Once, the notion of owning two homes was solely for the wealthy. But now more middle-class baby boomers entering retirement are “trading down” from a big family house to two small abodes in separate states, according to real estate specialists.

“These aren’t rich people. … Yet they have traditional pensions that give them enough income to support homes in two parts of the country,” says Margie Casey, a veteran real estate broker and author of “Relocate at Retirement or Not?”

In a typical scenario, a retiring couple will first sell their large family house. Then they’ll buy a smaller home nearby for use as their primary residence. Finally, they’ll purchase a small, secondary residence in another state, most often in a resort setting.

Wherever they choose to live, most boomers want low maintenance, with exterior upkeep provided through a condo or homeowners’ association.

“People want the total freedom of ‘lock and leave’ homes,” Casey says.

Of course, many boomers lack the wherewithal to pursue a two-home retirement strategy, often due to financial setbacks in recent years. But Casey says those with enough money are willing to spend it in order to enhance their retirement lifestyle.

Here are a few tips for those considering a two-home retirement dream:

•First check out the financial implications of your plan.

Casey, who reviews retirement communities, says anyone considering two-home ownership should first discuss the financial implications with a professional adviser.

“A planner can help you calculate what you can afford and give you a second opinion on your plan,” she says.

On paper, it should be no more expensive to own two small units than a single large one. But in reality, dual homeownership can be more expensive after you take into account homeowner’s association fees and transportation costs.

Local taxes are also a big factor, especially in today’s tough times, where cash-strapped municipalities are frequently raising them.

“Once you investigate the taxes, you may decide to live one state away from your grandchildren, assuming that lowers your cost of living,” Casey says.

•Think through the choice of a condo as one of your two homes.

Michael R. Crowley, a real estate broker and past president of the National Association of Exclusive Buyer Agents, says homebuyers considering the purchase of a condo should exercise caution.

As an example, he tells of a married couple he advised on the purchase of retirement property in Hawaii. The couple chose a condominium development that seemed attractive. Before they concluded a purchase there, however, they rented a unit as a trial run.

“After a brief time renting, they realized they hated condo living. It felt way too crowded to them. They were glad they’d tried it out before actually buying,” Crowley recalls.

As he notes, there are other options for small-scale living that provide many of the worry-free features as a condo-apartment.

For instance, in many “planned unit developments,” you can buy a one-level detached unit that comes with exterior maintenance, including a lawn service, Crowley notes.

•Consider transportation before deciding where to relocate.

Many a retiree has selected an idyllic retirement setting without taking into account airport access, which is a major mistake, Casey says.

Relying on an out-of-the-way airport makes it harder to travel to distant locations for vacation or to see your offspring. It can also add to your transportation bills.

“Try to live near an airport that’s a hub for one of the major carriers. That can save you a ton on air travel costs,” Casey says.

Another transportation factor to consider is proximity to major interstate roadways.

“Most retired people want to live within a two-hour drive of their grandchildren,” Casey says.

•Avoid high expectations for visits with your offspring.

“Living near the grandkids is the No. 1 thing for a lot of retirees,” Casey says.

Still, she cautions those choosing a retirement habitat to be realistic about their expectations on how often they’ll see family, no matter how close they live.

“Your kids have busy lives. Sure, you can hope to see them often. But don’t focus your whole retirement lifestyle on seeing family. First and foremost, choose the lifestyle that works for you,” Casey says.

•Remember the benefits of two-home living.

One reason retirees like owning two abodes is that they can take advantage of two distinct climates, avoiding harsh winters and interminable summers

By living in two places, Casey says, many retirees have “the best of both worlds.” They can choose a primary setting near family and a secondary one that satisfies their desire for intellectual stimulation, perhaps in a college town where they can enjoy classes, lectures and cultural events.

For instance, Casey cites low-cost courses available to seniors on many campuses through the Osher Lifelong Learning Institutes, www.osherfoundation.org Buying a home near a college town offering such classes can enrich retirement.

Obviously, not all retirees are suited to living in two homes. Some prefer a sedentary life with little travel involved. But many others thrive on a dual-town lifestyle, Casey says.

“Living in two places can be exciting. The change of going back and forth is stimulating. And that’s good for a lot of people,” she says

Wednesday Apr 4, 2012

(Reuters) – Here’s a list of some of the most popular and promising places for vacation-home shopping, with recent median list prices from real estate shopping site Zillow.com.

Aspen, Colorado

Median list price: $1,725,000

Sales were brisk in winter playground Aspen during the last year as motivated sellers accepted prices 25 percent off their 2007 peak, says local real estate agent Steven Shane.

The Hamptons, New York

Median list price: $2,100,000

Bidding wars these days aren’t uncommon for well-priced homes in this group of upscale enclaves on eastern Long Island, says Cia Comnas of brokerage Brown Harris Stevens, especially for properties close to the water. Home prices surged 22 percent in the third quarter of 2011, but smaller Wall Street bonuses could slow sales in 2012.

