Joyce Jewell, GRI, ePRO, ASP, ABR, SFR, RSPS

New Jersey Entices Solar

January 5th, 2010

New Jersey has the reputation of being one of the most business-unfriendly of the 50 United States. It's well deserved. They did it the old-fashioned way - they earned it!

But solar power is the exception. New Jersey is mandated by the state's Energy Master Plan to provide 20 percent of its energy through renewable sources by 2020. To reach that lofty goal just 10 years away, the state is offering monetary incentives to get it done. And alternative energy providers are lining up to cash in.

The state set up a system whereby solar systems - whether at a private residence or a commercial site - can earn Solar Renewable Energy Certificates. Each 1,000 kilowatt hours of energy produced earns the provider one credit. These credits are currently selling for just under $700 apiece.

The buyers of these energy credits are the utility companies, which are the ones under the gun to supply 20 percent renewable energy. If a utility doesn't meet the 2020 goal, they will be penalized with a Solar Alternative Compliance Payment. So if they're going to shell out the bucks anyway, why not go solar? It's good public relations and reduces dependency on coal, oil, etc and their associated price fluctuations.

There are currently over 50 renewable energy projects on the drawing board in New Jersey. As more farmers and large landholders become aware of this new income source, more and more projects will be planned in the Garden State. The key is for the solar farm to be located near high transmission lines, which makes getting the electricity they produce easier and less costly to get on the grid. And besides getting paid via the credit system, the providers also get the current rate per kilowatt. It's win-win.

There is one caution to anyone thinking about having solar panels installed at their property. Since this is a fairly new and lucrative business, a lot of inexperienced and unqualified companies are looking to install your solar system. Like anything, get quotes from at least three companies and ask for references and about projects they have already completed. Be careful and choose wisely. After all, this is New Jersey!

- Mountain Man and City Girl

http://www.MountainManandCityGirl.com

Distressed Properties Affecting Appraisals

January 5th, 2010

There are typically three main issues that can stop a potential real estate transaction dead in its tracks - the home inspection, the mortgage approval, and the appraisal. Let's talk about appraisals.

The problem with appraisals in today's real estate market is that properties sold via a short sale, sheriff sale, or foreclosure are being used as comparables when evaluating the price of a regular home. About 25% of realtors have had a sale fall apart because of a low appraisal. The National Association of Home Builders reported that 25% of their new home sales likewise were shot down by low appraisals.

In 2009, over one third of all home sales nationwide were either foreclosures or short sales. A short sale, of course, is when a lender let's the property sell for less than the amount of the loan, figuring its better to unload the property quickly, get some cash, and move on. These properties, on average, are selling for about 25% less than a property not in distress.

In an appraisal, the appraiser uses an approach in determining value by comparing similar recently sold properties in the same area. Allowances are made for differences, such as more or less bedrooms, a detached garage, swimming pool, etc. In a normal real estate market, where foreclosures are rare and short sales nearly unheard of, this is an effective method to determine true value.

But in today's topsy turvy real estate market, appraisals show no differentiation in a distressed sale vs non-distressed sale. And therein lies the problem. They are, after all, two different markets. And so, the family that always paid their mortgage is being penalized because their property is being weighed down by those that didn't or couldn't handle their financial responsibilities. Is that fair?

Buyers attempting to purchase a conventional property nowadays basically have three options when the appraisal comes in under the agreed upon price. Either make up the difference in cash, get the buyer to lower his price, or do a cash-only deal (using a home equity if necessary).

Until the real estate world returns to normal, "appraisal" will continue to be a four-letter word to realtors, builders, buyers, and sellers. Let's hope the end is near.

- Mountain Man and City Girl

http://www.MountainManandCityGirl.com

No Repeat of Bubble Burst?

Mountain Man and City Girl

The Blogsite of Jewell Real Estate Agency, Wildwood Crest, NJ 609-729-8505

January 4th, 2010

As the United States slowly pulls itself out of the depths of the recession, many still wonder how it happened and whether it can happen again? Good questions, and the answers all have to do in some way with real estate.

The biggest cause of the housing bubble was that the Federal Reserve and then chairman Alan Greenspan did not recognize what was happening soon enough. But they took the course that seemed logical at the time and, after all, hindsight is 20-20.

On the heels of the September 11 attacks, the Wall Street scandals, and the 2001 recession, the Fed felt that low interest rates were needed to get the economy rolling and to create jobs. And it did. However, housing prices started to escalate at the same time and by 2003 they took off. Here in Cape May County, New Jersey housing prices were rising 3% per month in 2004 and part of 2005. That lasted for a year and a half as speculators bought everything in sight at interest rates in the 5 to 6 1/2% range.

The prices kept rising during that period because, let's face it, few thought that they would stop going up. Lenders and appraisers bought into the same scenario, so everyone just kept doing business as usual and moving the market along. Folks got mortgages based on real estate values continuing to rise. When they stagnated, then dropped, many got caught with their pants down.

Now as Ben Bernanke is up for his second term as Fed chief, the focus seems to be not so much on simply more regulations, but on more effective and smarter regulations to keep from another period of real estate speculation. Through recent experience, the decision-makers are hopefully aware and prepared the next time that our economic freight train is in danger of running away.

Interest rates are still near historic lows and expected to stay that way, at least in the short term. That has to be balanced with the threat of inflation, which would result in another possible recession. We'll have to see what the future holds. We've got our fingers crossed.

- Mountain Man and City Girl

http://www.MountainManandCityGirl.com

A Common Sense Solution

January 4th, 2010

The little borough of West Cape May, like other towns in New Jersey, has to provide affordable housing thanks to the Mt. Laurel decision back in the late 1970's. But unlike most municipalities, West Cape May has come up with a novel plan that is offering incentives and fewer building restrictions.

