Make NJ Cool Again

From the APP:

Phil Murphy wants to spark NJ economy, but how?

New Jersey’s economy looks far different than it did when the Great Recession struck a decade ago, but its long-standing problems are firmly in place, academic and business leaders said Wednesday.

It prompted them to urge incoming Gov. Phil Murphy to break through the polarized political climate and develop a clear plan that will lead to long-term growth.

“Phil Murphy is a wonderful person,” said Tom Bracken, president and chief executive officer of the New Jersey Chamber of Commerce. “But where are we going?”

Bracken joined other leaders at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy for a forum that took stock of the state’s economy 10 years after the recession.

It came at a crossroads. Murphy, a Democrat, is getting set to take over for Republican Gov. Chris Christie on Jan. 16, becoming the latest in a long line of governors facing a seemingly intractable problem: The state needs to invest in work force development and transportation, but its residents are already among the nation’s most heavily taxed.

Posted in Economics, New Development, New Jersey Real Estate, Politics | 12 Comments

NJ Democrats face existential crisis

From the Star Ledger:

Democrats take control … of empty treasury | Moran

After Gov. Chris Christie hands off to Phil Murphy in two days, liberals in New Jersey will be unleashed to do as they please, with unchecked power in all three branches.

Part of me rejoices. Murphy will raise the minimum wage, fight climate change, and end the pointless war against pot. His cabinet looks like New Jersey, with a Muslim, a Sikh, and six women, two of them black and two Latino.

But I worry. Because New Jersey is broke, and most Democrats don’t seem to get that.

“That will be a challenge for the new governor,” says Tom Byrne, former Democratic state chairman, and son of the former governor. “People will be saying, ‘You promised me this. Why didn’t you do it already?'”

You may go numb when you hear the phrase “fiscal crisis” because it’s been a fact of life in New Jersey for so long. The sky has not fallen, so it may seem an empty threat, just numbers in a book in a dusty archive.

But it’s real, and the symptoms are everywhere. It explains why our transit system is such a mess, why addicts die waiting for treatment, why college kids pay more for tuition, why some poor kids can’t get a seat in preschool. Aren’t liberals supposed to care about all that stuff?

Jersey City recently paid a retiring police chief $512,000 for unused sick pay. Obscene is the only word I can think of to describe that. How many addicts could have been saved with that money? How many kids could be enrolled in preschool? In all, New Jersey taxpayers are on the hook for nearly $2 billion in these payments.

Health spending is out of control as well. Yes, public workers in New Jersey have taken a beating in the Christie years, with lower benefits and higher payments. But even now, their health plans would qualify as “platinum” under Obamacare.

So, this is an existential moment for Democrats. Murphy will try to raise taxes to soften the pinch, but that won’t be enough. If Democrats want progressive government, they will have to cut spending.

It won’t be easy. Most Democrats hear the word “union” and they think of coal miners fighting ruthless robber barons. But that’s way off.

Benefits for public workers are paid for mostly by middle-class taxpayers. By what warped logic is it “progressive” to force those families to pay for platinum coverage they can’t afford themselves? How many taxpayers are paid for unused sick time?

Posted in Economics, Employment, New Jersey Real Estate, Politics, Unrest, Where's the Beef? | 59 Comments

Ummmm. This analysis didn’t yield what you thought it would.

From the Star Ledger:

The 16 N.J. towns with the most single people

Looking for love? New Jersey isn’t a bad place to visit.

Just less than half of the population is married, according to Census data. About a third have never been married, and the rest are widowed, divorced or separated. But those numbers vary; white and Asian residents are more likely to be married than black or Hispanic residents. Women in their 20s are more likely to be married than men of the same age. And women over 65 are three times as likely to be widowed.

The most single cities in New Jersey are also some of the youngest, and have a relativity high percentage of minorities. They also tend to be the larger cities in New Jersey.

Don’t laugh too hard after the click.

