Price: $1,149,000
Sales Price: $999,999 (13% Lowball)

MLS# 2232084 - West Orange Twp.(Colonial)
Original List Price: $369,900
List Price: $335,000
Sales Price: $293,000 (12.5% Lowball, 20.8% off OLP)

MLS# 2256588 - North Arlington Boro(Colonial)
List Price: $399,900
Sales Price: $350,000 (12.5% Lowball)

MLS# 2272274 - Montclair Twp.(Bungalow)
List Price: $199,900
Sales Price: $175,000 (12.5% Lowball)

MLS# 2205368 - Califon Boro(Colonial)
List Price: $749,900
Sales Price: $665,000 (11.3% Lowball)

MLS# 2254633 - Ridgewood Village(Colonial)
List Price: $900,000
Sales Price: $800,000 (11.1% Lowball)

MLS# 2235824 - Millburn Twp.(RanchExp)
List Price: $1,350,000
Sales Price: $1,200,000 (11.1% Lowball)

MLS# 2216456 - Montgomery Twp.(Cottage)
Original List Price: $320,000
List Price: $297,900
Sales Price: $265,000 (11% Lowball, 17.2% off OLP)

MLS# 2246138 - Linden City(SplitLev)
Original List Price: $374,900
List Price: $359,500
Sales Price: $320,000 (11% Lowball, 14.6% off OLP)

MLS# 2258302 - North Bergen Twp.(Ranch)
List Price: $449,000
Sales Price: $400,000 (10.9% Lowball)

MLS# 2226156 - Livingston Twp.(Colonial)
Original List Price: $1,059,000
List Price: $849,000
Sales Price: $756,500 (10.9% Lowball, 28.6% off OLP)

MLS# 2252399 - Washington Twp.(Colonial)
List Price: $269,000
Sales Price: $240,000 (10.8% Lowball)

MLS# 2258113 - Clinton Town(Colonial)
Original List Price: $444,900
List Price: $424,900
Sales Price: $380,273 (10.5% Lowball, 14.5% off OLP)

MLS# 2266287 - Lincoln Park Boro(Colonial)
List Price: $479,900
Sales Price: $430,000 (10.4% Lowball)

MLS# 2112891 - Morristown Town(Colonial)
Original List Price: $1,500,000
List Price: $1,450,000
Sales Price: $1,300,000 (10.3% Lowball, 13.3% off OLP)

MLS# 2271049 - Scotch Plains Twp.(Ranch)
Original List Price: $479,000
List Price: $429,000
Sales Price: $385,000 (10.3% Lowball, 19.6% off OLP)

MLS# 2235985 - Nutley Twp.(Colonial)
Original List Price: $419,900
List Price: $389,900
Sales Price: $350,000 (10.2% Lowball, 16.6% off OLP)

MLS# 2246237 - Maplewood Twp.(Colonial)
Original List Price: $759,000
List Price: $724,000
Sales Price: $651,600 (10% Lowball, 14.2% off OLP)

MLS# 2251894 - Chatham Twp.(CapeCod)
Original List Price: $599,900
List Price: $425,000
Sales Price: $385,000 (9.4% Lowball, 35.8% off OLP)

MLS# 2108141 - Washington Boro(Colonial)
Original List Price: $164,900
List Price: $149,000
Sales Price: $135,000 (9.4% Lowball, 18.1% off OLP)

Caveat Emptor!

NJ State Budget Deadline Approaching

From the Star Ledger:

Sales tax proposal stirs budget trouble in Trenton

Slashing state aid to schools, towns and hospitals by $860 million. Closing casinos, state parks and campgrounds over the holiday weekend if a new state budget is not in place.

Those doomsday scenarios were outlined by administration officials in a series of internal memos as tensions mounted yesterday between Gov. Jon Corzine and Assembly Democrats over the governor's proposed sales tax increase.
State Treasurer Bradley Abelow yesterday sent a memo to several department heads spelling out what the governor had in mind in that "unlikely event." He ordered his fellow cabinet members to iden tify detailed cuts of $300 million in state aid, $500 million in school aid and $60 million in aid to hospitals for charity care.
"It is disappointing that an administration with so much credibil ity would issue a threat that is so incredulous," Roberts said in a statement. "This is a curious approach to building consensus with the Legislature on a balanced and responsible budget."

William Dressel, executive direc tor of the State League of municipalities called the specter of deep cuts in municipal aid "totally unacceptable."

"Right now we're looking at unprecedented property tax increases. This would exacerbate that problem. We should be talking about property tax reform, not catastrophic cuts," he said. "I just hope they lock themselves in the Statehouse and don't come out until they resolve this situation. It's going to take that kind of leader ship."
Corzine has also ordered his cabinet to prepare for a government shutdown should the deadline be missed. There is precedent for wiggle room: Last year's budget was not signed until the morning of July 2, but there was no shutdown.
Internal memos drafted by Cor zine administration officials detail how the state would shutter its 39 state parks and historic sites and cancel campground reservations on the holiday weekend, cease road construction projects, and shut down Atlantic City casinos, which require state regulators to be on hand. "Essential" state workers, such as State Police, emergency workers and prison staff would stay on the job.

Friday, June 23, 2006

Prudent Lending

If there was ever a sign that the market has topped, and is struggling to stay afloat, here it is.

From the Financial Times:

Lenders set to launch the 'five-minute mortgage'

A number of specialist mortgage lenders are drawing up plans for instant mortgage approvals that would give house hunters access to immediate mortgage offers without even requiring them to obtain a formal property valuation.

The move comes as strong growth in the availability of electronic information accelerates the process of securing finance on property purchases. Fierce competition among lenders is also driving greater product innovation as they seek new ways to attract business.
The new service could mean that home buyers are able to secure an unconditional loan in a matter of minutes rather than the typical one or two-week time frame they currently face.
However, some property experts have voiced concerns over these unconditional offers. Melanie Bien at Savills Private Finance, says: "They do look extremely risky. Lenders want evidence that the property is worth what is borrowed and without this they could end up with their fingers being burnt."

Reading this piece makes me ill. The only reason for the 5-minute loan is to enable impulse-purchasing of homes.

Can anyone help me understand why a one week timeframe to secure funding is a problem? Because, well, I can't really think of any reason at all.

Contrarians take notice, if this piece represents the state of the market, the burst of this bubble is going to be painful.


No Pool For Rule Breaker

From the Record/Herald:

Feud keeps Ridgefield family from using pool

Theodoros "Ted" Papas has the nicest pool on the block.

His 5-year-old daughter calls it "the beach." Some in the neighborhood call it the "Taj Mahal" of pools.

But no one is wiling away the hot summer days in the $80,000 oasis, built on the edge of a 30-foot cliff in Ridgefield.

