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By ERIK ORTIZ, Press of A.C.Staff Writer | Monday, March 8, 2010

Obtaining a loan last year was not an easy feat for Americans, as banks were quick to pull back on whom they lent to and how much they gave.

But in New Jersey, a borrower’s application was less likely to get tossed into the reject pile.

While lending nationwide dropped nearly

7.5 percent from year-end 2008 to 2009 – the sharpest decline in lending since 1942 – banks in New Jersey went in the other direction.

The amount of lending was up 4 percent, or from $96.4 billion, in 2008 to $100.2 billion in 2009, even as the number of state-insured institutions fell slightly from 126 to 123, according to new data from the Federal Deposit Insurance Corp.

In that same period, the number of U.S. banks dropped 3.5 percent, or from 8,305 to 8,012.

It is hard to pinpoint exactly why lending in New Jersey was on an upswing last year, although John McWeeney Jr., co-chief executive of the New Jersey Bankers Association, says it could be as simple as banks making the effort to lend.

“Most of our members are community banks, and they make their money on bringing in deposits and making loans. They want to make loans,” McWeeney said.

David J. Hemple, president and CEO of Century Savings Bank in Vineland, said its loan volume increased last year after customers fled the larger banks. While mortgage lending was relatively flat for the bank, it managed to surpass its goal of originating $1 million worth of commercial loans each month, he said.

“We’ve picked up some good business loans,” he added. “These were businesses that had a good history, but they got a call from their bank that their line of credit had been canceled due to non-usage. When you’re told that, it doesn’t make too many businesses want to stay with their original bank.”

New Jersey banks also have shown resilience during the economic downturn. The FDIC reported that 140 banks failed in 2009; only two of them were based in New Jersey.

“A lot of our banks have stuck to good underwriting throughout this and they’re not experiencing problems,” McWeeney said.

A review of publicly traded banks with branches in southern New Jersey showed most reported lending growth in 2009.

TD Bank, for instance, with 37 branches in the region, said its average loans increased $6 billion across the United States, with business loans up 6 percent and personal loans up 25 percent.

For Gloucester County-based Parke Bank, which has a branch in Northfield, net lending increased 9.5 percent, totaling $591 million at the end of 2009.

“We’re still in the market for loans if they make financial sense in this economy,” Parke CEO Vito S. Pantilione said.

Parke entered into a joint venture last year with another company to originate and sell Small Business Administration loans. From August to December, the bank closed $4 million in such loans, Pantilione said.

While numbers show lending was up, money is not free-flowing as it was before the recession, McWeeney said. Winning loan approval still requires a good credit history, acceptable income and, for entrepreneurs, the ability to show that your business will turn a profit.

Mays Landing resident Craig Phillips had all those essentials going for him when he was recently approved for a $100,000 loan from TD Bank. Phillips, 63, needed the loan to open a business, Ocean City Dog and Kitty, which will debut on the Ocean City Boardwalk on April 2 selling pet toys and treats.

“I’ve done business with TD Bank for many years with my other business (Pet Pros Pet Supplies in Somers Point) and my personal accounts,” he said. “I demonstrated that we’ve had a good balance, we never had a problem with bounced checks.”

Phillips also got the loan backed by the SBA, which has various programs that will guarantee bank loans for small businesses, effectively sharing in the risk should the borrower default.

Despite his sterling background and the SBA’s backing, the loan approval still took several weeks, Phillips said, because the bank wanted to fully review his application.

“Those days of just going in and asking for the money, that’s all changed now,” said Joe Molineaux, director of the Small Business Development Center at The Richard Stockton College of New Jersey.

He said that banks are lending, but borrowers need to be realistic about whether they can get a loan. That includes recognizing whether you have decent credit, some form of collateral and a track record for understanding a business and showing that you can make money.

Staff photo by Vernon Ogrodnek This 4,000-square-foot office building on New Road in Northfield was recently leased by a tenant who is expanding and wants to stay in the area, said Samantha Roessler, vice president of Rose Commercial Real Estate.

