Wednesday, November 01, 2006

NJ Urban Sales Booming

While buyers in the suburban housing market continue to shop and sellers find houses sitting instead of selling, the urban market is very active. Atlantic City is leading the way in sales according to Robert Gebeloff of the Star Ledger. In fact, sale prices in the 30 New Jersey cities seems to be booming.
Read Gebeloff’s story.

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Monday, October 30, 2006

Sell Your Home Faster

The first thing to consider when attempting a quick sale is the amount of profit you want from the sale. If sellers would consider receiving less in profit then the sale (say 150% instead of 180%), then selling price of the home could become more attractive. Oftentimes sellers' pricing and profit taking are not in line with what the market will bear. If the timing of the sale of the present house is important to moving into the dream home, then less profit taking can prevent a disruption in the planned move.
The last two items to consider for a quick sale are financial incentives and a contingency offer.
Read Sam Ali's article for the Star Ledger

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Thursday, October 26, 2006

Home Prices Slide

Home sales slipped for the sixth month straight in September despite the dropped mortgage rates according to the National Association of Realtors. Nationally 6.18 million units sold in September down from 6.30 million units that sold in August and 14.2 percent below the 7.20 million units pace of September 2005. Also the median price of a home fell for the second month to $220,000.
Read Sam Ali's story in the Times

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Tax Panel Begins Public Hearings

Public hearings will begin on the list of ways to cut property taxes proposed by the special legislative panel. The first hearing is today in Bordentown Township Hall, November 1st in Freehold Borough Hall, and November 9th at Bergen County Community Center. The meetings all begin at 7PM.
Read Tom Hester's Times story

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Wednesday, October 25, 2006

Stubborn Sellers Lose in Declining Market

Housing prices have declined since last year and buyers are slower deciding to make purchases. Some sellers still overprice their homes. The consequence of stubborn overpricing: the loss of home value as prices continue declining.

Read Patrick Rucker’s story in Reuters

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New Leader Named for Housing Agency

The new head of the housing and economic development department in Trenton is Alan J. Greenwald. Greenwald will replace Assistant Business Administrator Dennis Gonzalez who was acting director since 2005. Greenwald lives in Trenton and wants encourage more state workers to resident in Trenton.

Read Eva Loayza’s story in Trenton Times

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Monday, October 23, 2006

Corporate Housing

Relocating families have few options when the primary wage earner transfers to a location that requires moving the primary dwelling to anothers state. Until recently short-term housing meant family, friends, hotels, and a sprinkling of extend-stay facilities. Now however some developers have furnished unit available for corporate tranferees.
Read Beth W. Orenstein's article.

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Friday, October 20, 2006

FICO and Private Mortgage Insurance 101

Okay, let's use the fictitious Ed and Edna James again to help with this explanation. Ed and Edna are at the closing table on their new house. For the sake of this discussion, let's say their FICO score is 590 and they are only eligle for a sub-prime 2/28 adjustable rate mortgage; but, they are estatic at having succeeded in getting the mortgage and consider themselves one step closer to moving into the home of their dreams.

They do not really think about anything, other than leaving the table with the keys. They eagerly glance over and sign papers (planning to give them a more careful read in their new home), and only half listen to the talk that is going on around them until the talk turns to their total monthly payments. The payment is much higher than they expected. It is at the closing table that they learn their FICO score and their inability to pay a twenty percent (20%) or higher down payment on the property has increased the private insurance rate. The couple leave the table stunned but with the keys.

Private mortgage insurance (PMI) unlike any other insurance pays a third party, the lender, in the event the homeowner defaults on the loan; but, the homeowner pays the premium on the insurance. This insurance is required for loans. The borrower's FICO score helps determine the premium. While Ed and Edna should have gotten a good faith estimate of the cost of their anticipated mortgage and the PMI monthly payments, it does not always happen before closing. It is something every buyer with a mortgage should look for or ask about before going to closing and signing anything. Knowing the total monthly costs is something every buyer should know and consider before the going to closing.
Read more about FICO scores effect on PMI here.


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Wednesday, October 18, 2006

In Today, Out Tomorrow?

The next two years will tell the tale of what will happen with homeowners with adjustable rate mortgages (ARM). To understand the problem here’s a scenario: Ed and Edna James purchased a 180,000 dollar house an financed it with a 2/28 ARM. The couple has a combined income of $30,354. Right now they pay $1265 dollars monthly. When the loan is fully indexed the couple will pay a whooping $1990 dollars a month leaving them about $125 dollars for food, utilities, fuel, etc. Hopefully, the fictitious Ed and Edna spent the two years of the low rate getting their credit in order and are now able to get a fixed rate mortgage loan otherwise they will be unable to pay their mortgage and will have to move.
Read Sam Ali's story

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Tuesday, October 17, 2006

Kara Homes Gets $5 Million Operating Loan

Kara Homes based in East Brunwick, NJ filed for Chapter 11 bankruptcy on October 5th. Today the builder has lined up a high interest loan that would allow it to continue operating if the bankruptcy judge grants approval. The hearing with Judge Michael Kaplan is on Thursday in Trenton.

