The Jersey Shore Real Estate Bubble

APP Article on Hov

2007-04-29T10:26:00.000-04:00

During its nearly 50-year history, Hovnanian Enterprises has seen ups and downs in the housing market.

You can count this as one of those down times for New Jersey's largest home builder.

The company has lost money for two consecutive quarters and last month said it anticipated a loss in its next quarter as well. Wall Street has pummeled Hovnanian shares, which have dropped more than 35 percent over the last year.

Full article...

Blame it on the Weather

2007-04-24T21:21:00.000-04:00

[Existing-home sales plummeted 8.4 percent from February (6,680,000 units) to March (6,120,000 units) and 11.3 percent since March 2006 according to a report released by the National Association of Realtors (NAR) Tuesday. Erratic weather across the country and unrest in the mortgage industry are being blamed for the drop.

"For the last couple months we've been expecting a weather 'hit' on home sales finalized in March, but looking at overall activity in the first quarter we see that existing-home sales averaged 6.41 million -- a figure that is moderately higher than the sales pace during the second half of 2006," said David Lereah, NAR's chief economist. "We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers."]

Full article...

"I Saw the Bubble Bursting"

2007-04-23T19:53:00.000-04:00

"This past Saturday, I attended a barbecue at my friends' house in Maryland. I was surprised to notice as I pulled up out front that the house next door looked vacant and forlorn. Instead of a for-sale sign, there were pages glued to the front window.

As it turned out, forlorn might have actually translated into "foreclosed," since my friends' neighbors had apparently moved out in the middle of the night. (I can't help wondering whether the site was shown on the new "foreclosure" section Yahoo! (Nasdaq: YHOO) has added to its real estate hub.)"

Full article...

NJ Legislator Tries To Make Matters Worse

2007-04-11T21:05:00.000-04:00

There is probably not a faster way to reduce housing market liquidity than to tell banks they can not foreclose. Simply put, a bank will not make a loan if believes the state will impede its ability to collect their collateral should the home owner not pay principal and interest.

(ROSELLE) - Assembly Deputy Speaker Neil M. Cohen today called for a state-imposed moratorium on subprime mortgage loan foreclosures, pending an investigation into the burgeoning problems in the subprime lending market and its effects on New Jersey homeowners.

"The nation's subprime mortgage loan market is experiencing a total and catastrophic meltdown," said Cohen (D-Union), the chairman of the Assembly Financial Institutions and Insurance Committee. "A moratorium is needed to provided breathing room so regulators, investigators, and lawmakers can get a handle on what this meltdown means for New Jersey homeowners and what potential safeguards may be needed for consumers."

Full article...

Nice Deal For Carla Katz Corzine

2007-04-09T20:23:00.000-04:00

HOBOKEN — State workers' union boss Carla Katz, whose romantic history with Gov. Jon Corzine has caused him political headaches and shadowed recent contract talks, enjoyed a beneficial deal when she purchased a condominium four months ago in the same riverfront building where the governor resides.

So rare were the terms of Katz's $1.1 million purchase that only one other buyer of condominium units in the Hudson Tea Building got a better price in all of 2006, in terms of the ratio of the purchase price to a unit's assessed value.

And that buyer was a limited liability corporation consisting of three men whose names are listed as executives in the company that owns the building and is selling its condominiums — Toll Brothers of Horsham, Pa., a suburb north of Philadelphia.

Full article...

And according to Redbankgreen a judge from Little Silver will be taking a look into the matter.

Rumson House Back on Market - 2 Years After Original Listing

2007-04-05T18:12:00.000-04:00

An alert reader brings to our attention a house in Rumson that is back on the market. Way back in '05 we highlighted this house as an example of how delusional some home sellers had become about how much they thought their homes were worth. Two years after originally putting the house on the market, the owners are still looking for a buyer. (I think the home might have been rented out for awhile in the interim.)

"Hey our favorite Rumson house that we have been following is back on the MLS. Original list price in April 2005-$939,000. Current list price-$679,000."

Eastern Monmouth MLS at 4116

2007-03-28T19:23:00.000-04:00

At this time last year there were 3509 homes on the Eastern Monmouth MLS.

Inventories hit a record 4772 in September of 2006.

Sub Prime Problems Hit Local Bank

2007-03-27T19:37:00.000-04:00

"OceanFirst Financial Corp. said Monday it could be forced to buy back as much as $47 million in delinquent subprime real estate loans made last year by a mortgage subsidiary.

Problems at the subsidiary, Columbia Home Loans LLC of Valhalla, N.Y., have already caused OceanFirst, which operates the largest bank based in Ocean County, to restate its fourth-quarter earnings. Instead of a $4.6 million profit, the bank said late Friday it lost $1.6 million."

Full article...

Bad Day for Builders

2007-03-27T19:34:00.000-04:00

Tomorrow is going to be a bad day for home builders. Beazer's stock is down 15% in after hours trading.

NEW YORK, March 27 (Reuters) - U.S. authorities are investigating the lending practices and some other dealings at Beazer Homes USA Inc. (BZH.N: Quote, Profile , Research), one of the largest U.S. home builders, BusinessWeek reported on Tuesday, and Beazer's stock fell nearly 17 percent in after-hours trading.

Beazer Homes said in a statement it could not comment on or verify any investigation, but added, "However, we will fully cooperate with any investigation by any government agency."

Full article...

Asbury Park Press Addresses Sub Prime Issues

2007-03-19T20:03:00.000-04:00

The APP has some article about the sub-prime mess and its effects on the local area. It's nice to see the APP jump on board. While the mainstream media is just waking up to the sub-prime problems, we took a look at this issue as far back as last August.

Here is what I said on August 21, 2006.

Wall Street is loosing its appetite for sub-prime, no doc loans and other exotic types of mortgages. When the mortgage companies loose the ability to sell the riskier mortgages to investors, they will stop offering these types of loans to certain home buyers. It looks like sub-prime lenders are scaling back these knds of loans already.

From the APP snip...

[Experts say the question this year in real estate-rich New Jersey is whether homeowners will be able to handle the added debt.

"What we're realizing now, and it's a hard lesson, is that the housing market goes down as well as up," said Rutgers University professor Joseph Seneca, who leads the New Jersey Council of Economic Advisors. "These things are amplified on the most vulnerable in the market."]

Full article...

"Deadline set for Kara plan"

2007-03-17T10:29:00.000-04:00

From the Asbury Park Press

A U.S. bankruptcy judge has ruled that Kara Homes Inc. must come up with a reorganization plan within 30 days or begin to pay its secured creditors interest.

Judge Michael B. Kaplan rejected Kara's argument that its business consisted of more than building and selling homes, which would have given the company more time under bankruptcy law to determine how it would emerge from bankruptcy.

East Brunswick-based Kara, one of the Shore's biggest home builders, filed for Chapter 11 bankruptcy last October.

But at Least Hoboken Did Well

2007-03-15T21:28:00.000-04:00

March 15 (Bloomberg) -- Toll Brothers Inc. Chief Executive Officer Robert Toll said the spring selling season has been ``pretty much a bust'' and he can't predict when the housing recovery will begin.

``When will the market rebound?'' Toll said at a conference in Las Vegas today. ``Who knows? The Shadow knows. I have no idea. I would've thought that it would've rebounded by now and I would've been dead wrong, and I was.''

Profit at homebuilders has plunged since the five-year housing boom ended a year ago. Rising inventories of unsold homes and hesitation by potential buyers on concern that the price of their house will drop has stifled sales.

Full article...

"Eminent domain reform remained stalled..."

2007-03-15T21:26:00.000-04:00

"TRENTON -- Eminent domain reform remained stalled in the Senate Thursday, as the apparent standoff between an Essex County senator and Gloucester County lawmakers seemingly widened.

On paper it seemed there was compromise, as the Senate Community and Urban Affairs Committee listed a merged substitute of two pieces of legislation -- one sponsored by committee chairman Sen. Ronald Rice, D-Essex, and another sponsored by Sen. Stephen Sweeney and Assemblyman John Burzichelli, both D-Gloucester."

Full article...

"Why Your Home Is Not the Investment You Think It Is"

2007-03-15T21:23:00.000-04:00

"Too many people rely on their home as their primary savings strategy. That's a mistake.