By KEVIN POST Press of A.C.Business Editor | Sunday, February 28, 2010

Local and national reports this week indicate the commercial real estate market is finally bottoming, making 2010 the year it slowly begins to recover.

A Congressional Oversight Panel report on commercial real estate loans said $1.4 trillion in such mortgages will require refinancing in 2011 through 2014. The bad news? Nearly half are underwater, with the borrower owing more on the loan than the property is currently worth.

The quarterly commercial outlook from the National Association of Realtors said increased demand for office and warehouse space isn’t likely before 2011.

Southern New Jersey commercial property experts see the same trends, with just a bit of positive activity.

Rich Baehrle, commercial specialist with Vanguard Property Group in Egg Harbor Township, said tight credit is hurting commercial markets because they differ from residential.

“One of the biggest challenges in the commercial market is 90 to 95 percent of loans are written as 5-year adjustable mortgages,” Baehrle said.

In the past, if property owners paid on time and remained in good standing, renewal of the loan was almost automatic, he said. Now, lenders are scrutinizing loans and properties closely.

“If a bank’s not going to renew its commitment, it’s very challenging for the buyer to go out and find another lender,” he said.

A key factor for banks is the amount of rent revenue a property generates. This month’s survey by the Society of Industrial and Office Realtors found that rent concessions are being reported almost everywhere.

“When that happens, it has a negative ripple effect,” Baehrle said. “If the drop is $100,000 a year in rent, which is conceivable, the value of the property might diminish by $950,000 to $1 million.”

Samantha Roessler, vice president of Rose Commercial Real Estate and manager of its shore office in Northfield, said she’s seeing the same factors of tougher financing and tenant instability.

She said development of new commercial properties, particularly retail, will be on hold as the market starts to recover.

“In 2008 it all came down, 2009 was a leveling-off period and we have to rebuild in 2010,” Roessler said. “I think we’re dealing with the product we currently have on the market. Until our vacancies go down a little, we won’t see any new development.”

One problem, she said, is that commercial sellers have not yet made the price adjustments that residential owners managed over a long period.

“And land in our area is a tough sell because of the time frames to get approvals to do anything on it and the costs associated with that,” Roessler said.

There are positives in the commercial sector in the region, but they’re small.

“We’re starting to see an uptick in activity. The NextGen Aviation Research Park is spurring some growth, with two contracts going to be released shortly,” Baehrle said. “Quite a few people are looking at that.”

“We’re doing deals,” Roessler said. “They might not be the largest deals, but there’s still activity.”

The industrial and office Realtors survey’s measure of expected activity registered its first gain — a slight one — in the fourth quarter after declining for 11 straight quarters.

Fifty-five percent of industry professionals expect the commercial market to improve in the second quarter.

The National Realtors outlook predicted worsening conditions this year for the office, industrial and retail sectors, with significant improvement only in the multi-family housing sector.

Office vacancy rates nationwide are expected to increase from 16.3 percent to 17.6 percent by the end of the year and average 17.4 in 2011. Office rents are expected to decline 7.2 percent.

Industrial space is expected to fare a bit better, with vacancy rates rising from 13.9 percent to 14.9 percent, but rents are forecast to fall 9.6 percent.

The retail vacancy rate is expected to increase slightly, from 12.4 percent to 12.7 percent, with rents declining just 2.4 percent this year.

An increase in the number of American households should reduce the multifamily apartment sector’s vacancy rate from 7.4 percent to

6.6 percent. Rents, however, are expected to drop another 3.4 percent this year after falling 3.6 percent last year.

By Kenneth R. Harney

Saturday, February 13, 2010

With all the bad news about underwater homeowners and strategic walkaways, you might think that American homeowners’ equity holdings are in the tank. But the least-publicized recent statistic on real estate is that, despite these scary reports, home equity is again on the rise.

Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive research into mortgage balances and home-value changes in hundreds of local markets around the country and reports its findings quarterly.

According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity grew by nearly $1 trillion from the recession’s nadir in the first quarter of 2009 through the third quarter. From June 30 to Sept. 30, net equity rose by $418 billion.