Medical Capital Group loaned the builder 5 millions with a 18 percent interest rate over a six month term.
Read the entire story here.

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Thursday, October 12, 2006

Judge Approves NJ Affordable Sale

The judge overseeing the NJ Affordable Home bankruptcy case approved the sale of some 200 properties belonging to the company. A new twist has developed in the story though. Some of the investors signed mortgage notes and so they may now be on the hook to pay the difference between what the homes sold for and the balance of the mortgage. It appears the difference is $2.3 million dollars. The lending banks have not declared their intention yet.
Source: Greg Saitz, Star Ledger Staff

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Friday, October 06, 2006

Home Buying: Four Tips

Just finished a good article by Holden Lewis of Bankrate.com offering consumers four tips on buying a house. What I like about the article is Lewis encourages buyers to do their homework. Yes, using a buyers' agent is good, especially in this market; but having the ability to express the qualities of your dream home requires some thought. Being able to answer the questions of what neighorhood, style, must haves, wants, and price range means your agent will be able to look for houses that meet or closely match your criteria.
I encourage clients to look online for properties, even if it is not in the neighborhood they desire. It is true a picture is worth a thousand words so if a client has a dream house in an undesirable neighborhood it is likely I can find something similar in the desired neighborhood. I will not waste my client's time showing them houses that they will reject. My clients are happy and when my clients are happy, I am also.
Here are the four tips:
    • If you find the right house at the right price, buy it.
Waiting to see if prices go down could lose you the property.
    • Put technology and a good buyer's agent to good use.
I call this doing your homework. Check out houses online. Make a list of wants, must haves, and any other pertinent facts about your dream home. When the time comes to
do comparative market analysis(CMA) on a property a good buyer's agent will be invaluable. Now, I am not just saying that because it is what I love doing, I am saying it because even though there are other means to do CMA's the buyer's agent brings human experience and knowledge to the table that technology has not been able to surpass.
    • Negotiate effectively
A good buyer's agent will assist you in negotiating the best price, terms, and conditions for your home.
    • Avoid Gimmicks
There are all kind of gimmicks out there but the business at hand is to purchase a home. If a gimmick is offered turn that gimmick into cash toward the purchase of your home. Good advice.



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Wednesday, October 04, 2006

NJ Affordable Homes Liquidated

On August 30th we ran a story by Greg Saitz about Wayne Puff and NJ Affordable Homes which the SEC shutdown as being a Ponzi scheme. Mr. Saitz reports that in an attempt to raise money, last weekend there was an auction to liquidate the company’s assets: some 205 properties. The trustee held the 3-day auction and raised $20 million dollars well short of the $40 million dollars 500 investors sank into the company. Once the bankruptcy judge approves the sale and the various fees and liens paid, the trustee wants to split the money equally among the investors.

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Monday, October 02, 2006

Alleged Housing Discrimation in Lakewood, NJ

Looks like the government (the Department of Justice) is suing Triple H. Realty LLC for discriminating against non-jewish black and Latina tenants. What they are alleged to have done just turns my stomache. It is not rocket science people. Discrimination is not just plain wrong, it is illegal. If this company is guilty then I guess they had some money they wanted to give away because the lawyer fees, fines, and monetary damages just might be enough to get them to obey the law if not get a moral conscience.
This story bares watching to see what happens.


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New Home Starts Down 16 Percent

Got a look at the Courier-Post online story that says new-home builder are aggressively controling their inventory because of the cooling of the resale housing market.
"The new home market is directly dependent on move-ups or move-overs (empty nesters). In order for those two dynamics to continue, the resale market must be robust," said Patrick O'Keefe, executive director of the New Jersey Builders Association.

In other words, until the resale market swings toward a healthy number of interchanges between buyer and seller or buyer confidence rises new home builders are going to have to be careful to sell their inventory to remain profitable.


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Thursday, September 28, 2006

Market Upside= Affordability + Mortgage Rate Decline

James Lockhart, director of the Office of Federal Housing Enterprise Oversight said the recent changes in the market have an upside for buyers.