Planning your retirement? Don't bet the house on it.

Your home means a lot of things to you, most of them good. Your home gives comfort and protection to you and your family, and it could well embody all your material hopes and dreams.

But houses have become much more than just places to live. Your home is probably your biggest asset, and the price you could ask for it today is almost certainly much higher than what you paid for it back whenever."

Full article...

Inventory tops 4000

2007-03-12T22:29:00.000-04:00

The MLS for Eastern Monmouth says inventories are 4004. Although the market is supposedly stronger according to anecdotal accounts, it is clear that we are going into the spring selling season with record inventories for our area. Meanwhile, in other parts of the country, it looks like some markets are headed for a complete collapse, especially with sub-prime liquidity drying up.

Take a look at this comment from Ivy Zelman.
"We believe that 40% of the market ... is at risk of significant fallout from tightening credit and increased regulatory scrutiny. In particular, we believe the most pressing areas of concern should be stated income (49% of originations), high CLTV/piggyback (39%), and interest only/negative amortizing loans (23%)...."

Less Blogging

2007-03-01T18:40:00.000-05:00

Unfortuneatly my ability to blog has been curtailed just as things are getting interesting. Also, since the other blogs have done a great job, such as Grims Site, covering other markets, I've tried to limit my postings to info that is only pertinent to the Jersey Shore. As a result, I have not been posting much here lately. If anyone wants to be a guest blogger for awhile let me know and maybe we can arrange something. Send me an e-mail at silvered.little@gmail.com.

It's Going to be Hard to Get a Mortgage

2007-02-25T09:28:00.000-05:00

HARTFORD, Conn. (AP) -- Homeowners with troubled credit histories are finding it harder to get mortgages or refinance homes because softening in the housing market is making lenders less likely to handle riskier loans.

Several lenders of subprime mortgages - used primarily for home equity loans and for people with spotty credit - have shown signs of trouble after the housing bubble popped and more homeowners began defaulting high-interest mortgages.

On Wednesday, shares of Kansas City, Mo.-based Novastar Financial Inc. plunged more than 42 percent to $10.10 per share after the subprime lender posted fourth quarter losses of $14.4 million. Company officials set aside $45 million in anticipation of defaulting mortgages and said they were unsure Novastar would turn a profit in the next five years.

Full article...

Bubble Info Here

2007-02-22T20:53:00.000-05:00

Since my blogging has been slow lately, it probably worth taking a look at the Seeking Alpha Website for relevant housing bubble commentary. Here is the link to Seeking Alpha

"Judy Weil submits: Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can get this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service."

No More Credit; No More Price Gains

2007-02-17T10:19:00.000-05:00

"America's riskiest mortgages are set to pop. Where will the shrapnel land?"

The Economist

"LAST March, ResMAE, a mortgage lender catering to risky borrowers, cut the ribbon on its new headquarters in Brea, California. The sprawling, 135,000-square-foot building dwarfed the company's 458 local employees. But it fitted the firm's outsized ambitions. Less than a year later the company, rather than its ribbon, was facing the chop. This week it said it had filed for bankruptcy and was selling its assets for a diminutive $19m."

Full article...

Housing Construction Plunges

2007-02-17T10:16:00.000-05:00

WASHINGTON — Housing construction plunged to the lowest level in nearly a decade last month as the housing industry continued to struggle with a severe slowdown.

Meanwhile, wholesale prices dropped by 0.6 percent in January, the biggest amount in three months, providing fresh evidence that inflation pressures are easing.

Construction of new homes and apartments plunged by 14.3 percent in January, pushing total activity down to a seasonally adjusted annual rate of 1.408 million units, the Commerce Department reported Friday. Construction starts were up only in the Northeast, a gain of 8.9 percent.

full article...

3928 Houses on the MLS

2007-02-14T21:57:00.000-05:00

Inventories are probably going to hit the 4000 mark in a week or two. Anecdotally, it sounds like houses are moving faster now than they were a few months ago. I would attribute this to sellers finally lowering their prices. I've seen some meaningful price reductions since the start of the year and I'm getting more "price change" notifications in my e-mail.

Too Many Banks

2007-02-11T09:54:00.000-05:00

This article is only marginally real estate related, however, it brings up some good points. The article points out the proliferation of bank branches in many downtown areas of NJ. I've noticed this is Red Bank, Chatham, Hoboken, and other "downtown" areas in the state. While I believe banks have the right to put branches anywhere they want in commercial areas, it is frustrating to see them drive out businesses that people actually come downtown to visit. What's the point of having a downtown shopping district if the only things to shop for is mortgages or CD rates?

"To stand at Fort Lee's Main and Schlosser streets is to be in the middle of a gold rush.

Banks from near and far have flocked to that corner in recent years for a share of northern New Jersey's wealth of deposits. One can turn around in a circle and spot branches of national banks, such as Bank of America Corp. and J.P. Morgan Chase, regional players North Fork Bank and 1st Constitution and local start-ups that include Bank of New Jersey and North Jersey Community Bank."

Full article..

It's Not Over Yet

2007-02-05T19:18:00.000-05:00

WASHINGTON — Housing is proving to be one of the biggest wild cards in the economy in 2007 as analysts are deeply divided about whether the worst in the downturn is over or there is much more pain to go.

Only 9% of economists say the housing decline ended in 2006, according to a USA TODAY survey of 55 economists taken Jan. 18-24. Another 42% said the downturn will end in the first half of the year, and 45% said housing will bottom out in the second half.

"This is one of those hot-button issues," says Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. He estimates the downturn ended last year. "I don't know why people are so pessimistic."

Full article...

"Spring Thaw"

2007-02-04T17:20:00.000-05:00

"It's the dead of winter -- a slower-than-slow time in the real estate world.

But a recent open house in the tony hamlet of Short Hills drew so many people that even the listing agent, Howard Bunn of Keller Williams Realty in Summit, was left scratching his head.

"I've never seen this many people at an open house ever, and I've been doing this for 10 years," he said.

The house, a vacant, five-bedroom fixer-upper built in 1923, was listed at $999,000. An elderly couple that lived there for decades had died within one year of each other. Sitting on a half acre of land, the colonial needed a complete makeover of the slate roof, the kitchen, bathrooms and a paint job. And it needs a homeowner with a lot of spare cash and patience.

Still, surrounded by $1.6 million dollar homes, house hunters were all thinking the same thing: Bargain.

The next day, the house received 11 offers -- all but one of them at list price or higher, Bunn said."

Full article...

"Average increase in value for setting taxes was 209 percent"

2007-02-03T13:56:00.000-05:00

LONG BRANCH — City property owners this week finished receiving their new assessments, all of which are increasing as a result of the city's "vibrant" real estate market, said an official who oversaw the municipal property review.

"Long Branch did very well in the last few years with the redevelopment," said Neil Rubenstein, manager of Realty Appraisal Co., which last year received a $300,000 contract to reassess city properties. "The real estate market is vibrant."

But maybe Long Branch did a little too well. Mayor Adam Schneider said he is in the process of researching what authority he has to revisit the company's findings, noting some assessments have tripled or quadrupled.

Although the average increase was 209 percent, many property owners in the Elberon section saw their assessments triple, said Schneider, who lives in that section.

Full article...

Sub Prime is Getting Crushed

2007-01-27T09:37:00.000-05:00

Sub prime mortgages are experincing a record number of defaults, which is evidenced by the chart above. (Go here to see exactly what the chart represents.) In only the past two days, the index has found another leg down and it does not look like there is a bottom in sight. Lots of the easy money that was lent out the past three years is coming back to haunt the lenders now. This will translate into an increase in foreclosures and bank owned property sales across the country, if it hasn't already.

Otteau Report on the Shore

2007-01-27T09:14:00.000-05:00

"A huge loss in high-paying private sector jobs in New Jersey could affect home sales along the shore while a corresponding rise in government jobs is also bad for the housing market because it drives up property taxes.

Those conclusions come from Jeffrey Otteau, whose Otteau Valuation Group Inc. tracks housing trends for the real estate market. His latest report, the 2007 Real Estate Forecast, contains some dire news about job trends.

“New Jersey has added 59,700 jobs since December 2000 of which 53,700 have been government jobs,” Otteau said.