Posted in Demographics, Economics, Humor, New Jersey Real Estate | 33 Comments

In foreclosure … for 10 years

From Curbed:

In 2017, NYC foreclosures reached its highest level since 2009

Foreclosures have been on the rise across New York City for a while now but in 2017, the number of cases hit its highest peak in eight years.

In their annual foreclosure report, PropertyShark disclosed that last year, 3,306 homes in NYC were scheduled for auction. This represents a 58 percent year-over-year increase and is the highest level witnessed since 2009. What’s even more alarming, the number of foreclosures has practically doubled in just two years: in 2015 there were only 1,762 foreclosure auctions (Since auctions are constantly rescheduled or postponed, the report only focused on stats that include first-time foreclosures). To put it all into perspective, PropertyShark has created this interactive foreclosure map.

Queens and the Bronx both saw high increases in the percentages of homes in foreclosure, at 40 percent and 44 percent year-over-year increases, respectively. Once again, Queens had the highest number of homes in foreclosure in all of NYC with 114 homes scheduled in 2017. The highest concentration of foreclosure cases in all of NYC came from zip code 10469, which covers Baychester, Pelham Gardens, and parts of Williamsbridge.

In Brooklyn, first-time auctions rose drastically from 898 in 2016 to 1,260 in 2017, with Canarsie and East New York logging the highest number of foreclosures within the borough.

While Manhattan didn’t see much of a year-of-year increase in homes scheduled for auction last year, it did bring forth the biggest residential foreclosure in the city’s history when the owner of a full-floor condo at One57 defaulted. A $22.5 million apartment at One57 also hit the auction block last year and was actually the first foreclosure to hit Billionaire’s Row.

Staten Island had the most dramatic year-over-year increase and was up a staggering 134 percent from 2016. There were 428 first-time foreclosures scheduled in 2017, compared with just 183 in 2016.

Posted in Foreclosures, Housing Bubble, NYC | 267 Comments

Pyrrhic victory?

From the Star Ledger:

N.J. Legislature clears way for $5B in Amazon tax breaks

The state Legislature on Monday embraced Gov. Chris Christie’s plan to offer Amazon $100,000 per job it creates should it build its sought-after second headquarters in Newark.

New Jersey’s offer, which could total $5 billion in tax breaks, rivals some of the largest incentive packages hatched by states looking to land big businesses, and would set a record within the state.

These deals are often controversial, with governments giving away their claim to badly needed tax dollars businesses would generate otherwise. But those same tax dollars and the ancillary economic benefits wouldn’t exist at all, supporters say, if the business located somewhere else.

Here, lawmakers said the rare opportunity to compete for such a major development — Amazon predicts it will hire 50,000 workers and invest $5 billion in its new headquarters — is too big an opportunity to risk coming up short.

“When a company like Amazon is looking to invest billions and create tens of thousands of jobs, we simply cannot afford to be overlooked,” state Sen. Samuel Thompson, R-Middlesex, a bill sponsor, said in a statement. “This legislation sends the message that New Jersey is a serious contender.”

Christie’s administration has said residents stand to gain some $9 billion in economic benefits if Amazon comes.

xperts say Newark isn’t likely to be high on Amazon’s list.

Moody’s Analytics’s list of Top 10 candidates led with Austin, Texas, followed by Atlanta, Philadelphia, Rochester, N.Y., New York/Jersey City, Miami, Portland, Ore., Boston and Salt Lake City.

Newark’s bid has been criticized as too generous by those who call corporate tax breaks a race to the bottom. Christie’s administration dramatically scaled up the state’s awards to recruit and retain businesses.

State Sen. Michael Doherty, R-Warren, voted against the Amazon package, saying “New Jersey shouldn’t be in the business of picking winners and losers, nor should we give special tax breaks to a company that’s driving our mom and pop shops out of business.”

Posted in Economics, New Development, New Jersey Real Estate, Politics | 88 Comments

Parting shot or return to ugly reality?