"Housing starts are down. Permits are down. There is a significant change happening here. Hopefully the good news is houses will become more affordable." he said on CNBC's Squawk Box. (Source: MarketWatch)
In August the number of new home sales increased. Builders are offering incentives to move their inventory. Nationally the numbers rose by 4.1 percent and in the Northeast it rose 21 percent. (Source: Star Ledger)

Resale home prices fell in August as sellers began lower prices of homes for the first time in 11 years. This means that prices allow more buyers an opportunity to purchase. (Source: MarketWatch)



The 30year mortgage rate is the lowest it has been since March. The national average is about 6.31 (Source: Reuters)while the average for New Jersey is even better. (See above graph)

The signs are good for a quick buyer to get a new home or a resale one for that matter for an affordable price.


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Evaluating Property? Appraise Exterior Greenery

Now that the buying frenzy of the last few years is over and buyers are taking their time before making purchases, paying attention to the exterior of the house, particularly the grounds, the slope, and which way water flows. should concern both buyers and sellers. Joel Lerner of The Washington Post says appraise tree, plant, and shrub health prior to purchase as they come with the home and enhance or detract from the property’s value.
Here is a link to the story. (subscription necessary)

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Tips of the Day: Homeowners Tips

The tips this week is a recommendation to do-it-yourself homeowners: Get a hold of a This Old House Magazine for September 2006. There are a lot of good information about design, lighting and makeovers in the magazine but this issue is their 101st issue and they are celebrating by compiling 101 Homeowner Tips. The tips range from how to set a mouse trap to how to decrease the smell of latex paint. The magazine is worth the money (less than $10 bucks) for the handy tips alone. Check it out and get your copy before the month is out!


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Wednesday, September 27, 2006

GMA Takes the Challenge

The Challenge: Sell it in a week. A Tom's Rivers couple got the attention of Good Morning America's Barbara Corcoran by issuing the challenge and now the Ms Corcoran has taken it up. It is an opportunity for do-it-yourself homeowers and others interested in a fast sale in this market to see what is necessary to make a quick sale.

1) Staging (removing the clutter and personal items, free up closets and cabinets)
2) Correct pricing for the market
3) Advertising (strategic placement of signs, newspaper and magazine ads)

Now admittedly most FSBO's and real estate professionals will not be able to reach as many potential buyers as Barbara Corcoran can, but if all else is right -- and the gods are feeling generous -- buyers will come.


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Workshop for First-time Buyers

Workshops are being presented at area libraries for first-time homebuyers. The first of the series is tonight at the Ewing Branch of Mercer County Library at 6:30PM. The workshops provide information on how the mortgage process works.
The attendees will learn about a County program that will assist first-time buyers with downpayment and closing costs.
Worth a visit future buyers!
Source: Times of Trenton

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Tuesday, September 26, 2006

Median Prices Fall Slightly

The median price for existing homes fell in August according to the National Association of Realtors. The median is the point where half the houses sold for more and half for less. In August the median price was $225,000. NAR's chief economist said the declining prices in July and August is part of the "expected price correction".
“This is the price correction we’ve been expecting. With sales stabilizing, we should go back to positive price growth early next year,” NAR Chief Economist David Lereah said.
There are a number of factors contributing to the increase in inventories, nationally.
In some areas, home sellers are not making sufficient adjustments in their listing price, so their homes are staying on the market and contributing to the build up in inventory,” says NAR President Thomas M. Stevens from Vienna, Va.
Though there is a backup of inventory NAR's economist says we are still going to have the third highest home sales year. Lereach also predicts we should see "positive price growth early next year."


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Thursday, September 21, 2006

Princeton Area Floods Now Too

Okay, the Trenton area has been experiencing increased flooding for years. Now Princeton residents had joined its neighboring municipality in flooding woes. Princeton Township residents near the Harry’s Brook stream have experienced an increase in area flooding in recent years.
"There were floodings, but ... we didn't keep track of that because it wasn't happening" that often, said Olivia Applegate, a Harry’s Brook area resident.
Harry’s Brook has experience 10 or 11 major floods in the last three years she said.
The township enacted and ordinance last year that required single-family homeowners to have drainage management in any plan that required resurfacing their property. Residents making lateral expansion of their homes or adding driveways have to manage storm water runoff. The action of requiring single family homeowners to take such measures was unheard-of and prehaps even unprecedented in any of the other municipalities. Still requiring homeowners as well as builders to manage storm water runoff is very good. Do the enacting of water management ordinances mean that Princeton homeowners will have to start thinking regionally? Hmmm...
Source: Times of Trenton


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Fed Showing Interest in Housing Market

In a press release on Wednesday, the Fed held the interest rate at 5 ¼ percent but changed in its language concerning the cooling U.S. housing market. The August 8th press release suggested holding the interest rate at 5 ¼ percent.
”Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.”
The September 20th press release has a subtle difference in its language that could suggest the Fed is paying attention to the housing market.
”The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.
Whether this means they are considering taking some action or are just concerned is anybody’s guess, but the Fed is known for using subtle shifts in language as a precursor to some action to slow the cooling process.