The private sector has lost about 120,000 of the higher paying jobs in professional and business services, manufacturing, information and financial employment. From a real estate perspective, Otteau said this job loss equates to 31,000 home sales at $750,000 per house or 23,000 at $1 million per structure."

...snip...

“The shore is at great risk here because it is the higher paying jobs that account for vacation-home purchases. New Jersey is losing these jobs, which will greatly reduce demand for vacation homes. A large portion of housing demand is second-home buyers,” Otteau said.

Full article...

"It's by sheer luck Kara Homes went bankrupt.''

2007-01-26T06:37:00.000-05:00

"EDISON — Township officials plan to borrow up to $15 million to be used at a bankruptcy
auction in an effort to buy 27 acres of land Edison hopes to preserve as open space.

The tract, off of Woodland Avenue in north Edison, was owned by the now-bankrupt Kara Homes, an East Brunswick-based developer that planned to build 22 homes priced from $1.35 million on the property. Kara Homes filed for bankruptcy in October."

Full article...

"Correction still unfolding"

2007-01-25T18:27:00.000-05:00

For all of the REALTOR® talk about the real estate market finding a bottom, I don't see much agreement from home builders. Home builder CEOs in the past week and a half, including Beazer, Centex, Meritage and Ryland are all saying that they don't see a bottom yet.

snip...

[The company (Centex) also warned the housing market could still be in the early innings of the current slowdown.

"This housing correction is still unfolding," CEO Eller said. "Although we're seeing some encouraging signs in some markets, it's still too early to call the bottom."]

Full article...

Big Jump In Listings this Week

2007-01-24T20:42:00.000-05:00

...and especially year-over-year.

The MLS for Eastern Monmouth is now at 3852 up from 3777 last week. In the same week last year there were 2975 houses for sale in Eastern Monmouth County.

Anecdotally, it looks like many of the houses that were delisted before the holidays seem to be making their way back on to the MLS at lower prices. I bet we get back to the 4000 count by Superbowl Sunday and go into the "spring buying season" with record levels of inventory.

It's Cheaper to Rent

2007-01-23T21:11:00.000-05:00

OCEAN CITY — Fewer people may be buying a piece of the shore, but more are renting part of it.

Real estate businesses are reporting a surge in rentals even as home sales decline along the coast. An increase in rentals as high as 40 percent has been recorded by some real estate companies. Most are seeing a jump in the 10 to 15 percent range.

Full article...

2007 NJ Consumer Expectations

2007-01-22T21:00:00.000-05:00

TRENTON — Half of New Jersey consumers expect their household will do the same as or worse financially than last year, and state residents are nearly as bearish about business conditions this year, a survey finds.

The fifth annual poll by Fairleigh Dickinson University's Silbermann College of Business finds 47 percent expect business conditions to get worse or stay the same, while only 37 percent expect conditions to improve. The remaining 16 percent were uncertain.

A year ago, only 40 percent expected business conditions to get worse or stay the same over the coming 12 months, while 43 percent expected them to improve.

Snip...
The survey found 38 percent thought housing prices in their neighborhood would go down this year,

Full article...

Another Downgrade

2007-01-22T20:56:00.000-05:00

NEW YORK (Standard & Poor's)
Jan. 22, 2007--Standard & Poor's Ratings Services today lowered its rating on class B-2 from ACE Securities Corp. Home Equity Loan Trust Series 2005-SL1 to 'B' from 'BB+' and placed it on CreditWatch with negative implications (see list). The lowered rating and CreditWatch placement reflect the deteriorating performance of the collateral in the pool. Credit support for this transaction is derived from a combination of subordination, excess interest, and overcollateralization. Credit enhancement is currently projected to fall significantly below the original credit support amount of 13.15%. While actual credit enhancement is 9.74% of the current pool balance, additional losses resulting from foreclosures (approximately $2,682,000) and REOs (approximately $210,000) will likely erode much of the $5,251,200 of overcollateralization. Cumulative losses are $9,075,249 for this transaction, or 3.51% of the original pool balance. As of the December 2006 distribution date, total delinquencies, as a percentage of the current pool principal balance, were 12.65%, and 6.49% were categorized as seriously delinquent (90-plus days, foreclosure, and REO).

Hovnanian Need Less Space

2007-01-21T10:28:00.000-05:00

Hovnanian "the publicly-traded homebuilder that last year moved its corporate headquarters to the heart of Red Bank from Middletown, is scaling back its ambitions in the borough, according to a published report."

Full Story from Redbankgreen.

Listen to Wayno

2007-01-18T21:35:00.000-05:00

Wayne Nef says....

"Again, I would not join in to the rally at this point, I believe this is a dead cat bounce. Once momentum starts to wane I would look to enter short positions across a basket of these stocks since I believe this downturn has further to go. Absorbtion rates in many towns in the Northeast have more than doubled and I believe there is good potential for more houses to hit the market in the spring. Housing prices have been headed down over the past year and I believe they still have further to drop.

The Japanese real estate market took ten years to drop 50% from their highs, and so far, no one has convinced me that it can't happen here. The U.S. housing markets have just had an unprecedented move higher since 1998. I am a firm believer in mean reversion, and unfortunately, when markets overshoot to the upside they oftentimes over correct in the opposite direction as well. All said, I am a housing bear."

Full interview with Wayne, a regular Jersey Guy.

Would Jean approve of this Wayne?

3777 Listings This Week on the MLS

2007-01-17T19:24:00.000-05:00

Last week the count was 3749.

One thing I've noticed over the past few weeks is a number of furniture companies or stores going under. Nationally, one of the bigger furniture makers to seek chapter 11 proctection recently was Rowe Furniture.

Locally though, I noticed that Inspiration Furniture in Manalapan on highway 9 is closing. I once bought a couch from them.

Kara Gets Replacement Loan

2007-01-16T21:32:00.000-05:00

TRENTON — A judge today allowed Kara Homes Inc. to replace a $2.6 million loan from an investment bank with one borrowed from a hedge fund, and he will decide later this month whether an additional $2.4 million can go to the beleaguered home builder.

Kara will use the $2.6 million to pay off investment bank Bear Stearns and to fund its operations through the end of the month.

Full story...

"Real Estate Will Underperform Inflation for Decades"

2007-01-16T18:48:00.000-05:00

Snip...

"If the last 100 years are any indication of the future, expectations of future price appreciation are not a legitimate reason to buy real estate. A large percentage of the current buyers in the real estate boom of the 2000s are buying based on future price appreciation. Unfortunately, this means that the real estate boom of the 2000s is largely based on a myth. As real estate prices return to levels justified by the legitimate reasons, prices will fall in inflation-adjusted terms. "

Full article from Prudent Bear.

I'm Thinking of a New Pricing Model

2007-01-14T10:40:00.000-05:00

When I buy my next house, I'm thinking of going straight to the listing agent and not bothering with hiring my own Realtor. Ideally, if the listing agent wants to get a transaction done, they will have room to cut their commission since there won't be a split.

What I was also thinking though is maybe hiring a Realtor, but only if they were to change their commission structure. The commission structure that exists now does not work for the buyer because the Realtor's interest is in getting the transaction done at the highest price possible.

In order to eliminate this detrimental incentive to the buyer, I propose that the commission for the Realtor representing the buyer be based on a percent discount to the asking price. In short, the higher the discount that the Realtor negotiate, the higher the commission they will receive.

I'd like to hear from some Realtors or readers out there if they think this is a good idea.

Also, you can post anonymously again (you don't need to sign in or register.) Hopefully the spam will be kept to a minimum.

Realtors Turn In Licenses

2007-01-14T10:15:00.000-05:00

From Today's Asbury Park Press

"With home sales down about 20 percent in Monmouth and Ocean counties, real estate agencies are cutting expenses and diversifying their businesses. And as the business gets more competitive, some agents are deciding not to renew their licenses."

snip...

"Since the industry's revenue comes from commissions, when sales slow down, so does its revenue. To cope, agencies are employing a number of strategies. Some are cutting expenses, while others are actually increasing their marketing and spending more on training. Some agencies are diversifying into other areas of business such as insurance. Individually, some agents have decided to take some time off and are putting their real estate licenses on hold."