From Pensions and Investments:

Fiscal woes greeting N.J. governor

New Jersey’s Republican state treasurer sharply reduced the New Jersey Pension Fund’s assumed rate of return, producing a financial and political dilemma for Gov.-elect Phil Murphy, a Democrat, who will be sworn in later this month.

Last month, Treasurer Ford Scudder announced a cut in the assumed rate of return to 7% from 7.65% for the fiscal year that starts July 1, the second rate cut in 12 months. Last February, he reduced the rate to 7.65% from 7.9% for the current fiscal year.

The lower rate means cash-strapped municipalities and the state must raise more money to feed the severely underfunded New Jersey Pension Fund. Mr. Murphy will be hard-pressed to find politically palatable and sufficient additional revenue sources, even from a Democratic Party-controlled state Senate and Assembly.

As of July 1, the funding ratio ​ was 59.3%, according to the state Treasury Department. This statutory funding status includes the estimated present value of the state lottery. Last year, Gov. Chris Christie signed a law making the lottery an asset of the pension fund, using the proceeds to cover part of the state’s pension contribution.

Pension experts say the 7% assumed return figure represents a more realistic rate given forecasts for lower stock market gains and modest interest rate increases. They also said the size of the cuts within the time frame is unusual.

“It is significant, but we are getting realistic,” said Thomas Brendan Byrne Jr., chairman of the State Investment Council, which develops policies for the Treasury Department’s division of investment to manage the pension fund’s investments. The Trenton-based fund has $76.6 billion in assets.

“Timing aside, the direction is clear,” Mr. Byrne said. “Experts say stocks will return to single-digit gains and long-term interest rates will stay low. We can’t bet the ranch on stocks.”

The New Jersey Pension Fund produced a 13.07% return for the fiscal year ended June 30. The annualized return for the past three fiscal years was 5.25%; for five years, 8.75%; and for 10 years, 5.55%.

Some observers of New Jersey government said the rate reduction appears to have had some political overtones.

Marc Pfeiffer, assistant director, Bloustein Local Government Research Centers, Bloustein School of Planning and Public Policy, Rutgers University, New Brunswick, N.J., said the rate reduction can be seen “as a parting shot” by Mr. Christie toward his successor.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 109 Comments

Income inequality in NJ

From the Star Ledger:

See how your town scores on income inequality

There are multi-million dollar McMansions and blue-collar families just trying to make ends meet. Across New Jersey, the gap between the rich and the poor continues to get wider.

But how are things changing in your town?

The Census calculates income inequality using a measure called the Gini index, which assigns a value between 0, which would mean complete equality, and 1. The closer a score is to 1, the more wealth is concentrated among fewer people and the bigger the income inequality.

As a state, New Jersey boasts a score of 0.4782. That’s slightly higher than the last five-year period, 2007 to 2011, measured by the Census, but lower than the national average of 0.4804 over the last 10 years.

Posted in Demographics, Economics, New Jersey Real Estate | 64 Comments

Snow Day Jobs Day!

From Bloomberg:

U.S. Added Fewer Jobs Than Expected in December

U.S. payroll gains slowed by more than forecast in December, wages picked up slightly and the jobless rate held at the lowest level since 2000, adding to signs of a full-employment economy.

Employers added 148,000 workers, compared with the 190,000 median estimate of economists surveyed by Bloomberg, held back by a drop in retail positions, a Labor Department report showed Friday. The jobless rate was at 4.1 percent for a third month, while average hourly earnings increased by 2.5 percent from a year earlier, after a 2.4 percent gain in November that was revised downward.

“It’s a little soft across the board but overall, when you’re this close to full employment, I think it’s reasonable to see some slowdown in job gains,” said Jeremy Schwartz, a U.S. economist at Credit Suisse in New York. “This year we should probably expect to see some slowdowns in job gains — it’s just harder to add jobs when there’s a smaller pool to choose from.”