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Wednesday, September 20, 2006

Meritage Homes Admits Decline in Orders

Well, another new home builder has reported a decline in new home sales this quarter. Meritage Homes Corporation says its third quarter results to be near or below expectations. Meritage reported net new orders fell 38% below last year.
"Demand has slowed and resale inventories have risen in many markets, making it more difficult for our buyers to sell their existing homes, and in turn causing higher cancellations and inventories industry-wide," said Steven J. Hilton, Meritage CEO...
Meritage Homes joins Toll Brothers and other new home builders who have been effected by the change in the housing market. Monday we reported Builder Confidence at 15 year low.


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Monday, September 18, 2006

Housing Price Rate Increases Slowly

The selling price for houses rose to a 4.7 annual rate this quarter according to the Office of Federal Housing Enterprise Oversight.
"Gains in home values have been a major contributor to U.S. economic growth in the past four years. Consumers who feel wealthier spend more and save less. The personal savings rate has been negative for 16 consecutive months. Many consumers have also been able to borrow against their home's rising value, pouring hundreds of billions of dollars into the economy." write Rex Nutting for MarketWatch

Seller can expect a much different buyer than last year. Today's buyers looks to maximize the amount of house or give-backs or inclusions they receive for their dollars. It is truly a different market out there and sellers must adjust get the sale.


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Home Builders Still Cautious

The September New Home Builders’ index is expected to go a bit lower than the August index of 32. The index measures builder confidence. With real estate professionals' inventories high, mortgage rate high, and buyers expecting more for the dollar, builders are feeling less confident about being able to sell regain their investment.

The expectation is that the index will drop to 31 -- the lowest it's been since February 1991.
Source: MarketWatch


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Friday, September 15, 2006

Mortgage Rates Still Falling



Nationally for nine of eleven weeks the mortgage rate has fallen according to Holden Lewis at Bankrate.com. In New Jersey mortage rate are also declining. The national rate moved slightly lower after a speech by president of the Federal Reserve Bank of San Francisco and Fed's rate-setting Open Market Committee, Janet Yellen to the Emeryville, Calif., Chamber of Commerce. Read the Mortgage rate fall for 9th week in last 11.


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Thursday, September 14, 2006

The Golden Triangle

Read about the traditional golden triangle in The Times advertising supplement yesterday. Sorry, I could not find it online. No, it is not really a gold triangle, unless you are a designer of kitchens. The three points of the triangle represent to the location of the refrigerator, the stove top or cooking area, and the sink in a kitchen design. The design strategy is allow the chef to pivot to each item for the most efficiency of movement while preparing meal. While there is no standard about the length of the “legs” of the triangle but the rough rule gives designers plenty of leeway. Designers still have to meet the needs of the client. Kitchens are often a gathering area in families. Oftentimes the members assist with preparation. A designer may have to alter the design to accommodate the different needs. Still making a kitchen with efficiency of movement during food preparation a priority can keep the fun in meal preparation.

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Wednesday, September 13, 2006

Tip of the Day: Winterize your Lawn

Well Labor Day has passed, the kids are back in school, the hot hazy days of summer are finally gone for 2006. Fall officially starts on September 23rd. With its coming it is time to get your lawn ready for winter. Here’s a link to DoItYourself.com
While you are preparing the lawn get the gutters cleaned too. Now before the leaves begin falling and as needed all year round. Pay particular attention now to the downspouts (clear clog and flush with the garden hose). Gutters help protect your home investment from soil erosion and water damage. Keep them clear to save on repair and replacement costs of misdirected water damage to your home.

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Monday, September 11, 2006

Municipality Update

This will be a recurring theme whenever something crosses my desk that fits.
Bernards' Takes on Bash and Build Trend

With many of us still grieving the senseless destruction of September 11, 2001, the story about a trend toward bash and build seemed particularly poignant. Imagine a community with modest Colonial and Cape Cod style houses. Imagine some of the older homes in the neighborhood torn down and replaced a McMansion. The ambiance of the community changes immediately and irrevocably. That is exactly what’s happening in communities in New Jersey. Bernards’ Homestead Village is one place where the mayor and council are going to try to enact codes that will prevent the bash and build trend in their community. Read Cathy Bugman's, Star-Ledger article.

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FSBO's May Ask: Is An Agent Really Needed?