Full article...

One of the problems with having too many Realtors is that a delusional house seller can always find a Realtor willing to accept a listing that is obviously too high. I think as the Realtor population declines, the remaining Realtors will be able to walk away from listings that have no chance of being sold because of the price.

Old Listings are New Again

2007-01-13T12:13:00.000-05:00

[New Listing! (Sort Of)
Agents are pulling houses off the market and then presenting them as new offerings

Real estate agent Ross Simone wasn't attracting any potential buyers for a house in Mechanicsville, Md., that had sat on the market for months, so last November he took action. He pulled the house out of the regional database of active listings and then immediately reinserted it, changing the property ID number used to track properties over time. The result: The house appeared to be hitting the market for the first time. "It's in the best interests of my client [the seller]," Simone said in a November interview. "I started doing it consistently this year. I do it as much as I can."]

Full article...

Sub Prime Index Continues to Tumble

2007-01-11T18:57:00.000-05:00

This graph shows the price movement of an index that consists of pools of sub-prime mortages. What is essentially shows is that the market for sub-prime mortages expects a higher rate of defaults. (The lower the price of the index, the less probability 100% of the principal of the mortages will be collected.) If you want a good read as to why this is an ominous sign for the housing market, then read this.

3749 Homes on the MLS

2007-01-10T19:30:00.000-05:00

Last week the count was 3655. I'm guessing listing are going to shoot past 4,000 after the superbowl. Given all the nice weather we have been having, I think I would list my house now if I planned on selling.

Asbury Park Press Internet Poll, or Something

2007-01-09T20:26:00.000-05:00

The Asbury Park Press has the following text on their website (see below). In classic APP fashion, it does not appear to link to anything. If someone could find the link, please tell me where it is.

"What's ailing the real estate market?

Are mortgage rates too high? Home prices too high? Buyers fearful of not recouping their investment or not being able to afford a downpayment? Or none of the above?

Now is your chance to sound off. Visit our Web site at www.app.com and click on Business to vote. Readers are also invited to email us their comments. "

APP Web Page

Local Bank Enters the Home Building Business

2007-01-08T19:14:00.000-05:00

Magyar Bank is publicly traded. Ticker = MGYR.

TRENTON — Kara Homes can sell four of its developments at an auction to repay one of its lenders, Magyar Bank, a judge ruled today.

The decision by U.S. Bankruptcy Court Judge Michael B. Kaplan could set the stage for another builder to finish homes for 14 buyers who have contracts and already have spent thousands of dollars in down payments.

The developments, which include a total of 29 single-family lots, are: Danya Estates in Toms River; Hartley Estates in Little Egg Harbor, Prospect Ridge Estates in Stafford and Sterling Acres in Monroe.

Full article...

Listings are Heading Back Up

2007-01-06T11:45:00.000-05:00

Looking at the MLS this morning for Eastern Monmouth County, the number of listings went to 3707 from 3655 on Wednesday. It looks like the end of the year de-lisiting cycle may have ended and people are putting their houses back on the market again after the holidays.

Advice for people holding open houses tomorrow; make sure the Jets and Giants games are on. As a matter of fact, instead of tying a stupid baloon to the for sale sign, put up another sign that says, "The Jets or Giants Game is Currently on Inside."

Report from Cape May

2007-01-05T19:16:00.000-05:00

CAPE MAY COURT HOUSE — Nearly 30 percent fewer properties were bought and sold in Cape May County last year compared with 2005, confirming a definite cooling in a previously hot housing market.

More than 8,300 properties changed hands in 2006, a dip of about 3,500 from the previous year.

“The market has made an adjustment,” said Cape May County Clerk Rita Marie Fulginiti, whose office released the annual totals Thursday. “Our business reflects the ebb and flow of the real estate market.”

In Cape May County, the housing market is dominated by people who do not live in the county full time.

Full article...

Moving the Kara Thread to the Top

2007-01-03T19:24:00.000-05:00

Use this thread to discuss Kara Homes.

Here is the previous post.

3655 Homes on the MLS

2007-01-03T19:17:00.000-05:00

Last week there were 3870 listings. Looking at last year's figures, inventory declined every week between the middle of November and the middle of January. We'll see in a few weeks if the pattern holds this year.

Jersey Foreclosure Info

2007-01-02T19:16:00.000-05:00

"Rising foreclosure rates in New Jersey are likely to remain on the upswing in 2007, but experts say the odds are slim that the increases will signal a crisis for the state’s housing market or its economy.

For the first 11 months of 2006, home mortgage foreclosures in the state were 25,472, up 78 percent from 14,311 for all of 2005, according to Foreclosures.com, a real estate advisory firm in Sacramento, Calif.

Big increases occurred throughout the state. In affluent Bergen County, foreclosures jumped more than tenfold, from 104 in 2005 to 1,367 last year. In Monmouth County, home to many shore communities, foreclosures rose from 883 in 2005 to 1,533 last year."

Full article...

Mortgage Broker Dirty Tricks

2007-01-02T12:07:00.000-05:00

CHICAGO (MarketWatch) -- Brian Diez, a former military man, entered the mortgage business after a career as a stockbroker, figuring the field would offer him an altruistic benefit -- helping families buy their first homes. He learned quickly, however, that not every one of his fellow brokers had their clients' best interests at heart.

"What became clear to me is every company was really interested in selling as many loans as they can, and not really helping clients," said Diez, sales manager for First Class Equities in Oceanside, N.Y. His quest to inform consumers recently prompted him to create a blog on the topic,

See blog.

APP Article

2007-01-01T19:30:00.000-05:00

From the Asbury Park Press "Home Sweet Home"

[Despite the recent fluctuations in real estate prices and sale prices that have fallen short of sellers' expectations, homeownership has proved to be a good long-term investment, financial experts agree.

Buying a home is the largest investment most people will ever make, said Shrikant Nadkarni, a certified public accountant, certified financial planner and shareholder at WithumSmith+Brown PC's Somerville office.

"Owning a home over a long period of time is generally a good investment idea," Nadkarni said. "It brings financial obligations and forces savings through paying down the mortgage while building equity."]

Full article...

Update on Red Bank House Flip

2006-12-29T17:51:00.000-05:00

Redbankgreen has been watching an attempted house flip in Red Bank for the past few months. An update is provided.

"Remember that attempt to flip a house on Madison Avenue we told you about in June?

Well, the house remains unsold 18 months after an investor bought it, at the top of the market, for $475,000. Sara Swanson, the New York woman who oversaw its renovation—and lived amid the disarray of construction—is moving on. And the investor who bankrolled the project has decided to keep the house for himself, we're told." Full story...

I did a little bit of research on my own and noticed that a construction lien was filed with the county clerk for a total claim of $17,720.00 against this property. Also of interest, the contractor that filed the lien claimed he did $72,800.00 worth of work on the property. Therefore, the total out of pocket cost so far is about $547,800 assuming the total amount of the lien is paid off, and not including interest on the $360,000 mortgage (5.50% - 5 year ARM) and property taxes, insurance, etc.

3870 Listings on the Eastern Monmouth MLS

2006-12-28T16:55:00.000-05:00

Last week the count was 4006.

I predict listings will resume an upward trajectory about the third week of January. After all, the Spring selling season begins right after the Super Bowl if you ask a REALTOR®.

Past Crashes

2006-12-28T16:51:00.000-05:00

A Brief, Superficial, and Arbitrary History of Property-Price Collapses

"The Anderson Forecast team at UCLA might restore one’s hope that academic economists fulfill a productive function. Having disparaged the California housing boom through its ascent, a springtime presentation by one of its economists predicted the swoon that has come to pass. Alas, he stumbled. Asked if a real estate crash was in store, he reverted to form: Southern California is in no way comparable to such one-industry towns as Houston, and besides, California had never suffered a real estate meltdown. On the first point, with 2% of adults in California now proudly waving real estate licenses to sell, houses to California today may be as dominant a force as oil to Houston in the 1980s. On the second point, one of the worst real estate debacles in the history of the United States occurred on the ground where he stood."

Full article...

Gloating Renters

2006-12-26T21:24:00.000-05:00

Snip...