Hilton Head, South Carolina

Median list price: $475,000

Home sales in Hilton Head, known for ocean breezes and world-class golf, were up 13 percent last year over 2010, says local agent Andy Twisdale. Prices on this South Carolina island benefit from a limited supply of land.

Santa Barbara, California

Median list price: $799,000

Temperate climate and easy access to the ocean and mountains draw buyers to this posh community about halfway between Los Angeles and San Francisco. The high-end market especially is heating up, with half of all deals in cash, says broker Bridget Murphy.

Avalon, New Jersey

Median list price: $1,350,000

A barrier island near the southern tip of New Jersey, this seashore community has long been one of America’s most expensive zip codes. Beachfront homes range in price from $4 million to $12 million, according to local broker Paul Leiser. “As of February, there’s been a stampede of buyers,” Leiser says. “From modest condominiums to beachfront, we’ve seen an incredible run.”

Miami Beach, Florida

Median list price: $447,000

International jet-setters have descended on Miami Beach in recent years, with buyers from South America and Russia in particular gobbling up high-end properties. “It’s a seller’s market,” says agent Allison Turk.

Sun Valley, Idaho

Median list price: $649,000

Prices are down 25 percent to 30 percent from their 2007 peak in this year-round resort, but realtor Dan Gorham has already seen 17 properties over $2 million close this year — three times more than all of 2011, he says.

Phoenix, Arizona

Median list price: $120,000

In 2006, Phoenix, a popular destination for Midwestern snowbirds, became the epicenter of the mortgage crisis as home prices tumbled. Prices ultimately dropped more than 60 percent on average, but the market seems to be back on its feet. New-home sales in the hottest areas are up 35 percent over the past month, say Jim Belifore, a local real estate consultant.

Lake Geneva, Wisconsin

Median list price: $299,000

Inventories are still rising at this lakeside resort town two hours from Chicago, but local brokers say prices have hit bottom after falling more than 25 percent since 2006. Sales are climbing. “The market last year was impressive, with a full volume recovery evident by year’s end,” wrote local real estate blogger David Curry. “Yet this year, Geneva Lake is on track to absolutely obliterate recent sales results.”

South Lake Tahoe, California

Median list price: $265,000

In South Lake Tahoe, tucked in the Sierra Nevada mountains, home prices are down 50 percent in the last five years, according to local real estate agents Gary and Richard Bolen, but demand was up 7 percent in 2011 and sales of properties under $300,000 grew by nearly 20 percent. Bargains are still available: Homes in the $600,000 to $650,000 price range are nearly two-thirds larger than they were in 2005.

(The author is a Reuters contributor. The opinions expressed are her own.)

Avalon, NJ

Much has been made recently of the government’s renewed efforts to spark the housing market from its dismal slide, however we fear there are yet more unintended consequences lurking just around the corner. The various ideas being posited for a broad REO-to-rental program is one of these steps as BofA points out in accommodating the dramatic shift from ownership to renting (with 4.2mm new renters and 1.2mm fewer homeowners since the end of 2006). Of course removing foreclosures from the for-sale market reduces competition for voluntary sellers – which should help to support prices for non-distressed homes but here is where the crux of the unintended consequence lies.

We have a squatter epidemic. There are millions of ‘homeowners’ currently living mortgage-payment-free (by choice) who will soon be forced (as the foreclosure process ramps up post-settlement) to pay rent (since they will not qualify for a mortgage). This will have the double whammy effect of reducing overall discretionary consumption spending (as rent is greater than ‘free’ – unless the cardboard box is preferable) and driving inflationary forces into rental costs (something we are already seeing). Of course these are the much larger second-order effects and we will only be told of the primary benefits of clearing foreclosure inventory, but at the margin (along with gas prices) the household will have less discretionary iPad-buying ammunition as opposed to more.

Since the end of 2006 there are 4.2 million more renters and 1.2 million fewer homeowners…

Distressed property prices continue to turn down (and re-accelerate) as the foreclosure pipeline starts to unclog…

7% Jump in US Median List Price
For-sale housing inventory drops 22%, near a 2-year low

Data courtesy Inman News.

Median list prices jumped 1 percent or more on a year-over-year basis in February for about 73 percent of the 146 markets tracked in a report released this week by Realtor.com.

On a national basis, the median list price rose about 7 percent year over year in February.

Among the top 10 markets for the highest year-over-year hike in list prices in February, seven were in Florida — Miami topped the chart with a 26.2 percent increase, according to the report.

The median list price of homes tracked by Realtor.com rose $2,500 between January and February 2012, to $188,000, which is 6.82 percent higher than the median list price was a year ago when it was at a two-year low. February 2012′s median list price is on par to what it was in February 2010.

Only two markets showed a year-over-year increase in for-sale inventory, according to the data: Philadelphia and Springfield, Ill.

The housing market shared in the summer economic slump, brought on by the downgrade of the U.S. credit rating, impotent congressional squabbling over deficit reduction and Europe’s self-inflicted debt crisis.

