Find A Shore Home

ATLANTIC CITY — After a decades-long absence, the internationally known diving horse act will return to the Steel Pier this summer as part of an overhaul approved for a Casino Reinvestment Development Authority loan Wednesday by the agency’s board — moments after the Tourism District Master Plan was adopted.

Robert Mulcahy III, left, James B. Kehoe and John F. Palmieri speak at the CRDA board meeting.

The CRDA’s $6 million contribution to the $20 million first phase of the Steel Pier improvement project is a prime example of what the Master Plan is intended to help accomplish in Atlantic City: economic recovery and realized potential by playing up — and improving on — its existing attributes and using government support to leverage private investment in the city.

“The mayor and (City) Council have always been supportive, but we have never seen a climate like this, with (all levels of) government,” said Tony Catanoso, one of the pier’s owners. “Instead of saying, ‘No, we can’t,’ they’ve expanded their vocabulary by one word: ‘Yes.’ We’ve never had that kind of attitude in Atlantic City in 20 years in business, and it’s totally driven from the top.”

Both the master plan and loan to Catanoso and his partners received unanimous support from the 15 CRDA board members (Nicholas Ribis and Debra DiLorenzo did not attend). They voted at the Atlantic City Convention Center on Wednesday, a deadline set by state law. Effective one year ago, those regulations also established the Tourism District and CRDA development powers within it, in addition to setting in motion other changes based in part on a report commissioned by Gov. Chris Christie to revive the resort beset by competition from nearby gaming markets and the recession.

State Sen. Jim Whelan, D-Atlantic, was one of the main proponents of the legislation.

“This is beyond my wildest dreams, what we saw today. I’ve been… around since the pre-casino days. And more remarkable than the plan we saw today, as great as it is, is …the consensus behind it coming out of the gate. That doesn’t happen in Atlantic City. It gives me great hope that this isn’t just another set of pretty pictures,” said Whelan, referring to the succession of citywide development strategies drawn up over the years. “That this set of pretty pictures is going to become a reality.”

Formerly mayor of the city, Whelan still lives here and sat among the nearly 300 city residents, public officials, journalists and other stakeholders at the two-hour session. The meeting included a presentation by The Jerde Partnership, one of four companies working on the master plan.

“This master plan is a vision, a guide, for furthering the city’s success. The future of Atlantic City is guided by those who know it the best — you,” said Jerde Vice President David Sheldon to the audience. “We are the interpreters, the visionaries. We want to position Atlantic City as … a city where there is no off-season.”

The $800,000 contract awarded to the consulting team, which is headed by Jones Lang LaSalle, includes ongoing engineering and other professional support CRDA officials expect to need as they implement the plan.

“No one expects this to be easy, but now we have a plan to provide direction,” said CRDA Executive Director John Palmieri.

There are three phases in all, with the long-term phase setting out suggestions that will be implemented five years or longer from now.

Bader Field, for example, is slated for development, but not until at least five years from now. The plan makes suggestions for how to do that — mixing residential and commercial uses perhaps, definitely maximizing waterfront access and green open spaces — but also advises continuing to host events there in the meantime.

State law also requires a progress report from the CRDA after the first, two-year-long phase of the plan, said CRDA Deputy Director Susan Thompson.

The three-year Steel Pier renovation plan calls for $102 million worth of upgrades to the 114-year-old structure that extends 1,000 feet into the ocean opposite the Boardwalk from the Trump Taj Mahal Casino Resort.

By this summer, a beer garden, six new rides and eight new games will start operating beneath new lighting and spruced up, better-coordinated facades. The diving horse act — which last appeared in the summer of 1993 — will be up and running, along with other acts inside an amphitheater in the works, too.

By 2015, Catanoso and his partners hope to be operating an enclosed pier that’s 25 percent larger.

“Everyone’s on board,” Catanoso said. “The attitude, enthusiasm is there. I think Atlantic City is going to come back, just by the way people are acting.”