[Among all the defiant renters, few roar louder than Killelea, who pays $2,350 a month to rent a snug, two-bedroom craftsman house near Stanford University in Menlo Park, Calif. He figures it would cost him $7,000 a month in mortgage payments and taxes if he owned it.

Most mornings, he sits at a small pine table just off his kitchen and scans emails from acquaintances for any bad news that fits his world view. Before he heads off to work at a bank, he posts the dozen bleakest stories to his Web site - patrick.net/housing/crash.html - under the permanent headline, "U.S. Housing Crash Continues." ]

Full story...

Now You Have to Register to Comment

2006-12-23T14:05:00.000-05:00

As a result of a number of infantile personal and denile of service attacks I am going to require that posters to the comment section register. Hopefully, once all of the idiots are scared away, I can resume anonymous posting again.

Kara is Looking for $40 Million

2006-12-22T10:10:00.000-05:00

BY MICHAEL L. DIAMOND
BUSINESS WRITER

Kara Homes Inc. is seeking a $40 million loan from Bear Stearns to help it build or finish building at least some of the 300 homes that were not constructed or left unfinished when the home builder filed for bankruptcy more than two months ago.

The construction financing plan, spelled out in documents Kara filed with U.S. Bankruptcy Court, is in the initial stages.

Kara first needs approval from Bankruptcy Court Judge Michael B. Kaplan to pay Bear Stearns $75,000 that it would use to study whether it should make the loan. It then would need permission to pay the New York investment firm another $100,000 to complete the transaction.

Full article...

Report from PA; NJ Buyers Mentioned

2006-12-21T12:13:00.000-05:00

snip...

"Experts have said the rate of home appreciation in the Valley was unsustainable. The average home price for 2005 was a record $207,000, up 12.5 percent from 2004, according to statistics from the Lehigh Valley Association of Realtors. It was the housing market's best year ever and the third consecutive year in which existing home prices in the Valley rose 10 percent or more. Homes were selling in a matter of weeks, rather than months.

The market was bolstered by strong demand from home buyers moving to the Valley from more expensive towns in New York and New Jersey, and to a lesser extent the Philadelphia area. The newcomers found Valley home prices more affordable and often offered more than the asking price. Some paid cash for homes they bought here."

Full article...

Brick is the Safest BIg Town

2006-12-21T11:25:00.000-05:00

"This small city near the Jersey shore recorded the lowest rate of violent crime of any town of 75,000 residents or more, according to Morgan Quitno Press, an independent research publisher in Lawrence, Kansas, which used FBI statistics in its analysis. "

Eastern Monmouth MLS at 4006

2006-12-20T18:16:00.000-05:00

On November 29, the count was 4280.

RedBankGreen Covers the Hovnanian Debacle

2006-12-19T20:19:00.000-05:00

RedBankGreen has a write up about Hovnanian's earnings report. Needless to say, the results were pretty bad and the outlook for 2007 is worse than originally expected.

Do any long time Shore residents remember a story from about the early 90s involving a Hovnanian owned yacht, a fire and a 20,000 feet mid-Atlantic abyss? I have a fuzzy memory of a very expensive boat being lost at sea many years ago after all hands were rescued; can anyone remember more about this incident?

"Sellers employ incentives to avoid cutting prices"

2006-12-19T20:15:00.000-05:00

"There was a time not so long ago when houses in Montclair would get five, 10, as many as 20 offers at prices $100,000, $200,000, even $400,000 above what the seller was asking.

McMansions in Middlesex County and high-rises in Hoboken couldn't be built fast enough, fetch ing multiple offers before the shovel hit the ground. Houses sold not just before the "for sale" signs went up, but even before buyers walked through the door; offers were made based on the pictures buyers saw on the Internet."

Full article...

"Holiday Blues" from Kara Homes

2006-12-17T09:03:00.000-05:00

"Holiday blues: Kara Homes bankruptcy turns lives of prospective buyers upside down"

Posted by the Asbury Park Press on 12/17/06

"Mark File is living a "borderline nightmare."

Thinking he was only a week or so away from moving into a new home at Horizons at Birch Hill in Old Bridge, File sold his former house in June and moved his wife and two children into a hotel in Somerset.

Months later, they were still living in a hotel room because their home still wasn't ready. And then on Oct. 5, builder Kara Homes Inc. filed for bankruptcy protection, the day before his home was scheduled for a final inspection.

"It is still depressing going into the holidays," said File, 53, who is now renting a condominium in the same development where his new home stands, unoccupied.

"Sometimes, you feel, like, that you got knocked off your feet somehow," File said. "You didn't see it coming. You don't feel like you deserved it. It is not a nice feeling for the holidays."

File is among the 300 home buyers who had signed contracts and made deposits for homes that were in various stages of construction when Kara filed for bankruptcy. The company said it ran out of cash, blaming a slowdown in the real estate market."

Full article...

Urban Vs. Suburban Living

2006-12-16T10:17:00.000-05:00

This NY Times article describes some of the reasons for the relative strength of the NJ Gold Coast (Jersey City, Hoboken, Edgewater, etc.) versus that of the suburbs.

snip...

Executives from other major home building companies active in New Jersey like Tarragon Properties, K. Hovnanian Homes and the Pinnacle Companies also talked of urban projects as strong performers despite a general market malaise.

Ms. Skarka is a vice president at Lennar Urban Northeast, a division of the national company that is a partner in developing Port Imperial, a $2.1 billion mixed-use project spanning nearly two miles on the Hudson waterfront in Weehawken, West New York and Guttenberg, all a short ferry ride from Manhattan. Lennar is also completing two projects in the Morristown town center and starting one in downtown Atlantic City.

“The suburban market is still moving along” in New Jersey, Ms. Skarka said, despite the severely slowed sales pace and falling prices of the last six months. People are still buying single-family homes, she said, “but as a company, we’ve been focusing on our urban division for a while now because that’s where things are going really well,” and home values are holding up better, too.

snip...

For example, in Edgewater, where Tarragon is opening One Hudson Park, a glass condo tower, sales have been slower than expected. Young professionals are signing contracts in the numbers expected, Mr. Friedman said, but not empty-nesters.

“The empty-nesters have to sell the houses they have,” he said, “and they’re having trouble doing that.”

Full article...

I think the last paragraph says a lot about the state of the market. The natural buyer of an empty nester home in Chatham is the two bedroom seller in Hoboken or Jersey City. The owners of the two bedroom condo are trying to sell into a market with tons of new supply coming on line from Toll, Taragon, Hovnanian, Trump and they can't get the price they need to buy the Chatham home.

Liquidity is Disappearing Quickly

2006-12-16T10:15:00.000-05:00

From Prudent Bear

snip...

"The growth of real-estate based debt is slowing and is causing lower consumer liquidity. The slowdown in household mortgage debt flow SHOULD lead to a recession - BUT the Federal Reserve is determined to prevent one.

The latest economic statistics show that consumers depended on new debt for 90% of their cash flow during 2006. Any decline in debt flow will constrain liquidity and should cause a decline in the growth of consumption and household investment.

We demonstrated in our March, 2006 update and confirmed in our June and September, 2006 updates that consumer liquidity was falling sharply. This report shows that consumers could be setting historic liquidity lows on all of our measures by January 1, 2007. "

Full article...

More About Sub-Prime Loans

2006-12-14T20:51:00.000-05:00

MORTGAGE lending is hardly the raciest business, but it has its moments. “It's a bit like the definition of combat: 59 minutes of boredom followed by a minute of sheer terror,” says Michael Youngblood, an analyst at Friedman, Billings, Ramsey, an investment bank. “And we seem to be going through another one of those minutes now.”

What has set pulses racing is subprime lending—mortgages extended at higher than normal rates to those with weak credit histories. In America, where it is most advanced, this market is under a lot of strain, and so, by extension, is the giant asset-backed securities market that is linked to it. The market for prime mortgages (those extended to higher-quality borrowers) is faring better, though it, too, is showing signs of weakness, exacerbated by cooling house prices. Might these troubles, some wonder, be the canary in the mine, warning of a looming credit crunch as investors, for years free with their money, recoil from risk?

Full article...

And this article from Bloomberg...

