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.

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.

GAY TALESE  never learned to swim and only occasionally ventures onto the beach. The wind makes it impossible for him to read the newspaper and, he said, during a recent visit to his second home in Ocean City, N.J., “I’m not going to sit on the sand swatting flies.”

Yet for the last 40 years, Mr. Talese, a writer, and his wife, Nan, a Manhattan book editor, have spent weekends and summers there, in the town where he was born, tucked into a rambling red-shingled Victorian they own that sits just one block from the ocean.

Unlike the Hamptons or Litchfield, Conn., where many of the couple’s Manhattan friends seek refuge, Ocean City has long been a getaway for middle-class Philadelphians.

SECOND-HOME TOWN Nan and Gay Talese at their 1902 house in Ocean City, N.J., where Mr. Talese was born

The Taleses like it because it’s the antithesis of the Manhattan literary whirl. So, don’t ask for a whole-wheat roll at the hoagie shop, or a chic mixed drink when you’re dining out. Ocean City has been dry since its beginnings as a Methodist retreat in 1879. Night life? Choose between the kiddie rides on the boardwalk or star-gazing on the beach.

“It’s a great contrast to New York,” said Mr. Talese, who is 75, as he conducted a tour around town, pointing out the building on Asbury Avenue where his mother owned a dress shop, his father ran a tailoring business and the family lived in an upstairs apartment.

Large parts of many of his books, including “The Kingdom and the Power”; “Thy Neighbor’s Wife”; “Unto the Sons,” a family reminiscence that’s largely set in Ocean City; and his latest, “A Writer’s Life,” were written in the third-floor office of his Ocean City Victorian.

“Nobody bothers me here,” he said. “I much prefer it in winter. It’s empty, and you can see the sky. It’s light, and cheerful.”

Built in 1902, the house sits on a tree-lined street in one of the resort town’s most desirable neighborhoods, the Gardens. As in most houses of its kind at the shore, the first floor is raised above street level to take advantage of sea breezes, with a wraparound porch, white wicker furniture and a green-and-white-striped awning. Although the original view from the front porch favored dunes stretching all the way to the Atlantic, by the time the Taleses arrived there were already houses across the street. Five years ago, those were torn down and replaced by town houses, which still did nothing to revive the old sea view.

If you squint, though, you can still see a bit of ocean from a wide window seat in the second-floor master bedroom. Mrs. Talese, who is publisher of Nan A. Talese/Doubleday books (her writers include Margaret Atwood and Ian McEwan), likes to read there in the afternoons after her morning swim and some weeding in the garden. “It’s marvelous with the sun on your skin,” she said.

The house has seven bedrooms, four on the second floor and three on the third, one of which is Mr. Talese’s office. The three bathrooms on the second and third floors contain original claw-foot tubs, each painted to coordinate with the wall color.

Their purchase of the house came about almost by accident. The couple rented it for the summer in 1967 when their older daughter, Pamela, was a toddler, and their younger daughter, Catherine, was a newborn. They were planning to rent it again the next summer when they discovered that another family was considering buying it to live in year-round.

“I said to Gay, ‘Buy it,’ ” Mrs. Talese recalled. They were renting an apartment in an Upper East Side brownstone, a building they would buy many years later, and had little money to spare. But it didn’t deter her. “It was on the spur of the moment,” she said. “He’s cautious. He wants to be unfettered. But I like real estate.”

It turned out to be a wise investment. The house cost $32,000, including the adjoining lot. Mr. Talese said he recently had offers of $1 million to $1.4 million.

Although the two considered buying a place in the Hamptons or Connecticut in the 1970s to be able to spend more time with friends, they decided it would be too much like their social life in New York.

“It’s a place to be away,” Mrs. Talese said. “When we come down, we just stay at home.”

One of the first major changes they made was to winterize the house so Mr. Talese could write there year-round. A deck was added on the back, and bookshelves were added to in the dining and living rooms. And a pantry wall in the kitchen was demolished to open up the space.

Mr. Talese’s third-floor office is set up so that he rarely has to leave. There is a bed that he sleeps in when he’s in Ocean City alone; an ancient IBM Selectric with a grimy plastic cover; and a five-year-old Power Macintosh, which is not connected to the Internet. (Mr. Talese does not engage in e-mail and prefers to hand-deliver his manuscripts to his editors). To reduce the glare from a skylight, Mr. Talese has put together a plastic foam canopy that swoops over his U-shaped desk like a sail on a blustery day. Mrs. Talese calls it “the suspension bridge.”