This single-family house on Simpson Avenue in Ocean City was among the homes in the region that sold during the third quarter for the median price, $220,000.

Home prices fell again, but by less in the southern New Jersey shore market, the latest data from the National Association of Realtors show.

Home sales, though, increased everywhere from a year ago — up 13 percent in New Jersey — helped by record low mortgage interest rates.

In the Atlantic, Cape May and Cumberland counties region, the median home price in the third quarter was down 3.8 percent from a year ago to $220,600.

That was better than the 4.7 percent decline nationwide and 6.5 percent drop in the Northeast.

Anthony D’Alicandro, president of the Atlantic City & Atlantic County Board of Realtors and broker/owner of Coldwell Banker Casa Bella Realtors in Linwood, said the price drop is a function of supply and demand, with too much inventory and too many distressed properties on the market.

Another factor is low consumer confidence, which is lower than it was in 2008, he said.

But overall, D’Alicandro said he feels good about the housing market and “the little bit of growth we’re seeing.”

A healthy market grows slowly, as it did in the early 1990s, he said, not like the housing bubble in the following decade that ended in the current oversupply.

“We will see an initial decline in prices, and then nine to 12 months from now, we’ll start to see true stabilization and a little bit of growth by the end of 2012,” D’Alicandro said.

Mortgage rates that remain about 4 percent will continue to motivate buyers as long as they last, and the shore region will remain an appealing market to home buyers, especially those looking forward to retirement, he said.

“We have an attractive place to live, near the shore, with lots of things to do, near the big cities of Philadelphia and New York, with a nice climate, and we’ve seen a tremendous increase in the quality of health care, which is important,” D’Alicandro said.

Jarrod Grasso, the chief executive officer of the New Jersey Association of Realtors, expressed a similar sentiment about the statewide market in explaining the strength of New Jersey home sales.

“The resiliency of Garden State infrastructure and industry, plus our location between the New York City and Philadelphia markets, places us in a strong position for employment and stability,” Grasso said in a statement.

Thanks to low mortgage rates and fallen housing prices, home affordability continues at record-high levels.

NAR’s Housing Affordability Index was 183.8 in the third quarter, the highest ever except for the record level in the first quarter this year. The index gauges how readily those with a median income could afford a mortgage for a median-priced home. The median is where half are higher and half lower.

A third of home purchases in the third quarter were for cash, and two-thirds of those cash buyers were investors, the Realtors said.

D’Alicandro said that with rents for homes soaring, housing makes sense as an investment again. “We’re seeing rates of return in the 9 percent to 11 percent range.

Distressed properties — either short sales or foreclosures — made up 30 percent of home sales in the quarter, down from 33 percent in the second quarter, the Realtor survey said. Those houses typically sold at a discount of about 20 percent.

D’Alicandro said that while there is a large backlog of distressed properties from the legal system’s slowdown of foreclosure processing, he doesn’t expect those to undercut demand much for normal homes.

“If you think about a 28-year-old who is exceptionally good at writing HTML code, I don’t know that he wants to buy the house that’s been sitting vacant for three years,” he said.

The 3.8 percent decline in the regional home price follows a 5.8 percent increase in area home prices in the second quarter.

The current median price in Atlantic, Cape May and Cumberland counties is about the same as it was in 2009, and 13 percent lower than it was in 2008.

By JOEL LANDAU Staff Writer Press of Atlantic City

GALLOWAY TOWNSHIP — Joe and Stephanie Tucci spent a year and a half looking for the right house.

And six months after submitting a bid, they’re still waiting and waiting and waiting to find out whether it will work out.

Stephanie and Joe Tucci, of Mays Landing, stand in front of a Galloway Township home that they hope to buy in a short sale. They submitted a bid six months ago and have been waiting for bank approval.

The township home that the couple bid on is a short sale, which means the owner of the house could no longer afford to pay its mortgage and is working out a deal with the lender to sell at a price lower than what the owner owes. When a potential buyer makes a deal with the seller, the lender’s approval is required for the sale to take place.

Local real estate agents say short sales are becoming a larger part of the local market and can often translate into a lower price for a buyer willing to be patient.

“People walk away from short sales because they get tired of waiting,” said Robert Shamberg, owner of Prudential Diversified Realty in Galloway Township. “Everyone wants a deal. Everyone knows short sales are a good deal. But they may not realize it takes a lot of time.”

The home could have several lenders that all need to be satisfied, Shamberg said. The bank could take longer than expected to give an answer or make a counteroffer, he said.

Shamberg counseled Joe and Stephanie Tucci through the process and said they could get a good deal if they were willing to wait. The couple placed a bid at $200,000, which Shamberg said is about $50,000 less than a realistic market value.

But sellers and banks are often willing to accept less rather than go through the long and costly foreclosure process.

That’s the hope of the Tuccis, who fell in love with the home that was recently renovated and features an open kitchen and cathedral ceilings. The couple placed the bid in April and hope to hear within the next few weeks.