Dec. 14 (Bloomberg) -- Fitch Ratings said it will likely lower the credit ratings of more than 300 securities backed by the riskiest mortgages next year, as more funds are removed from reserves set aside to protect bondholders.

The company will probably downgrade about 300 so-called sub- prime bonds this year, Grant Bailey, a director at New York-based Fitch, said on a conference call today. That number will increase in 2007 as older bonds suffer from too little funds in so-called over-collateralization accounts, he said.

Full article...

San Diego Short Sales

2006-12-11T18:08:00.000-05:00

Does anyone know of any short sales occuring in the Shore area recently? I've looked at two houses in the Monmouth Beach / Long Branch area that were bought as flips in 2005 and I'm pretty sure the owners would be looking at a short sale if they did not get better than their asking prices.

Also, do any particular brokers in Monmouth or Ocean Counties have expertise in negotiating short sales?

"By Emmet Pierce
UNION-TRIBUNE STAFF WRITER

December 11, 2006

In a sign that San Diego County's once-soaring housing market has returned to earth, analysts say the number of homeowners seeking mortgage debt forgiveness is on the rise.

Such transactions, designed to prevent defaults, often are called “short sales.” They occur when home prices fall and mortgage debt exceeds the value of the property. If the lender agrees, homeowners can sell the depreciated homes and settle their debts for reduced sums."

Full article...

ABX-HE-BBB 06-2

2006-12-11T17:50:00.000-05:00

This is a gragh of the ABX-HE-BBB 06-2 index. The ABX is an index of securitized mortgages and the triple "B" denotes its rating (triple "A" would be the highest.) Also, the "06" means it is comprised of mortgages written in 2006. As one can see, the index started to weaken in early December and fell off of a cliff last week. The dive was reportedly due to the demise of sub-prime lender Own-It and broader concerns many sub-prime lenders are going to fail very soon.

Lis Pendens are Up in Jersey

2006-12-09T09:47:00.000-05:00

Snip...

"The numbers do appear staggering: In September 2005 in New Jersey, there were 967 filings of lis pendens -- the first stage of foreclosure. This September, there were almost 1,650 filings -- a whopping 71 percent increase, according to the foreclosure data service Sheriffsalesonline.com. "

Full article

This is the web site is for the Monmouth County Clerk. It allows you to search through various filings including foreclosure notices, deeds, mortgages, liens, etc. If you have a few minutes, peruse through the filings and you'll find some interesting information.

Kara Discussion Continued

2006-12-09T09:43:00.000-05:00

Last Kara Thread is here.

Sub Prime Lenders Look Weak

2006-12-07T19:33:00.000-05:00

There were a number of rumors today about sub-prime lenders closing shop. This one turned out to be true. This forum on BrokerUniverse seems to be a good source for finding out which sub prime lenders are in trouble.

"Dec. 7 (Bloomberg) -- Ownit Mortgage Solutions Inc., a California-based home lender part-owned by Merrill Lynch & Co., closed this week and told more than 800 workers not to return, a former employee said.

The company informed its staff of the closure on Tuesday, Kevin Panet, who was a training manager for the Agoura Hills- based lender, said in a telephone interview today. Chief Executive Officer William Dallas didn't return messages left on his voicemail and with an assistant.

Ownit joins Ameriquest Mortgage Co., Countrywide Financial Corp., H&R Block Inc.'s Option One, BNC Mortgage Inc. and other lenders in shutting operations or laying off employees as the U.S. housing market slows. Delinquencies are rising, home prices are falling and borrowers of adjustable-rate mortgages are facing higher monthly payments."

Full article...

Price Data Seemingly Flawed

2006-12-07T19:16:00.000-05:00

The NY Times had an article yesterday that argued that home prices are actually down year-over-year, despite there being a prevelance of statistics that median home prices are mostly up year-over-year.

Snip...

"The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept."

Full article...

Sub-Prime Problems

2006-12-05T20:21:00.000-05:00

Today's Wall Street Journal had a front page, top-of-column "A" article about the rise of delinquency rates of sub-prime mortages. Here is an excerpt. You need a WSJ subscription to read the whole article but it looks like the Grim's site has more info too.

More Borrowers
With Risky Loans
Are Falling Behind
Subprime Mortgages Surged
As Housing Market Soared;
Now, Delinquencies Mount
By RUTH SIMON and JAMES R. HAGERTY
December 5, 2006; Page A1

Americans who have stretched themselves financially to buy a home or refinance a mortgage have been falling behind on their loan payments at an unexpectedly rapid pace.

The surge in mortgage delinquencies in the past few months is squeezing lenders and unsettling investors world-wide in the $10 trillion U.S. mortgage market. The pain is most apparent in subprime mortgages, though there are signs it is spreading to other parts of the mortgage market.

Subprime mortgages are loans made to borrowers who are considered to be higher credit risks because of past payment problems, high debt relative to income or other factors. Lenders typically charge them higher interest rates -- as much as four percentage points more than more-credit-worthy borrowers pay -- one reason subprime mortgages are among the most profitable segments of the industry.

Shore Towns Plan Development Future

2006-12-04T22:26:00.000-05:00

I think we need to limit access to the beaches more by allowing beach clubs to erect barricades along right-of-ways and easements.

Also, the Shore needs to generate more tourist revenue by raising the price on parking or just by issuing more tickets. Hoboken randomly boots cars, why can't Deal?

More tax payer money to protect private beaches too. Those homes were not cheap to build and if private industry will not insure them, then my tax dollars should.

Martells Luxury Condos sounds much better than Martells Tiki Bar. How about Donovan's Reef View Estates at Seabright?

"JERSEY SHORE — Sixty municipal representatives, stakeholders and officials from 30 Monmouth County communities recently launched a two-year study that will culminate in a plan for the future development of the county’s Atlantic coastal region, spanning 27 miles of the New Jersey shoreline.

Initiated by the Monmouth County Planning Board, the Coastal Monmouth Plan was launched at a meeting last week at Brookdale Community College, Lincroft.

“The goal of the Coastal Monmouth Plan is to help those communities prepare, both collectively and individually, for sustainable growth while at the same time protecting their environmental resources and maintaining their unique local character,” said Monmouth County Freeholder Lillian G. Burry, who is liaison to the county’s Planning Board."

Full article...

More Exclamation Points !!!

2006-12-04T18:27:00.000-05:00

I get lots of e-mails from listing agents describing various properties around Monmouth County, which I appreciate. What I have discovered is that (1.) I hate reading exclamation points and (2.) Realtors® use them by the ton.

While exclamation points are annoying! (see) they are a pretty good indicator of when a Realtor® is posting in the comment section or on other message boards.

"You must see this Gorgeous totally Remodeled & Updated Centerhall Colonial at the end of a cul-de-sac in the xxxx! This home has a great view of a Large Pond w Wild-life & Waterfowl around it. In addition to its many amenities, it has a Full Finished Bsmt w Ceramic Tile, Large Deck, New Siding, Roof, Windows, Appliances, Garage Doors, Driveway, Walkway, upgraded 200 amp electric plus too much more to list! This is a unique property in a fabulous neighborhood & is truly a must see!"

Pending Home Sales Down

2006-12-04T18:16:00.000-05:00

The National Association of Realtors® spokesperson/economist David Lereah calls the latest drop in pending sales "stabilization".

What else would he say, "housing prices have further to fall, run away at all costs and don't buy until 2011?"

"Pending Home Sales Indicate Market Stabilization

WASHINGTON, December 04, 2006 -

Pending home sales are hovering in a narrow range, another indication that a stabilization is occurring in the housing sector, according to the National Association of Realtors®.

The Pending Home Sales Index,* based on contracts signed in October, slipped 1.7 percent to a reading of 107.2 and is 13.2 percent lower than October 2005. The index had trended up from a cyclical low of 105.6 in July, and a decline from year-ago levels is narrowing. In September, the index was 13.6 percent below a year earlier, while in August the decline was 14.0 percent."

Full article...

test

2006-12-04T18:11:00.000-05:00

test

"Distressed Real-Estate: Priced to Sell"

2006-12-03T14:02:00.000-05:00

"As a weak housing market nudges the foreclosure rate higher, next year is looking promising for investors in distressed real estate.

