Foreclosure trend not catching on in southern N.J.
Press of Atlantic City
Published: Friday, September 22, 2006

The U.S. real estate market is showing another sign of heading south, while this region remains reluctant to follow.
As home prices skyrocketed the past couple of years, economists worried that buyers might not be able to keep up with their big mortgage payments if the economy slowed.

They repeatedly warned that buyers using adjustable rate mortgages, often sold with artificially low initial "teaser" rates, might find themselves in the hole if (or when) interest rates went up.

Now that house prices have started dropping in many areas of the nation and rates have risen a little, the watch is on for signs of distress among homebuyers. Nothing impairs one's ability to consume, and keep the economy growing, like taking a bath on one's biggest purchase.

The first alarm bells have sounded.

Last week, the Mortgage Bankers of America reported that foreclosures on adjustable-rate mortgages rose 29 percent to a four-year high in the second quarter of this year from the previous quarter.

Foreclosures are recorded when a lender tries to seize property for nonpayment of the loan or the overloaded borrower simply walks away from it.

RealtyTrac, which maintains a national database on foreclosure properties, reported the same day that they increased 24 percent for all loans just from July to August.

How far this trend goes will depend on a confluence of factors, including stagnating household incomes and rising expenditures on energy, property taxes and insurance. If energy prices and interest rates moderate, we probably won't see a lot of people losing their homes.

In southern New Jersey, an increase in distressed homeowners is even less likely.

RealtyTrac's figures for the region show that foreclosures in Atlantic County actually fell 19 percent from the first to second quarters of this year. In Cape May County, the drop was 18 percent, in Cumberland County 48 percent, and in Ocean County the decline was 37 percent.

Economist Richard Perniciaro, director of the Center for Regional and Business Research at Atlantic Cape Community College, said strong demand for housing in the region is keeping the market in better shape than most.

"The people who are buying are people who have been coming here all their lives and they didn't look anywhere else," he said. "So we have a pretty sure flow of demand, and that will only get bigger as the boomers retire. New Jersey might have the most Baby Boomers of any state."

Home prices in the region were up 15 percent in the second quarter, a smaller increase but still an increase, he said.

"What really would cause our market to falter would be if people wait six or eight months to buy," Perniciaro said.

But even that would be temporary.

"People just want to be here," he said. "They've planned for 10 years to buy into here."

Five-year job to cost $400 million
Heavy construction to start next month
By MICHAEL MILLER Staff Writer, (609) 463-6712
Press of Atlantic City
Published: Thursday, September 21, 2006

OCEAN CITY — Work finally began this month on the new Route 52 causeway, the most expensive road or bridge project ever undertaken in southern New Jersey, after years of delays and much anticipation.

Construction crews began clearing a staging area and set up an on-site office on Garrets Island near the Ocean City side of the causeway. Several heavy trucks and a mammoth crane bearing an American flag were poised at the water's edge Wednesday.

The 2.5-mile-long causeway project is expected to cost $400 million when both phases are complete.

The new causeway will have four wide lanes, an emergency shoulder and a separate walking and bicycle path. It will have a boat ramp, fishing piers and places to fish from the bridge.

“It's good to see the project begin. The sooner it begins, the sooner it will end,” Ocean City Mayor Sal Perillo said. “It's not just the amount of money but the amenities the state is building into the project.”

“Heavy construction will start in early to mid-October,” said Erin Phalon, spokeswoman for the state Department of Transportation.

The first half of construction calls for rebuilding the 1.2-mile-long interior portion of the new causeway from Garret's Island across Rainbow Island to Elbow Island. The second half of construction will replace the two exterior drawbridges with fixed spans, rebuild the Ocean City Welcome Center and eliminate the Somers Point traffic circle.

The completion date is Memorial Day 2011.

The Route 52 causeway is a major link between Somers Point and Ocean City, and Atlantic and Cape May counties.