“You can get a really good deal but you have to have time,”Stephanie Tucci said.

The couple has continued renting in Mays Landing and have looked at some other homes as a potential backup plan.

“It’s just a waiting game,” Joe Tucci said. “Hopefully they’ll take our bid or they’ll lose out and have a vacant property.”

Brenda Lawn, a real estate agent for Prudential Fox & Roach in Northfield, said short sales are an “absolute roller coaster”that can take an emotional toll on the buyers.

“The first thing I do is educate them. I tell them it’s a long process and there will be a certain degree of frustration,” she said. “It’s hard to do that. The buyers are so enthusiastic. But it really is difficult because it doesn’t always have a happy ending.”

Lawn said short sales and foreclosures have taken up as much of a third of the housing market in most of the region.

She said she’s had buyers wait between three months and a year for the bank to approve a deal, but Jeff Quintin, of Prudential Fox& Roach in Ocean City, said he has had some recently that took only a few months.

Conducting a short sale “is a skill providing you know how to manage the lenders and structure the deal properly,” he said. “If you know what you’re doing and get it structured the right way, a short sale can be like a typical sale.”

Quintin said larger banks may not open the file on the property until the bid is submitted, so it’s impossible to know what the bank would accept.

“In most cases there is not a predetermined (price) for the short sale unless you have already gone through the process,” he said.

But a short sale is often worth it to the bank considering it can take more than two years to foreclose on a property owner, Quintin said.

“You never know what a bank will approve,” he said.

Short sales also benefit the seller because they avoid foreclosure and leave the seller in a better position than if they waited to get more money on the sale, Quintin said.

“Their credit may go down 100 points but they can improve it faster than the market can improve itself,” he said, adding many sellers are finding it too difficult to redo their loans.

And the program has had its results.

Quintin said he recently had a home valued at $4 million approved for a $1.425 million short sale in Ocean City. Another Ocean City property valued at $2.765 million closed at $780,000, he said.

“The buyer is always getting a property under market value,” he said. “It’s worth it many times to go through it.”

By Jeff Reeves, editor for InvestorPlace.com

Now could be the best time in history to buy a home. Presuming, of course, you have the money and the credit to do so.

The average rate on a 30-year fixed mortgage hit record lows last week, down to 4.01%, according to Freddie Mac. The Federal Reserve’s recent “Operation Twist,” which was designed to do just this, appears to be doing the trick.

There are a lot of reasons to consider buying a home right now. The big savings on interest is just one of them — the difference between a 4% rate and a 5.5% rate on a $200,000 home loan is just shy of $200 in monthly payments and can save a homeowner more than $60,000 in interest payments across the life of the loan.

Another motivating factor could be the fact that rents remain sky-high in the U.S. right now, and in many markets it’s actually cheaper to buy a home than rent a two-bedroom apartment.

While housing might not be at a “true” bottom just yet, there are many signs it is nearing one in many markets. Housing prices rose from June to July in 17 of 20 cities tracked by the Standard & Poor’s/Case Shiller home price index. It marked the fourth straight month of rises in most U.S. cities.

That’s to say nothing of the case-by-case bargains to be had. Here are two personal stories that show the opportunities to be had in this housing market:

I live in the Washington, D.C., area and purchased a short-sale home in 2009. Although three months of back-and-forth with the bank drove my wife and me crazy, we finally closed on the property just hours before a foreclosure auction — after which my Realtor asked if I wanted to immediately re-list my home with him for about 30% more than we had just paid. I had purchased the property for a growing family and good schools, so I politely declined. But the message was clear: If you suffer through a painful distressed property purchase, you get a hefty discount for your trouble.

On the other side of the coin, my brother purchased a newly constructed home in Roanoke, Va., as his wife attended medical school at Virginia Tech. Seemed like a good idea at the time — but now he’s 40% upside down on his house and renting it for barely enough to cover the mortgage. Unfortunately, he now lives six hours away, so it’s no picnic to manage his rental. My brother recently decided he has enough stress in his life so he will list the house at slightly below market rate just to get rid of it — even if it’s going to cost him big-time. Very bad for him, but some lucky southwest Virginia family is going to get a nearly brand-new home for a heck of a deal.

I’m sure many of you have your own story to tell about the housing market. Share it with me (see below) or better yet, post it in our comments section so everyone can read and weigh in.

There are plenty of other bank-owned homes or desperate sellers that folks can pursue, with deals akin to the two listed above. But the million-dollar question, of course, is whether prospective homeowners can get a loan — and if they can, whether they want one.

After the mortgage meltdown, banks have wisely tightened lending standards . That’s as it should be, but it understandably shuts many folks out of the market. Other people have good credit but don’t have the necessary savings for higher down payments some lenders now require. That’s to say nothing of folks who perhaps could sign up for a new home but are just too uncertain about their job or retirement.