With the Internet making more tools available to do-it-yourself homeowners and home buyers one might ask if an agent is really necessary. Amy Hoak of MarketWatch wrote:
”Indeed, the housing slowdown now unfolding only underscores how crucial of a role that brokers have as property owners brave chilly new headwinds. This past week saw a steady drumbeat of reports highlighting a severe slump taking hold, including industry data showing the number of homes on the market soaring to a 13-year high.”
Internet savvy does not sell houses. While it assists the home buyer in communicating the style and area of a future home, getting the best price requires negotiation skill. Companies may promise to charge you less than real estate professionals but if you house sits on the market and doesn’t sell, has few agents actively showing the property, it will not sell. A real estate professional uses staging and targeted marketing to generate interest. The combination, staging and interest, sells houses at full market value or more.


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Thursday, September 07, 2006

Proposed Ordinance Change

With New Jersey running out of building space one can expect communities’ redevelopment efforts to rise. Hightstown’s council proposes to change their redevelopment ordinance because builders would not submit plans that complied with the previous ordinance. The new ordinance draft will exclude the affordable housing units and increase the maximum number of units from 80 to 130. Read Nicole Castelli's article: Proposed ordinance a lure for developers

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Wednesday, September 06, 2006

It All About Maintenance

A Robert Frost poem said "Good fences make good neighbors" but regular maintenance makes good fences. Washington Township residents want to spend less time tending their fences. In an article Ryan Tracy reports Residents desire easy-care yards in the Times of Trenton today. Residents want to replace the care and maintenance of wooden fencing with what they think is a low maintenance material, vinyl. Wooden fencing requires maintenance at least every other year and tends to crack and warp. Vinyl fencing tends to get dirty and will require washing or scrubbing or power-washing or some combination. No matter what the fencing material, to keep that ideal suburban look some effort is required of the owner, be it painting or scrubbing.


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Tuesday, September 05, 2006

Short-sightedness May Hurt Seniors and Working Poor

Steve Chambers of the Star Ledger writes Affordable housing in NJ nears its sunset. New Jersey, like other states, offered developers breaks to keep housing affordable for ten to thirty years. The affordable housing helped to assist senior citizens and working class families. Now that the term is ending these communities could see increases in their living space costs. The expiring contracts cover housing projects, assisted living units, section 8, and sections 202 and 515 housing loans. One wonders why 10-30 years rather than a permanent solution.


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Thursday, August 31, 2006

Check Your Credit Report

Eileen Alt Powell reports that federal laws protect consumers' saving and loans in today's The Times of Trenton. Since mortgage companies use credit reports and FICO scores to determine whether a buyer is likely to default on their loan, it is in a buyer’s best interest to check his credit report at least once a year. Get reports from each of the three main bureaus – Equifax, Experian, and Trans-Union; it’s free.
“Often the first place that signs of ID theft show up is on your credit report,” said attorney Joel Winston, an associate director in the Federal Trade Commission’s bureau of consumer protection.
Disputing information found in the report and placing fraud alerts on their credit files can assist consumer who believe they are victims of identity theft. There are laws in place to protect consumers.



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Wednesday, August 30, 2006

Economic Growth Expected to Soften

Reuters reports on a Federal Reserve study that says it was technology and not speculation that drove the housing boom. The study debunks the bubble theory but the market is still deflating much like a balloon or tire with a leak. The study also said much of the economic expansion this period was driven by equity from rising home values. Economic growth could slow when these gains dwindle.
"The wealth effect is fading and the economy is slowing," said Elisabeth Denison, economist at Dresdner Kleinwort Wasserstein.
John Fisher and Saad Quayyum, economists at the Chicago Fed and authors of the report do not expect growth will soften too far below its long-term trend.



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Too Good To Be True

Greg Saitz reports Wayne Puff and his alleged fraudulent NJ Affordable Homes is answering to the SEC and paying a hefty price in having assets auctioned off. The sell-off of 390 company properties is set for September 29 – October 30. The SEC alleged NJ Affordable Homes was a “Ponzi” scheme “Ponzi” schemes are pretty hard to differentiate from legitimate investment schemes, until they start to fall apart. Still the rule your grandma told you about if something looks to good to be true, it probably is... might not be a bad one to keep in mind. I just love it when Granny’s right!




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Monday, August 28, 2006

Auctions Replace Negotiated Settlement? Not Likely

Just found a article at a fellow NJ blogger site talking about the Prudential, Fox & Roach deal with Sheldon Good & Co. Frankly, auctions are a marketing tool for a quick sale. It is true that there are bargains to be found at auctions, but everybody has to have done his homework and know the market value of the property at bid. Novice or inexperienced bidders can drive the price of a property well beyond the market value. Also non-motivated sellers can set unrealistic reserve prices that prevent the property from selling too. It all about executing the "Know". Perhaps Prudential can help with the "Know". We just have to wait and see.