The plan’s approval means it will be available in its full form today, complete with underlying economic analysis supporting its new ideas and existing ones that were incorporated. But suggestions for Bader Field and many other of the plan’s components geared toward achieving that end were revealed during a series of public meetings during the past month. Those sessions were meant to answer questions and get feedback from residents, business owners and other stakeholders. Concerns and questions remain, however.

Dennis Konzelman, president of the Westside Civic Association, said once residents understand how they’ll be affected by proposed changes, they’ll want to see results quickly.”

“This is great and beautiful and exciting,” said Konzelman, whose neighborhood doesn’t fall within the boundaries of the Tourism District. “We need to see something happen, and we want to know what’s going to happen to us. We’re not in the Master Plan. So just don’t forget about us, the people who live outside of (the Tourism District).”

Business owners also objected to the plan’s push to get rid of widely used steel doors that they roll down or pull across their storefronts for overnight security. But some parts of the plan suggest changes that are universally supported and have long been recognized, such as the intent to redevelop Kentucky Avenue with a focus on the street’s legacy as a nightlife destination and focusing on Atlantic Avenue as the city’s main street. Other parts of the plan note best practices already are in place, such as in Gardner’s Basin, or advocate moving forward with existing plans, such as those for the Steel Pier.

Mayor Lorenzo Langford didn’t bite when a reporter asked him to respond to criticisms from Christie, a break from the jabs they’ve exchanged before, such as Langford comparing the state’s implementation of the Tourism District to South African apartheid.

“This is a great day for Atlantic City,” Langford said. “The governor’s a man just like I am. He’s entitled to his opinions. I don’t put too much stock in what he has to say.”

Christie released a statement that was similarly even-keeled.

“A successful, vibrant Atlantic City is vital to the economic growth of both the regional and state economies,” the statement read. “Exactly one year to the day of signing landmark legislation that established the Atlantic City Tourism District, we now have an ambitious, visionary road map that will transform Atlantic City and lead its comeback.”

Eliminate ‘dead zones’ between major hubs and landmarks by adding art installations and eight to a dozen ‘innovation pavilions,’sponsored by international brands and extending from the Boardwalk over the sand.

Expand Ambassador program beyond Boardwalk by adding greeters elsewhere; expected to be triple the size for summer 2012.

Business corridors

Improve walkability and increase pedestrian traffic on Pacific Avenue with patio-style dining and street-accessible bars, boutiques and other venues. Establish small-scale retail in ground floors of casino parking garages on the beach blocks of Michigan, Missouri and Mississippi avenues.

Focus on improving storefronts and the mix of vendors and uses along Atlantic Avenue to help establish distinct districts within the city that seamlessly transition from one to the other yet maintain their own identity. Entails daily parades and other events, reducing detractors such as overnight security doors.

Mid-term: between two and five years from now

Arts District in Ducktown centered on Dante Hall Theater for the Arts.

AC LIVE! previously discussed as the entertainment-focused fourth phase of The Walk.

Revitalize Kentucky Avenue with focus on music and history to pay homage to nightlife and entertainment that once made the street a tourist destination in and of itself.

Expand Gardner’s Basin to include an oceanic research facility, fishing fleet operations and other offerings that fit with area’s existing marine and education themes.

South Inlet redevelopment: Lighthouse Park expansion, linear waterfront park.

Sculpture parks, skate parks, small festivals, sports fields in areas between Indiana and North Carolina avenues.

Long-term: five years or longer

Keep Bader Field as an event venue, with long-term plans for commercial, residential or mixed-use development.

Marina District should establish a network of waterfront walking and biking paths connecting new and existing gaming and nongaming resort properties.

