New Jersey Estates/Weichert Realtors/ NJ Luxury Real Estate/ New Homes: February 2008

Appealing Your Property Tax Bill

If your property tax is aligned with or assessed based on the value of your home, a swing in property values could warrant close scrutiny of your property tax bill.

Some more progressive tax jurisdictions will make the adjustment for you -- up or down -- but most only move your rate up or they'll wait for the property to change hands before adjusting the tax.

Even where adjustments are automatic, you still may not be satisfied and will need to appeal the deal.

Over valued or over assessed property is perhaps the most common and successful grounds for challenging your tax bill.

When the economy is faltering and spawning foreclosures, short sales and homeowners otherwise bailing out of homeownership, consider it a red flag -- it's time to scrutinize your property tax bill.

Many homeowners bailout, accept the foreclosure or take the short sale way out because their mortgage is more than the value of the home, which may have fallen for a variety of reasons.

The incidence of incorrectly calculated property tax bills may also warrant a close inspection of your property tax bill or an appeal.

Many errors in calculating your property tax bill also stem from clerical mistakes according to the American Homeowners Association (AHA) which, along with the National Taxpayers Union, offers a low-cost kit to help you check our property tax's accuracy and, if necessary, attempt to lower your levy.

Visit the Federation of Tax Administrators to pinpoint your property tax jurisdiction, records and procedures.

Tell-tale signs your property tax could warrant an adjustment include:

• Errors in the description of your property on the tax bill.

   

• Compatible homes in the area that have sold for less than your appraised value.

   

• Neighbors with lower assessments on similar houses. Keep in mind some homes retain the same assessed value for years and assessed values often don't rise or fall in step with market values or home sale prices.

   

• Value reducers in your home or area, including drainage problems, easements, re-zoning, heavy traffic, nearby railroad tracks, freeways, industry or toxic waste.

   

• Depreciation factors, including the quality of materials, inefficient heating, structural cracks, deterioration, or chronic defects.

When you examine your tax records in the local assessor's or property tax office to make sure the information is complete and accurate also ask yourself:

• Did you buy your home in a bidding war? An overvalued property is an over assessed property.

   

• Are there errors in your tax records? Look closely at your records and make sure there aren't reporting errors. A condo listed as a single-family home, square footage that's off, too many rooms and more can falsely boost assessed value.

   

• Do the math. Many states put a cap on how much above the market value an assessment can be and how much it can rise each year.

If you need to appeal the assessed value and related property tax, prepare yourself for a time-consuming ordeal.

In most cases the process if free for taxpayers, but you may want to enlist the aid of a licensed professional to assist you.

Typically, you'll have to find three, five or more comparable homes in your neighborhood that have lower assessments. Obviously, the lower the better. Also, the more comparables, the stronger your case. Truly comparable homes are homes nearly identical to your home's floor plan, age, lot size, improvements and other factors.

The information is largely public and available, with some digging, from your tax assessor's or property tax office, but you can hire a real estate agent or other professional with access to your local multiple listing service. They can quickly generate a comparable market analysis of homes both recently sold and those in escrow to hone in on your home's true value.

An appraiser with multiple listing service access can do the same, as well as perform an appraisal of your home.

If you hire a professional you could be out a few hundred dollars. Don't make a case if you don't think it's worth the cost to appeal.

Approach the appeal objectively, not with an adversarial chip on your shoulder. You only want your due, not to incite the property tax system.

If at first you don't succeed, be prepared to appeal to a higher authority.

See the AARP's property tax section for more property tax considerations.


Written by Broderick Perkins
February 28, 2008 

Second Homes: Luxury Housing Booms On

If you've forgotten what a housing boom looks like, check out the luxury home market.

The luxury home market includes the vacation home getaways of the rich and famous and continues, for the most part, to enjoy record-level sales and prices in many locations.

That's according to a survey by high-end real estate brokerage Christie's Great Estates.

Listing-Beverly Hills Villa:

Whether it's a $50 million, 30,000-square-foot, Italian villa in Beverly Hills or the $70 million Penthouse at The Pierre, with a 360-degree view of Manhattan, high-end homes are hot.

Christie's says the same desires that drive demand for fine art also put luxury homes on a pedestal. The emotional rush that comes with heightened visual appeal is simply priceless. Toss in a stellar location and luxury homes are the stuff of dreams.

In the fourth quarter 2007 survey of its regional markets Christies found:

• Manhattan apartments achieved a record average price of more than $1.4 million for a 34 percent gain over the same period the previous year.