His summer routine is to write in the morning, play tennis in the afternoon, then maybe watch a game on the 36-inch Sony Trinitron with DirecTV service that he has set up in his office. His tastes run from the Yankees to Japanese skiing.

At the other end of the hall is a room that doubles as a home gym (Mr. Talese lifts weights, and Mrs. Talese uses a videotape for Pilates) and a guest room for visiting writers. The novelist William Kennedy and Mr. Talese’s cousin, Nick Pileggi, are among those who have stayed and worked there for extended periods.

The house is strictly a kick-off-your-shoes-and-stay-awhile place, even though Mr. Talese continues his habit of dressing formally — even in the heat of summer.

“There’s nothing spiffy about this place,” Mr. Talese said one 90-degree day earlier this summer, looking natty in a long-sleeve, pink linen shirt with contrasting white collar, cufflinks, tan pants, a yellow-and-green neck scarf, white belt and brown shoes. Outdoors, he covered his silver hair with a straw fedora and, by early evening when the sun had lost its edge, slipped on a beige jacket with a yellow silk handkerchief tucked in the pocket.

Memories are what seem to count most in the Taleses’ Ocean City home. In the living room, the surface of an old baby grand piano with yellowing keys that once belonged to Mr. Talese’s parents is crowded with family photos and pictures of him with his writing peers — John Irving, Kurt Vonnegut, William Styron, Norman Mailer, Joseph Heller. In one baby photo, the Taleses’ daughter Catherine, now a photo editor in New York, sits on the lap of the legendary Random House editor Bennett Cerf.

Journalist pals, like the late David Halberstam, have always been frequent guests. Pamela Talese remembers her father and his writing cronies lined up on the front porch in their chairs in the mornings, each with his own copy of The New York Times.

Growing up, the Talese children remember old-fashioned summers of swimming, biking and baseball games in the yard. But they also had chores. Each morning they would buy their father a glazed doughnut, leave it outside his office door, then return at 11 a.m. with a plate of poached eggs. After reserving a tennis court for her father in the afternoon, Pamela would bring him a hoagie sandwich and half a beer at 3 p.m. while he watched a ballgame on TV. “Then he would go back and write,” she said.

Although the Talese children have long been on their own, they say they still love visiting the Ocean City house. Once there, they fall into the old routine — padding around in bare feet and taking daily dips in the ocean with their mother, who’s an avid swimmer. On a rare day, they might even catch a glimpse of their father on the beach in a long-sleeve shirt, straw hat, neck scarf and swim trunks, struggling with a newspaper and swatting flies.

Because of the manner in which the law was written, the sale of single family homes from individual sellers was made subject to the requirements, resulting in home purchasers having to file paperwork and provide ten days notice to the Division of Taxation for every real estate transaction, or else risk being held liable by the State for the seller’s delinquent taxes. Under A-2748, the sale by individual sellers of any dwelling unit, primarily one- and two- family homes, will no longer be subject to the bulk sales notification requirements.

BILL SIGNED:

A-2748/S-2313 (Diegnan, Schaer, Lampitt, Conners/Van Drew, T. Kean) – Exempts sales of certain homes and seasonal rentals from the bulk sale notification requirements

By JOEL LANDAU Staff Writer press of Atlantic City

Local real estate agents report a strong summer rental season, which they say is an indication of both a rebounding economy and interest in the Jersey Shore.

The agents also hope that renewed interest in rentals could translate into more people buying a vacation home.

Ron Giordano, president of Atlantic Beach Realty in Stone Harbor, said rentals were up

7 percent among the 150 units his firm has for the season.

But the number of rentals among the lower-end, less-expensive properties actually went down. It was the higher-end properties that had higher occupancy rates this summer, he said.

“The higher-end people doubled their money in the stock market,”prior to late summer’s market swoon, he said.

Giordano’s office tried new initiatives this year, such as posting pictures of rentals on its website.

Joe Wilhelm, of Ocean City Realty, said the rental market got busier as the season moved along.

“The three weeks from July 30 to Aug. 20, it was impossible to find a rental for most people,” he said. “As the year started, more and more calls were placed to find a rental.”

Overall, Wilhelm said, rentals in his office were up 34 percent from the previous year.

Wilhelm said the majority of his clients were from Pennsylvania, New Jersey, New York and Delaware. With gas prices nearing $4 a gallon, they did not want to travel further south — even rental prices are lower.

“They could get places for cheaper in North Carolina, but they would have to drive longer,” he said. “We had a busy year. People did not want to travel as far as they used to. So they are coming to the Jersey Shore.”

Wilhelm said he is optimistic for next year’s market.

