Posted: Sunday, October 23, 2011

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: Saturday, October 22, 2011

By ROB SPAHR Press of Atlantic City Staff Writer

Merchants and crafters line the park Saturday during Sea Isle City's Octoberfest at Excursion Park and JFK Boulevard.

SEA ISLE CITY — When Charles Landis founded Sea Isle City in the early 1880’s, his goal was to create a city on canals, similar to Venice, Italy. Those plans never materialized, but 130 years later, hundreds of people gathered at Excursion Park to celebrate a different kind of European culture — a German-themed ‘Octoberfest.’

Oktoberfest is a two-week long beer festival held in Germany every year. But Sea Isle City’s Octoberfest is geared more toward families.

The music of the Philadelphia German Brass Band — whose members were decked out in traditional German attire — filled the air as children bounced to the beat inside inflatable castles or had their faces painted. A brightly-decorated man on stilts interacted with smiling families while another man created a herd of balloon animals.

Click here to see more photos.

“It is definitely a nice family day all around,” said city resident Bill Gallagher, 67, after taking a hayride on the beach with his children and grandchildren. “And it’s always great to be able to come out to support the city and the businesses here.”

This was the fourth year for the festival, and organizers said the event was by far the biggest.

“We never had vendors before. They were trying to make this different than other festivals we have in the city, but people were coming here and looking to spend money and had nothing to spend it on,” said Barbara Steele, the events planner for the Sea Isle City Chamber of Commerce and Revitalization, which hosted the event with the city. “But we brought in about a dozen local vendors, all of whom are members of the chamber, and the effect that that had is definitely noticeable. And the weather is beautiful, which also helps.”

While a majority of the vendors were selling ordinary items, some made sure to include a German flavor.

Bill McGinn spent the day grilling bratwurst under the “Bubba Dogs” tent, even though the delicacy is not typically on the popular hot-dog stand’s menu.

“The (organizers) asked us to do something with a German flavor for this event and they’re actually selling pretty well,” said McGinn, adding he expected to go through more than 150 brats and 350 dogs during the four-hour event.

And a block away from the park, more vendors were set up outside LaCosta Lounge.

LaCosta bartenders were serving seasonal Oktoberfest-themed beers from taps on a vintage fire truck while a DJ was spinning tunes from underneath a tent nearby.

“I think that Oktoberfest is so big in Europe that Americans are now catching on and are trying it out,” LaCosta bartender Jason Buck said about the recent rise in the popularity of Oktoberfest-themed beers and events.

The event’s popularity could help the city accomplish one of its own goals.

“So many people enjoy Sea Isle during the shoulder season, so the businesses here are trying to extend the shoulder season as much as possible,” LaCosta bartender Ken Merson said. “So having events like this be successful at the end of October is going to be very helpful.”

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation’s ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter “throws money down the drain.” Whether buying is a better deal than renting isn’t a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers’ favor. Stock-oriented folks can think of a house’s price/rent ratio as akin to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren’t hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or “points.”) The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index’s historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today’s buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer’s monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. “If you have good credit, a job and a down payment, you can get a mortgage,” Mr. Humphries says. “There’s more paperwork and scrutiny than five years ago, but things are pretty much like they were in the ’80s and ’90s.”

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent “yield.” The median market’s rent yield is 9.3% and Detroit’s is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor’s 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody’s Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. “If the economy slips back into recession, however, we could easily see a 10% drop,” Ms. Chen says.

And property “flipping” can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren’t that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

Never a dull moment or a bad sunset on the island of Sea Isle City, NJ. What an unexpected pleasure stepping out on the bayfront at 80th Street. The colors were amazing and I had to share my peaceful evening with you. And Jack Johnson’s Sitting, Waiting, Wishing isn’t bad either !  Namaste, Ian

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.

6 Good Reasons to Buy a Home Now

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.

By JULIA LAWLOR

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.

Here is an email we just recieved from Bank of America. For short sales with Bank of America in the state of Florida, they are now offering up to $20,000 for sellers to participate in a short sale in many cases. With this program, Florida home owners can get cash back for a short sale with Bank of America! Here is the complete email -

Florida Real Estate Agents:
Florida Enhanced Short Sale Relocation Assistance
Florida homeowners may receive $5,000 to $20,000
in relocation assistance.

Bank of America encourages distressed homeowners to explore a short sale as a viable option for avoiding foreclosure. To that end, for a limited time we are offering enhance relocation assistance to help motivate homeowners to engage with us on a pre-offer short sale. An additional benefit for these pre-offer programs – such as the Home Affordable Foreclosure Alternatives (HAFA) and Bank of America’s proprietary program – is that deficiency may be waived for the homeowner.