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Revenue Generators: Condos or Apartments

Read curious article over the weekend in Reuters that said developers who planned upscale condos were likely to down-grade the condos to apartments as a result of the slow housing sales. It would mean eliminating higher-end amenities to cut costs, but it was a way to complete projects.
”"There are definitely an awful lot of projects in the pipeline initially designed as 'for sale' that, I understand, can get converted as they approach completion," said David Seiders, chief economist for the National Association of Homebuilders”

Wondered if that is what will happen by the Trenton-Mercer airport where high-density housing is planned. If so I cannot see how the change would not have affect on the Ewing school system or help the township's revenue generation woes.




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Thursday, August 24, 2006

Opportunity's At the Window

Housing sales continue slide

While it is true housing sale continue to slide and there is an increase in the incentives and terms that sellers and builders are offering buyers and
Indexes extend losses
the stock market is showing concern over the speed of the housing slump houses are continuing to sell.
Mortgage rates fall for 5th week
It looks like there is a window of opportunity opening for buyers now that interest rates have fallen for the fifth week. How long the window will be open or how wide it will get is anybody’s guess. We just have to hope the Fed's economists don’t run scared and shut the window too soon. Still it is a fine economic lesson for those of us watching predictions and interdependences that make up our economic system.


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Wednesday, August 23, 2006

Kudos to the Governor

Gov. Corzine and Commissioner Ryan

Corzine announces flood-control plan

Well it's cheers for Governor Corzine (seen above with Commissioner Kevin Ryan of the Department of Children and Families). Seems the Governor is really going to tackle some to the problems New Jersey residents have faced for years. First he is forcing the legislature to do something about property taxes and now he has proposed a flood-control plan that includes things like doing something about the flooding that happens on Route 29, restricting building around rivers and creeks for a much as 300 feet, and making builders bring-in and take-out equal amounts of fill. Now if the plan gets some tough penalties and strict enforcement maybe New Jersey can continue to be the Garden State even when it rains.

Here's the press release too!


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Monday, August 21, 2006

Tip of the Day: Homeowners’ Insurance

Watch out on your homeowners policy

After all the post-Katrina publicity, most people know that homeowners insurance may not cover flooding expenses but there are other gaps in insurance coverage worth noting. New Jersey residents might want to check their policies and make adjustments. Most important is replacement costs as opposed to actual depreciative value. Replacement insurance is more expensive than the cost of actual depreciative value which is the standard coverage. Replacement insurance is meant to replace the item rather than a company assigned depreciative value. Oftentimes there is a cap placed on the replacement costs. If there is a cap make sure it is set at 150% to 200%. The article is worth a read for homeowners.


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Disturbing Practice Reported

The Times of Trenton ran a story today that is not available online entitled, “Practice hides real deal on homes for sale”. The story talks about a practice that just may undermine public trust in Realtors. The practice is designed to hide from buyers how long a house has been on the market and how far the price has fallen in that time. One broker even said it was a “marketing strategy”. If it is a marketing strategy it is dishonest because its primary purpose is to hide the truth about a property. A realtor is skilled negotiator. Doing that job should compensate for length of time a house is on the market or the number of price reductions.
That the market is cooling means buyers are going to be more reluctant than last year to pay the seller’s price. Price reductions are expected. Tougher negotiations are expected too. I would hate to think my colleagues don’t want to earn their commission. It is my hope those doing this stop before any other action becomes necessary.


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Friday, August 18, 2006

Housing Potpourri

Housing sales dive 16.3% in Jersey

The Star Ledger reports housing sales fell in June. It also reported that housing prices fell in Central New Jersey.

Replacing Old Door Hinges

When steel and brass hinges show signs of rust, Tim Carter tells homeowners how to replace the hinge without having to buy expensive tools.

2005 New Jersey School Report Card

It is time for back to school shopping and you can check the report card for your child's school. The New Jersey Department of Education released the 2005 School report card. The 2004 report is also available.

New bill calls for school fees ban

A bill to prevent school districts from assessing activity and sport fees on families. The only school district charging these fees is Washington Township but Assemblyman John Burzichelli
present the bill because he was concerned charging the fees was a wrong direction for school districts.

"Without this (bill), we are allowing such fees to gain momentum in school districts," he said. "It's a bad thing to have and will result in a slippery slope."