“I think this will be good for next year too,” he said. “People really enjoy coming to the shore. They did it as kids and want to keep the tradition going with their kids.”

Local real estate professionals also used the summer rental season as a way to secure future home sales.

Chris Hegel, sales associate of Weichert Realtors in Brigantine, handled rentals this summer as an opportunity to make more contacts.

About 80 percent of the agency’s 200 homes were rented this season, but the newer and higher-end homes were closer to 100 percent.

“I think it went great,” he said. “All in all, our office did very well with our units.”

People were still reluctant to step up and buy, but they were more curious this year than they have been in the past, Hegel said.

“They see a lot of inventory and affordability. Two working people can afford a second home again,” he said. “I did not have a lot of sales from rentals, but contacts have been established. I feel it will translate in a couple of transactions in the next year.”

Giordano was enthused by the strong rental market but nonetheless is waiting to spend money on marketing until the economy improves.

“The economy has to change itself,” he said. “It doesn’t make sense to advertise for homes when no one is buying. When the economy moves around, you start advertising and make money. Then you save your nuts like a squirrel.”

By JOEL LANDAU Press of A.C. Staff Writer

OCEAN CITY — There is mounting evidence the housing market in Ocean City is stabilizing, but still has a little ways to go.

Joe Wilhelm of Ocean City Realty recently sold this home on Coral Lane in Ocean City for $1,076,000 after having it on the market for 26 days.‘I think there are more buyers in the market,’ he says.

Tax Assessor Joe Elliott believes the housing numbers in the city have begun to stabilize after steadily dipping each of the past three years. Though he warns there may still be some dips in prices, he said the city is in a position to move forward.

“That market has stabilized,” he said. “It’s clearly evidence that we have seen the worst.”

Elliott said he is tracking home sales this year and is seeing more sell at price levels from before the market slowdown — especially for homes $650,000 and under.

Homes for $650,000 and less sold at about a

2 percent drop of their assessed values each of the past three years, he said. High-price property ranging between $2 million and $5 million — which is mostly ocean and bayfront — declined 6 percent a year each of the past three years, he said.

The higher-end homes may still be decreasing in value because they’re not as active a market, he said.

But the number of sales is increasing,  Elliott said.

For sales at $99,000 or more, there were 666 recorded in 2009. In 2010, there were 683 sales, and through June 30 there were 378, which projects to 756 for the entire year, Elliott said.

“There is good evidence of stabilization in Ocean City,” he said. “I don’t think everyone can say that, but we can.”

Joe Wilhelm, a Realtor for Ocean City Realty, has seen an influx of buyers in the market during the past six months.

He recently sold a house on Coral Lane near the bay for $1,076,000. The house was on the market for only 26 days, and he showed it the first day it was listed, he said.

“I think there are more buyers in the market,” he said. “The interest rates are so low, people are deciding to put their money into real estate and not the stock market.”

The city had the busiest July in years, and more high-end homes on the bay and beach are selling, he said.

Wilhelm said 90 properties sold last month compared with 57 sales in July 2010.

“When it’s priced right most of it will sell. You hear the market is so bad right now, but in Ocean City and surrounding towns the buyers are starting to come back in,” he said. “It’s still not the levels of 2004 and 2005, but it’s definitely improving. It feels great to see the market starting to change.”

But there is still some work to be done.

Jeff Quintin, salesman for Prudential Fox & Roach in Ocean City, said the still-ample number of available homes in the market is keeping the prices low.

“We are nowhere near the place where we would have an upward swing,” he said. “It’s leveled out to a point, but there’s still a tremendous amount of inventory.”

There are still about 1,000 properties in the city for sale, which is only a few dozen less than the amount of properties listed for sale last July, he said.

“If nothing new comes on the market, it would take 20 months to sell everything,” he said. “We have to clean out the inventory in the marketplace. It has declined over the years, which has been great, but we still have a ways to go. Overall the market has been getting better each and every year. It will still be a while before we see an upswing.”

Jersey Shore Opportunities

This blog post for September 10, 2011 was to a question posed to me the other day asking is this a good time to buy a shore property? Let’s start out with some background by saying I worked with my first real estate company in Atlantic City in the spring of 1985. During that time the market at The Jersey Shore was showing signs of topping out and starting to rollover. The Atlantic City real estate market was being fueled by the massive speculation of gambling and was still on a tear because casinos and investors were still buying the dream. Also in this time period new high rise condos were being brought to market by some out of the area real estate developers that were probably late to the party but were in no position to back out at that point. With major marketing dollars and plenty of effort four residential high rise developments with approximately 1400 condominium apartments were sold and closed from January 1985 until July of 1988. The impact of these properties that entered the market was extraordinary bad. First most of these properties were sold in a vacuum meaning that the prices weren’t really the market they were the prices the developers asked for and got because of the hype. Many of the buyers were from New York or Northern New Jersey and didn’t get sticker shock like their friends from the south in Philadelphia. With the onslaught of closings about 20 to 25% of those properties were put back on the market which by then became a non market.