“There's no question over the next four years there will be disruptions and inconvenience,” Perillo said. “We'll work through it.”

The old causeway is scheduled to remain open throughout construction. On Wednesday, one of the two northbound lanes was closed. Phalon said that lane closure was temporary.

Meanwhile, Perillo said the city was advised that the causeway will see more lane closures later this year to repair the southern drawbridge that tends to expand in hot weather.

“It's a good feeling to see that crane,” said Assemblyman Jeff Van Drew, D-Cape May, Cumberland, Atlantic. “The important issue is to ensure that as construction takes place, we deal with other hazardous traffic conditions in southern New Jersey.”

Van Drew said he would push for new ramps at Exit 20 and the reopening of the Beesleys Point Bridge.

Cape May County Engineer Dale Foster said he is most concerned about keeping the old causeway open through the five-year construction schedule. Any prolonged causeway closure could stress the 34th Street Bridge to Ocean City.

Vibrations from pile-driving on the new Ocean City-Longport Bridge forced the closure of the old Ocean City-Longport Bridge more than a year earlier than planned and created miserable traffic jams on the island.

For this project, the state moved the new causeway farther from the old spans to prevent a similar problem. But Foster said that might not be enough.

“The existing bridges are still in poor shape. They still have to survive a few more years. Something could happen to them that is not construction related. Like old age,” he said.

The city plans to take advantage of the construction to dump dredge spoils.

NJ Transit spokesman Dan Stessel said construction might affect which lanes buses may take on Route 52 but will not interrupt passenger schedules or require detours.

“The level of coordination that has taken place between NJ Transit and the DOT has been very robust,” he said.

A public meeting on the project is scheduled from 4 to 8 p.m. Wednesday at Dawes Avenue School in Somers Point.

The official ground-breaking will take place next month, Phalon said.

To e-mail Michael Miller at The Press:MMiller@pressofac.com

Slower housing market means fewer demolitions

By MICHAEL MILLER Staff Writer, (609) 463-6712
Published: Thursday, September 7, 2006
Press of Atlantic City

OCEAN CITY — As tourists stow their beach bags for another year, Ocean City is getting ready for the launch of its second industry: teardowns.

Builders say they are seeing a dramatic slowdown in home construction on the island, reflecting a national trend. That could spell fewer demolitions, new homes and jobs on the island this fall.

“Our busy season usually starts in the fall. I hate to say it, but it's not going to be half as busy as past falls,” said Mark Tietjen, manager of Peter Lumber in Ocean City.

The New Jersey Builders Association said the number of home starts is down 15 percent statewide over last year.

“The slowdown is gaining momentum,” trade group spokesman Patrick O'Keefe said. “The watchword in new home construction is inventory management. Builders are not starting units unless they have firm commitments of sale.”

Tourism still fuels Ocean City's economy. Everything from local politics to demolition is geared to the vacation season. But the building trades are a crucial part of the city's job base, particularly in the fall and winter.

“It's very important. I go into Wawa at 7 a.m. in the winter, and if 30 people are in line, 25 are in the building trades,” Tietjen said. “It's a big part of Ocean City.”

Ocean City builder Halliday Leonard has seen its workload drop off considerably. The company had 80 jobs lined up last fall. It has fewer than 20 planned for this fall.

“I haven't seen this kind of slowing in 16 years,” builder Scott Halliday said. “We're seeing a steep decline in the number of homes under contract or demolished.”

“They're doing 30 percent of the volume of a year ago. I think that's consistent with the information we're getting with building permits,” Mayor Sal Perillo said.

“In the housing market, you have people … betting that by the time the property is completed, it will be worth significantly more than when they started construction,” he said.

But these speculators no longer make up a substantial part of the new construction market.

“They're all owner contracts, not speculator contracts,” Halliday said.

As a result of the slowdown, his building company plans to give fewer jobs to subcontractors.