Looking to parents to replace funding cuts from the state in public schools does seem a bit of a misnomer but funding must come from somewhere. Washington Township's attempt to keep fund extracurricular activities and sports without looking to property taxes for funding is admirable. If it worked like Assemblyman Burzichelli suggests that only children from families able to pay these fees could participate then yes, it is troubling in public schools because at present property taxes fund public schools.

Growth dilemma for food kitchen

Trenton area soup kitchen will begin an expansion project in September. The 3500 square foot project will allow the soup kitchen to meet the growing number of New Jersey residents it serves to sit and eat their meal. While New Jersey is one of the richest states in the country, 40 percent of families receiving emergency food assistance report having to choose between "buying food and paying utilities, rent and mortgage".

With the wealth to only 10 percent of the population nationally the divide between the rich and the poor is expanding. The gap between the rich and the middle class is also expanding. The Times asks a valid question of New Jersey residents, "Why are we growing soup kitchens?"



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Wednesday, August 16, 2006

Fiscal Challenges

Well it begins. Mercer County and Ewing Township are on a path that leaves residents, potential residents and local enterprise on the road to conflict. New Jersey residents want lower property taxes. Counties and Townships need capital to provide residents with services. As the state looks to reform the tax system and those system dependent on the tax revenue, many townships are struggling to meet their budgets without making further monetary demands on residents.

Ewing Township

Ewing Township needs to increase it revenue to continue doing business for its residents. With New Jersey having the highest property taxes in the country and the legislature meeting in special session to address the property tax issue, Ewing Township approved a plan for high-density housing, condominiums, near one of the Trenton-Mercer airport's runways (see Housing News Potpourri). Did the Township know that their residents were already complaining about the noise living near the airport? Yes. Did they know that the new residents would probably have noise issues too? Yes. Did they suggest that the condo residents would not further distress the school system i.e. no school age children in the condos? Yes. Did township officials suggest the occupied condos would generate needed revenue? Yes. So who is the expected target market for the condos? Was there another location for the housing available within the township? According to the board, no.

Mercer County
Plan brings Delta line to Trenton-Mercer
Mercer County has on numerous occasions attempted establish commercial airlines at Trenton-Mercer airport. They were unsuccessful but the efforts were on record. Finding the right airline to bring the correct size plane to the airport was just a matter of time. Will the plan bring revenue to the area? Yes. Will Ewing residents near the runways still complain? Probably. Should the county discontinue its attempts to attract commercial airlines to the Trenton-Mercer Airport? No, Ewing Township and Mercer County need the kind of enterprises with the airport's potential to expand its revenue generating sources.

Mercer County deals with complaints from current Ewing residents about the noise related to airport activity. Township officials are also aware of constituent complaints about airport noise but approved high-density housing near the airport anyway. Though the Township's decision, distressed the County, they continued the plan to attract commercial airlines to the airport knowing complaints would likely increase with the traffic.

Finding Common Ground

Both the Township and the County are trying to generate needed revenue. Working to increase the attractiveness of the airport will help both the Township, though not immediately and the County. Ewing Township needs the airport to become a thriving concern to attract more business to the area. If the airport gets more use by area business and businesses wanting to do business use the airport for its convenience and will consider locating in the area. With a little imagination and some cooperation both Ewing Township and Mercer County can meet their budgets and provide essential services to their residents.

Ewing residents currently living near the airport and those who unknowingly purchase one of the new condo will still have airport noise. The noise is not going to go away. A successful airport means even more noise in their future. At least Comair has proposed a schedule that allows residents to sleep-in until 7 a.m. when the first flight will depart and end their day after the last arrival at 9:30 p.m. As a compromise, it is not the greatest for families with young children or others who go to bed early; but otherwise it is pretty good. There is no simple solution to the fiscal challenge of balancing a budget but without reliable state dollars, but townships like Ewing will have to be creative and forward thinking in order to survive.


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Monday, August 14, 2006

Spending Maintenance and Upgrade Dollars

There are maintenance dollars and there are upgrade dollars. Maintenance dollars are what is used to keep things in working order around the home. Maintenance dollars also replace worn out appliances and big ticket items like the roof or the furnace. Maintenance is the key to getting back at least what you paid for the property plus the market increases. Upgrade dollar on the other hand improve the quality of your life but do not necessarily add to the value of a home. The best use of upgrade dollars is to improve the property – things that increase the value like increasing square footage of the home. Upgrade dollars tend to be used less frequently than maintenance dollars. Still homeowners need to plan for both expenditures -- 85% for maintenance and 15% on upgrades.
Batheing Beauties
Right now pools are hot! With the summertime temperatures into the 90’s and higher, relaxing in the pool after work seems like just the thing. While it is true that more people want to have a pool in their back yard, when it comes to resale value the pool will cause some buyers to look elsewhere. The dangers to families with young children, the expense of maintenance, the increase in utility costs are all things prospective buyers look at before they make an offer. The stories of toddlers harmed by getting through fences and gates to the pool are too numerous for parents with youngsters to consider a home with an in-ground pool. The last thing you want is to run off potential buyers.