“This is a benign slowdown,” Schwartz said. “The Fed would probably be happy to see this slowdown.”

The breakdown of December data across industries showed solid gains of 30,000 in construction and 25,000 in manufacturing. Retailers cut 20,300 positions during the height of the holiday-shopping season, bringing total gains among service providers to 91,000, down from 176,000 in November.

Revisions to prior reports subtracted a total of 9,000 jobs from payrolls in the previous two months, according to the report. November’s reading was revised upward to 252,000 from 228,000.

Posted in Economics, Employment, National Real Estate | 182 Comments

37% of large metros now overvalued

From HousingWire:

CoreLogic: Home prices jump 7% annually in November

CoreLogic’s HPI showed home prices increased 7% from November 2016 to November 2017 and jumped 1% from October to November.

But these home price increases are expected to slow into 2018 as the CoreLogic HPI Forecast shows home prices will increase by just 4.2% from November 2017 to November 2018. Monthly, home prices are predicted to increase 0.4% from November to December.

The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“Rising home prices is good news for home sellers, but adds to the challenges that home buyers face,” CoreLogic Chief Economist Frank Nothaft said. “Growing numbers of first-time buyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for ‘starter’ homes and further erosion of affordability.”

CoreLogic’s Market Condition Indicators showed 37% of the largest 100 metropolitan areas in the U.S. are now overvalued in terms of housing stock.

“Without a significant surge in new building and affordable housing stock, the relatively high level of growth in home prices of recent years will continue in most markets,” CoreLogic President and CEO Frank Martell said. “Although policymakers are increasingly looking for ways to address the lack of affordable housing, much more needs to be done soon to see a significant improvement over the medium term.”

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 167 Comments

Update on the most important town in NJ

From Patch:

These Development Projects Could Transform Wayne In 2018

There are nine TEN development projects in the works that could change the township and continue to improve the local economy.

In his annual State of the Township address, Mayor Christopher Vergano stated that the following projects “will come to fruition” this year:

A 122-room Marriot Hotel on Route 46 West
CarMax’s redevelopment of the former State Farm property off of Route 23 North
A 150-unit assisted living facility on Hamburg Turnpike on the former Partners in Research property
A new 100,000-square-foot retail center on the Wayne Hills Mall property.
A 400,000-square-foot warehouse at 150 Totowa Road
A new Hilton Hotel at the former Bally’s health club on Old Turnpike Road off of Route 46
SHAKE SHACK (grim edit)

A controversial apartment and retail complex is going on Route 23 South. A five-story apartment building, 12,800-square-foot building and a 262-seat restaurant to be built on the 10-acre site.

The Willowbrook Mall-area will see two major developments this year.

Also, Dave & Buster’s is expected to open only its second New Jersey location Feb. 19. The entertainment and dining establishment is being constructed on the second floor of the Sears store at the Willowbrook Mall.

Also, Cinemark will open a 12-screen movie theater at the old Sears Auto Center at the Willowbrook Mall.

Vergano mentioned the township’s AAA bond rating, which is attributed to a “very strong financial position, an affluent wealth and income profile and a considerable tax base.”

Posted in Demographics, Economics, Humor, New Jersey Real Estate | 132 Comments

Loopholes and tax cuts

From the NYT:

Democrats in High-Tax States Plot to Blunt Impact of New Tax Law

Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.

Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.

One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.

Such ideas may sound far-fetched. And until recently, they were mostly the province of tax professors and bloggers. But they are now getting serious consideration in state capitols where some lawmakers see the Republican law as a thinly veiled assault on parts of the country that typically vote for Democrats.

Companies, of course, have long sought to exploit loopholes in the tax code. Governments, as a rule, have not. State leaders, however, said Congress, in singling out certain states, had broken an implicit compact with the states.