“We're going to do a lot of the work ourselves, keeping the work in-house,” Halliday said.

And with more investment homes lingering longer on the real-estate market, the city likely will see fewer demolitions, O'Keefe said.

“I think all of that will act as a depressant on the demolition and construction of new units on the island,” he said.

The city lifts its yearly summer ban on demolition Monday. Ocean City was second only to Camden in the number of property demolitions in 2005, according to state figures.

Meanwhile, city officials are watching the construction business as well. Booming property values collectively slowed the city's annual tax-rate increase. The city now has more than $7 billion in property value.

Traditionally, about 25 percent of the city's properties are demolished every 10 years, Council President Jack Thomas said.

“If we're behind on construction starts for 2006, the buildings may not become new ratables until 2008,” Council President Jack Thomas said. “I'm concerned about 2007, but I'm really concerned about 2008.”

But it's not all bad news. Companies such as Peter Lumber expect to get a boost from home remodeling this winter.

“When new construction slows down, remodeling business picks up,” Tietjen said. “The new construction guys go to work in home remodeling. That will keep us going.”

And a buyer's market might encourage more year-round residents to move to Ocean City, said Joann DelVescio, director of the Ocean City Regional Chamber of Commerce.

“We want to make it enticing for people to come and vacation here. But we want to continue to make it a place where they want to raise their families, too,” she said.


To e-mail Michael Miller at The Press:MMiller@pressofac.com

Gas co. sues Ocean City over street-opening fees
By MICHAEL MILLER Staff Writer, (609) 463-6712
Press of Atlantic city
Published: Saturday, September 2, 2006

OCEAN CITY — South Jersey Gas balked at new fees the city charges utilities that open freshly paved streets.

The company is suing Ocean City to kill the fees, as high as $2,000 per road opening.

Utilities are responsible for patching any holes they dig in roads. But residents complain the patches have a tendency to leave potholes and uneven surfaces that can be punishing on cars.

And with 90 miles of roads and 30 miles of alleys, Ocean City never has a shortage of repairs.

Except in emergencies, utility companies must first apply for a city permit for each road opening. They pay an application fee and a restoration fee that can vary from $1,000 to $2,000 for roads and $300 to $700 for alleys.

The gas company said the city never explained the fee structure and how it relates to road repairs.

“Enactment of the (fees) is therefore simply a revenue-raising device,” the company said in court papers.

Not so, City Councilman Roy Wagner said.

“The philosophy behind it is, with all the street cuts we have, it helps to accelerate the deterioration of the roads. After so many cuts, the roads have to be resurfaced sooner than if there were no cuts,” he said.

The gas company paid the first $2,000 in new restoration fees to the city July 25, but did so under protest. The company is asking a judge to throw out the ordinance and order Ocean City to reimburse all restoration fees.

“They are charging us to do work we are entitled to do,” company spokeswoman Marissa Brooks said.

Brooks said the city never considered other alternatives. Initially, the city wanted to charge as much as $10,000 per road opening, she said. Ocean City is the first of 112 towns in New Jersey that has tried to levy “impact” fees on the company, Brooks said.

In court papers, the gas company said it was being penalized even when it responds to emergencies such as gas leaks. And it warned the fees would be passed on to customers.

“You know for sure they'll raise their rates. It just keeps going round and round. The person who gets beaten is the taxpayer,” said Fred Hoffman, president of the North End Civic Association.

Hoffman said he agrees with the principle behind the road ordinance, especially if it encourages utilities to schedule more road openings before major repaving projects. The ordinance requires the city's Public Works Department to give utility companies a paving schedule a year in advance of island road construction.

“It's incumbent upon the utility company to seal the opening so it doesn't become a pothole. They're doing it with fill that doesn't stand up to the substantial beating it takes,” he said.

The case was transferred in August from state Superior Court in Atlantic County to Cape May County.

To e-mail Michael Miller at The Press:MMiller@pressofac.com