Whatever the reasons, it all adds up to a decided lack of demand in the housing market. Many factors have created great deals right now, but those factors also might just be too daunting for many to overcome right now.

I remain convinced that I made the right choice in buying my home — not because it was an “investment,” but because it’s in one of the best public school systems in the country and I now have two beautiful daughters who wouldn’t fit very comfortably in an apartment. And by the way, that two-bedroom apartment rented for only about $100 less a month than my current mortgage. Buying a home was the right thing for my family, and for my finances.

And perhaps that’s the biggest lesson of all: The best reason to buy a house is because it will become your home — not a path to profits.

By KEVIN POST Business Editor Press of Atlantic City

Joel Naroff, of Margate and Holland, Pa., is president of Naroff Economic Advisors and this year’s most accurate U.S. forecaster, as determined by the National Association for Business Economics.

His clients include the Susquehanna and Metro banks, grocery giant Ahold USA, Cumberland Advisors, eMoney Advisors and Prudential Fox & Roach. Naroff discusses the economic recovery, government interventions, lasting effects of the downturn, and the future of the regional economy.

Joel Naroff, economist and president of Naroff Economic Advisors, discusses the economy, Tuesday Oct. 18, in Pleasantville.

Q: Is the popular perception of the economy accurate? Should we be worried more or less about the strength of the recovery?

A: For about a year and a half I’ve been asking people if they think the recession is over, and if I get 5 percent of the group saying yes, that’s a lot.

Yet the recession ended in June 2009. That perception is being driven by job numbers.

We seemed to be coming out of it in the first part of the year. There were several months where we had job growth in the 200,000 range. That was signaling that the economy was on the verge of changing gears.

Unfortunately, before the job growth could get strong enough and be self-sustaining, we had $4 a gallon gasoline. And that really cut the legs out of what was always going to be a tenuous recovery.

You could never get a really strong recovery with housing not going to rebound the way it did in the past. Housing used to lead the recovery, but we built almost twice as many homes as we needed in the last decade, so housing’s going to be weak.

But if you look at the details of the economy, the manufacturing sector is really good, the service sector has been expanding, exports are really doing very well. The details are better than the headline popular number, which is jobs, and I think that’s why people are depressed, and with very good reason.

If you can’t find a job or are worried about losing your job, that’s job insecurity, and that’s what a lot of people have right now.

Q: What are the strengths and weaknesses of the Jersey Shore’s economy?

A: Clearly the attractive forces in terms of the shore communities and the summertime are not going to go away and are only going to grow. But I think the key factor over the next 10 to 20 years is the slow but steady retirement, or whatever they call it, of the baby boomers.

Baby boomers are not retiring all at once, but that process has begun and over the next 10 to 20 years it will ramp up. Baby boomers are looking for different things than their parents’ generation looked for. They’re looking for what I call high-density amenity locations. Places where they can get to and do lots of different things easily.

That changes where they’re going to locate. Center cities become not really great places. Areas around colleges become really nice places. The shore becomes a wonderful area. If you think of Atlantic City in terms of all the cultural amenities that is has to offer — the music, the shows — it’s a really desirable place not just for the summertime, but for the baby boomers it becomes a desirable place to retire to.

I think we’re beginning to see that. A lot of the rentals over time will be replaced by retired baby boomers living there full time. That will change the face of shore communities because the services that go along with more and more full-time and reasonably well-off residents will have to be developed.

Atlantic City is obviously the linchpin, but Atlantic City is also the risk in that, for the longest period, it had relatively little competition. Now that’s not the case. There are casinos everywhere, and Atlantic City needs to define itself in a different way.

Outside of Atlantic City, clearly what’s happening in the airport and (William J. Hughes) Tech Center area is potentially a huge plus over the next 10 to 20 years because that’s so much of where the world economy is going.

Q: Will the region’s housing market benefit going forward from its substantial second-home and retirement-home segments?

A: If my thinking about the Jersey Shore being a retirement community and not just a tourism attraction is correct, that’s very good for the stability and growth of the housing market.

That demand will continue and grow to a major force as more baby boomers retire. To the extent it requires a more diverse and stable base to support the residents, that’s going to bring more workers, more incomes, and more demand for housing throughout the area, including offshore.

Again this is going to take a long time, 10 to 20 years, but it does have a really good implication for housing market outlook.

Q: What is the potential for Atlantic City to set itself apart from the convenience gambling competitors around it?

A: Atlantic City faces a major challenge right now to identify itself in a different manner.

It can’t be the same Atlantic City that it was 20 or 30 years ago, and it isn’t. It has been trying to wean itself off of the day-trip model and become more of a destination. That’s critical.

The challenge is figuring out precisely what that image is. It’s got to be something else that really sets it apart.

It’s got a large enough mass now, with the Revel hotel coming in, that even if it loses some of its casinos, it’s a different place than anything that exists on the East Coast. It has to make that clear and sell that. I’m not a marketing expert, but I think there’s an understanding that it’s a tourism place, it’s got the summers, but getting people down here in the fall and spring is really important as well.

