The news on Friday that the Federal Deposit Insurance Corporation (FDIC) was taking over IndyMac Bank should not have come as any great surprise. 

Why no surprise?  As far as I am concerned, IndyMac was the poster child for irresponsible lending (and borrowing).  In my experience as a real estate agent for nearly 30 years, marginal borrowers could always find a loan at IndyMac, regardless of their income.  IndyMac specialized in "stated income" loans, the so-called "liar loans."  Potential borrowers would simply state their occupation and income, without providing any documentation or verification.  This would allow people like independent contractors to obtain mortgages, but it also was open to outright fraud.

When a buyer of one of my listings resorted to IndyMac for financing, I held my breath until the closing.  They usually closed, but not without a lot of, shall we say, excitement.

Senator Charles Schumer (D. New York) has taken a lot of heat for suggesting in a letter of June 26 that IndyMac was in trouble.  So, he's blamed for the Emperor not having any clothes on?  Or for the heavily-made-up pig?

The bigger surprise is that IndyMac held on this long after another lender, Countrywide, fell into a hole.  The FDIC claims that it has 90 institutions on its list, and it has been reported that IndyMac wasn't even on that list.  That's scary, but we live in scary times.

Last week in this space I wrote about the May numbers for Somerset County, New Jersey, and how they were a bit disappointing.  Absorption rate increased, and supply/demand ratios decreased for the first time this year.  Two days ago the National Association of Realtors® released their May pending home sales numbers, and described the same scenario for the so-called "national real estate market."  Because of the scope of their research they always lag behind my reports, but I find it intriguing that the dynamic was the same in Somerset County as across the country.

The good news is that June pending numbers in Somerset County have already improved, as I pointed out here last week.  Supply/demand increased to 57% and absorption rates fell to 7.2 months.  As I pointed out then, the real estate market is "definitely on the mend."

Although all real estate is local, and local market conditions are most important to buyers and sellers, it appears that Somerset County has become pretty much reflective of many markets across the country.  Perhaps next month NAR's figures will show the recovery we've already noticed in Somerset County. 

Stay tuned....

New construction is very much available in Hillsborough, New Jersey.  In fact, it constitutes nearly 18% of all active listings in the Garden State Multiple Listing Service (GSMLS).  There are nine separate developments by seven different builders, ranging from the large, national, Toll Brothers and Beazer, down to smaller local builders.

Among the larger builders, Beazer is at the low end in price, starting at $664,900, with Parkside at Mountainview - 8 homes available in GSMLS.  Toll Brothers has three developments in Hillsborough, The Preserve, Hillsborough Chase and Roycebrook Meadows, with 24 homes in the three listed in GSMLS. Among the other developments are Distinctive Domains (3), Colonial Square (4), High Branch Estates (5), Country Classics (2) and Hidden Forest (1).  These eight new home developments constitute the majority (65%)of homes in $600,000+ price range.

The overwhelming presence of new construction in Hillsborough demonstrates just how slim the selection of homes is becoming, since there are only 217 "resales" available.  More importantly, that means that there are only 217 homes under that $600,000 mark, which is the middle of the middle price range ($500,000-750,000). 

It may sound strange, but without more inventory in the under $600,000 price range, the steady market recovery in Hillsborough could stall.