That short story was the Atlantic City story which had seen the amazing spikes from speculators and casino land grabbing. The casino stocks were flying and many people became multi-millionaires overnight. Let’s get back to the real world for a minute. Other parts of Atlantic County saw much growth from housing and indirect investment in the form of retail and commercial properties to keep up with the growth from the casino engine. Now sleepy Cape May County was feeling some growing pains from the exodus of some Atlantic County residents to Upper Township where the prices didn’t see the same increases and the taxes had not increased much either.

What happened to the other shore communities other than Atlantic City? Of course they went up, but not in the dramatic fashion as A.C. did.

So what happened to make one of the greatest advances in real estate prices fall? Probably to answer this question two fold, the first was greed. How fitting for the New York metro area and second is the easier answer. A market will eventually top out for what ever reason. There becomes a point in time when there is no one in the marketplace that will buy at those prices are there isn’t anyone left in the marketplace to buy. What happens next? It’s called a correction and it can last a long time or a short time depending on the increase of the advance and the longevity of the advance.

Historians have said that the end of the run up in the late 1980’s was from a few major events. First, the tax reform bill of 1986 which changed the status of rental investment properties that owners now either had passive or active income from their investment properties and then the stock market crash of 1987. These two events were the beginning of the end for the run up, on a financial front and then on a psychological front. This one-two punch put the economy and the real estate market in a correction that lasted until 1995 or 1996 depending on the regional economy.

Let’s go back and try to answer the question. When was the best time to buy shore real estate between 1987 and 1996? Let me point out the real estate market bottomed out 1992, 1993, 1994 which I call the muddy bottom. At that time buyers and sellers were trading deeds and the prices stayed generally fixed except the buyers that were buying the quality pieces made out much better in the long run. If you bought in 1991 did you not get a great price? If you bought in 1995 did you not get a great price?  All I can say in that if you bought in all five of those years you would have doubled or tripled the value of your investment.

Why did the real estate market just decide to go up then? Supply and demand is the usual factor. When the supply dips below the demand the prices will start to increase slowing because there is always addition supply waiting for the prices to increase. When do the prices really start to move? Now we go back to the opposite psychology, because when everyone is buying other people feel more comfortable to buy! Friends and family always try to keep up with the Smiths or Cohen’s.

Don’t many people say the market will never go as high as it did this time? Hell yeah. Most people have a memory problem and it starts as soon as times become comfortable. We hear the economy is better, we hear how wonderful the president is doing and we hear whatever we want to hear.

On a different concept when does the market finally go into hyper mode? This one took my much more time to figure out. Bingo! When the entire back inventory is cleared and the properties that were bought at the top of the market are either sold on the market or not returned the market is when the real estate marketplace has the opportunity to flow. Keep in mind timing, as the prices go up how much new inventory will be a drag on the markets. The quicker this happens the fewer properties will be out there since most of the buyers are holding for at least 3 to 5 years.

Now back to the story at hand. The Cape May County market from 1996 to 2000 was having a steady flow of buyers since the baby boomers were entering the resort second home market. I would say they were seeing a 5 or 6 percent increase year over year. Not bad right? The market was just plugging along until the first bump in the road and didn’t turn into a speed bump but a catalyst. The stock market had a nasty correction what was called the internet bubble. If you remember what happened, investors were back to buying stock in companies that never made money. Some people forget or it’s just a new generation of people that don’t know better. So what are people to do now? I got it! Let go back to buying bricks and sticks since they are way less volatile. Right? Well guess what happened next? Like it was yesterday, the World Trade Center came down on September 11, 2001. If you weren’t freaking out you must have been on the moon! For six months the whole country was in shock and many people had a new idea about life. Live for the day and enjoy the time you have with your family because we never know when life could be cut short. Seeing all of those young people in the twin towers and in the financial district it was so unspeakable and this brought on the next wave in my opinion.

One last flashback to 2003, I end up working as the President and general manager of The Landis Co., Realtors in Sea Isle City.  At the time I started having conversations with Jim Sofroney the Broker/ Owner of the firm who had been in the real estate business for 30 plus years. Our conversations were how to manage the risk for our clients since we managed 1000 rental properties and wanted to give the owners our best interpretation of the market twice a year. We were starting to feel a little concerned about the increase in prices already. By the end of the summer of 2003 the prices were holding and the inventory was not increasing and the economy was getting traction.