Papas and his family have been banned from the back yard because of an escalating spat with borough officials and his neighbor, Joseph N. Deguilmo.
Officials revoked permits for the pool and deck, saying a former building official mistakenly overlooked deviations from the original building plans. They have fined Papas $6,000 for three building violations, plus another $1,500 every day the pool remains out of compliance – and they have banned him from his own back yard until the violations are resolved.
The pool fight came to a head on Father's Day, when Papas illegally held a party with about 10 friends and their children. Deguilmo called police, who visited the home three times to order the guests out of the pool. On the third trip, police posted a red sign on a gate entrance to the back yard, signaling it was off-limits.
Ridgefield officials say Theodoros "Ted" Papas violated the following three ordinances:

Building a fence higher than 6 feet. The retaining wall around the pool is double that in some places, the borough says.

Paving more than 40 percent of a back yard with impervious materials. The area around the pool is covered with brick pavers.

Building without a permit. Papas moved part of the retaining wall to satisfy the borough but failed to get a permit first.

Old Bridge Bail Out

From the Star Ledger:

Old Bridge bail out is for local open space trust

Middlesex County officials last night agreed to reimburse Old Bridge for $9 million in loan payments that threatened to cripple the township's open space trust fund.

Old Bridge Mayor Jim Phillips, who also is the county treasurer, thanked the freeholders for their unanimous support. "You're bailing us out," Phillips said.

The mayor stressed the county's reimbursements will go to the local open space trust -- not the township's general coffers. He wanted the public to know his plea for help was not a gimmick to balance his municipal budget.

"Not one penny will go into our operating budget," Phillips said in his brief remarks to the board.

The freeholders last night agreed to reimburse Old Bridge annually for the $600,000 to $700,000 debt payments it will be making for the next 18 years to pay off the $9 million loan from the New Jersey Environmental Infrastructure.

The township borrowed the money to acquire a 196-acre tract, known as Cedar Ridge II, off Morganville Road near the township high school.

A prior administration seized the property through eminent domain to block a developer from building 139 houses on the land. Originally, the township expected the land would cost $6 million and Old Bridge secured a $2 million grant from the county open space trust to help acquire and preserve it.

During the condemnation proceeding, however, the courts concluded the land's true value was $18 million. Phillips said that when he took office he had attorneys review the case to determine whether an appeal could succeed. The attorneys advised against it, he said.
Phillips said now that the county agreed to reimburse Old Bridge, the township can pursue its goal of acquiring the Cottrell Farm near the municipal complex, where a developer proposes to build commercial space, townhouses and apartments.

Thursday, June 22, 2006

Price Reduced! 6/4 - 6/22

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.

The list is (mostly) straight off the top:

MLS# 2288307 - Little Falls, NJ (Ranch)
Previous Price $350,000
List Price $265,000 (Price Reduced 24.3%)

MLS# 2278701 - Springfield, NJ (Colonial)
Original List Price $499,000
Previous Price $450,000
List Price $349,900 (Price Reduced 22%, 29.9% off OLP)

MLS# 2278848 - East Amwell, NJ (Colonial)
Previous Price $895,000
List Price $699,000 (Price Reduced 21.9%)

MLS# 2260619 - Stillwater, NJ (Ranch)
Previous Price $245,000
List Price $199,000 (Price Reduced 18.8%)

MLS# 2283463 - Wayne, NJ (Develpmt)
Previous Price $489,000
List Price $399,000 (Price Reduced 18.4%)

MLS# 2274620 - Montclair, NJ (Colonial)
Previous Price $729,900
List Price $598,000 (Price Reduced 18.1%)

MLS# 2270141 - Franklin Lakes, NJ (Colonial)
Original List Price $924,900
Previous Price $849,900
List Price $699,900 (Price Reduced 17.4%, 24.3% off OLP)

MLS# 2283592 Elizabeth, NJ (Colonial)
Previous Price $470,000
List Price $390,000 (Price Reduced 17%)

MLS# 2100785 - Hackettstown, NJ (Victorian)
Previous Price $598,000
List Price $498,000 (Price Reduced 16.7%)

MLS# 2245059 - Hillsborough, NJ (Colonial)
Previous Price $1,199,999
List Price $999,999 (Price Reduced 16.7%)

MLS# 2257607 - Scotch Plains, NJ (Colonial)
Previous Price $1,195,900
List Price $999,999 (Price Reduced 16.4%)

MLS# 2255116 - Frankford, NJ (Colonial)
Original List Price $475,000
Previous Price $429,900
List Price $360,000 (Price Reduced 16.3%, 24.2% off OLP)

MLS# 2087523 - Newark, NJ (Colonial)
Previous Price $400,000
List Price $335,000 (Price Reduced 16.3%)

MLS# 2276200 - North Caldwell, NJ (Colonial)
Previous Price $950,000
List Price $799,000 (Price Reduced 15.9%)

MLS# 2258587 - Harmony, NJ (Colonial)
Original List Price $499,900
Previous Price $449,900
List Price $380,000 (Price Reduced 15.5%, 24% off OLP)

MLS# 2226538 - Blairstown, NJ (Colonial)
Previous Price $650,000
List Price $550,000 (Price Reduced 15.4%)

MLS# 2243794 - Hackensack, NJ (FirstFlr)
Previous Price $230,000
List Price $195,000 (Price Reduced 15.2%)

MLS# 2257607 - Scotch Plains, NJ (Colonial)
Previous PRice $2,350,000
List Price $1,999,000 (Price Reduced 14.9%)

MLS# 2271609 - Denville, NJ (Colonial)
Previous Price $469,900
List Price $399,900 (Price Reduced 14.9%)

MLS# 2241648 - Scotch Plains, NJ (Custom)
Original List Price $1,695,000
Previous Price $1,399,000
List Price $1,199,000 (Price Reduced 14.3%, 29.3% off OLP)

MLS# 2237685 - Wayne, NJ (Colonial)
Original List Price $353,900
Previous Price $349,900
List Price $299,900 (Price Redced 14.3%, 15.3% off OLP)

MLS# 2262252 - Randolph, NJ (Colonial)
Original List Price $749,900
Previous Price $699,900
List Price $599,900 (Price Reduced 14.3%, 20% off OLP)

MLS# 2272654 - Kingwood, NJ (Ranch)
Previous Price $525,000
List Price $450,000 (Price Reduced 14.3%)

MLS# 2287003 - Bound Brook, NJ (Colonial)
Previous Price $349,000
List Price $299,900 (Price Reduced 14.1%)

MLS# 2269011 - Sparta, NJ (Cape Cod)
Previous Price $649,000
List Price $557,900 (Price Reduced 14%)

MLS# 2259908 - Mount Olive, NJ (Colonial)
Previous Price $579,900
List Price $499,900 (Price Reduced 13.8%)

MLS# 2251965 - Westfield, NJ (Victorian)
Previous Price $1,450,000
List Price $1,250,000 (Price Reduced 13.8%)

MLS# 2259815 - Phillipsburg, NJ (Cape Cod)
Previous Price $255,000
List Price $219,900 (Price Reduced 13.8%)

