The old saying “for every dark cloud, there is a silver lining” may be very true when it comes to real estate in Bayonne.
While no one can deny things have been far from good over the past year, some local real estate experts say the market is slowly getting better.
By all standards, 2008 was a dismal year for real estate throughout the country, with foreclosures and short sales clogging the market and older homes stagnating the sale and construction of new homes.
In a foreclosure, the lender takes possession of a home in lieu of payment of the loan. In a short sale, the owner sells the property in order to pay back the lender. Both leave the market flooded with homes and deflate the value of potential new homes so that builders are less likely to begin construction on planned projects or undertake new ones.
Banks and other lenders, burned by bad loans, become reluctant to risk loans even to some well-qualified borrowers.
Try a local lender
Depending on which real estate agent you talk to, local banks seem more willing to offer loans than the large banks, but all seem to be slow to get back to doing business as they have in the past, taking a much closer look at loan applications to make certain borrowers will be able to pay the loans back.
“People with cash can get some really good deals,” according to Jack Pinerio, of Prudential McGeehan-Pineiro Real Estate.
Even prior to President Barack Obama’s stimulus package, Pineiro said a number of programs on state and federal levels are available to help homebuyers, especially first-time purchasers.
The legal concept of a first time buyer, however, is broad, said Annette Rubin of Exit on the Hudson Realty, because, in many cases, to qualify as a first time homeowner you must prove you haven’t owned a home in the last three years.
Pineiro said that residential development at the former Military Ocean Terminal (Peninsula at Bayonne Harbor) and the recently approved 10-story nursing home facility on Broadway and 29th Street send strong signals to developers that Bayonne is a good place to invest.
Pineiro said his agency saw a trend toward condos and one family homes.
“There is also always a move toward rental units during times like these,” he said.
Five year tax abatement may be encouraging
One of the things that seems to be helping the city attract and keep potential development opportunities is the tax abatement plan the City of Bayonne authorized in 2008, which gives a 30 percent, five-year tax break for home improvement or new development, gradually phasing in a homeowner to paying full taxes over a five year period.
“In the past, people were getting hammered with taxes. Now the city is working with the builders and this restores faith in the city.” – Annette Rubin
“In the past, people were getting hammered with taxes,” she said. “Now the city is working with the builders and this restores faith in the city. While the tax break isn’t great, it may make the difference to whether a builder constructs here and someone buys here.”
Pineiro agreed that the abatement program has helped, providing an added incentive for developers to construct in Bayonne and for people to purchase homes in the city.
“Having a program like this tells developers they can still sell here,” he said. “And buyers will be attracted because they know they will get a break on taxes for the first four years. After five years, the city benefits by getting a full taxpaying property.”
Light rail, government programs may help
The impact of the Hudson-Bergen Light Rail line is also felt in the real estate market since people will buy homes where they know they can get reliable public transportation. In the past, new development and rising home values have followed the light rail line. With three existing stations open and a fourth under construction on Eighth Street, the light rail opens up most of the city to expanded development.
Pineiro is optimistic about a relatively quick turnaround in the markets, predicting an earlier than expected change.
“I think we’ll see more positive signs by the spring,” he said. “Things were pretty bad. But I believe that if someone can hang on for a little longer, things will get better.”
He said in his experience, local banks seemed to be more open to giving credit than the larger national banks. But he also said other lending institutions seem to be getting the message from Washington, D.C. and are starting to lend more freely.
There are also a number of programs to help first-time homeowners, including the Smart Start program and other state and federal programs that help cover the costs associated with purchasing, as well as discounts on the down payment when purchasing a home.
Joe Bonaduce, of Jersey Mortgage, a New Jersey-based company that works with many local real estate agents, said good real estate agents know about the programs and can help buyers seek out those that might be of benefit to them.
Rubin agreed that there are some positive signs that people are looking to purchase.
“We’ve had open houses for our third weekend and traffic has been good,” Rubin said. “People can get a good deal if they have the financing.”
One statistic that gauges progress of home sales is the pending sales list. This dropped in 2008 from well over 1,000 pending sales at any given time to just over 700. But over the last few weeks, that number has been creeping up again and is over 830.
“It is slow progress,” she said. “But it seems to indicate there is a trend that buyers are coming back to the market.”
Al Sullivan may be reached at firstname.lastname@example.org.