So where am I going with this story? If you aren’t familiar with the real estate market in Cape May County we have two strong buying seasons, the spring which would consist of February, March, April and May. Then our Fall season would be the end of August, September and October. When we hit the fall season of 2003 the prices were increasing at 1% to 2% per month. Everyone thought this was great, so we saw people that shouldn’t have been in the investor market or people were buying multiple properties at these scorching numbers. The prices were being driven up by the speculation from the builders and developers that were buying land and buildings to turn into townhouses and condos. The more buyers bought the more their friends and family wanted to buy. Human nature at its worst, the greed factor or the let’s keep up with the Jones’ syndrome was at work. We didn’t see this market not being able to digest the entire inventory until the fall of 2005 when things started to roll over. Prices didn’t go up or go down, so the premise was we were beginning to stabilize. That made sense since all we were doing was taking a breather from that frantic period. Right? No! Wrong the real estate markets were exhausted and the developers were still building which was putting even more pressure on the markets that the inventory was peaking out because many of the buyers were planning on flipping their property at the same time the builders were dropping their prices to meet the slowing market.

It became apparent that the real estate markets when the land costs dropped 35 to 40%. The most improved part of the market became the worst place to be. The lot costs probably came back to a reasonable price point but the actual condos and townhouses haven’t dropped that much. Over the last five to six years we watched the prices drift anywhere from 25% to 50% from the ultimate time depending on the town or property type which you might be researching.

Prices were drifting lower at a snail pace until the bad boys of the banking community decided to do lots of bad thing. Well let us say did. Knowingly selling bond portfolios of loans that were to have little or no equity to Main St and sell them as CMO’s (Collateralize Mortgage Obligations). Boy doesn’t that sound warm and fuzzy sitting in your brokerage portfolio? Guess what the executives decided to they owned a bunch of this stuff themselves and tried to figure out a way to cover their bet with derivatives (a financial product like an option to play the other side of the bonds). Well who do you call to help with this mess since this is a new fangled problem? Let’s drag the insurance companies in since they understand derivatives and insurance programs. They will come up with a solution so they thought. The first big insurance company that took a hit was AIG. AIG was probably the biggest insurance company at the time and now running as a few smaller companies. This brought on one of the worst financial crisis ever to hit the United States. The Financial bailout of 2009 was also the biggest blunder since the following year the banks and financial firms that we bailed out had the largest profits in history.

As the prices kept falling and more and more property owners were underwater by 2009 and 2010 it seemed that a lot of the investors were throwing in the towel after getting professional advice from either lawyers or accountants.

The outcome from the professionals was three basic ideas; hold the property for as long as you can. Rent it out, use it, sell it were their choices on scenario one. Then the tough stuff the lawyers would be involved with. If you can sell the property at a price less than the amount you owe the bank we can get you out of the property with out you losing the property in foreclosure. Its easy to do because the banks don’t want to the real estate back and it will even be a longer time before they get it back and if the markets drop further, lets do the deal now and move on to the next one. Back in the early 1990’s most professionals called this a “cram down”. It was a verb since it was being crammed down the banks thought. Today the term is a Short Sale. Aw, isn’t that nice? Since the bank is letting property owners do these they aren’t the victim they are getting what they want. Less bank owned properties and much less legal fees make it a win-win for both parties. The last is the do nothing and enjoy the property and when the bank finally takes the house just get there before and get your personal items out. This process could take anywhere from six months to 18 months depending on the financial ability of the owner and the type of property.

Let’s fast forward back to today September 10, 2011 the day before the tenth anniversary of 9.11.2001. For some reason we are still not comfortable with the local real estate market. We still not have a crystal ball and we are only past history to project the next one or two years out. Why do we even care? I’m not really sure but my blog essay is to show you that history does repeat itself and that where we are today is must closer to the bottom then we are to the top.

Let’s explore these simple questions that people like you might be asking;

Is this a good time to upgrade into a larger Jersey Shore property? Yes. The first question I would ask is how much equity do you have in your current property? The difference between the realistic values of the property and any loan or debt amount attached to the property would be your equity amount. This has nothing to do with any profit or loss you might have experienced. Either way we are looking at a snapshot of today to decide our next move. Psychologically no one likes to take less on an investment but that is irrelevant in deciding to upgrade into a bigger or better property. In the long run the objective is to leverage to down market to your advantage by buying the more expensive property now. On a percentage basic if all things were equal the dollar lose would be substantially more on the larger property than the small property.