Eligibility:

• Homeowners with property in Florida
• Short sales initiated without an offer between September 26 and November 30
• The customer will have to be eligible for one of the without offer programs such as the HAFA program or our proprietary program (specific investor participation and eligibility criteria do apply to these programs)
• Successful closing of the eligible short sale by August 31, 2012
• Minimum relocation assistance is $5,000 and maximum is $20,000, with the specific amount calculated based on the unpaid principal balance

Exclusions:

• Ginnie Mae, FHA, VA and USDA loans are ineligible for participation
• Lot loans are ineligible for participation
• Properties outside the state of Florida are ineligible for participation
• Short sales initiated with an offer are not currently eligible for the enhanced relocation assistance

Frequently Asked Questions:

Q: How can I find out if my client/homeowner qualifies for this relocation assistance?

A: Call a Bank of America short sale specialist at 1-877-xxx-xxxx.
Monday – Friday 8 a.m. – 10 p.m.; Saturday 9 a.m. – 5:30 p.m. Eastern

Q: Do I have to do anything differently when initiating or completing the short sale?

A: No. As long as the homeowner’s short sale is initiated between September 26 and November 30, 2011, and the property closes by August 31, 2012, they will be eligible.

Q: Will the relocation assistance funds be reported on the HUD-1?

A: Yes, they will be documented on the HUD-1, and a 1099-MISC will be issued.

Q: Can the relocation assistance funds be used to pay off existing liens?

A: Yes, if the investor approves it.

Q: Is the relocation assistance added to any other incentives, such as the HAFA or Bank of America proprietary program incentives?

A: No. A homeowner will receive the $5,000 to $20,000 in place of the typical incentive paid out by these programs. The relocation assistance is essentially an enhancement to the standard payout offered on these programs.

Q: Is the enhanced relocation assistance available for other programs?

A: Currently, the enhanced relocation assistance is only available to short sale programs initiated without an offer. However, as we gauge the success we may extend this incentive to other programs.

Questions?

Homeowners and may call Ian Lazarus, Abraham and Associates, Davie, Florida. 609-457-0258 ian.lazarus@mygo2realtor.com

Posted: Sunday, October 2, 2011

By JOEL LANDAU, Staff Writer Press of Atlantic City

A state bill could offer relief for developers who cannot finish proposed projects due to the economy.

Michele Wheaton, broker for the Riverfront Condominium complex, said removal of its restriction to seniors has opened the market for it. Ben Fogletto

But the bill has drawn criticism from residents and municipal officials who fear it undermines their planning-and-zoning process.

Under the bill S-2950/A4128, introduced in June, developers would be able to seek a modification to their previously approved housing projects from municipal planning and zoning boards. Under the bill, the developer must demonstrate the project would not work under the current economic conditions.

Specifically, the developer must show one of the following:

• The current zoning or existing approval does not provide the property with an economically viable use.

• No feasible market exists for development of the property based upon the property’s current zoning or existing approval.

• Financing for the development of the property under current zoning or the existing approval is not readily available.

This would affect properties whose original application was submitted prior to Jan. 1, 2006, or the property must be owned by a lender who took ownership through foreclosure.

The bill would require the municipality to grant the change if the developer meets the criteria, and the application can be granted “without substantial detriment to the public good, to the extent it is not incompatible with the use of adjoining properties,” the bill states.

State Sen. Jeff van Drew, D-Atlantic, Cape May, Cumberland, said the bill is intended to foster communication between towns, developers and banks to get the properties sold and have residents pay property taxes.

Van Drew said he does not expect the bill to move forward anytime soon and also expects amendments to be made.

“It is a problem,” he said. “We need to get these properties on the tax rolls but do it in a way that’s fair as well.”

But the bill has drawn concern from municipal officials, who fear the bill would undermine the local planning and zoning process.

Michael Cerra, senior legislative analyst for the New Jersey League of Municipalities, said the original approvals presumably had been madE on sound decisions by the planning and zoning boards.

“Whether there may have been a bad business decision five or six years ago does not mean the taxpayers should pay for it over the long term,” he said. “It’s a short-term solution that could create a long-term headache.”

Anthony Cappuccio, president of Boardwalk Design & Development Inc. in Margate, said he favors the bill and is keeping apprised of its process.

“The state we’re in right now, I don’t think it could hurt,” he said. “It does take away a bit of home rule but it could also put a lot of people back to work on projects that have not been finished.”

Cappuccio is already taking advantage of a similar law passed by the state last year that allows developers to remove the 55 and older restriction on approved senior homes. Cappuccio bought the Absecon Gardens development in Absecon last year and got the senior restriction removed in May.

The company wants to market the 76-unit property to young professionals, empty-nesters and those looking for a second home. But the change has brought a lawsuit from residents who want to keep the complex as is.

Other changes have been more warmly received. The Riverfront Condominium complex along the Maurice River in Millville was developed by Haffelfinger & Standeven Construction Co. and they also got the senior restriction removed last year.

Michele Wheaton, broker for the property, said the change has opened up the market, though they have yet to sell any properties as the developer continues to finalize its financing.