MLS# 2281843 - Summit, NJ (Colonial)
Previous Price $799,900
List Price $ 689,900 (Price Reduced 13.8%)

MLS# 2268787 - Chatham, NJ (Ranch)
Previous Price $740,000
List Price $640,000

MLS# 2233988 - Summit, NJ (Colonial)
Previous Price $1,850,000
List Price $1,600,000 (Price Reduced 13.5%)

MLS# 2110935 - Pohatcong, NJ (Ranch)
Original List Price $256,000
Previous Price $229,900
List Price $199,000 (Price Reduced 13.4%, 22.3% off OLP)

MLS# 2260652 - Clifton, NJ (Custom)
Previous Price $2,599,000
List Price $2,250,000 (Price Reduced 13.4%)

MLS# 2251943 - Fort Lee, NJ (First Flr)
Original List Price $84,900
Previous Price $74,900
List Price $64,900 (Price Reduced 13.4%, 23.6% off OLP)

MLS# 2266086 - Clinton, NJ (Custom)
Previous Price $375,000
List Price $325,000 (Price Reduced 13.3%)

MLS# 2284653 - Bergenfield, NJ (Colonial)
Previous Price $679,000
List Price $589,000 (PRice Reduced 13.3%)

MLS# 2281812 - Montclair, NJ (Colonial)
Previous Price $575,000
List Price $499,000 (Price Reduced 13.2%)

MLS# 2286531 - Hackensack, NJ (Colonial)
Previous Price $1,150,000
List Price $999,000 (Price Reduced 13.1%)

MLS# 2279116 - Millburn, NJ (Colonial)
Previous Price $2,295,000
List Price $1,995,000 (Price Reduced 13.1%)

MLS# 2258916 - Glen Ridge, NJ (Colonial)
Original List Price $529,900
Previous Price $459,900
List Price $399,900 (Price Reduced 13%, 24.5% off OLP)

MLS# 2233170 - Scotch Plains, NJ (Colonial)
Previous Price $1,150,000
List Price $999,999 (Price Reduced 13%)

MLS# 2268598 - Millburn, NJ (Colonial)
Previous Price $2,295,000
List Price $1,999,000 (Price Reduced 12.9%)

MLS# 2255951 - Morris Twp, NJ (Colonial)
Previous Price $1,950,000
List Price $1,750,000 (Price Reduced 12.8%)

This period of time (6/4 - 6/22) saw 4289 price reductions. The average price reduction was 4.3%, which represents a total dollar amount of $102,787,035.

Caveat Emptor!

More On Hovnanian's Jersey City Development

Update on the Hovnanian/Equity Residential development in Jersey City.

From the Record/Herald:

The two towers

Two 500-foot towers with 901 housing units will rise above the Jersey City waterfront as a more affordable alternative to Manhattan, two developers announced Wednesday.

Red Bank's K. Hovnanian and Chicago-based Equity Residential said they each will build a tower on a 1.76-acre parcel bought from Hartz Mountain Industries of Secaucus for $70 million.

The two will target different markets. Hovnanian will build 420 condominiums, mostly one- and two-bedroom apartments. At the lower end, studios are expected to sell for $300,000. And a small number of penthouses will go for $2 million.

Equity Residential's tower will contain 481 apartments. Studios will likely rent for upward of $1,900 and two-bedroom units will probably go for more than $3,000, the company said.

The towers are scheduled to be completed in spring 2009.
Still, there is plenty of local competition for buyers. Just a few blocks away, Donald Trump is building more than 850 up-market units in two towers.

Farther north along the coast, Hovnanian this weekend will begin selling 268 loft apartments and 68 town houses that the company is building in West New York, among several other projects under construction on the waterfront.

Scott Selleck, a broker at NJ Gold Coast Real Estate in West New York, noted that the Montgomery Green condominiums nearby has yet to sell out.

"It's a risky situation," he said. "There is a possibility of oversupply. It may be difficult to move those condos."

He said there is a big demand for rental units in that area, however.

Housing Bubble Impacting Insurance Premiums?

From the AP:

Homeowners Far Away Pay Katrina's Damage

The letter begins: "We're writing to you with what we know is unfortunate news about your Allstate Insurance."

Startled, Marie Collins reached for her glasses, then a magnifying glass and pored over the letter, realizing with a sinking feeling this isn't a standard mailing from the company that insures her home.

It was a cancellation. Her home was being dropped, the letter said, because it's in the path of future hurricanes.

But Collins doesn't live in New Orleans or even Florida. She lives in New York City.

Hurricane Katrina may have made landfall on the Gulf Coast last year, but its impact is being felt hundreds of miles away, as insurers scramble to reduce their exposure to future catastrophes.
Yet hers is one of 30,000 homes the nation's No. 2 insurer, Allstate Corp., is canceling in coastal counties of New York, citing the need to protect itself from future storms. Other major players are following suit: Nationwide Mutual Insurance Co. is no longer writing new policies on the eastern half of Long Island, N.Y., while MetLife Inc. is requiring extra inspections and expensive storm shutters for new customers living within 5 miles of salt water.

It's a strategy of retreat that's unfolded before: After Hurricane Andrew in 1992, insurers drastically scaled back their presence in Florida, forcing residents into the expensive, state-run insurance pool. The difference is that now insurers are not just shedding policies in traditional hurricane targets such as Florida, but all along the eastern seaboard.
Even though the Northeast has not had a direct hit in decades, the high replacement value of homes there makes it an especially vulnerable spot in an insurer's portfolio.

"Homes in Long Island (N.Y.) have gone up in the last five years between 60 and 70 percent. Believe me, our rates have not gone up by 60 or 70 percent," said Edward M. Liddy, chairman and chief executive of Northbrook-Ill.-based Allstate. "You look at our exposure and you say 'We want to have enough capital to protect and care for all our 17 million households across the country.' To do that, you may have to reduce your exposure in a small way in other areas."

Those in the industry stress that a single massive event like Katrina can wipe out years of savings, putting an entire company with policyholders all over the nation at risk.

"The market isn't soft. It isn't even slow. It's dead"

From the Journal News:

Region's housing market deflates

It's over.

The crazed phase of frenetic home buying in Westchester, Rockland and Putnam counties has screeched to a halt — leaving some industry experts wondering if the sound they hear now is the housing bubble bursting.

"The market isn't soft. It isn't even slow. It's dead," said Liz Rosenblatt, an agent with Fuerst & Fuerst Inc., a real estate firm in New Hempstead.

Scott Stiefvater, a broker-owner at Stiefvater Real Estate Inc. in Pelham, said prospective homeowners are still looking at properties. "They just aren't buying," he said. "I'm getting a little worried."