   

• Single-family luxury homes in Palm Beach, FL rose in price by nearly 16 percent to $5.3 million.

And in California's Beverly Hills, properties that sell for $10 million or more are selling for more than they would a year ago, according to Jeffery Hyland of the Hilton & Hyland in Beverly Hills.

Hyland said that's because there's lots of cash, but too few luxury homes.

But all is not well in Tinsel Town.

Some celebrities are having problems unloading multi-million dollar estates.

Young Canadian rocker Avril Lavigne; former Guns N' Roses guitarist Slash (Saul Hudson), Johnny Carson sidekick Ed McMahon and Vidal Sassoon all have or had homes on the hard-to-sell list.

The toughest sell has been one of the nation's most expensive residential listings, Saudi Arabia's Prince Bandar's 56,000 square foot, 96 acre Hala Ranch in Aspen, CO. Listed for a cool $135 million, it's been on the market for a year.

The New York Times recently featured the sprawling estate in a recent story.


Written by Broderick Perkins
February 28, 2008 

Real Estate Outlook: Numbers Best in Months

Every week, it seems, there's a battle of conflicting numbers when it comes to housing.

The latest existing home sales survey from the National Association of Realtors is a perfect example. You may have seen the news reports about another bad month for resales -- down for the sixth straight month, according to the Associated Press, to the "lowest level" in almost a decade.

But take a closer look: Yes, resales were lower by four tenths of one percent in January, but they were down from an upwardly-revised total for December.

Drill down just a little deeper and you find that resales of single family detached houses were actually up in the latest month -- up by one-half of one percent. Condominium and cooperative sales, on the other hand, took a sharper drop -- falling by 6.5 percent, and that dragged down the national sales total overall.

So the real news was mixed: Sales of detached single family units ROSE in January while condos and cooperatives were down.

Either way you present it, though, total resales were essentially flat from month to month, hardly as dramatically negative as the scare headlines had it. Maybe we're at bottom, maybe not, but the fact is: Sales are not falling off the charts.

Also last week, there were some other mildly positive economic signs: Construction starts of new houses rose by eight tenths of a percent, and home builder confidence -- as measured by the Wells Fargo/National Association of Home Builders poll -- rose slightly as builders reported seeing stronger flows of shopper traffic through their model homes.

Again, there's nothing dramatically positive here, but the numbers are better than they've been in months. They simply got drowned out by all the gloom-mongering.

Even the Conference Board, a research group that represents a broad spectrum of U.S. industries far beyond real estate, said things are beginning to look up for housing. Chief economist Gail Fosler said in a report last week that "the housing market correction is about over ... . Housing affordability is beginning to improve, and with the recent interest rate cuts and house price declines, it should improve further."

January and February, said Fosler, "are not big months for housing, but rising affordability (plus favorable demographic trends) bode well" for the overall outlook.

Fosler's economic report preceded last week's jumps in mortgage rates -- taking 30-year rates back over 6 percent -- but her forecast on where housing is headed is significant.

Someone's got to call the turnaround. Fosler thinks it could start this Spring.

We'll watch and see.


Written by Kenneth R. Harney
February 28, 2008 

Washington Report: Where the Candidates Stand

Housing and mortgage issues are surging to the forefront of the Presidential primary campaign and the differences among the three major candidates are huge.

Here's a quick overview of where the candidates stand:

John McCain says he favors beefing up the FHA program, and he supports the Bush administration's private-sector remedies to the foreclosure problem -- efforts like the Hope Now Alliance and the recent Project Lifeline concept that offers distressed borrowers an extra 30 days to work things out with lenders before they lose their homes to foreclosure.

McCain also supports national licensing of mortgage brokers and tougher crackdowns on mortgage fraud and predatory lending.

The really big fireworks over housing are between Hillary Clinton and Barack Obama. Clinton wants to clamp a 90 day moratorium on all foreclosures plus a freeze of subprime adjustable mortgage rates for "at least" five years.

Obama calls that approach "disastrous" because, he says, it would cause lenders to raise rates on all new mortgages or abandon the mortgage market altogether.

But Obama also strongly favors a change in federal bankruptcy laws that lenders say would force them to raise rates as well: He wants to empower bankruptcy judges to reduce borrowers' mortgage debts to lenders -- something the banking industry is now fighting tooth and nail on Capitol Hill.

Obama also wants to create a new writeoff program for lower and middle-income homeowners who don't itemize on their federal taxes. The plan would offer a "universal tax credit" for 10 million borrowers that would save them an estimated average of $500 a year.