Source: David Sheldon, vice-president at The Jerde Partnership, consultants on the Atlantic City Tourism District Master Plan

By KEVIN POST Business Editor pressofAtlanticCity.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted: Sunday, November 13, 2011

By MICHAEL MILLER Staff Writer pressofAtlanticCity.com

OCEAN CITY — Faced with increasing tax appeals in the wake of the national real estate bust, the city plans to reassess its highest-priced coastal properties this year and the entire island in 2012.

OCEAN CITY — Faced with increasing tax appeals in the wake of the national real estate bust, the city plans to reassess its highest-priced coastal properties this year and the entire island in 2012.

Cape May County lost $2.8 billion in taxable property value in 2010, the Board of Taxation’s abstract of ratables shows.

In terms of property value, that is the equivalent of having the entire city of Cape May break off from New Jersey and sink into the Atlantic Ocean. Now, Ocean City and many of Cape May County’s 15 other municipalities are planning reassessments to ensure everyone pays a fair share of taxes.

“We found it’s hard to justify assessments,” county Tax Administrator George Ray Brown III said. “Some towns reported a 30 percent loss in value since the real estate peak.”

Ocean City Business Administrator Frank Donato has warned City Council that there is $60 million less in property on the tax rolls this year. And that likely will drop if property owners prevail in appealing their assessments, as 622 people did this year.

In a typical year, the county tax board might approve 30 percent of appeals. But since the housing bust, property owners have been winning 95 percent to 99 percent of their appeals, Brown said.

“Assessors are simply unable to support the values of tax assessments on the books now,” Brown said. “There’s no justification for having an assessment above market value.”

Avalon took action last year to address its declining market. A reassessment last year determined the island’s 5,500 homes and businesses lost a staggering $1.6 billion in value since the 2005 peak in the local market, Assessor Jeffrey Hesley said.

As a result, the borough’s local-purpose tax rate increased this year nearly 25 percent from 41 cents to 50 cents per $100 of assessed value. But since this higher rate is levied against lower-valued homes, the effect on the tax bill is negligible, Hesley said.

“A reassessment is not a revenue-generating project. It’s about equity and fairness, and making sure everyone pays a fair share,”he said.

“When you deal with big numbers on a daily basis, the sticker shock isn’t that much,” he added. “When I speak with my colleagues, they may talk about properties that sell for $250,000. I have an oceanfront in Avalon that sells for $12 million. Numbers are numbers to us.”

Ocean City is addressing the difference between assessed property values and actual market values by reassessing beachfront, bayfront, and motel-style condominiums this year. Next year, the city will reassess the entire island and its 19,000 properties, city Tax Assessor Joseph Elliott said.

Elliott said the waterfront neighborhoods generated the most tax appeals this year. If the city did nothing to address the problem, he would expect to see more than 1,000 appeals filed in each of the next few years.

But some members of the Ocean City civic group Fairness in Taxes question whether everyone in Ocean City will pay a fair share in taxes if only parts of the island are re-examined in a single year.

“They’re going to be lowering the value on beachfront and bayfront communities for the coming year,” resident Jack Stover said. “That means if the budget does not go up $1, everybody else on the island will still be getting a tax increase. The poorest in the town will get an increase in taxes and be paying for the one year’s worth of reduced assessments on the wealthiest in town.”

Elliott did not dispute Stover’s analysis. But he said this partial reassessment would be fairer to the city’s taxpayers than doing nothing.

“We couldn’t do the entire municipality. It’s too big,” Elliott said. “The fairest solution was to do the neighborhoods that were assessed highest. It’s a fairer approach than not doing it. The Tax Board agreed with me. They approved the plan.”

There is a simple solution for beleaguered property owners, Stover said. He plans to file a tax appeal.

Elliott said taxpayers have until April 1 to file an appeal. He suggested they wait to file until at least Feb. 1 to see if their property is one of the approximately 3,000 that will be reassessed for 2012.

In the meantime, tax assessors said it is impossible to predict when the market might begin an upswing.

“People are waiting on the sidelines for things to become more stable. That’s when you’ll see the investment in property again,”Avalon’s Hesley said. “Trying to pinpoint that time is just as difficult as finding out when the bottom of the market is.”