“The game has changed,” said Stephen M. Sweeney, the Democratic president of New Jersey’s Senate. “They’ve completely turned the tables against us.”

Another idea would be for states to partly or completely replace their income taxes with payroll taxes paid by employers, similar to existing taxes for Social Security and unemployment insurance.

In theory, such a move wouldn’t change after-tax income for either companies or individuals. It would just change where the tax checks were coming from. Companies would reduce workers’ pay by the amount of the payroll tax, and would be able to deduct the payments on their federal taxes. Because they would never receive the money, workers wouldn’t be taxed on it.

“In effect, it preserves the state income tax deduction,” said Dean Baker, a liberal economist who has been pushing for the plan.

Republicans argue there is a much simpler solution for high-tax states: lower their taxes.

Joseph Pennacchio, a Republican state senator in New Jersey, said that he opposed limiting the state and local tax deduction but that New Jersey should focus less on gaming the system and more on lowering its tax burden. There are signs that may be happening. Mr. Sweeney, the Senate president, said that because of the new tax law, he had “pressed the pause button” on a plan to impose a new tax on millionaires.

“Maybe people are starting to realize,” Mr. Pennacchio said, “you’ve got to tiptoe when it comes to raising taxes, because it can do more harm than good.”

Still, lawmakers from both parties said it would be hard to cut taxes enough to offset the impact of the new tax law. For one thing, states like New Jersey and New York have high costs of living and high housing costs, not just high tax rates. Even if their tax rates were the same, far more homeowners in New Jersey than in Alabama would hit the $10,000 cap.

But perhaps more significant, cutting taxes would also mean cutting funding for schools, subway systems, anti-poverty programs and other services that residents in those states have come to expect.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 120 Comments

Predictions 2018!

This is becoming a tradition around here, so here we go again! You know how this works, break out the crystal balls and prognosticate.

Ground Rules

Predictions provided should either be for June 30th, 2018 or December 31st, 2018, please specify.

Provide justification for your forecast, where applicable (unless you are just making it up, if so, state that).

You may provide any caveats and/or assumptions that your forecast is based on.

You need not provide a forecast for all categories below.

Where applicable, forecasts are judged against the surveys/reports listed.

Real Estate
National
Existing Home Sales – NAR
Existing Home Price – S&P Case Shiller HPI
Existing Home Price – Other
National New Home Sales – NAHB
Median New Home Price – NAHB

New Jersey
Existing Home Sales – NAR/NJAR
Existing Home Price – S&P Case Shiller HPI
Existing Home Price – Other

Commodities
Energy (Oil, NatGas)
Metals (Gold, Silver, Copper)

Equities
United States
International Developed Markets
Emerging Markets

Mortgage Financing
30-Year Fixed – Freddie Mac PMMS
15-Year Fixed – Freddie Mac PMMS

Foreclosures
Delinquency Rate
Foreclosure Rate

Cybercurrencies
Date of crash
Total % decline during crash
Suicides as result of the crash

Macroeconomic
10y Treasury
Fed Funds Rate
National Unemployment Rate
New Jersey Unemployment Rate

Oddball
Anything else you’d like to make a prediction about.

Posted in General | 141 Comments

Stick it to Trump by paying early?

From the Star Ledger:

Christie orders N.J. towns to accept 2018 property tax prepayments

New Jerseyans rushing to their town halls this week in hopes of immediately paying next year’s property tax bills before the new federal tax law kicks in Monday just got a last-minute boost from Gov. Chris Christie.

But the IRS may be limiting how big of a boost they’ll get.

Christie issued an executive order Wednesday requiring that all municipalities in New Jersey permit homeowners to prepay 2018 property taxes, as long as the payments are postmarked by the end of the year, which is Sunday.

That will allow homeowners to deduct the payments on their 2017 federal tax returns.

The move is designed to help taxpayers temporarily minimize the impact of the federal law signed last week by President Donald Trump, which will limit the amount in state and local taxes that homeowners can deduct from their federal income taxes to $10,000 beginning Jan. 1.