All three candidates support efforts to help defaulting subprime borrowers to refinance into more affordable replacement mortgages, such as FHA. But Obama proposes creating a new $10 billion federal "Foreclosure Prevention Fund" that would help people renegotiate loans with their current lenders or to sell their homes.

Not to be outbid, Clinton says that $10 billion just won't do the job, and promises that her version of the fund would be three times the size of Obama's.

A Clinton spokesman was quoted as saying Obama's overall plan "positions him to the right of George Bush" on housing issues.

As you know, we're nonpartisan here at Realty Times. We stick to the facts. So we won't go anywhere near that last bit of red-hot campaign trail rhetoric.

But we will keep you up to date on the presidential politics of real estate as events unfold in the weeks ahead.


Written by Kenneth R. Harney
February 25, 2008 

Realty Viewpoint: Why You Can't Outsmart The Market

A deluge of discouraging news from rising mortgage interest rates to falling stock prices have economy watchers moaning that the recession is here and housing is going to get worse.

If you're a buyer waiting for mortgage interest rates to stay low, you bet on the wrong horse.

According to Realty Times' own David Reed, mortgage interest rates shot up this past week at the fastest pace in 20 years taking homebuyers and refinancing homeowners by surprise.

Just when things were beginning to look rosy for early spring housing sales, the bond market went south, and the yields went north. Mortgage interest rates are tied to the sale of mortgage bonds and mortgage-backed securities.

Homebuyers hearts weren't in it as mortgage applications sank over 22 percent (22.6 percent). Purchase applications fell 11.55 percent, and refinancings dipped nearly 28 percent (27.9 percent) during Valentine's week.

Translation? By waiting just one week to finance, you added $50 a month to your monthly mortgage payment thanks to higher interest rates.

Hindsight is 20-20 so you can see well enough to kick your own butt.

But don't despair. Just consider a little lesson in market timing. It doesn't work.

All you can do is watch the indicators and make your move when you think the most variables are in your favor.

For example, interest rates are higher, but if you move now, you could still take advantage of the higher conforming loan limits. FHA loans are 125 percent of your area's median price.

Now might be a very good time to buy a new home. The credit crunch is adding to builders desperation. They're finally realizing that they can't keep adding to stagnant inventories. New construction in January fell to a 17-year-low. They're slowing down on new single-family homes and accelerating starts on condos and apartments.

Both new and existing homes are at a nearly 10-month supply, so now's the time to negotiate better terms.

Keep in mind, there are only a few things that matter when you're buying a home: getting the home you want, at the price you want, at an affordable monthly payment. If you get all three, you've made a good deal.

The housing crunch won't last forever, and when it turns, think about where you want to be -- with first choice or the leftovers?


Written by Blanche Evans
February 22, 2008 

Real Estate Outlook: Positives Taking Shape

If you're looking at housing statistics over the past quarter or year, there's no question you're going to come up with a lot of negatives.

But if you look ahead -- there definitely are some positives taking shape.

On the negative side, we've got a bumper crop: The National Association of Realtors reported last week that median home prices in the fourth quarter of 2007 fell in 77 of 150 major markets compared with year-earlier numbers. And the median price of an existing home nationwide dropped by 5.8 percent.

On top of that, total sales were down in the fourth quarter by 8 and a half percent from the previous quarter and were 21 percent below where they were in the fourth quarter of 2006.

I've got one word for those numbers: Ouch! They're pretty sobering. But let me ask this: Is anyone really surprised that after the biggest run-up of prices in American history and six years of record-breaking sales that the correction phase following the boom cycle has been tough?

Even in the face of all this, roughly half of the 150 major markets -- 73 of them, spread from Yakima, Washington to Binghamton, New York -- saw median price GAINS last year during one of the worst real estate environments in a century.

Now let's turn to market developments still ahead: No one is predicting any quick turnarounds or sudden bursts in sales, but think about these facts:

• Thirty-year mortgage rates continue to be in the mid to upper 5 percent range -- among the lowest in half a century. If they stay low, most economists agree they will stimulate home sales.

   

• Federal Reserve chairman Ben Bernanke told Congress last week that he is committed to lowering short-term rates even further to help stimulate the economy -- and hinted that the Fed could cut rates another half point in mid March.

   

• The new, higher mortgage maximums for Fannie Mae, Freddie Mac and FHA will kick in by mid-March and should help thousands of first-time buyers in high-cost markets like California and the Northeast and ultimately help clear out some of the unsold inventory clogging those areas.