After nearly seven years of unprecedented strength, the housing market has taken an unexpectedly steep slide, real estate professionals throughout the Lower Hudson Valley concur. It's gone from multiple offers for more than asking price just hours after properties were listed for sale to no offers at all, even after price reductions.
The number of homes on the market in Westchester and Putnam counties has swelled from about 1,000 at the end of the first quarter of 2005 to about 1,500 at the end of the first quarter this year. In Rockland, inventory soared from 734 at the end of the first quarter of 2005 to 1,325 at the end of the first quarter this year.

Real estate brokers have concerns because inventory continues to grow, at an average pace of five to 10 listings in most communities each week. Stiefvater said there usually are about 25 homes for sale in Pelham. Now, he added, it has climbed to more than 80. In Clarkstown, Rosenblatt said, there usually are about six residential properties for sale. "Right now, we have about 45," she said.
In Westchester and Putnam, for example, the report released in April shows that there were 1,823 closings in the first quarter of this year, down 9 percent from a year earlier. Single-family home sales fell 14 percent, compared to the first quarter of 2005, while co-op sales slipped 5.7 percent in that same period. Only condominium sales were strong, posting a gain of 3.8 percent.

In Putnam, first-quarter home sales were 11 percent lower this year than 12 months earlier, the report continued. Rockland had a more modest decline in the first quarter, when 323 homes and 134 condominiums were sold, compared with 325 and 136, respectively.

Real estate agents and brokers speculate that second-quarter statistics will show an even steeper decline in sales.

NJ Highways Encourage Sprawl

From the Courier Post:

Highways said to speed travel, contribute to sprawl

Traveling across New Jersey would be more difficult, the state would be poorer and cities would be a lot more crowded if not for the interstate highways crisscrossing the Garden State.

The drawback, transportation experts say, is the U.S. interstate system -- which is 50 years old this month -- encourages people to live far from work and school and leads to suburban sprawl.
In New Jersey, interstates 80, 78 and 287, combined with the New Jersey Turnpike and other major roads like the Garden State Parkway, give people the freedom to engage in that most American of activities -- driving on the open road, experts say. The turnpike precedes the interstates; construction began in 1949, seven years before President Eisenhower authorized the interstate system to be built.

Rutgers University transportation expert Martin Robins said the interstates and connecting state and local roads have opened up rural western New Jersey to economic development. But more and more people are fleeing larger cities to buy bigger homes in suburbia or farther out in "exurbia," where home prices and property taxes are lower.

As commuting times increase and traffic jams grow bigger, people have less time to spend with their families, said Jim Coyle, who heads the Gateway Regional Chamber of Commerce in Elizabeth. People have the option of deciding whether to live close to work or far from it.

"Downtowns are no longer the focus of economic activity. As people have moved, jobs have moved as well. I do know people who spend hours commuting each day," he said. "I put it down to personal choice. Everybody knows what the tradeoff is."

McGreevy Moves To Plainfield?

From the Star Ledger:

A Plainfield mansion for McGreevey and partner

Former Gov. James E. McGreevey and his partner, Mark O'Donnell, are about to purchase a 17-room, $1.4 million home in Plainfield's historic Sleepy Hollow neighborhood, according to two people with direct knowledge of the deal.

The ivy-covered Georgian Colonial boasts eight bedrooms, five fireplaces and four bathrooms. The neighborhood is home to several local politicians, including former Plainfield Mayor Al McWilliams and Assemblyman Jerry Green (D-Union).

McGreevey will live in the 92-year-old home with O'Donnell, a successful Manhattan financier who has been dating the former governor for about a year. The couple is expected to close the deal next week, the sources said.
The palatial home, which includes a solarium, a butler's pantry and in-ground swimming pool, sits on 1.7 acres and was originally built for a founder of the New York Stock Exchange. Its gardens were designed by the firm of noted landscape architect Frederick Law Olmsted, who created Central Park.

Somerville to Redevelop Landfill

From the Star Ledger:

Somerville considers future uses for landfill

Somerville has a message for developers hungrily eyeing the borough's largest remaining open- space tract: Us first.

Still smarting from the last plan for revamping the 115-acre site -- which produced nothing for the town but a decade of legal entanglement -- Somerville officials and residents continued to take the lead in refining their vision for the landfill property at a meeting last night.

What emerged were ideas for mixed-use residential, office and carefully chosen retail buildings near the borough train station and housing and commercial buildings on the land closer to Route 206.
The Hub, the area closest to the borough train station, will primarily become mixed-use residential, office and retail buildings, with businesses carefully selected so as not to draw customers away from the Main Street area, Lane said. The Heights, the steep-sloped area that extends from the center of the property to Route 206, will contain a combination of housing units and commercial or "signature" buildings.
Most participants agreed, and after somewhat narrowing their ideas for The Heights, sent Lane home with requests for specific analyses of the potential fiscal and traffic impact of the changes. Lane said he expects the redevelopment to bring 1,200 residential units to Somerville, which could lead to a population influx that affects the school.

Wednesday, June 21, 2006

Luxury Condos - At What Price?

From Atlanticville (Long Branch):

Redevelopment puts life, business on hold

Resident becomes activist as eminent domain looms

Long Branch resident James Keelen thought he was living the American dream.

Keelen, 49, began operating his business, Keelen Bus Co., at 142 Belmont Ave., in 1992 and just seven years later, purchased a home next door to his company where he is raising his family.

Keelen found his American dream was short-lived when he learned that both his business and home are located in the city's Broadway redevelopment zone and could be slated for eminent domain like homes in other zones.

"This is my whole life," said Keelen in an interview Monday. "Everything I have ever worked for is here, sitting on this property that could be taken from me.

"What if I wanted to give [my company] to my children or sell it and retire?" he asked. "I can't do it. It is all on hold. They have my life on hold."
Keelen said he is not ready to turn his business and home over to the city and has decided to get involved to protect the property he owns from the prospect of eminent domain abuse.
The hardest part for Keelen, though, is planning his future, he said.

"I just want to know what is going to happen," Keelen said. "I don't want to wake up everyday and ask if I still have a home and a job."

While a developer has not yet been designated for the redevelopment area where Keelen's home and business are located, the city has designated Broadway Arts Center (BAC) as the developer for the first nine acres of the entire Broadway redevelopment zone which extends from Second to Memorial Avenues and from Union Avenue to the north and Belmont Avenue to the south.
Redevelopment underway in the Beachfront North, phase II area, known as MTOTSA for Marine and Ocean Terraces and Seaview Avenue, calls for the properties, some of which are slated for eminent domain, to be razed and replaced with luxury condominiums.

Members of the MTOTSA alliance have filed a motion in Superior Court to dismiss condemnation complaints served by the city on 20 residents in the zone and residents are currently awaiting a decision by Judge Lawrence M. Lawson.

In Beachfront South, plans also call for razing the neighborhood and replacing it with luxury condominiums.

The developers of the zone are negotiating with the property owners for the purchase prices of their homes which could result in eminent domain if an agreement is not reached by the July 1 deadline.