So far, the U.S. housing slump hasn't produced a bonanza for such investors, but lenders stuck with foreclosed property are becoming more inclined to slash prices or sell properties through auctions, industry experts say.

"We're all going to have to be more creative in the next 12 to 24 months" in selling foreclosed homes, says Chad Neel, president and chief operating officer of Fidelity National Asset Management Solutions, a unit of Fidelity National Information Services Inc., Jacksonville, Fla. Mr. Neel's company helps lenders manage and sell foreclosed homes. "

full article...

Mortgage Bonds Begin To Buckle

2006-12-02T11:23:00.000-05:00

"Dec. 1 (Bloomberg) -- The mortgage bond market is beginning to buckle under the weight of the worst U.S. housing slump in six years.

Yields on so-called sub-prime mortgage securities rated BBB have risen to 6.52 percent on average from 6.28 percent on Sept. 5, data compiled by Bank of America Corp. show. The yield premium, or spread above the one-month London interbank offered rate, a lending benchmark, rose to a seven-month high of 1.2 percentage points."

Full article...

Bubble Bloggers

2006-12-02T11:20:00.000-05:00

Newspaper, Bubble Blogs Feed the Real Estate Obsession

by Mark Glaser, 12:12PM

Have you ever gone to an open house even though you weren’t interested in buying the property? Have you ever pored over housing price data on Zillow or read through housing ads on Craigslist just for fun? You are not alone. There seems to be a growing obsession with real estate in the U.S., as home prices have soared in the past few years, only to come back to earth a bit in the past year.

Full article...

Kara Unsecured Creditors Blog

2006-11-30T06:24:00.000-05:00

"On November 20, 2006, the Court entered an interim order approving debtor-in-possession financing in the amount of $350,000 from Bear Sterns Investment Products, Inc. ("Bear Sterns"). The interim order authorizes use of the $350,000 in conjunction with an approved budget which is designed to meet some of the Debtors' emergent needs, including, among other things, insurance, security for the developments and payroll. "

Full text link to Kara Homes Unsecured Creditors Blog

But Did Prices Really Rise?

2006-11-29T22:13:00.000-05:00

New Home sales were out today. Although the number of sales were lower, prices actually rose.
I don't actually think prices rose, rather, people buying new homes got more for their money in the form of incentives. If you look at the third quarter results of the homebuilders, you will see that gross margins tightened pretty considerably from the third quarter of 2005 to the third quarter of 2006. In the case of Lennar Homes, the gross margin fell from 16% last year to 8.7% this year. In short, Lennar added larger kitchens, granite countertops and mortgage paydowns to in order to induce buyers to make a house purchase. The extra incentives show up in Lennar's financial statements as an increase in Cost of Goods Sold, or as a decrease in gross profits as a percent of revenue.

"Nov 29, 2006 — WASHINGTON (Reuters) - Sales of new U.S. homes dipped in October and inventories rose, but builders boosted prices by over $30,000 per unit after a sharp decline in home prices a month earlier, a government report showed Wednesday.

New single-family home sales declined 3.2 percent in October to an annualized rate of 1.004 million units from a downwardly revised rate of 1.037 million in September, the Commerce Department said. Analysts polled by Reuters were expecting October sales to ease to a 1.044 million rate from a rate of 1.075 million in September.

October sales were down 25.4 percent compared to a year ago.

The median sales price of a new home rose more than 13 percent to $248,500 in October from $218,200 in September as builders were able to boost prices despite a modest decline in the rate of sales. October's median home price was the highest since they reached $257,000 in April."

Full article...

Eastern Monmouth MLS at 4280

2006-11-29T22:11:00.000-05:00

Last week 4378. At the same time last year, there were 3065 homes for sale on the MLS for Eastern Monmouth County.

Excerpt From Ben Bernanke's Speech Today

2006-11-28T22:57:00.000-05:00

Snip...

"Obtaining a precise read on home prices is difficult: During a period of weak demand, potential sellers often choose to leave their homes on the market longer or even to remove them from the market, rather than accept price offers that are below their expectations. The timeliest data on house prices do not fully account for changes in the composition of home sales by location, size, and other characteristics. Moreover, the data do not capture hidden price cuts, as when builders try to stimulate sales through the use of "sweeteners" such as paying the customer's mortgage points or upgrading features of the house at no additional cost. Nevertheless, there can be little doubt that the rate of home-price appreciation has slowed significantly for the nation as whole. Some areas have continued to experience gains--albeit smaller ones than before--while other markets have seen outright price declines."

Full speech...

Existing Home Sales Came Out Today

2006-11-28T22:41:00.000-05:00

"Sales of existing homes posted a tiny increase in October but the median home price fell by a record amount. Analysts forecast more price declines in coming months as the once-booming housing market undergoes a painful correction."

Full article...

New home sales will be reported tomorrow.

Realtor® is to Real Estate Agent as Mercedes® is to Car

2006-11-27T21:01:00.000-05:00

Johnathan Miller at the Matrix linked to this article last week. The article basically describes the NAR's excuse for why real estate brokers rank last on a poll of most prestigous occupations.

"Recently, some journalists reported results of a Harris poll in which real estate agents were perceived as one of the least prestigious occupations in a list of 23 professions. Too bad they didn’t include Realtors® on the list.

Realtors® are distinct from real estate licensees. In addition to completing mandatory quadrennial Code of Ethics training, Realtors® also have access to educational opportunities and training in real estate specialties that are not available to other licensees. NAR’s Public Awareness Campaign educates consumers about these and other distinctions, and after nine years, the campaign’s effects are evident.

Full article...

Asbury Park Press Opinion Piece

2006-11-26T18:10:00.000-05:00

"Anyone who has had trouble selling their house in recent months, trying to decide whether to drop the price or take the house off the market, may have been surprised to read that third-quarter median housing prices in the region that includes Monmouth and Ocean counties were up 7.3 over the same quarter a year ago.

What about the real estate bubble? What about all the unsold inventory? What about all the homes that have been sitting on the market for months without drawing any serious offers?

The explanation, it seems, is that the median price was pushed up by the tepid demand for homes in the moderate price range. Demand has remained stronger for high-end real estate."

Full Opinion...

The Dollar Took a Hit on Friday

2006-11-26T14:42:00.000-05:00

A lot of real estate bulls have placed their hopes for a spring rebound on the expectation that interest rates will start to come down again. If the dollar continues to fall, as it did on Friday, the chances that the Fed would lower rates will continue to diminish. If the Fed is given a choice to save housing by lowering rates or saving the dollar by raising rates, it will pick the latter, always.

[THE euro climbed above $1.30 on Friday, hitting its highest level since April 2005, with further gains predicted in the months ahead. The dollar fell sharply at the end of last week on fears about the US economy, unsettling financial markets.

The dollar’s fall had a knock-on effect on a wide range of markets. The price of crude oil rose in dollar terms as a direct reflection of the American currency’s weakness.

“The dollar is the big story,” said Nick Stamenkovic, an economist with RIA Capital. “The question is whether it has been exaggerated by thin markets.”

US trading was quiet ahead of the weekend as a result of the Thanksgiving Day holiday.

“The break of 1.30 is a strong signal that the dollar has to weaken,” said Carsten Fritsch, a currency strategist at Commerzbank in Frankfurt.]

Full article...

Bonus Season BS

2006-11-22T09:29:00.000-05:00

The NY Observer takes a look at the myth that big Wall Street bonus seasons leads to increased home purchases.

Is Bonus Bump Bogus?
Wall Street’s $36 B. Test

"In 2005, Wall Street investment houses handed out a record $21.5 billion in year-end bonuses, according to the State Comptroller. This year may be even bigger, with I-bankers and other staid dice-rollers expecting at least $36 billion total in bonuses to be doled out this winter.

Real-estate brokers must be popping champagne bottles. A very healthy bonus season means a very healthy Manhattan home-sales season in the spring, right?

Not really. While bonuses can pump up springtime prices, the effect on the volume of sales is more Wizard of Oz than Master of the Universe."

Full article...

Homes on MLS = 4378

2006-11-21T21:40:00.000-05:00

Last week 4444.