That’s not all that impressive compared with the quarterly increases during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity — and three years of rapid expansions in the number of underwater borrowers with negative equity — there are signs that the down cycle may be shifting.

Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of modest improvements for housing. The overall negative-equity rate among American homeowners remained flat in the fourth quarter, at 21.4 percent. But like the Fed’s numbers, that ratio represented a slight decrease from the first two quarters of last year, when 22 percent and 23 percent of owners owed more on their mortgages than the estimated market value of their real estate.

Zillow’s study found that in dozens of housing markets — including the District, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg — the percentage of homeowners with negative equity appears to be on the decline. In the Washington area, 27.5 percent of homeowners had negative equity in the fourth quarter. That was down from 29.6 percent in the third quarter and 33.5 percent in the second.

Some of the largest declines occurred in cities hardest hit by the recession and the housing bust: Ann Arbor, Mich. (a decrease of 9 percentage points); Riverside, Calif. (-5.7); and Phoenix (-2). Florida markets that have struggled with major price devaluations also saw significant improvement in negative-equity rate in the fourth quarter, such as Fort Myers (-5.4), Miami (-5.1), Naples (-4.5) and Tampa-St. Petersburg (-1.4).

On the other hand, Zillow’s study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3 percent of homeowners — 256,000 households — were underwater on their mortgages in the fourth quarter. This number is down from 82.5 percent in early 2009, but that’s no consolation to the affected borrowers.

In Phoenix, 61.5 percent of borrowers were in negative territory. That’s two percentage points lower than in the previous quarter but still scarily high.

Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2 percent); Harrisburg, Pa. (5.7 percent); Binghamton, N.Y. (5.6 percent); and Peoria, Ill. (8 percent).

Negative-equity rates are crucial barometers of local housing markets’ propensity to experience high rates of mortgage default, foreclosure and strategic walkaways. Communities with single-digit negative-equity rates tend to have fewer walkaways and foreclosures.

The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens of thousands, even hundreds of thousands, of dollars less than the principal balance owed to the bank. They feel they are throwing away money on real estate that might take a decade or more to be worth what they paid for it during the boom.

Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative-equity ratios are high because, in her view, they are prime candidates to walk away from their loans. Once underwater borrowers miss a payment on their mortgage, Goodman said, there is a 75 to 80 percent probability they will chuck the whole deal.

Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.

By KEVIN POST Business Editor | Posted: Sunday, January 31, 2010

The widespread belief that real estate had a terrible 2009 is being disproved by the data for the southern New Jersey market released this week.

Compared with the prior year, sales were almost even in Atlantic and Cape May counties, and significantly higher in Cumberland County. Prices fell, but by single digits, and the time it took to sell homes remained about the same.

Real estate offices said the second half of 2009 in particular was strong, and the momentum is continuing into this year.

“I thought we had a great year,” said April Puesi, broker owner of Coldwell Banker Excel Realty in Vineland, estimating sales at the agency were up 25 percent.

Prudential Fox & Roach’s HomExpert Market Report this week showed 551 home sales in Cumberland County in 2009,

21 percent more than the year before. The median price fell

8.3 percent to $154,000, and the average days a house spent on the market increased from 104 to 113.

Puesi said she’s starting to see prices rising, with appraisals coming in higher than half a year ago.

“I think this is going to continue. We’ve seen it pick up in the last two weeks,” she said. “December was dry, but in January we went right back to normal compared to last year’s sales.”

In Atlantic County, home sales fell 1 percent to 2,602 last year, according to the market report. The median price dropped 9.6 percent and days on the market inched up from 115 in 2008 to 119 in 2009.

“We increased our properties sold about 12 to 15 percent over the previous year,” said Carlo Losco, president of Balsley Losco in Northfield. “That’s not great because 2008 was not a hard year to beat.”

But Losco said that after a weak first half of 2009, sales in the second half were strong through December and continuing into January.

“I’m projecting our agency will see another 15 percent increase in houses sold, but I’m predicting housing prices will probably remain at the same level,” he said.