As long as you have 20% for your new down payment from funds from the old property or new funds the transition is a go. This is how people with money have been upgrading all the way to the beachfronts or bay fronts. You can’t imagine how many people have asked me “how did those people buy on the beach?” In most cases it was their second or third property at the beach. If you have additional questions about this awesome timing opportunities please email me or call to discuss.

Is this a good time to invest in a Jersey Shore home? Yes is the answer. If you are like most people who are trying to catch the bottom of this cycle well we are in it right now. I would consider being within a 10% margin of the top or the bottom as a good reference point. Why do I say that? No one has a crystal ball from what I been told. Then all we can do is our very best to identify the bottom. First of all I like to call this next two years as the muddy bottom. Properties will come up and be sold at similar prices in the period of time. This is where an experienced real estate broker will come in handy. What was the first thing you were told about real estate? The three most important components to buying real estate are location, location and location. Then I heard the experts say buy the smallest home in the best neighborhood. So my final word of advice when buying in the soft market is do not let the price be your guide. Still buy the best piece of property you can comfortably afford and jump in enjoy The Jersey Shore with your family and friends because that’s what me and my fellow Realtors are really selling. This is the greatest opportunity to enjoy the nature and the shore lifestyle for you and the most important people in your life.

So go out there and don’t get caught up in the greed of vacation property ownership and do what millions of people have done for generations. Live The Jersey Shore lifestyle. Namaste ~ Ian

Ian Lazarus

Broker Associate

Team Leader – The Lazarus Team

The Landis Co., Realtors

4201 Landis Avenue

Sea Isle City, NJ 08243

609.457.0258

ian.lazarus@mygo2realtor.com

www.AvalonRealEstateBlog.com www.BuyCondosOnTheBeach.com www.BuySeaIsleCityCondos.com www.CondosOnTheBeach.net www.FindaShoreHome.com www.FindaShoreHome.tv www.MySeaIsleRealEstate.com www.OceanCityShortSaleBlog.com www.SeaIsleCityBeachBlockHomes.com www.SeaIsleCityBayfrontHomes.com www.SeaIsleCityBeachHouses.com www.SeaIsleCityCondosForSale.com www.SeaIsleCityRealEstateOnline.com www.SeaIsleTownhouses.com www.StoneHarborRealEstateBlog.com www.TownsendsInletBeachHomes.com www.TownsendsInletRealEstate.com

Welcome to the bottom of the real estate market. Might as well get used to it because we’ll probably be here a while.

One of the two units in this duplex on Coolidge Avenue in Margate, with three bedrooms and two baths, sold for its asking price of $349,000 on Aug. 30.

One sign of the bottom is that home-price surveys are starting to show small and perhaps fleeting increases. Another is that houses are selling near their listing prices. And different surveys are picking up improvements in different places, the way boats drift in different directions in calm winds.

The calm of the real estate bottom is that the four-year fall in prices is ending, and that the stream of distressed properties hitting the market has been reduced — for now.

“We’re still heading toward bottom-end stabilization, and I think it will remain at that bottom end for two years, and will take three to five years before we see an uptick in the market in general,” said Carlo Losco, president and owner of Balsley Losco Real Estate in Northfield, the region’s largest independent agency.

Federal Housing Finance Agency second quarter home prices for the region support the trend seen earlier in figures from the National Association of Realtors, but less robustly.

FHFA said its housing price index dropped 2 percent in Atlantic County in the quarter, leaving prices 4.6 percent lower in the past year. That’s in line with a U.S. decline of 1.9 percent for the quarter and 4.5 percent for the prior four quarters.

Cape May County, however, was one of the few metro areas covered by FHFA to post an increase, up 1.1 percent for the quarter (but still leaving the price index 3.3 percent lower for 12 months).

The Realtor survey for the quarter had found a 5.6 percent rise in the median home price for the combined Atlantic, Cape May and Cumberland counties region — with prices rising 9.3 percent in Cape May County and 1.7 percent in Atlantic County.

Both surveys saw prices falling, but a bit more slowly, in Cumberland County. FHFA’s limited coverage there showed a one-year decline of 5.7 percent as of the second quarter, compared to 6 percent in the prior survey.

“I would like to think we’re bouncing along the bottom here,” said Brian Groetsch Jr., president of the Cape May County Association of Realtors.

Groetsch said southern county Multiple Listing Service figures showed a 5 percent gain in home prices in line with the Realtors survey, and a 3 percent rise since the first quarter.