But Wheaton said interest is up even though the people contacting her are still predominantly senior citizens.

“When you open the market up, it brings up the value a whole lot more,” she said. “But it still has to fit with plans. The condos are two bedrooms, two baths. Not many families are going to want to live there.”

Posted: Sunday, October 2, 2011

By JOHN FROONJIAN Statehouse Bureau Chief Press of Atlantic City

Homeowners in most towns in Atlantic and Cape May counties, with spending caps in place and housing values declining, experienced low or moderate property-tax increases this year, an analysis of tax data by The Press of Atlantic City shows.

Property taxes actually decreased in Avalon this year. Dale Gerhard

Property-tax increases from 2010 to 2011 were held to 3 percent or less in 25 of 39 municipalities, or 64 percent of towns in those counties.

A typical homeowner’s property-tax bill actually decreased in four towns — Corbin City, Estell Manor, Avalon, and Wildwood — and stayed flat in Sea Isle City and Woodbine, Press analysis shows.

Tax bills increased by 10 percent in Egg Harbor City — the region’s highest increase — and by 7 percent in Upper Township, where a new municipal purpose tax was instituted. They rose by only 1 percent in Mullica, Dennis, and Lower townships and West Cape May.

The Press used state Treasury property-tax data to calculate the median assessed values of homes in each municipality, then multiplied those values by the overall local tax rates to arrive at a typical homeowner tax bill. Data are not yet available for Cumberland and Ocean counties.

Property-tax bills overall in Atlantic County rose by 3 percent, and rose by 1 percent in Cape May County.

Officials said local governments have responded to the tight economy by cutting costs.

“I think they have all battened down the hatches,” said George R. Brown, Cape May County Tax Board administrator.

A state-mandated cap on municipal, school, and county spending was in place for this year’s budgets. The cap, enacted in July 2010, prohibits spending and the tax levy to increase more than 2 percent unless approved by local voters.

Certain costs, however, are exempt from the cap, including pension and health benefit costs, debt payments, and emergency spending.

Effects of the reeling housing market are evident in the property-tax data, as the median assessed home value declined from 2010 to 2011 in 11 towns in Atlantic County and nine towns in Cape May County. In some places, including Avalon — where tax bills dropped by 9 percent — all property values were reassessed or revalued. In others, lower home sale prices led to property-tax appeals that reduced values for some homeowners.

In Wildwood, the median home value declined from $250,700 to $222,400. Mayor Ernie Troiano said the city lost $220 million in assessed value because of tax appeals.

Troiano said the city has reduced spending and staff, and put off construction work on roads and other infrastructure. But he said a tourist town cannot afford to ignore maintenance needs for long.

“That can bite you a few years down the road,” the mayor said.“You need to fix your streets. Most of our infrastructure is 80 to 100 years old.”

But he said he understood that taxpayers are hurting, so it made sense for the city to put off such costs for now. The tax bill for a typical residential property in Wildwood declined from $4,598 to $4,214, an 8 percent drop.

Galloway Township Manager Steven Bonanni said officials have cut staff, including reducing the police force from 73 to 56 officers, and have pursued shared services agreements to reduce spending.

In past years, the township’s residential base grew at a consistently fast pace. But spending cuts are now being made as home building has stopped and values are deflating. The 2011 median home assessment of $218,700 is $200 less than what it was last year.

A typical homeowner’s tax bill in the township went from $4,310 in 2010 to $4,416 this year, an increase of 2 percent.

Bonanni said local officials are trying to attract more businesses to the area to help spread the tax obligation.

“We’re holding spending down,” he said.

In Egg Harbor Township, the typical property-tax bill increased from $5,266 to $5,405, up 3 percent. Township Administrator Peter Miller said a 20 percent reduction in staff since 2008 was just one of many strategies being employed to keep costs down.

“We’re doing a multitude of things. There’s no one magic bullet,” Miller said.

One example, he said, is that the township refinanced debt from 2002 within the past month, saving about $45,000 a year.

The township has conducted cost-benefit analyses to explore increased efficiency, he said. It considered whether to privatize trash collection but concluded it would be more expensive in the long run. Miller said the township was able to eliminate 11 positions by using an automated trash collection system with a truck that lifts 96-gallon trash barrels provided to residents.

In Cape May County, Brown said property values have declined for various reasons. Selling prices have fallen below assessed value in many towns, especially along the ocean. With home construction stalled in the poor economy, pricey new housing is not expanding the tax base.

And some towns have reassessed or revalued all properties, as did North Wildwood and West Cape May. Tax bills increased by only 1 percent in West Cape May and by 2 percent in North Wildwood.

Brown said local governments and school districts have had to deal with the pressure of rising costs while their tax base is declining.

“I think officials have done their best,” Brown said. “Towns like North Wildwood should be credited for holding the budget line in a year of down assessments.”