Losco credited several factors for the improving market: low interest rates, more aggressive lending by banks, pent-up housing demand, federal tax credits and other incentives, and reduced prices.

He said there are many buyers now “stalking the listings,” and as soon as a home price is adjusted to what’s considered a good deal, there are multiple offers for it.

In Cape May County, which isn’t covered by the market report, the county Association of Realtors reported this week that 2009 sales dropped 1 percent to 1,879. The median price fell

8.1 percent to $296,000 and average time on the market was unchanged at 221 days.

Steve Booth, market manager for Prudential Fox & Roach Realtors in Ocean City, said his office sold more units in 2009 but that was due in part to efforts in the primary home market outside of the city.

“I think the Ocean City marketplace is starting to recover, but the numbers across the board from last year in Ocean City itself are still down,” Booth said.

The city is dominated by secondary and investment houses, he said, which haven’t been helped by incentive programs aimed at first-time home buyers and now existing homeowners as well.

“The general feeling is that the worst is over, not so doom and gloom as it has been the past two or three years,” Booth said. “I think we’ll see a gradual recovery in the secondary and investment housing markets, but not a huge jump for the foreseeable future.”

The HomExpert Market Report covered the Greater Philadelphia area, southern New Jersey and northern Delaware.

For all of southern New Jersey, the report said sales were down 1.4 percent in 2009 and the median price declined 8.3 percent to $199,000 from the prior year.

Prices and interest rates are down and buyer interest is up !

RISMEDIA – You’d love to buy a vacation home, but (let’s be honest) the recession and the not-so-dim memory of the housing bubble have you a bit skittish. If only you could see what the future holds. But since a reliable crystal ball has yet to be invented, you must resort to less mystical indicators.

According to Christine Karpinski, the National Association of Realtors® (NAR) 2009 Investment and Vacation Home Buyers Survey suggests that the iron is sizzling hot-and if you’re going to strike, the time is now.

“A few years ago when prices were escalating rapidly, people were kicking themselves for not having bought earlier when real estate was far more reasonable,” notes Karpinski, director of Owner Community for HomeAway.com and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment. “Well, in 2012 or so, people will look back on 2009 as another missed opportunity.”

While all home sales were down significantly in 2008 (as one would expect)-and vacation property sales were down some 30%-so were real estate prices. That, of course, makes for an extremely favorable buyer’s market. It’s not surprising at all, therefore, that the NAR report found that 80% of vacation property and investment property owners surveyed believe that now is a great time to purchase real estate.

These sentiments echo those of Walter Molony, spokesman for NAR, who said in a recent CNBC article that the second home market is “fundamentally healthy.”

“The long-term underlying demand is favorable for vacation homes because of the large number of middle-age, middle income Americans [who are the primary buyers of such properties],” Molony was quoted as saying. “In recent years, this market has been driven by the Baby Boomers, but there are two even larger population groups coming up right behind them. Those younger segments will continue to fuel this market for the next 10 years.”

Karpinski says the NAR 2009 survey results, in conjunction with a proprietary Special Report done for HomeAway, constitute clear evidence that now is an ideal time to buy a vacation home.

She offers the following insights:

- Home prices are way, way down. The National Association of Realtors survey showed that the median sales price of the typical vacation home was $150,000-down 23.1% from 2007’s median price of $195,000. (To put this in perspective, consider that when NAR started conducting this survey, the median vacation home price in 2003 was $190,000 and reached a high in 2004 of $204,100.) When combined with the rock bottom interest rates, says Karpinski, all signs point to the likelihood that we’re now at the picture perfect time to buy.

“Anecdotally, I can tell you that people who would never have purchased a detached single home on the coast are now seriously considering it,” she notes. “Homes that would have once cost $3 million have now fallen to $1.5 million. And these buyers know that the price won’t stay down long, and will never be this low again.”