The Council on Affordable Housing (COAH) was created out of that controversial court ruling that mandated a required number of low and moderate income units for each of New Jersey's 566 municipalities. West Cape May needs to provide just two units by 2018, but they're offering breaks for those creating the first 10.

Called "accessory apartments", they can be in garages, above stores, in existing homes, or even new construction, as long as they're in an area of the town where public sewer and water already exist. No planning board approval would be necessary, just the usual construction permits. The landlord would have to sign an agreement stipulating that the unit be rented below the market rate for 15 years. But the town's $25,000 to $75,000 incentive would help make up the difference. After 15 years, the landlord is free to charge the usual market rate.

The borough will create a pool of tenants after determining their eligilibility based on income. Landlords can ban smoking or pets or such, and do criminal backgrounds and credit checks, plus charge a security deposit. The rent can't be raised as unless a tenant leaves and a new one moves in.

In an expensive shore resort area like the Cape Mays, rentals are beyond the financial scope of many young families. City officials hope that this will allow more to stay in the area and not move on to less pricey locales.

While West Cape May is just two units short of its COAH goal, two other Cape May County municipalities have a rougher road ahead. Middle Township is mandated to provide 934 units and Upper Township 566 by 2018. That would overcrowd the schools and burden the two towns' services, not to mention the added real estate property taxes that residents would be forced to shoulder. The towns have minimal areas of infrastructure and over 50% of each municipality is either federal, state or preserved land and not buildable. Providing this absurd number of units definitely would promote sprawl and change the character of the towns.

Perhaps Governor-elect Christopher Christie, who has spoken out against COAH, will do something to abolish this forced build-up of semi-rural communities.

- Mountain Man and City Girl

http://www.MountainManandCityGirl.com

Mountain Man and City Girl

A Realtor's Sad Day

My husband looks like a mountain man, but he can be such a softie inside.

January 3rd, 2010

Being a realtor has many rewards other than financial. There's nothing like finding a young couple their first home, helping them navigate through the various stages of buying a property that are still so alien to the inexperienced. They're thankful for everything along the way and often we become lifelong friends.

Here in Cape May County at the southern tip of New Jersey, we sell primarily vacation homes. For many families that have worked hard their entire life, finally being able to afford this second home at the shore is the fulfillment of a dream. We sell dreams. It feels sooo good.

But there is another scenario for a realtor that is not so pleasing. In fact, it is sad.

Here at Jewell Real Estate Agency, we have had several occasions where we have sold a home for an elderly person and moved them directly into an assisted living home.

Two of my favorites ladies were Helen Smith and Clara Carr. Mrs. Smith - as I called her out of respect and she called me Mr. Jewell - had lived in the same single family home in Wildwood since 1953. When I first met her and listed her home in 2005, her husband had been deceased for over 15 years. He had built the home himself - with a small apartment over top - and Mrs. Smith was proud of her property, as she should. The craftsmanship was nice, though the property was obviously outdated.

After a few months, we put the property "under contract". In 60 days, Mrs. Smith would be leaving the only home she'd known for over a half century. She was upset, but knew that she was no longer physically able to maintain the property. With no relatives close by, I offered to move the belongings she was keeping to the assisted living facility 12 miles away. She was relieved and gave me a big hug. We each had a tear in one eye.

When the big day came, I brought along two of my maintenance guys and two pickup trucks. We moved her bed, favorite bureau and stuffed chair, an end table or two, and the few boxes of clothes and such that she had so carefully packed. Her family had come from out of state to pick through her possessions and take what they wanted, so we then packed everything else in the house and took several loads to drop off at a charity.

We got Mrs. Smith settled into her new room on the second floor of the facility, patiently placing each piece of furniture and possessions exactly where she wanted them. "A little to the left," the 90-year old would request. No problem. I promised to visit her, then left.

Clara - she called me Doug - and I had history. A few years prior she was still on top of her game and sharp as a pin. We had belonged to an environmental group together and stood on picket lines holding protest signs. Nothing stopped Clara. She was right there along with the rest of us.

We sold Clara's house in 2003. She was being pressured by a daughter to come live with them in another state. It was hard to say goodbye to my 75-year old friend and comrade. It was also hard to see her give up most of her lifelong possessions knowing she would be limited to one room of space in her daughter's house.

And so, a week after moving Mrs. Smith to the assisted living facility I returned for a visit to see how she was making out. We hugged and talked for an hour about her new home and the world in general. Then she said, "By the way, I ate lunch with a friend of yours the other day." It was Clara. I was dumbfounded.

A few minutes later I was knocking on Clara's door down the hall. We hugged and had a tearful reunion. It turns out that living with her daughter didn't work out, so having no other options she moved to this facility to be back in her hometown. We talked for a couple hours and Clara hadn't lost a beat. She was still totally together in mind and body.

And so a couple years passed. I would visit Mrs. Smith and Clara around Christmas and a couple other times a year. Then one visit I discovered that Clara had recently had a stroke and her speech was difficult to understand. Still, we were both all smiles seeing each other.

On my last visit, in 2008, I sat with Mrs. Smith first and we talked and talked. I mentioned that I was going to see Clara next, but she warned me that Clara had gone downhill lately. "Don't be surprised if she doesn't recognize you," she said. She was right. Clara was totally confused when I entered her room and didn't recognize me. She might have even been a little afraid of this stranger. I left, disheartened by the loss of my friend.

Mrs. Smith died two months later. At 93, she was still mentally on point right up to the end.

It makes me sad to think of the loss of my two friends. But because of being a realtor I had the opportunity to really get to know these wonderful ladies. I cherish our memories.

- Mountain Man

http://www.MountainManandCityGirl.com