Many municipalities — from Jersey City to Hoboken to Evesham — had already been accepting at least partial 2018 prepayments from worried residents.

But Christie said not every town in the state was following suit. His order instructs the director of the state Division of Local Government to mandate that all of New Jersey’s 565 municipalities do so.

“The action I took today will ensure that local governments are flexible and accommodating of their local property taxpayers as we transition to the new federal tax code for 2018,” Christie said in a statement. “This executive order requires local officials to dedicate the resources and staffing to serve New Jerseyans who are planning in this way for their families and their futures.”

There’s a snag, though. The Internal Revenue Service said Wednesday that 2018 prepayments are deductible only if you’ve already received a bill from your local government and paid it by Sunday. That could add confusion for those hurrying to meet the deadline.

Experts say New Jersey’s tax bills have been sent out only for the first and second quarters of 2018. That may mean homeowners are allowed to deduct prepaid taxes only for the first half of next year but not the latter half.

Posted in New Jersey Real Estate, Politics, Property Taxes | 85 Comments

Will NJ home prices fall?

From NJTV:

Tax reform throws NJ real estate market into period of uncertainty

The president gathered a crowd outside the White House to celebrate the new tax plan last week. Republicans cheered the new order, but across New Jersey homeowners and prospective home buyers were pulling out their calculators and calling their realtors because the cap on state and local tax deductions, now $10,000, will mean a tax increase for many homeowners, and that will have an impact on the housing market.

“Essentially, their taxes just went up,” said realtor Robin Pierce. “Because if the max is $10,000 that you’re paying with pre-tax dollars, now, if you’re paying $14,000, in order to pay that additional $4,000, you have to make maybe $5,000 or a little bit more.”

And if you pay $14,000 in real estate taxes, you’re not even in the top five New Jersey towns for taxes. Take a look. If you live in Tavistock paying $31,000, you’ve just lost $21,000.

What impact will that have on property values? No one can say exactly, yet, because real estate markets are affected by more than real estate taxes. But an analysis by Moody’s Analytics paints a dark picture. You’ll notice that New Jersey has seven of the top 10 counties in the U.S. when it comes to losers in home prices across the country. Essex County tops the list with a 10.5 percent hit.

Essex County is where Larry Stanley sells real estate. He admits it’s still too early to tell what the impact will be, but he says the effects may be marginal.

“First of all, all real estate is local. Everything that happens is on a local level — what happened in this area last week, last month, last year,” he said. “We have to look at it and say, we’re going to sell houses the same way we did before. This might cut out a couple of people who weren’t going to enter a certain community. In Essex County, the rail towns will always be hot. If there’s a train station in your town, it’s a hot market.”

Yeah, when you could write off your full $23,000 real estate tax. But now, even with what realtors call a low-inventory market, or more buyers than sellers, the tax plan has thrown the market into a period of uncertainty.

“I was at a client’s house, and he lives in Haworth, and he doesn’t even know if purchasing a property now would be the right thing with this new tax bill. Maybe he should just continue to rent,” said Pierce. “It gives me a lot of concern. Now that could be good for investors and landlords.”

Who can pass on tax increases to tenants. But if you’re a one-family homeowner thinking that you maybe want to upgrade to something a little bigger or fancier, you may want to think again.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 170 Comments

Up up and away

From CNBC:

US home prices surged 6.2% from a year ago

U.S. home prices climbed a robust 6.2 percent from a year ago, amid strong demand from would-be buyers and a shrinking supply of properties for sale.

Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index stood in October a solid 6 percent above its previous 2006 peak. Prices are rising at more than double the pace of wage growth, creating some affordability pressures that have been offset by relatively low mortgage rates. Metro areas with booming job markets and the steepest home price gains could see more residents staying as renters.

“Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

Posted in Economics, Housing Recovery, National Real Estate | 15 Comments