- It’s never been more obvious that real estate is a sound long-term investment. The NAR survey results revealed that the share of speculator sales is down from 29% to 16%. Combined with the fact that 34% of buyers are purchasing properties within 100 miles or less of their primary residence-which suggests they intend to use it themselves-this trend indicates that more and more people are embracing a “buy and hold” strategy. Plus, Karpinski says she constantly sees evidence that people are beginning to see the long-term benefits of real estate investing earlier in life. (The median age of vacation property buyers in 2008 was a relatively young 47.)

- The vacation home rental market is booming. While 89% of vacation property owners surveyed cited “to use for vacations or as a family retreat” as a reason for purchasing their second place answer is telling, indeed. Twenty-seven percent of respondents said they were purchasing their home “to rent to others.” While this number is up from the 25% cited in last year’s survey, Karpinski predicts next year’s survey will really tell the tale. As recession-crunched homeowners pursue new income streams-and as it becomes ever more evident that the vacation rental market is booming-2009 will prove to be a huge turning point in the renting out of second homes.

- People are more in touch with “rental realities” than they once were. In the past, says Karpinski, a first-time vacation homeowner might have expected to rent out their property an unrealistic number of weeks (say, 50 weeks out of the year). But NAR’s Special Report for HomeAway shows that 44% of respondents said they plan to rent anywhere between 9-26 weeks.

- Renting by owner has become mainstream. The NAR Special Report for HomeAway reveals that 54% of respondents plan to market their homes themselves. This do-it-yourself attitude reflects not only a burgeoning confidence index among vacation property owners, but also the wealth of support resources available to those who want to rent out their homes themselves.

Everything has changed. The truth is it’s gotten so easy and so affordable that there’s no valid reason not to do it yourself.” Need one more reason to take the plunge? Consider the fact that last month Fannie Mae rescinded its four-property limit for investors. If you’re financially secure and can come up with the requisite 20% down, chances are good you’re going to easily qualify for a mortgage.

“Of course there are always risks when buying any kind of real estate,” Karpinski acknowledges. “But investors who are comfortable with risk have to realize that conditions are ripe right now for a ‘perfect storm’ of success. Even if housing prices do go lower, interest rates surely will not. And once the turnaround comes, selection won’t be nearly as good as it is right now.

“Naturally, you should be cautious and do your homework before you buy any property-but don’t be so cautious that you miss this window of opportunity,” Karpinski adds. “These windows do have a way of slamming shut, and you don’t want to be stuck on the other side wistfully looking in a few years down the road.”

Christine Karpinski is the author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment andProfit from Your Vacation Home Dream: The Complete Guide to a Savvy Financial and Emotional Investment.

Housing starts are down 40% in the Northeast

By Inman_News

Created 01-20-2010

Housing units authorized by building permits were up year-over-year and month-to-month in December, even as housing starts and completions were down on a monthly and year-over-year basis, according to a report [1] on new residential construction by the U.S. Census Bureau and the Department of Housing and Urban Development.

“Builders have acted prudently by cutting back production during a period of low demand and uncertainty in the overall market,” said Joe Robson, chairman of the National Association of Home Builders, in a statement.

“With inventories so low, we’re seeing an increase in permits as builders understand they need to ramp up production to take full advantage of the short window offered by the homebuyer tax credit and the expectations of increased demand as the economic recovery begins to take hold later in the year.”

In December, the number of privately owned housing units issued building permits rose an estimated 10.9 percent to a seasonally adjusted annual rate of 653,000 from a revised November rate of 589,000. The rate increased an estimated 15.8 percent year-over-year, from 564,000 in December 2008.

The Northeast saw the biggest year-over-year increase — 45 percent — in total units authorized, while the South saw the smallest increase, at 5.6 percent.

Of the units authorized by permits last month, 508,000 were for single-family homes. That’s an estimated 8.3 percent above the revised November figure of 469,000 and 37.3 percent higher than in December 2008. The West saw the biggest increase, 48 percent, year-over-year.

In buildings with five units or more, authorizations were at a rate of 127,000 in December, or an estimated 33.7 percent higher month-to-month and 27 percent lower year-over-year.