Elliott said there have been promising signs this year.

“We’ve seen more teardowns this fall than I’ve seen in the past four years,” Elliott said. “The market is stabilizing, and there is more new construction being set up.”

Posted: Saturday, November 5, 2011

By JOEL LANDAU Staff Writer Press of Atlantic City

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And the program has had its results.

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

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

Here are 14 items of real estate jargon, divided into 2 buckets and decoded for the post-recession house hunter.

Bucket #1: Transaction signals. Distressed properties –foreclosures and short sales – make up about a third of the homes currently on the market, and these transactions have their own unique flow, timelines and challenges compared with “regular” equity sales. So, it only makes sense that listing agents have developed a set of abbreviations to brief prospective buyers on what they can expect and should be prepared for if they make an effort to buy such a home, with just a glance at the listing:

1. REO: Real estate owned by the bank/mortgage servicer, this acronym refers to homes that were foreclosed and repossessed by the former owner’s bank. It also signals that buying this property will involve doing a deal with the bank; possibly dealing with a different escrow timeline, offer process or contract forms than a non-REO sale; and almost always taking the place in as-is condition, among other things. Oh, yeah –and it might also involve one more thing: a great deal.

2. S/S, Subject to bank approval: What once stood for stainless steel is now being used to describe a short sale – a property whose seller anticipates will net them less than they owe on the home. Short sales are often described as “subject to bank approval,” which simply points out the obvious truth about these transactions, that the seller has very little control over whether the bank will allow the transaction or what price and terms the bank will approve of, and that the transaction might very well take the better part of your natural life could take 6 months or longer to close. Talk to your agent for more details about short sales, and to determine how you can tell the success-prone short sales from those that are less likely to close.

3. Pre-approved short sale: Many knowledgeable agents say no short sale is truly “pre-approved” unless and until the bank looks at a specific buyer’s offer and the seller’s financials at the same time, but some listing agents designate a short sale as “pre-approved” when a previous short sale application was approved at a given price, but fell out of contract for some other reason.

4. Motivated seller: This is a perennial term in listing parlance, but against the backdrop of the current market, translates to something like, “Have mercy on me.” I kid – this phrase often signals a seller’s flexibility in pricing and/or urgency in timing.

5. Coveted: In a word, “expensive.” No, seriously, even on today’s market, many locales have a neighborhood (or a few) which have been relatively recession-proof, have been fairly immune to the foreclosure epidemic and have seen home values continue to rise. If you see the word ‘coveted’ in a listing, chances are you’re house hunting in that sort of neighborhood, or there’s something about the individual property the home’s seller is trying to position as unique and desirable, as compared to competing listings (i.e., the view, location of the lot, or floor plan).

6. BOM, often accompanied by “No fault of the house:” Homes go in and fall out of escrows on today’s market constantly, often due to things the seller has no control over. BOM indicates a home that was in contract to be sold, but is now “Back on the Market.” “No fault of the house”may describe a situation in which the buyer lost interest in the home after a long short sale process or failed to get final loan approval, as contrasted to a situation in which the home’s inspection turned up deal-killing problems or the property failed to appraise at the purchase price.

7. Not a short sale, not a foreclosure. Sellers on “regular” equity transactions are often more negotiable on items like price and repairs, and are certainly able to close the transaction (i.e., let the buyer move in) sooner than sellers of REOs and short sale properties. Some also pride themselves on having maintained their homes in better condition than the distressed homes on the market. For buyers that seek quick certainty and closure, non-distressed homes can be especially attractive.

Bucket #2: All about the Benjamins. The government’s role in financing homes has grown exponentially over the housing recession, so the alphabet soup of government housing and home financing agencies, their guidelines and programs is now more important to understand than ever.