Q: Is there anything that government can do to reduce unemployment and strengthen the weak recovery?

A: With this really, really disappointing recovery, I think everybody’s turned toward the magic bullet. Can’t the government do something? We’ve spent all this money, bailed out the banks, had stimulus plan after stimulus plan. Why isn’t the recovery stronger?

With fiscal policy being restrictive and state and local governments cutting back on their budgets and their work forces, and with housing and finance not adding in the way they used to, it’s very difficult to get things going.

That said, could the government be doing more? Well, the problem with fiscal policy is that it takes a long time. Even the so-called shovel-ready projects we started are still being worked on. We have construction just beginning or not yet finished and it’s nearly three years ago we started that.

The government can’t simply say, gee, we’ll cut taxes. Businesses have $2 trillion in cash on hand. That’s not what’s stopping them from hiring more people and investing more. It’s uncertainty about the economy.

Q: Are there things government shouldn’t do during this period of prolonged economic weakness?

A: There’s a lot of debate about that. You don’t want the government to put up hurdles to business. At the same time we’re in a special situation.

We had been letting the financial sector handle things on their own, and while there were plenty of regulations to deal with the excesses that occurred, the regulators didn’t enforce those regulations nearly to the extremes that they might have to prevent things from happening.

I’m not saying the regulators were at fault, but now the question we’re having is what’s the right amount of regulation and what’s too much or too little regulation. We’ve gone through a period of too little regulation and we may be going through a period of too much regulation, but we know there are costs involved with that. We need to make sure there’s not too much regulation.

We need to make sure there’s confidence coming out of Washington, coming out of the statehouses across the country, coming out of local governments, that people are dealing with the issues rather than fighting.

In a period where psychology matters, the chaos that’s going on in Washington is not particularly helpful.

So what government can’t do is send the wrong messages and create major hurdles that will prevent households and businesses from doing the things they need to do.

Q: What is the soonest and the latest the economy might return to what we’d consider normal?

A: This is one of those questions that if I knew the answer I’d write it down. I’d like to say it’s probably going to be at 2:30 in the afternoon of March 14, 2012. The reality is that we really haven’t had to go through a recovery where we were dealing with two of the most critical components of the economy, housing and finance, that were so badly damaged that it was taking a long time for them to recover and get things going.

These are conditions we really hadn’t seen in previous recoveries in the post-World War II era, really in the last 60 to 70 years. That makes it a very odd situation.

The economy is going through what I call a slow but steady grinding recovery. It’s going to take a while. By the time we get to next spring or summer, we will clearly see that things are back. Are they going to be normal? Maybe not fully normal but getting there. If you think back to last spring, when job growth was coming around, we hadn’t flipped a switch, we hadn’t shifted gears, we were getting to that point such that, if gasoline prices hadn’t shut the recovery down, by now we’d be in pretty good shape.

We’ve essentially pushed that recovery back a year, so by the spring we’ll probably be in the process of shifting gears and by summer we’ll see things getting appreciably better.

Q: Will the severe downturn have lasting effects and, if so, what might the new normal look like?

A: Whether it has as deep an impact as the Depression did on that generation that lived through that, which became extraordinarily cautious for a long time, is unclear.

But the longer this goes with this kind of slow growth, this kind of uncertainty, with this kind of job insecurity, the more that perceptions and attitudes are going to change.

It’s going to be a long time before we have another go-go housing market. People are going to look at jobs in different ways. Job security had been defined by a lot of people as simply the ability to get another job. If I don’t like this one, I’ll just go find another one. Well, they’re going to be looking at trying to keep their jobs.

In addition, a lot of people are being scarred by changes in income and spending, and so their spending habits are going to change. Shop ’til you drop will return, but it’s going to take a long time. Maybe it will be shop ’til you’re tired.

Then there’s the idea of what’s a normal economic expansion. We think of the last 20 years as having really strong growth, but what drove the ’90s? It was a tech bubble. That created a huge amount of wealth and that wealth drove strong growth.

Similarly, what happened in the last decade? A lot of people saw their housing prices go up, they spent as if their $250,000 home was really worth $2.5 million, and that extra wealth on paper drove the strong growth.

Unless we have another bubble that creates huge wealth, we’re not going to have that strong growth.

So the new normal, which is an old normal, a non-bubble-driven normal, is significantly slower growth than we had in the bubble periods.

Q: How will the jobs of the future be different, and how should workers prepare themselves for them?

A: The job of the future is just a continuation of the changes that we’ve seen the last 20 years. The days of being able to get a basic high school education, go into a factory and make a decent living are pretty much behind us. Factory jobs are much more skilled right now, and you hear stories every day about manufacturers who even in current circumstances are having trouble finding the right people with the right skills.

That’s in part a result of our perception that manufacturing is disappearing so we don’t have to train for it. It’s not necessarily that the education system went wrong, just that we told everybody they should be in software, rather than getting the kinds of technical skills that every firm requires right now.