“What’s encouraging is the volume of sales, which are up 12 percent year over year,” he said. “I pulled a report showing all the different areas within our market and what jumped out at me was a marked increase in sales in higher-value areas such as the barrier islands, which could be the reason for the bump in the median sales price.”

After years of steep home price declines — the FHFA said New Jersey prices are down 18 to 27 percent from their peak, depending on its survey methodology — stabilization is welcome.

“At least I can see the bottom. That’s all you can hope to garner out of this right now,” Losco said.

He said there’s a considerable advantage to the market bottoming out for real estate professionals: Pricing homes effectively becomes easier.

“I can tell someone today that if the price is at a certain point it will sell, where that wasn’t the case a year or two ago when we were heading for the bottom,” Losco said. “So you can give people accurate advice.”

That better pricing of homes and the stabilizing market are resulting in houses selling much nearer their listing prices.

“The actual MLS records (for Atlantic County) show that the houses that are selling are getting 97 percent of their asking price,” he said.

That asking price, though, often has been reduced significantly from what the seller originally hoped to get. Losco said there are many Internet-savvy bargain hunters tracking houses and their prices, even getting automatic alerts when homes have reached a target price.

He said he’s seen houses languish with no offers and then, after another small drop, multiple offers suddenly appear and you wonder “where did all these people come from?”

Market stabilization has been helped by the slowdown in foreclosure processing due to legal challenges and questions about paperwork, especially in New Jersey and the 20 other states where foreclosures are handled by the courts.

Nationwide, foreclosures sales were up 6 percent in the quarter and down 11 percent from the year before. In New Jersey, foreclosure sales fell 25 percent in the quarter and are down 46 percent from 2012, said RealtyTrac, which gathers and markets foreclosure information.

Atlantic County’s 117 foreclosure sales were a third less than the first quarter and half the number from the second quarter a year ago.

Cape May County’s 50 sales were a 6 percent increase from the prior quarter, but still down 57 percent from last year.

The 31 foreclosure sales in Cumberland County were a 19 percent increase for the quarter, but a 46 percent drop from the same period in 2010. And Ocean County’s 258 sales were up 9 percent for the quarter, but down a third from a year ago.

Losco said the processing delay of foreclosures has helped with the biggest challenge for home sellers — appraisals.

He said getting loan appraisers to value a home high enough for a sale agreement to work amounts to having to sell the home twice for real estate agents.

As a certified general appraiser himself, Losco said he understands the pressure on appraisers. “I see a lot of bulletins to appraisers, and in most cases they’re mandated to state how many bank-owned properties are in the area, and sometimes ordered to put three bank-owned properties in their appraisal report.”

One group that doesn’t need to worry about appraisals or financing is cash investors, and Groetsch said he’s seen “a staggering increase in cash transactions.”

Cash home sales are up 48 percent from a year ago in MLS data, he said.

“Most cash transactions are on the barrier islands,” said Groetsch, who is also broker associate with Century 21 Gilmartin & Co. in Cape May. “Second home and investment buyers are looking for alternatives to invest their dollars versus the stock market, which is very volatile right now.”

With the processing slowdown, foreclosure sales accounted for 17 percent of sales in Atlantic County, 7 percent in Cape May County, 15 percent in Cumberland County and 13 percent in Ocean. In the U.S., they still make up a third of all home sales.

The building backlog in bank-owned properties in New Jersey is one reason why Losco and others don’t expect a rebound soon.

“I don’t see an upward trend because once the banks start releasing properties, in a small market like this that could have a huge impact,” he said. “When they turn the valve on, that’s definitely going to be something we have to contend with.”

Groetsch said the current signs are encouraging, but the industry needs to see more buyers obtain conventional and FHA-backed mortgages — which requires administrative or legislative action at the federal level.

“Hopefully we’ll all be better off for the time we spend on the bottom,” he said.

By MICHAEL MILLER, Staff Writer Press of Atlantic City

OCEAN CITY – John Skibbe and his late wife, Diane, bought their home on Seaspray Road for $2.2 million in 2004 during the meteoric rise of the last real estate boom.

Seven years, two presidential elections and a burst housing bubble later, their house was still assessed last year at a whopping $3.3 million.

John Skibbe appealed the $3.3 million assessment last year on his house in the 500 block of East Seaspray Road in Ocean City, above. He negotiated a new assessment of $2.7 million, saving him the equivalent of about $4,000 in property taxes last year, he said. (Dale Gerhard)

“I bought when prices were high. Then I saw that prices were coming down. I looked at the recent sales and thought, ‘Something is wrong here,’” said Skibbe, 84, of Blue Bell, Pa.