These stories about eminent domain abuses are becoming much too commonplace in New Jersey. Why bother even owning property in New Jersey? Property 'ownership' doesn't mean much when local governments can take that property away on a whim.

Caveat Emptor!

7.00% - Here We Come

From Bankrate:

Weekly Home Mortgage Survey

Average mortgage rates for single-family homes in the 10 largest metropolitan areas as of June 21, as compiled by The rates are for 30-year, fixed-rate mortgages for 80 percent of the value of the house. A point is a one-time fee equaling one percent of mortgage.

June 21 Prev. Wk

Boston 6.81 + 0.22 6.74 + 0.16
Chicago 6.98 + 0.05 6.87 + 0.06
Dallas 6.84 + 0.48 6.69 + 0.52
Detroit 6.87 + 0.04 6.79 + 0.00
Houston 6.81 + 0.56 6.68 + 0.59
Los Angeles 6.87 + 0.47 6.73 + 0.49
New York 6.80 + 0.23 6.70 + 0.21
Philadelphia 6.70 + 0.40 6.58 + 0.48
San Francisco 6.93 + 0.24 6.77 + 0.27
DC Metro 6.68 + 0.63 6.53 + 0.74
National Avg 6.83 + 0.33 6.71 + 0.35's national average for a 5-year adjustable mortgage, based on a 30-year loan for 80 percent of the value of a single-family house.

June 21 Prev. Wk

Average 6.49 +0.32 6.31 +0.33

Northern New Jersey Weekly Inventory Update

Please note, the inventory numbers provided this week represent a two week change in inventory. I do not have the inventory data for last week..

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

6/7 - 17,708
6/21 - 18,240 (3% Increase)

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

6/7 - 8,725
6/21 - 9,034 (3.5% Increase)

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

6/7 - 2,568
6/21 - 2,540 (1.1% Decrease)

Where Does The Money Go?

From the Wall Street Journal:

Don't Blame the Latte: The Real Reason You're Not Saving More Is Closer to Home

The U.S. savings rate has fallen sharply since the mid-1980s. In fact, last year, it was negative for the first time since 1933.

At first blush, this collapse in the savings rate seems puzzling. Our incomes have climbed at a healthy clip over the years, easily outstripping growth in spending on key items like food and clothing.

So why do we find it so tough to save? We can't, it seems, blame it all on morning lattes and evenings out. Instead, the big culprits are our two largest expenses: The roof over our head and the cars in our driveway.

Some pundits have argued that the savings rate isn't as low as the official statistics suggest, or that Americans don't need to save so much because they are wealthier than ever. But when I look around, I see plenty of signs of financial distress.

A study sponsored by Putnam Investments estimates that seven million retirees have chosen or felt compelled to return to work. A Pew Research Center survey discovered that 20% of baby boomers had provided financial help to a parent within the past year. Families are also finding it tougher to pay for college, with College Board data showing a 194% increase in annual borrowing through college loans over the past decade.
It might seem like Americans spend too much on clothes, eating out and entertainment. In reality, however, the portion of our spending that's devoted to food and apparel has fallen sharply over the past century.

Tobacco and booze also account for a shrinking share of spending. Meanwhile, the slice of our budget that goes to entertainment and health care isn't much changed from 40 or 50 years ago. Indeed, if you look at all these categories, you might imagine families have ample financial room for maneuver.
Yet we struggle to save -- and the blame seems to lie with two other expenses, transportation and housing.

Our transportation spending jumped sharply in the 1960s and has remained high ever since, accounting for more than 19% of spending in 2002-03. It's easy to see why: The number of passenger vehicles has leapt 270% since 1960, far ahead of the 86% increase in the adult population. We now have one car, van, pickup truck or sport-utility vehicle for every adult.
Meanwhile, housing expenditures have climbed fairly steadily over the past century, and our homes now claim a third of our spending.

More families are buying houses, more folks are purchasing second homes, and houses are getting bigger. According to the Census Bureau, over the past 25 years, the number of second homes has jumped 95% and the size of the typical newly constructed single-family home has ballooned 40%.
"The trend has been to buy the most house you can afford, rather than the amount you need," notes Sophie Beckmann, a financial-planning specialist at A.G. Edwards in St. Louis. "It's the same thing with cars. You see a lot more luxury cars on the road. While you can get by with a $20,000 car, people buy the $40,000 SUV with the leather seats and the TV. There's a lot there that's discretionary."

No More McMansions For Wayne

From the Record/Herald:

Wayne wants to stop 'supersized homes'

If you buy a small building lot, you'll have to settle for a small house.

That premise is embodied in a proposed rule change that would particularly impact the "hot" lake communities where officials say they expect more redevelopment but want it to conform to what's already there.

The Township Council is voting on adoption of an ordinance tonight that aims to prevent "supersized homes" in the lake communities, where log cabins, small ranches and classic Cape Cods built in the '50s and '60s have been the norm. For the past five years, during the latest real-estate boom, such modest homes have been targets for buyers who modify them with major expansions or simply knock them down and build huge mansions on the lots.
Many towns in North Jersey have already instituted such laws to try and stop the construction of "McMansions" -- those monster homes that gobble up entire lots and dwarf homes around them. In Paramus, for example, living space on a 10,000-square-foot lot cannot exceed 3,500 square feet. In Kinnelon, the limit is 2,400 square feet on a 10,000-square-foot lot.
The large-home trend is a national one: In 1950 the average home was 938 square feet. In 2005, the average new home built in the Northeast had a floor area of 2,556 square feet. Nationally that figure was an all-time high of 2,434 square feet, according to the National Association of Home Builders.
"This is occurring at a time when the average family size is actually decreasing," said Township Planner John Szabo.

In Wayne, the average family size in 2000 was 2.86, down from 3.17 in 1980, he said.

15 Blocks Of Redevelopment For Hoboken

From the Jersey Journal:

Hoboken sets vote on redeveloping 15-block area

The City Council is expected tonight to designate 15 blocks in the southwestern portion of the city as an area in need of redevelopment - the latest in a string of new redevelopment zones.

The vote comes one day before the state Assembly is likely to vote on a bill that would significantly curb the power of municipalities to take private property.

But Mayor David Roberts said the 13-acre area - bounded by Paterson Avenue and Observer Highway to the north, and Jersey City to the south and west - would likely meet the more stringent criteria.

The 31 properties within the area comprise a mix of industrial and commercial uses, surface parking, stacked car storage, vacant lots, two residences and a holding area for police horses and other animals.

Roberts said the city will look to create mixed-use commercial and residential, improve the streets and sidewalks, and add trees and open space.

But unlike another longtime redevelopment zone in the northwest, Roberts said the city will not look to award the entire 15-block area to a single developer, choosing instead to encourage individual property owners to develop smaller sites.

New Jersey Population Growth

A number of pieces on the recently released Census population estimates for 2005.