It shouldn’t be that we have so many manufacturers looking for skilled workers and they aren’t out there at a time when we have unemployment above 9 percent in the state and nation. That’s a lack of understanding where the skills were going and setting up the training to match that.

Q: What are your business clients most concerned about this year?

A: In the beginning of this year, the question I was asked the most was: When are we going to get out of this and how strong will the recovery be?

Then as we moved through the summer and the chaos of Washington with the debt ceiling, budget cuts and the downgrade, the question became: Are we going to go into a double dip?

Businesses are uncertain and they’re not hiring because of that. They want to have some confidence that if they make an investment and hire some people, the economy’s not going to fall apart three months from now. And while no one can give them certainties, my forecast is that’s not likely to happen, at least not unless there’s another shock to the economy.

Posted: Sunday, October 9, 2011

By KEVIN POST, Business Editor Press of Atlantic City

The new home market still looks grim for homebuilders, but pretty good for potential buyers: Houses haven’t been this affordable in decades.

Even so, local homebuilders are starting to feel a bit expansive, planning new developments in the area and extending their territories again.

U.S. households, with a median income of $64,200, could afford 73 percent of the new and existing houses on the market in the second quarter.

That’s slightly down from the 75 percent affordability in the first quarter, the highest ever recorded by the National Association of Home Builders.

Locally, affordability was nearly as good.

In the Atlantic City/Hammonton area, 66 percent of houses were affordable to families earning the median $71,100 income for the area.

In Vineland/Millville/Bridgeton, 65 percent of houses were within reach of the median income of $62,400.

The exception to this record affordability was Ocean City, where the data is skewed because houses priced for second- and vacation-home buyers living elsewhere are often out of reach to local household incomes.

This made Ocean City the least affordable of the 220 metro areas surveyed by the NAHB, with only 41 percent of its houses affordable with the local median income of $70,100 a year. While that income is nearly the same as in Atlantic County, the median home price there was $203,000. In Ocean City, resort homes pushed the price to $360,000 in the NAHB survey.

Halliday-Leonard kept to its stronger hometown market of Ocean City as the downturn hit, having built houses from Hammonton to Cape May for 33 years. Now, it’s reaching out again.

“The last five to eight years, we concentrated on Ocean City,” said co-owner Scott Halliday, also of Ocean City. “Now, we’re starting to look elsewhere too. I’m heading to Avalon now for a possible job.”

Tim Schaeffer Communities – which avoided most of the damage of the market collapse and finally sold off the last of its 123 homes at Pine Crest in Egg Harbor Township – also is making plans for an improving new-home market.

After recently starting construction on the 14-unit Walden Commons in Hammonton, the firm is preparing to build a model and sell six homes off Zion Road in Egg Harbor Township, said the Haddonfield firm’s president, Jason Schaeffer.

“We’re also planning to start a project in early 2012 in Vineland. That’s about 180 single-family homes in a development called Menantico Estates,” he said.

Joel Naroff, president of Naroff Economic Advisors, said the shore and New Jersey markets may do a bit better than elsewhere in the year ahead.

“Some of the shore areas have done reasonably well, and that’s pretty good. That’s an area less affected by distressed homes,” Naroff said. “To some extent, the upscale homebuilders have a greater chance.”

Statewide, although there are “a fair number” of short sales and foreclosures, “they’re more sprinkled around, so we’re likely to see more of a recovery in the New Jersey housing market,” he said.

The latest figures on new-home sales suggest that recovery hasn’t begun. The Census Bureau said sales of new single-family homes were down 2 percent in August from the prior month, but still up 6 percent from the same month a year ago.

Houses are more affordable than they’ve been in a decade.

Jersey Shore Waterfront Home

By Pat Mertz Esswein, Associate Editor

From Kiplinger’s Personal Finance magazine, October 2011

1. Prices have nearly hit bottom.

In most areas, most of the excess has finally been wrung out of the market. But if you’re buying a first home or looking to trade up, there’s no need to rush. Although prices may fall some more — blame foreclosures still working their way through the system and tighter credit — they won’t fall by much. Fiserv Case-Shiller, which tracks home prices, forecasts that the median price nationwide will ratchet down for about six more months, then stay flat for three or four years.

In most of the cities where home values experienced a double dip after the expiration of the home buyer’s tax credit in mid 2010, median prices won’t fall below their 2009 or 2010 lows, says David Stiff, Fiserv’s chief economist. These cities include San Francisco, San Jose, San Diego and Washington, D.C. But in cities with lingering oversupply of homes for sale, Fiserv forecasts a decline of 10% or more in the median home price (for the year ending March 31, 2012). These cities include Riverside–San Bernardino, Cal.; Las Vegas; and Miami.