Housing units authorized by building permits in all of 2009, an estimated 571,600, were an estimated 36.9 percent below 2008’s figure, 905,400.

Privately owned housing starts in December fell an estimated 4 percent to a seasonally adjusted annual rate of 557,000 from a revised November estimate of 580,000, but rose slightly — an estimated 0.2 percent year-over-year from 556,000.

In the Midwest and the South, housing starts year-over-year rose 15.8 and 9.5 percent, respectively, but in the West and the Northeast, starts fell 19.4 and 19 percent, respectively.

Single-family housing starts in December fell to 456,000, an estimated 6.9 percent below the revised November rate
of 490,000. In all regions but the Northeast, however, such housing starts rose year-over-year, with a 30 percent rise in the Midwest, a 23.3 percent rise in the South, and a 15 percent rise in the West.

In the Northeast, single-family starts fell an estimated 27.5 percent.

The December rate for buildings with five units or more was 92,000, or 15 percent higher month-to-month and 40.3 percent lower year-over-year.

Housing starts last year overall dropped an estimated 38.8 percent from the year before, from 905,500 to 553,800.

Privately-owned housing completions in December fell to a seasonally adjusted annual rate of 768,000, an estimated 11.2 percent from the revised November figure of 865,000, and 25.3 percent below the December 2008 rate of 1,028,000.

Completions in every region fell year-over-year, with the West experience the largest drop, down 39.8 percent. In the Northeast and South, completions fell 27.6 percent and 22 percent, respectively. The Midwest saw the smallest decrease at 6.8 percent.

Of those completions last month, 503,000 were single-family units, an estimated 11.1 percent below the revised November rate of 566,000. Single-family completions year-over-year dipped 41.4 percent in the West and 32.4 percent in the South. Such completions stayed flat in the Northeast and rose a bit, 4.3 percent, in the Midwest.

In buildings with five units or more, the December rate was 245,000, or 13.1 percent lower month-to-month and 23.4 lower year-over-year.

Throughout 2009, completed housing units dropped an estimated 28.9 percent, to 796,000 from 1.12 million in 2008.

Welcome to Sea Isle City sign

By BRIAN IANIERI Press Staff Writer | Posted: Wednesday, January 13, 2010

SEA ISLE CITY – Mayor Leonard Desiderio proposed a budget Tuesday night that would increase local purpose tax 2.7 cents per $100 of assessed value – a $108 increase on a $400,000 home.

Desiderio said his budget has funding for a down payment on a $12 million capital plan, which includes more than $6 million for a beach replenishment and about

$6 million for various work, including restructuring the beachfront Promenade, building a band shelter for concerts, putting aside money for the Ludlam Beach Lighthouse, as well as for road projects.

“I’m putting this on the budget, but if anywhere Council sees they want to cut any of it out and not proceed with it, that’s absolutely fine with me,” Desiderio said. “I understand the tough economic times, and these are items that have been discussed.”

In his annual state of the city address Tuesday, Desiderio called the beach replenishment a priority, but said other capital plans could be taken out of the budget, which would bring the tax rate increase below 2 cents per $100 of assessed value.

In Sea Isle City, the mayor proposes a budget that is essentially a guideline, but the decisions are in the hands of the five-member City Council.

City Council is expected to introduce a budget Feb. 9.

Councilman Michael McHale said the council will hold public workshops later this week as it begins to tailor the budget.

Regarding the proposed budget increase, Desiderio also cited pension contributions and a more than 20 percent increase in health-care premiums. This year, Desiderio said, the city will renegotiate with its bargaining units, including police, public works and management, whose contracts expire this year.

In related news Tuesday night, City Council introduced a borrowing plan to pay for a beach-fill project in its southern end between 73rd and 93rd streets. The city is partnering with Avalon on a $10.4 million project to pump 700,000 cubic yards of sand in Sea Isle City and 500,000 cubic yards in Avalon.

Sea Isle City Administrator George Savastano said the city also hopes to get approval to expand the beach fill to include several hundred thousand more cubic yards of sand.