From the Star Ledger:


So far this decade, the ranks of New Jerseyans willing to make that trade-off have swelled, according to census data released yesterday.

The new numbers are population estimates for the state's 566 towns, and they show that most of the state's meager population growth occurred in small communities like Hamburg.

In fact, when towns are grouped by size -- from the smallest tenth to the largest tenth -- the fastest-growing segment is those in the third group from the bottom, with populations between 2,771 and 4,287 in 2000.

These 56 towns saw a nearly 9 percent increase in population -- more than twice the rate of the state as a whole. Put another way, this group of small towns, comprising 2 percent of the state's population, has garnered 6 percent of the state's population growth over the last five years.

"This is a reflection of two forces," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "There's the issue of housing affordability and the receptivity in many of these towns to growth."
New Jersey's largest cities, while experiencing a construction boom, are not seeing a population explosion, according to the census figures. Newark is up 3 percent this decade, while Jersey City is down slightly.
"And it's only perceived economics that brings people here, not real economics. It requires that you discount the value of your time to nothing, and that you are willing to put up with spending all your free time in traffic," he said.

The rush-hour drive from northern Sussex County to Route 80 can take 45 minutes to an hour -- and that doesn't include the time it would then take to get to the ultimate destination.

From the Star Ledger:

2 counties continue to grow

Population figures for Somerset and Hunterdon counties continue to show steady growth, particularly in Montgomery Township, where the number of residents has shot up 30 percent over the last five years, according to U.S. Census figures released yesterday.

Montgomery ranks ninth among the state's 566 municipalities for population increases since 2000, with the latest figures showing 22,741 residents.

Lebanon Borough in Hunterdon County ranks second. Population in the tiny hamlet has risen from 1,065 to 1,749 in the past five years fueled by recent housing developments. Only Woolwich Township in Gloucester County ranks higher.

Towns along the eastern border of Somerset County surrounding the New Brunswick area also have shown double-digit growth rates over the past five years.
Franklin Township, Green Brook and Watchung all rank among the top 40 municipalities for population increases in the state. Watchung's population has shot up 23 percent since 2000 to 6,170 residents, according to the Census figures.

From the Daily Record:

Morris population growth slowing

At the midpoint between decennial censuses, new data released today show the Morris County region as a whole growing at a much smaller rate than it did in the previous decade.

The 2005 population estimates from the U.S. Census Bureau show that population in the typical town in Morris rose by about 3 percent since Census 2000, or less than a half percent a year. Between 1990 and 2000, population rose by more than twice that on average, or 1.1 percent a year.

But that doesn't mean some places aren't growing.

Already, the bureau estimates, the population in four Morris communities has jumped more than 10 percent in five years. Florham Park has registered the largest increase, of nearly a quarter. Mount Arlington, Pequannock and Rockaway Township all have had double digits population increases.

Between 2004 and 2005, Mount Arlington, Pequannock and Denville saw their populations rise the most, the bureau believes.

"The fastest growers are towns with large condo/(apartment)-style housing -- senior or assisted living," said Christine Marion of the Morris County Planning Department.
But there are also several municipalities that census officials believe have lost population, either between 2004 and 2005 or in the previous five years.

Chatham, Lincoln Park, Mine Hill, Rockaway, Victory Gardens and Wharton all have smaller population counts in 2005 than they did in 2000, according to the estimates. And Butler, Madison, Mendham Township, Rockaway, Victory Gardens, Wharton, Hopatcong and Stanhope had fewer residents in 2005 than a year earlier.

The Census Dataset by County can be found here:

Census 2005 Population Estimates (Warning: Large CSV File)

Population Estimate Changes (July 2005 - July 2006)

New Jersey 32,759 0.38%
Atlantic 2,704 1.01%
Bergen 816 0.09%
Burlington 2,087 0.47%
Camden 2,629 0.51%
Cape May -1,175 -1.17%
Cumberland 2,232 1.48%
Essex -3,958 -0.50%
Gloucester 4,126 1.51%
Hudson -1,838 -0.30%
Hunterdon 1,086 0.84%
Mercer 1,875 0.51%
Middlesex 5,851 0.75%
Monmounth 890 0.14%
Morris 3,156 0.65%
Ocean 5,248 0.95%
Passaic 121 0.02%
Salem 1,027 1.57%
Somerset 3,677 1.16%
Sussex 1,013 0.67%
Union 611 0.12%
Warren 581 0.53%

Caveat Emptor!

Tuesday, June 20, 2006

Housing Starts Rise, Permits Fall

From Bloomberg:

U.S. Housing Starts Rose More Than Expected in May

builders worked on backlogs of unfilled orders and used incentives to win new business in a slowing market.

Housing starts rose a greater-than-expected 5 percent to an annual rate of 1.957 million from 1.863 million in April. Building permits, a sign of future construction, fell 2.1 percent to an annual rate of 1.932 million, the Commerce Department said today in Washington.

Unfilled orders are helping to sustain home construction as sales ebb from last year's record. The increase in starts doesn't change the outlook for a slowdown in the housing market that's forecast to reduce U.S. economic growth this year, economists said.
Economists expected May housing starts to rise to a 1.869 million annual rate from April's originally reported pace of 1.849 million, according to the median forecast in a Bloomberg News survey of 60 economists. Estimates ranged from 1.775 million to 2 million. Monthly housing starts averaged an annual rate of 2.08 million units last year.

Building permits were forecast to fall to a 1.95 million pace from an originally reported 1.973 million in April. Housing permits averaged an annual rate of 2.16 million units a month in 2005.
Slowing sales have left a record numbers of unsold homes on the market. There were 565,000 new dwellings and 3.383 million previously owned residences awaiting purchase in April, according to the National Association of Realtors and the Commerce Department.
``I don't think anybody sees the light at the end of the tunnel yet,'' Rassman said. ``There's no indication this slowdown is ending.''

Can Government Land Grabs Be Stopped?

From the Jersey Journal:


The New Jersey state Legislature is considering a plan that would curb the government's power to take private property for economic good - a practice some say has turned the Garden State into a playground for real estate developers.

Lawmakers in the Assembly are expected to vote on Thursday on a bill that would restrict the legal definition of blight and change the criteria municipalities use when adopting redevelopment zones and exercising the power of eminent domain.

municipality can currently create a redevelopment zone when a property meets one of several definitions, including dilapidation, building code violations or other unsafe conditions.

The state also expanded the powers of eminent domain in 1992 by allowing municipalities to consider "under-utilization" or "stagnant" condition of property.

Under the proposed bill, which is being sponsored by Assemblymen Louis Manzo, D-Jersey City; John Burzichelli, D-Paulsboro; and Robert Gordon, D-Fair Lawn, municipalities would no longer consider "under-utilization.