2. Houses are affordable again.

Homes haven’t been this affordable since 1991. Economists often define affordability as the ratio of median home price to median family income. According to Fiserv Case-Shiller, the U.S. ratio now stands at 2.6 — down from a peak of 4.1 in mid 2005 and just under the long-term average of 2.8. Of course, some areas continue to defy affordability. In California’s coastal cities and the New York metro area, the ratio is 5 or more. Average mortgage payments are another way to look at affordability. Since the housing market’s peak in 2006, the average principal-and-interest payment in the U.S. has fallen from $1,063 to $645.

Renters considering the jump to homeownership may be encouraged by the price-rent ratio, or the median home price divided by the median annual rent. In 2005, the national median home price had inflated to nearly 21 times the median annual rent, according to Marcus & Millichap, a commercial real estate brokerage company in Encino, Cal. Since the bust, the ratio has deflated to 14, less than the historical average of 15. During the same period, the difference between the median monthly mortgage payment and median monthly rent fell from $745 nationally to $102. Marcus & Millichap expects rental vacancy rates to hit pre­recession levels this year, allowing landlords to raise rents by an average of 3.5%.

3. Mortgage rates won’t go any lower.

For the past couple of years, interest rates have hovered at levels last seen when the veterans came home from the Korean War. According to HSH.com, which tracks mortgage rates, at the beginning of August the national average 30-year fixed rate was 4.5%. FHA loans, which require only a 3.5% down payment, had a 4.3% rate. Adjustable-rate mortgages are even cheaper, and even rates for jumbo mortgages have hit lows not seen since the 1980s.

Freddie Mac forecasts a 30-year fixed rate of 5% by year-end and 6% by late 2012. Standard & Poor’s downgrade of the U.S. credit rating won’t have an immediate effect on rates because of the weak economy. But credit is tighter, and you’ll need a credit score of 740 or more and a down payment of at least 25% to nab the lowest rates. If you fall short of that, you’ll pay interest-rate risk premiums if the bank plans to sell your loan to Fannie Mae or Freddie Mac. For example, lenders must charge an extra 0.25 point if a borrower has a 740 credit score but puts down less than 25% (but at least 20%).

4. It’s a buyer’s market.

Demand is low; supply is high. In early summer, the National Association of Realtors reported that sales of existing homes (single-family houses and condos) fell by 9% from the year before. NAR also reported 9.5 months’ supply of homes. That’s how long it would take to sell all the homes on the market at the current pace of sales, and it strongly favors buyers. (Four to six months’ supply is considered balanced between buyer and seller.)

With so much selection, you’ll find more properties in good school districts or near your job, or homes that offer added value, such as a mother-in-law suite, says Thomas Popik, research director with the Campbell surveys of real estate professionals. You’ll spend less time shopping and competing against other bidders. And you don’t have to waste time with sellers who set unrealistic prices (although they’re still out there).

One caveat: If you’re searching among entry-level homes, which had more extreme price declines than upper-end houses did over the past year, you may face stiff competition from investors. They typically pay cash, which makes them attractive to sellers who want to close the deal fast. However, says Popik, you may find opportunities in homes that were bought and fixed up by investors, who intended to flip them but have had difficulty making a sale.

5. You may find a distressed property.

Bank-owned foreclosures (or REOs, for “real estate owned” properties) sell for an average discount of 35% off the per-square-foot price of conventional homes for sale, according to RealtyTrac. In the first half of 2011, lenders owned about 870,000 REOs but listed only about one-fifth of them for sale, concentrated in such high-foreclosure states as Arizona, California, Florida, Michigan, Nevada and Ohio; even with the slowdown in the foreclosure pipeline due to legal-processing issues and new supply exceeds sales. Find more on buying foreclosures.

Short sales, or homes sold with lenders’ permission for less than their owners owe on their mortgages, have also grown in number. Lenders have become more amenable to them as they seek to avoid the often huge losses associated with foreclosures, says Rick Sharga, of RealtyTrac. Short sales offer buyers less of a bargain than REOs, but the homes tend to be in better condition. Banks may still take two to six months to sign off on a short sale, so patience is imperative.

6. Homeownership is still attractive.

A home is the biggest purchase most people ever make. But deciding whether and what to buy isn’t purely a financial decision, says Chris Herbert, research director at Harvard’s Joint Center for Housing Studies. When you own a home, you can control your living environment and security, upgrade and change your home as you see fit, and create a sense of rootedness in your community.

You can offset some of the cost of homeownership by deducting mortgage interest. But don’t mistake a home for an investment, at least not in the short run. “If your goal is to jump in and get a return of 6% annually, that’s a bad idea,” says Fiserv’s Stiff, given the forecast for weak price appreciation. Instead, you need to commit to owning the home for at least five to seven years to ride out any further price declines and recoup your down payment and transaction costs. If you think that you might need a bigger home before that time to accommodate a growing family or that you might have to move to another area for your job, don’t buy unless you’re willing to become a long-distance landlord.

Shop carefully, and be patient. Exclusive buyer’s agent Michael Crowley of Spokane, Wash., tells buyers it may take three to four months to find the right house. “We can be in a hurry, or we can be particular, but we can’t be both,” he says.