The Bubble is Over, You Can All Go Home Now

2006-11-21T15:40:00.000-05:00

This article reports that the median price of homes in the Shore area grew 7.3% in the third quarter. A few experts offer an explanation for the apparent rise in the median price. Anecdotally, and from keeping track of a few homes, I think house prices on a same-house basis are about 10% lower compared to this time last year.

What also needs to be pointed out is that many homebuilders reported record sales in the third quarter of 2006. Although the sales levels might have set new records, the homebuilders gross margins collapsed by between 200 and 500 basis points. This was because although the builders kept list prices at high levels, they also added incentives, such as appliances, mortgage buydowns, and pools, that increased costs. In short, they sold more house for the same amount of money.

Given the use of incentives by new home builders, I would not be surprised if the higher median number didn't also include the increased use of incentives, (ie. cash rebates, pre-paid taxes etc.) on existing homes, which unfortunately are not netted out of the gross sales number.

BY DAVID P. WILLIS
BUSINESS WRITER

After taking a slight dip in the second quarter of 2006, median home sale prices in the region that includes the Shore area rose 7.3 percent in the third quarter, the National Association of Realtors reported Monday.

The median sale price for an existing home in the region that encompasses Monmouth, Ocean, Middlesex and Somerset counties was $415,100, up from $386,900 in the same quarter last year, according to the association. In the second
quarter, the median sales price had fallen 0.1 percent to $393,600.

The median means that half the homes in the area sold for more and half for less.

"The fact that it is up rather than down is at least some sort of hint that the area is not suffering greatly, at least yet, from any major price pressures,'' said Joel Naroff, chief economist at Commerce Bank. "That is not to say that I don't think it might happen.''

Full article...

Funny Video at Flipper Nation

2006-11-20T19:24:00.000-05:00

"It kind of took us to the ground almost,"

2006-11-19T09:37:00.000-05:00

The Asbury Park Press has a few Kara related stories today.

Snip...

[Grounded companies

John Cambra Sr., owner of Air Controlled Environments Inc. in Lacey, was able to pay all his suppliers, subcontractors and other bills, even though Kara Homes owes his company about $120,000. But he had to let his two subcontractors go and lay off four of his eight employees.

"It kind of took us to the ground almost," Cambra said. "It was more than half of our business, and, along with that, the slowing economy has really, really thrown us to the ground."

Small business owners have put a lot into their own companies — sometimes their life savings — said Melinda Middlebrooks, a Roseland lawyer for several subcontractors, including ADE, which are collectively owed about $1.5 million.]

Full article...

A Glut in Manhattan Too..

2006-11-18T10:39:00.000-05:00

From today's NY Times

IN the last few years, renowned architects and enterprising developers have rushed to put their stamp on Manhattan with contemporary condominium buildings that have seemed far more inventive than the staid old co-ops of the Upper East Side. But now, they are looking at the horizon and fearing that there will soon be a glut. They are trying to figure out how to avoid flooding the market they once fought to build in. Full article...

"A tornado hit the housing sector in October."

2006-11-18T09:28:00.000-05:00

From today's Asbury Park Press

The pace of new home construction at the Jersey Shore has slowed this year as builders put on the brakes amid turmoil in the overall housing market.

The number of building permits issued in Monmouth County through the first nine months of the year fell to 1,103, down 12.9 percent, compared with the same period last year, according to the U.S. Census Bureau. In Ocean County, it fell to 1,503, down 21 percent.

Snip...

"Builders have seen the light from the housing market meltdown and are now moving as rapidly as possible to reduce supply," said Joel Naroff, chief economist at Commerce Bank. "A tornado hit the housing sector in October."

Full article...

(As a side note, the NJ Real Estate Report, posted a similar story with the same title. Joel Naroff, the expert with the "tornado" quote has a different job. In the Asbury Park Press article, Joel works for Commere Bank, but in the story on the NJ Real Estate Report, Joel works for himself.)

"U.S. October Housing Starts Drop 14.6%"

2006-11-17T08:54:00.000-05:00

U.S. October Housing Starts Drop 14.6% to 1.486 Million Pace

By Joe Richter

Nov. 17 (Bloomberg) -- Housing starts in the U.S. tumbled in October to the lowest in more than six years, as waning home sales and swollen inventories discouraged new projects.

Builders broke ground on 1.486 million new homes at an annual rate, down 14.6 percent from September's 1.74 million pace, the Commerce Department said today in Washington. Building permits dropped to a 1.535 million pace, a record ninth straight decline and the lowest since December 1997.

Full article....

I can think of at least one builder who didn't start any new construction in October.

Kara Gets a Very Small Loan

2006-11-17T08:48:00.000-05:00

The amount of the loan is for only $350,000 and will keep the company in business for about two weeks according to this article. The amount is probably about the amount that would have been needed to put a deposit on one of Kara's Tradewinds Homes.

BY MICHAEL L. DIAMOND
BUSINESS WRITER

TRENTON — Kara Homes Inc. can receive a $350,000 loan from Bear Stearns to stay in business for two more weeks, a judge ruled Thursday, despite arguments from its major creditors that the investment bank essentially would take control of all of the home builder's decisions.

The loan was less than the $2.6 million Kara sought from the investment bank to keep it in business for 13 weeks. But without it, the company wouldn't have met its payroll today and could have shut down.

Full article...

Otteau Report is Out

2006-11-16T21:46:00.000-05:00

The Otteau Report is published quarterly. It provides charts and graphs showing real estate trends in many NJ towns. This link is to the Monmouth County edition of the Report.

The Jersey Shore Real Estate Bubble

APP Article on Hov

Blame it on the Weather

"I Saw the Bubble Bursting"

NJ Legislator Tries To Make Matters Worse

Nice Deal For Carla Katz Corzine

Rumson House Back on Market - 2 Years After Original Listing

Eastern Monmouth MLS at 4116

Sub Prime Problems Hit Local Bank

Bad Day for Builders

Asbury Park Press Addresses Sub Prime Issues

"Deadline set for Kara plan"

But at Least Hoboken Did Well

"Eminent domain reform remained stalled..."

"Why Your Home Is Not the Investment You Think It Is"

Inventory tops 4000

Less Blogging

It's Going to be Hard to Get a Mortgage

Bubble Info Here

No More Credit; No More Price Gains

Housing Construction Plunges

3928 Houses on the MLS

Too Many Banks

More Sub Prime Problems

It's Not Over Yet

"Spring Thaw"

"Average increase in value for setting taxes was 209 percent"

Sub Prime is Getting Crushed

Otteau Report on the Shore

"It's by sheer luck Kara Homes went bankrupt.''

"Correction still unfolding"

Big Jump In Listings this Week

It's Cheaper to Rent

2007 NJ Consumer Expectations

Another Downgrade

Hovnanian Need Less Space

Listen to Wayno

3777 Listings This Week on the MLS

Kara Gets Replacement Loan

"Real Estate Will Underperform Inflation for Decades"

I'm Thinking of a New Pricing Model

Realtors Turn In Licenses

From Today's Asbury Park Press

Old Listings are New Again

Sub Prime Index Continues to Tumble

3749 Homes on the MLS

Asbury Park Press Internet Poll, or Something

Local Bank Enters the Home Building Business

Listings are Heading Back Up

Report from Cape May

Moving the Kara Thread to the Top

3655 Homes on the MLS

Jersey Foreclosure Info

Mortgage Broker Dirty Tricks

APP Article

Update on Red Bank House Flip

3870 Listings on the Eastern Monmouth MLS

Past Crashes

A Brief, Superficial, and Arbitrary History of Property-Price Collapses

Gloating Renters

Now You Have to Register to Comment

Kara is Looking for $40 Million

Report from PA; NJ Buyers Mentioned

Brick is the Safest BIg Town

Eastern Monmouth MLS at 4006

RedBankGreen Covers the Hovnanian Debacle

"Sellers employ incentives to avoid cutting prices"

"Holiday Blues" from Kara Homes

Posted by the Asbury Park Press on 12/17/06

Urban Vs. Suburban Living

Liquidity is Disappearing Quickly

More About Sub-Prime Loans

San Diego Short Sales

ABX-HE-BBB 06-2

Lis Pendens are Up in Jersey

Kara Discussion Continued

Sub Prime Lenders Look Weak

Price Data Seemingly Flawed

Sub-Prime Problems

Shore Towns Plan Development Future