In addition, municipalities would be forced to prove that 80 percent of property within a proposed redevelopment area meets the definition of "classic blight," and that the remaining 20 percent of property is necessary to the project and cannot be achieved by any other means.
John Buonocore, an attorney specializing in condemnation cases who represents several property owners in Hoboken, called the legislation a step in the right direction, but said more needed to be done to determine how developers are selected.

Corzine Plans For Shutdown

From the Star Ledger:

Budget standoff in Trenton

Facing an impasse with Assembly Democrats over his proposed sales tax increase, Gov. Jon Corzine yesterday refused to budge and ordered his Cabinet to prepare for a government shutdown.

It was a day of tough political talk, closed-door meetings and a noisy rally that brought thousands of public employees to the Statehouse complex to cheer the governor's plan. At day's end, legislative leaders stressed that they were working with Corzine to resolve their differences, but there was no immediate sign of compromise.
Facing a July 1 deadline to adopt a balanced budget, the Democratic governor sought to cast Assembly Democrats as fiscally irresponsible and said there was no choice but to raise the sales tax from 6 percent to 7 percent to bring in $1.1 billion.

"We are trying to get recurring revenues, the money coming in, to match the money going out, as opposed to just using the same old song about gimmicks and borrowing," Corzine said in a fiery speech to the labor rally. "Now I don't have a choice this year, in my view. It is a last resort."
Maggie Moran, Corzine's deputy chief of staff, yesterday dispatched a memo to the governor's Cabinet ordering them to draft contingency plans for a "government shutdown." By Thursday, departments must detail for the governor what services are essential and what are nonessential and come up with plans for a shutdown of up to four weeks.

"In the event that the state of New Jersey does not have a balanced budget passed by midnight on June 30, it is important we are prepared for closure of state government," she said. "In the event of a shutdown, no obligations could be incurred except in connection with essential services."

Monday, June 19, 2006

Real Estate Industry a 'Cartel'

From CNN/Money:

Consumer group goes after real estate industry
By Les Christie

A leading consumer rights group, the Consumer Federation of America (CFA), on Monday issued a report charging that real estate industry members act as a cartel to stifle competition, resulting in higher prices and poorer service for homebuyers.

It's the latest episode in the long-running soap opera that pits consumer groups and the government against the real estate industry. The dispute has become increasingly heated in recent years as soaring home prices have resulted in huge commissions for the industry. At the same time, the technology advances that have dramatically lowered costs in investment, travel and other industries have not had a great impact on real estate.

"Many traditional real estate brokerage firms, and their organizations, function as a cartel that tries to set prices and restrict service options," said Stephen Brobeck, CFA's executive director at a press conference in Washington D.C.
Traditional brokers charge high, uniform prices regardless of the quality of the broker involved. Even a newly licensed, inexperienced agent receives the same commission no matter what the level of service offered.
Traditional brokers who work with both seller and buyer in a home sale almost always function as facilitators. Brokers try to make sure a sale is completed (and they get paid), rather than as fiduciary agents acting in the best interests of their clients, as the brokers claim to do.
Brokers "double-dip," promoting their own listings or the listings of their firm over properties better suited for their clients.
Many real estate brokers also sit on state real estate commissions; they make up the majority of all state boards, according to the CFA. They regulate themselves and make rules that disadvantage competing business models.
"Prices should be left up to the marketplace," says Brobeck, "but the cartel still sets the prices."

Glimpse Of The Future

From the AP:

Foreclosures May Jump As ARMs Reset
By J.W. Elphinstone

In 2003, Anita Britten refinanced her two-story brick cottage in Lithonia, Ga. using a hybrid adjustable rate mortgage, or ARM. Her lender reassured her that she could refinance out of the riskier loan into a traditional one when her interest rate started to reset.

Three years later, Britten can't get a new mortgage and her monthly payment has jumped by a third in six months. She can't afford her payments and may face foreclosure if her financial situation doesn't change.

As more ARMs adjust upward and housing prices begin to dip, many Americans like Britten can't refinance and are finding themselves trapped in too-high monthly payments. For those who can't make their payments, foreclosure is the only way out.
For example, Britten's monthly payment jumped from $1,079 to $1,340 at the beginning of this year. It rose again on June 1 by another $104 and is scheduled to increase again in December. Britten, who is also paying off student loans, went to a credit counseling service to help her avoid foreclosure.
"ARMs are a ticking time bomb," said Brad Geisen, president and chief executive of property tracker "Through 2006 and 2007, I'm pretty sure we'll see a high volume of foreclosures."
In 2002, Christopher Jones, 32, refinanced into a hybrid ARM with plans to refinance again when the rate started to readjust. At the time, his downtown Atlanta house appraised for $108,000.

Now, his monthly payments have shot up, but Jones can't sell his house for more than $84,000 and he can't get an appraisal for more than $85,000.

The appraisal firm told Jones that the value of houses in his neighborhood have fallen victim to a cooling market. With no other options left, Jones has decided to pack it in and foreclose on the house.

"I'm just going to take the loss," he said. "That's all I can do."
Unfortunately, during a runaway market, many buyers, sellers and mortgage brokers were more excited about making deals than making smart deals, and the fallout has just begun.

Homebuilder Confidence At 11-Year Lows

From Bloomberg:

Homebuilder Confidence in U.S. Declines to an 11-Year Low

Confidence among U.S. homebuilders dropped this month to the lowest in more than 11 years as higher mortgage rates caused sales to fall.

The National Association of Home Builders/Wells Fargo's index of builder confidence declined to 42, the lowest since April 1995, from 46 in May, the Washington-based association said today. A number below 50 means pessimists outnumber optimists. The index hasn't increased for the last eight months, the longest such stretch since 1994.

Fewer home purchases and less building this year will erode consumer spending and slow the pace of economic growth, economists said. Today's report also showed a decline in builders' sales expectations and traffic of prospective buyers.
A measure of sales expectations for the next six months fell to 50 from 55, and the index of buyer traffic declined to 29 from 33. Both were the lowest since March 1995. The builders group's index of current sales fell to 47, the lowest since May 1995, from 50.
Confidence fell in all four regions this month, with the biggest decrease occurring in the Northeast, which plunged to 40 from 47. The Midwest declined to 25 from 29, the South fell to 49 from 51 and the West declined one point to 61.
The number of homes available for sale is 35 percent higher than it was a year ago, according to a Wachovia Securities report on June 6 by analyst Carl Reichardt. The report said the housing slowdown is ``worse than we thought.'' There were 565,000 new homes for sale at the end of April, a record.

Readership Keeps Growing

We've reached a major milestone this week, 500,000 hits!

Momentum has been growing steadily. Each week brings more hits and visits than the last. It took us six months to hit 100,000, but only two more to bring that total to 250,000. In only two more months, we've managed to hit a major milestone, the 500,000 mark. I'm sure we'll break a million before the summer is through.

I, again, want to thank all the readers and contributors for making this site a success. But even more important, for turning this blog into a community.

We're averaging approximately 1,900 unique visitors a day, up from 1,500 in April. Hits have increased to 3,500 a day from 3,000 over the same time period.