   

• Combine low-cost money with sharply lower prices and at some point, you hit bottom -- flatten out -- and sales begin to pick up.

Downcycles aren't forever, nor are upcycles.

Here at Realty Times we think in a slowly expanding number of areas as the year proceeds, you'll see the arrows start pointing up again.


Written by Kenneth R. Harney
February 21, 2008 

Real Estate Outlook: Spring Market Has Good News

Could last week's surprise 12 percent jump in the number of people applying for mortgages to purchase a home be a hint that the Spring real estate market could be better than a lot of the pundits believe?

Well, it probably would be a mistake to make too much fuss over a single week's statistical report from the Mortgage Bankers Association of America.

After all, the National Association of Realtors' latest pending home sale index -- which looks out over the horizon to predict sales activity a month or two ahead -- registered a decline of one and a half percent.

But you can't simply ignore all those new mortgage applications. They're real. Something's going on -- and it could be that the word is finally getting out to consumers that home loan rates at an average 5.6 percent for a 30-year fixed-rate mortgage -- are close to 40-year lows.

Money for home purchases right now is cheap, no question. And we all know housing prices are lower this year than they were last -- sometimes by 10 and 15 percent or more, depending on local market conditions.

So a 12 percent jump in purchase applications could be a significant development ... or just a fleeting statistical fluke. We'll keep you up to date on it.

Another potentially important factor looking forward: The federal economic stimulus package signed into law this week opens the door to more affordable home purchases in some of the hardest-hit, high cost markets in California, New England, Florida and the Mid- Atlantic states.

Rather than being stuck with expensive "jumbo" loans -- with rates of one to two percent above standard -- buyers will now be able to take out mortgages with lower rates, even if the loan amounts go to nearly $730,000.

Those new "budget-priced" jumbos will be available not only through Fannie Mae and Freddie Mac, whose lower capital costs get passed onto borrowers, but also through the FHA, whose capital costs are even lower.

There's a hitch, though: These special jumbo deals will only be available this calendar year. They disappear December 31st.

Buyers and sellers who want to benefit from this part of the stimulus package need to get into the game fairly soon.

Who knows? Maybe the economic stimulus package -- which most people think of in terms of tax rebate checks -- just might bring some heat and energy to the housing market, just in time for Spring.


Written by Kenneth R. Harney
February 19, 2008 

Realty Viewpoint: Foreclosures Caused By More Than Subprime Loans

With FHA, Freddie Mac and Fannie Mae conventional loan limits being raised to nearly $730,000, the housing industry should be breathing a sigh of relief. Or are new conventional loan limits just a band-aid on the huge foreclosure wound?

A new coalition of mortgage lenders called Project Lifeline aims to help homeowners who are 90 days or more behind in their mortgage payments. The program includes a 30-day pause to give homeowners and their lenders time to work out a payment or loan modification solution.

Other homeowners can refinance their high-risk loans into conventional loans, and the higher loan limits will allow more homebuyers access to conventional loans.

But will that slow foreclosures?

Some believe the foreclosure crisis, such as the crush of foreclosures in Southern California, aren't being caused by subprime loans, but by homeowners who are simply walking away from homes with negative equity. They could make the payments. They just don't want to. Why are they being pressured by price? New homes that aren't selling.

"If you look at the hardest hit areas, you will see they are the areas with the most dramatic growth," says Sean O'Toole, spokesperson for ForeclosureRadar.com. "In Stockton, for example, there is an unsold new construction inventory of over 7,000 units (source: Hanley Wood, includes improved lots), yet only 150 homes (MLS) selling each month. That has put serious downward pressure on pricing -- with builders leading the charge on discounting to get existing inventories sold."

A recent study by the Boston Federal reserve found that downward pricing pressure is the primary cause of foreclosures - not subprime loans.

O'Toole points out that Realty Times noted a correlation between the date range of loans in foreclosure and the origination of risky loans, but he says the date range of loans in foreclosure also correlate with being upside down (prices have fallen to 2005 levels).

"As we think about how to get out of this crisis, I think we should all focus on the core problem -- price declines due to too much inventory. Without action this problem will get worse before it gets better. We added 60 percent more REO's to existing inventory in January than we did in December (exclusive ForeclosureRadar.com data). Ultimately, of course, it will self-correct even without intervention, with prices falling until the rent/price relationship comes back into historic norms."


Written by Blanche Evans
February 18, 2008