8. OO/NOO: Owner-Occupied and Non-Owner Occupied – You’ll see this on listings in two different ways. First, the vast majority of home loans must comply with government loan insurance guidelines, including guidelines around how much of a condo complex must be owner-occupied (i.e., 75 percent, minimum, in most cases). Also, some bank-owned property sellers will consider offers from owners who plan to occupy the property if they buy it as much as a week or 10 days before they will look at NOO or investor offers.

9. FHA: Short for the Federal Housing Administration, which backs the popular 3.5 percent down home loan program. FHA guidelines also include somewhat strict condition and homeowners’ association dictates, so if a home’s seller notes that they are not taking FHA loans, they might be saying that the property has condition or other issues which disqualify it for FHA financing.

10. Fannie, Freddie: Fannie Mae and Freddie Mac, federally controlled company/agency hybrids that now back most non-FHA (conventional) home loans, and thus provide the guidelines most Conventional loans must meet, including guidelines around seller incentives like how much closing cost credit a buyer can receive.

11. DPA/DAP: Down-Payment Assistance or Down-Payment Assistance Program

12. FTH/FTB: First-time homebuyer/First-time buyer – cities, states and large employers like universities tend to be the last bastion of these programs which offer mortgage financing or down payment assistance, usually to people who have not owned a home in the relevant city or state anytime in the preceding 3 years.

13. HUD: The federal department of Housing and Urban Development, which governs the guidelines for FHA loans, acts as a seller of homes which were foreclosed on and repossessed for non-payment of FHA-backed loans, and publishes the Good Faith Estimate and settlement statement forms every buyer and borrower will be provided at the time they shop for a loan and close their home purchase, respectively.

14. HFA: Short for Housing Finance Administration, this acronym refers to a loose body of state and regional agencies which offer an array of financing and counseling programs that varies by state, from down payment assistance for first time buyers to the Hardest Hit Funds that offer foreclosure relief assistance and principal reducing loan modifications to unemployed and underwater homeowners in the states hardest hit by the foreclosure crisis.

Liz Davidson, Contributor  Forbes.com

As a financial education company, we often see financial crises coming because employees contact us when they have financial problems or concerns they need help resolving. With the recent mortgage crisis, we began to see a major spike in calls on debt in the year leading up to the meltdown. Debt calls in 2006 increased to an all time high—representing close to half of our total calls at the time. Even worse, many callers were frantic. They weren’t looking to simply reduce their debt load; they were struggling to make ends meet. They weren’t asking about putting together a plan to pay off high interest rate debts; they were beginning to consider drastic options like foreclosure and bankruptcy.

It was rather like seeing a car crash in slow motion. You know it’s coming and you can tell the driver to slam on the brakes or swerve out of the way, but it’s too late to do much more.

Move up, Move down.

Today, there’s another mortgage crisis in the works—that is, NOT having one—choosing to rent when you can afford to buy; choosing to forgo building equity in a home as a major source of retirement security—something that may be more necessary now than ever before with a soft stock market and low interest rates. This emerging crisis is not yet at the car crash stage– more at the reckless driving without a seat belt stage. There is time for Americans to resolve this one, but they must change their perspective on home ownership before it’s too late.

Why own a home when you can rent? We are hearing this question much more these days as people choose to “sit out” of the real estate market or disregard homeownership altogether after seeing many of their friends and family end up in short sales or foreclosures. Renting is the low-risk option for these callers. It’s the only way to ensure that nightmare will never happen to them.

The problem is that it will; it’s just a different nightmare. Consider this: A homeowner with a $1,500 monthly payment would still be writing the same check fifteen years later while prices everywhere increase around them. In August 2011 the Consumer Price Index included a .4% increase in rents, the biggest increase since 2008, which represents an annualized increase of 4.8%. If rents didn’t even increase that much but simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation) and of course would end with a final payment. There might even be some real equity in the property, even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement.