As an FYI, I'll be travelling tomorrow, so my input will be light. Can't wait to be back in Jersey.

Caveat Emptor!

Homes Getting Too Big?

From RealtyTimes:

New Homes: Will The Big Home Downsize?
by Blanche Evans

As city planners, developers, builders, and Realtors look to the future of real estate, one question is on everyone's minds -- are homes getting too big?

Surprising no one, the U.S. Census department has found that new homes today are "substantially larger and packed with more amenities than their predecessors of 30 years ago."

"Between 1975 and 2005, the portion of new homes built with central air conditioning has risen 43 percent, while the portion of homes built with fewer than two bathrooms has fallen from 41 percent to just 4 percent," noted Jerry Howard, chief executive officer of the National Association of Home Builders (NAHB). "Meanwhile, the share of newly built homes with four or more bedrooms has risen steadily from 21 percent 30 years ago to just shy of 40 percent last year."

In 2005, the average floor area in a new home reached an all-time high of 2,434 square feet -- up from an average 2,349 square feet in 2004 and just 1,645 square feet in 1975. The Northeast had the largest average new-home size for any region last year, at 2,556 square feet. New homes in the Midwest had the smallest square footage, with an average of 2,310 square feet.
Affordability issues may also herald a return to the smaller home. Rising interest rates, an increase in lower-paying jobs, utility costs, and building and repair costs all favor the construction of smaller homes.
Despite the reluctance to think small, the National Association of Home Builders predicts that the average new home in 2010 will be 2200 square feet, not the record-breaking 2,434 square feet of 2005.

Camden Eminient Domain Abuses?

A bit out of the blog area, but an important piece on eminent domain abuses..

From the Courier Post:

Meeting today on possible taking of Cramer Hill homes

A meeting to discuss the possible taking of homes in the Cramer Hill section of the city is scheduled for 6 p.m. today in the Christus Evangelical Lutheran Church, 26th Street and Hayes Avenue.
On Thursday, Superior Court Judge Michael Kassel permitted the city to move forward with plans to build affordable housing in the Cramer Hill area.

The homes would be built by the Michaels Development Co. of Marlton. Several versions of the project have been discussed.

If 162 units are built, the city could take 43 homes from residents by a process called eminent domain, where the city can seize property in the name of the public good. Residents would be paid what the city determines is a fair market price for their homes.

If a smaller, 78-unit version of the Michaels development is approved, no homes would have to be taken.
Randy Primas, the state-appointed chief operating officer, has said no homes will be taken until new homes are ready as replacement housing. But the city has declined to put the promise of replacement housing in writing.

Vernon Redevelopment

From the NJ Herald:

Vernon on road to redevelopment

As Township Planner Fred Suljic put it, redevelopment puts Vernon in the driver's seat to lead developers and residents toward an overarching vision for the town.

Tied to concerns over expanded government powers and public involvement in resort development, the recent approval of three redevelopment zones is expected to transform Vernon into what officials and developers hope will be a year-round destination.
Through redevelopment, officials said they will be able to craft and implement detailed plans for future growth in Vernon and, in the process, attract new jobs, affordable housing opportunities, and commercial development that will stabilize municipal taxes without adding to the local school population. Developers would be attracted to these areas through grants, loans and possibly tax incentives.

"We get to be very selective in what we want to see there," Suljic said. "It all helps the economy of the town."

Some skeptics are troubled by the power that comes along with redevelopment. Over the last several months, residents and township officials have questioned giving the government more authority in planning decisions, including the potential use of eminent domain.

"One of the things that concerns me is redevelopment provides ample opportunity for abuse by unscrupulous officials," El's Way resident Rick Renfrow told the Township Council at Monday's meeting, when council members approved the designation of the three redevelopment areas.
Controlling growth through redevelopment aligns with Vernon with numerous other towns around the state that have taken similar steps toward improving their local economy. While redevelopment is historically associated with healing social blight in cities like Newark and Asbury Park, planning experts said Vernon's goals might prove that redevelopment can work in the shadow of mountains as well.

Sunday, June 18, 2006

Weekend Open Discussion

I'm going to open up the weekend thread earlier than usual. Since my web access is a bit spotty, I'm going to get the topic up now.

Observations about your local areas, comments on news stories or the New Jersey housing bubble, Open House reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let's have them.

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As always, anything goes!

More Eminent Domain To Start Your Day

From the Star Ledger:

When a state can take or save the family farm

When the state wanted open land to create wetlands in 1998, it condemned 20 acres of the Borinski farm in Lincoln Park, despite the farmers' objections.

When Montville wanted an access way to a well on Lotta Lettuce farm last year, it used eminent domain to try to take some of the property, touching off litigation.

And when the state looked for another area to create artificial wetlands, it moved this year to take 17.4 acres of Harvestone Farms in Washington Township, drawing the ire of local officials and state legislators.

Parcels of working farms continue to be eyed by state and local governments for a variety of purposes. As open, level spaces, they can look like welcome mats, farmers say.

But agriculture advocates note that hundreds of millions of tax dollars are now being spent to preserve farms. They point out the state is now giving farmers tax breaks to keep them in business and enforcing the Right to Farm Act, which helps farmer get around conflicts with local officials and neighbors.

"Why then should it permit farms to be exposed to the random application of eminent domain and contradict all those adopted policies?" New Jersey Farm Bureau Executive Director Peter Furey said.

"It seems appropriate to remove all farmland from eminent domain proceedings," Furey said in an interview.

Don't Stonewall Affordable Housing

From the Star Ledger:

Meadows towns pay the price of growth

In the past two years, towns in the Meadowlands have embraced redevelopment proposals to transform old industrial sites and landfills into thousands of housing units and millions of square feet of commercial space.

Now, the bill's coming due.

State housing rules enacted in 2004 require all residential and commercial projects to include a share of housing for poor and moderate-income families. The massive size of the projects -- 7,300 residential units, 27.5 million square feet of commercial, office and warehouse space and 2,750 hotel rooms -- could force towns to build 2,500 affordable units or more.

As the scale of development -- and the housing obligations they trigger -- became better understood, there have been sharp repercussions.
"It took us years to get the (state) to preserve wetlands and set aside natural resource areas for conservation," said Hackensack Riverkeeper Bill Sheehan. "Now, we've got judges telling towns they have to allow 20-story buildings on the banks of the river."
Earlier this month, state Superior Court Judge Jonathan Harris blasted East Rutherford and Carlstadt for stonewalling on affordable housing. He stripped the towns of land-use powers and said a landowner could build two high-rise towers beside the Hackensack, which would include 140 units of affordable housing.

While courts have never ordered towns to build housing, they have been generous in allowing developers to build more units than zoning permitted if they set aside some for the poor.

Cassella and others believe that strategy has proved disastrous, visiting large-scale development on places that aren't equipped to deal with it.