Skibbe was one of 202 Ocean City property owners last year who appealed their tax assessments. Of them, 195 secured a favorable change. This year, more Ocean City property owners took note. More than three times as many taxpayers as last year filed appeals by the April 1 deadline. The Cape May County Board of Taxation will hear these 650 cases over the next few months.

City officials such as Finance Director Frank Donato are sounding the alarm about the impact these appeals could have on the island’s $12.9 billion value. He persuaded City Council this week to keep more surplus to offset a potentially larger tax increase next year.

To the south, Wildwood Crest Tax Assessor Jason Hesley said he is watching Ocean City’s plight closely. His town will see 171 tax appeals this year, a more than three-fold increase from the 47 filed in 2010.

Hesley expects revenue from new construction will offset any declines in property value. But just in case, the borough also set aside surplus to prevent a tax increase in next year’s budget.

Like Cape May County, Atlantic County saw 13 percent more tax appeals this year, Tax Administrator Margaret Schott said. The Atlantic County Tax Board will hear 8,632 tax appeals in 2011 – or four times as many as it heard each year during the peak of the real-estate boom in 2006, Schott said.

Two towns, Longport and Egg Harbor City, are planning reassessments to ensure property owners pay their fair share in taxes, she said. Hamilton Township underwent a full revaluation that doubled its value from $1.3 billion to $2.6 billion.

In Ocean County, the tax board will consider 11 percent more appeals than last year, or 8,693. But that is far fewer than the 14,000 that taxpayers filed in 2009, Tax Administrator L. Ozzie Vituscka said.

“It’s a volatile market. Appreciation rates are nonexistent. It’s one of the worst market times I’ve seen,” Vituscka said.

It will take a few years to get straightened out,” he said. “It’s tied into the economy, the interest rates. All the economists are saying the same thing.”

In Ocean City, Skibbe negotiated a new assessment of $2.7 million, or about $560,000 less than the previous value, saving him the equivalent of about $4,000 in property taxes last year.

“If they think it’s too high, anyone who doesn’t appeal their assessment is making a mistake,” Skibbe said.

“What happened in the go-go or boom years, government raised spending each year,” Donato said. “But each year they divided their rate by a bigger number. The tax rate would not change.”

Now the reverse is true. Every dollar that is removed from the tax rolls could result in higher tax rates – unless the city cuts more from the budget.

Property owners in Ocean City were able to negotiate $35 million in cuts on their property assessments last year. But the added value of new construction last year made up the difference.

City Tax Assessor Joseph Elliott said the market was especially unkind to the highest-valued properties on the island – along the bay and ocean. The typical condo or single-family home in Ocean City declined in value by about 2 percent per year since the 2008 mortgage crisis, Elliott said.

“But beachfront and bayfront have declined substantially more – 6 percent per year,” Elliott said. As a result, the 650 tax appeals this year could have a proportionally larger impact on next year’s tax rolls. Many of these are seven-figure homes with pricetags as imposing as their ocean views.

Jeffrey Monihan, owner of Monihan Realty, negotiated a tax appeal last year on his beachfront home on the south end that trimmed $170,000 off the original $1.6 million value. He said property owners have little to lose by appealing to the Cape May County Tax Board. Applicants pay a filing fee of $25 to $150, depending on the value of their property.

“They’re very cooperative in trying to negotiate so you don’t have to go through the full appeals process,” he said. “I do personally feel they should give a little more than they do. But they’ll strike a deal with you to save them from losing more (in taxes) and save you the aggravation of going through the full process.”

Monihan said the city should consider paying to reassess the entire island.

“It seems municipalities are having difficulty dealing with the reality of the declining real estate values,” Monihan said. “It seems they’re not as quick to do a revaluation when prices are falling as when prices are rising. Assessors don’t want to fully acknowledge the degree to which the bubble has deflated.”

The city’s tax assessor said he approached the Tax Board about conducting a partial reassessment along its entire waterfront and the Riviera neighborhood. But the board said no.

The average property in Ocean City is assessed at just more than 100 percent of its true market value, which is not grounds for a costly and time-consuming reassessment, he said.

The city last conducted revaluations in 2008 and 2003 with a reassessment in 2005.

“We never do any type of revaluation or reassessment in a precipitous or haphazard manner,” he said. “Ultimately it may be in our future. It’s a very expensive proposition. I would like to see evidence of stabilization before we do that.”

Cape May County Tax Administrator George R. Brown III said the city is likely to undergo an adjustment that is not as extensive as a complete revaluation, much like similar adjustments in Lower Township and West Cape May.

“We’ve been talking to Ocean City about doing a revision to their assessment, which likely would bring their property values down,” he said.