The renter, by contrast has no equity in their home, so in addition to almost $900,000 in rent in the above example, the renter would also be giving up $400,000 in retirement assets (and that’s at a growth rate of just 1%– far lower than even the lowest growth rate over a 30 year time period). At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference, not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?

And this doesn’t even include the tax benefits. The US government essentially subsidizes your house payment by allowing a mortgage interest and property tax deduction on Schedule A of the 1040. Any points you pay when you get the loan can also be deducted. Then an amazing thing happens: the IRS allows a tax exclusion on the sale of a primary residence. Owners who live in their property two out of the past five years, who have equity and sell their primary residence, receive a maximum capital gain exclusion of $250,000 (if married $500,000.) Where else can you get a tax break on an investment and then receive the proceeds tax free? I can’t think of another investment like it.

So, deciding that “renting” is safer and there’s no need to take the risk of buying a home or even waiting in an effort to time what is an unpredictable real estate market, buying only when prices have been up for a while, can be very costly. It doesn’t bring with it the emotional trauma of a foreclosure or short sale. But it is a slow drain on your finances, that over time, could compromise your ability to retire or at the very least, to retire the way you want, when you want.

All that said, I’m by no means advocating homeownership for everyone. For many, renting is the right option, at least for now. If you can’t afford to own a home, you shouldn’t even consider buying—one of the key lessons learned from the mortgage crisis. Your mortgage should be under 25-30% of your income not including bonuses or promotions and you should have an emergency fund of 3-6 months expenses in savings before you purchase a home. Also, if you don’t qualify for a reasonable interest rate on a mortgage due to credit problems, if your income is unstable, or if you crave mobility, renting is the better choice. Renting is cheaper than buying in the short term and has other advantages. Repairs: as a renter, when you turn on the shower and freezing cold water spurts out in your face, you simply make a phone call to the landlord and they have to install a new water heater instead of you footing the bill. Mobility: If you have a job opportunity or promotion in another state, you simply give notice and move. You don’t have to go through the arduous process of selling (or not being able to sell) your home. You are free from the obligations of homeownership. Property taxes: As a homeowner, even when your mortgage is paid off you still have to pay property taxes and insurance, and those costs will continue to rise.

Just remember that freedom has its price and, in this case, it is a steep one. It costs much more in the long run to rent, which is why homeownership can be the ultimate retirement strategy. When people are making decisions on whether to buy a house or not, many aren’t factoring in thirty years from now when the home is paid off. They are wondering if the market is at the lowest point possible, if interest rates will drop even lower or if the property will appreciate. This vital element of homeownership has a long incubation period. We always hear that an employee’s peak earning years come after age 50, when you combine high earnings with the elimination of an expense that takes up a third of most people’s take home pay, people have a real chance to meet their financial goals. Homeownership is the ultimate retirement plan.

Home ownership isn’t for everyone, but for many, it is the best choice. The smartest choice, of course, is making the right decision for the right reasons based on your own circumstances. Homeownership basics apply just the same as they always have: buy only the home you can afford, lock in a fixed rate loan with the lowest interest rate possible, and refinance only to get a lower rate and only for the same loan amount and same term. What got many people in trouble during the financial crisis was going to the extreme and buying a house they could barely afford with a variable rate loan payment. When the payments reset with higher interest rates, many couldn’t make the payment. They never should have been in the house in the first place.

If Americans don’t recover soon from their pessimism around homeownership, we predict another fallout from the financial crisis will surface many years from now when a nation of renters tries to retire. They won’t have equity in their homes. Their paychecks will be stretched to the limit, not leaving room for saving and investing for retirement and other financial goals such as college funding. Instead of their expenses reducing through retirement, they will look straight down the barrel of increased rent payments for the rest of their lives. Homeownership makes a significant difference in the long run so it is concerning to see so many walking away from the American Dream. We don’t want to see it become the American Nightmare.

I got an article from my broker regarding purchasing a property these days see on the daily wealth website. It was kind of incredible to compare the time we are are living these days with the past.