The above ground pool also tends to be a disadvantage to these families but less so than the in-ground variety. The advantage of the above ground pool is that it can be excluded from the sale and moved to the new house if the buyer does not share your enthusiasm.

Consider also increasingly homes are within developments that have a community pool, tennis courts and club house within the development. The homes are closer together and have less acreage per unit around the home – which is prohibitive to an exterior pool. Access to the communal pool is not far away. Instead of having to maintain a pool, the development does and charges you a fee.

Upgrade dollars are better spent on finishing the basement, the attic, moving the laundry room to an upper floor or increasing the square footage of the property.




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Thursday, August 10, 2006

Untapped Resource

While the home selling boom is ending, the new trouble spot is home maintenance.
More New Jersey residents are finding home maintenance a challenge according to Beth Fitzgerald in her story:
Dire State of Repairs
Homeowners often allow contractors they don’t know to make repairs without checking there license, checking their references, or even checking to see if there have been complaints lodged again the contractor. Home improvement contractors are required by law to register in New Jersey. Complaints against home improvement contractor have been rising steadily for the last few years.


Source: New Jersey Intstitute for Social Justice
The best way to find a good contractor is to ask the real estate professional from whom you purchased your home. Not just because I am a real estate professional do I recommend this. The truth of the matter is a real estate professional has an interest in you keeping your home in the best condition that has nothing to do with the friendship you developed while looking for your home: future commission. Whether you sell with the same real estate professional or not the potential for commission either as the buyer’s or seller’s agent means that homeowner have a place to look for home contractors that are likely to do a good job. I know I have a list of contractors for all kinds of home repairs even though few homeowners contact me for them. I don’t see why my colleagues would not have them too.




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Wednesday, August 09, 2006

Housing News Potpourri

Plan for 270 condos near airport draws criticism
Okay, can somebody explain to me what the Ewing Township planning board was thinking? They are going to put 270 condos less than 1000 feet from a Trenton-Mercer airport runway. The fact that there are complaints from other Ewing residents who live with the noise on record did not seem to matter. People moving into these condos are not expected to put a strain on the school system i.e. singles or empty nesters downsizing after raising their families. I can just see it, you’ve gotten Suzy and Joe Bob Jr. through college, nearing retirement. The kids are beginning their lives and now its time to downsize the homestead. Happy retirement? Not likely with the whine of 280 planes and helicopters taking off or landing each day! Who is going to want to live with that?

Fed finally takes break: Interest rates
After two years of increases, it’s good news about the short-term interest rates from the Fed. They are going to remain at 5.25 percent at least for now. The prime rate (what banks charge their best customers) is 8.25 percent for now. The move will not affect mortgage lending rates yet.

Toll Brothers says home building still sliding

News from Toll Brothers is not good. Orders for new housing fell 47% this quarter for Toll Brothers so it cut its forecast for the number of homes it expects to sell for the fourth time this year.



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Monday, August 07, 2006

Mortgage Repayment: Sooner Is Better

"Paying off the mortgage could keep mom home"

If you can get your hands on a copy of Sunday’s The Times of Trenton business section there is a case worth reading. The Your Money section holds a column: "Get With the Plan" that highlights personal finance concepts using financial information supplied by real people. This week’s column uses 32 year olds Betty and David finances. They have a winfall of $160,000 inheritance. The article discusses the best use of that inheritance with their goal in mind.
The print version details on the couple’s assets and liabilities as well as their monthly expenses. The article makes more sense seeing the breakdown so that is why I am recommending getting your hands on the print version of the column.

"Painful ARM twisting"


Chuck Jaffe of MarketWatch suggests that the after-effects for the market boom will become a cautionary tale for future generations. With the increase in interest rates the popularity of Adjustable Rate Mortgages (ARM) are resetting and in the end may cost some people their homes.

"Mortgage defaults up 67% in California"

Already in California mortgage defaults have increased 67% which is a three year high. As more companies feel the adjust to higher costs and more people face unemployment the expectation is for more people to have difficulty meeting their mortgage commitment.

"Slow Job Growth Could Give Fed Pause"

With job growth slowing there is a real disaster in the brewing for some homeowners. Unemployment rates rising again may encourage the Fed to leave interest rates alone but that probably will not help people with ARM loans that are due to begin resetting over the next few years.




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