Right now, is the most effective time in history to purchase a house in America.

These days, I’ll show you why… based on a few cold, challenging facts.

First, mortgage rates are lower than they’ve ever been in American history…

Most investors have only seen a couple decades of mortgages rates on a chart. But my buddies at Global Financial Data have databases – which includes real estate data – that literally go back centuries.

I had dinner with the Global Financial Data team over the weekend. And they told me about their “Winans International” real estate indexes, with housing costs back to the 1800s and mortgage rates going back over a century. I had to share it with you…

Take a look at this chart of mortgage interest rates since 1900:

In U.S. history, you can see that the current mortgage rates are the lowest.
The last time that the mortgage rates were so low was just after World War II.
And what happened, just after World War II, when mortgage rates were this low?
The greatest postwar boom in housing prices – by far.

Take a look. Mortgage rates bottomed in the mid-1950s, and house prices bottomed about the same time. Then the greatest boom in home prices in our lifetimes started.

Today we have record-low mortgage rates. And we have another thing in our favor…

Homes are more affordable than ever.

Based on the 40-year history of the Housing Affordability Index… houses are more affordable than they’ve ever been. Take a look…

“Affordability” takes three factors into account: home prices, your income, and mortgage rates.

Home prices have crashed. And mortgage rates are at record lows. But incomes (nationwide) haven’t fallen nearly as much… So homes are now more affordable than ever.

“Most people” out there will only tell you the bad news about housing… That’s the way it goes in a bear market. People drive looking in the rearview mirror.

Meanwhile, we have some darn compelling facts out there…

Home prices have fallen by a third… and mortgage rates are the lowest in history. Therefore, U.S. homes are more affordable than they’ve ever been.

You can listen to “most people.” Or you can choose to ignore them and stick to these facts.

Based on these facts alone, now may be one of the best times in American history – even the very best time – to buy a house.

Oct. 3, 2011, 11:01 a.m. EDT

By Jeff Reeves, editor for InvestorPlace.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Timing is everything ! Everything is timing !

Reuters is out with a new report on the state of real estate in Dubai. According to the report, prices in Dubai are expected to continue to decline. Here on the Jersey Shore in Cape May County, we are expecting prices to steady. Unlike many international markets we continue to have an influx of yearly vacationers to Sea Isle City and the Jersey Shore.

Buyers have been enjoying the benefits of the lower than normal interest rates are quietly buying up most of the low hanging real estate before next spring when the sellers seem to have some footing on the prices and have the benefit of the summer rental income wind at their backs.

My peers and I used to joke about having clients cruise down during snow storms with borrowed SUV’s to get a brand new property listing under contract before the weekend when herds of potential home owners would weigh down the Islands with cash filled pockets and deposit checks already written and signed before even seeing the house.

To put this in prospective this is the fall and winter season that buyers will be rambling down for the last of the distressed inventory. More of the available properties are priced to market than anytime in the past seven years.

Contact Ian or any well trained agents of The Lazarus Team, The Landis Co., Realtors, for market data that an engineer would cry for. We can explain the information so that your four old grandchild can grasp as long as he didnt just get off the boat from . . . . .

Get the point? We do easy, easy ! As my son Rami says “Relax and let use do the heavy lifting.” The apple doesn’t fall far from the tree I see.

For all of the reader who have been lulled to sleep over the past seven years and congratulating themselves in not getting caught purchasing a shore home at the top of the market for what ever reason. Don’t get to cocky because even the smart and very smart money are moving in.

Let us know what part of the buying process we can help. We are saving our clients thousands of dollars today!

For those who are interested we do have a Jersey Shore Foreclosure & Short Sale Email List Available.

From the beautiful beaches of the Jersey Shore to Florida , I serve discerning home buyers and sellers.

Sea Isle City, NJ – Outer Banks, NC – Corolla, NC – Greenville, NC – Fort Lauderdale, FL

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.