Inventory on the horizon? Maybe not.

Posted in Economics, Housing Recovery, National Real Estate | 13 Comments

From DS News:

Economist: Declining Shadow Inventory Will Not Help Country’s Short Housing Supply

A consistent and steady decline in shadow inventory, which is the number of residential properties that are in foreclosure but not being sold because the owner is waiting for price appreciation, has been a broad trend nationwide, according to National Association of Realtors (NAR) Chief Economist and SVP Lawrence Yun.

“With new home construction still sluggish the housing inventory shortage could last longer,” Yun said. “Home price increases in many parts of the country are nearly assured as a result. The price gains in some cases will be too fast and not good for the overall health of the local real estate market.”

The percentage of all mortgages comprised of shadow inventory has fallen from 10 percent a few years ago at the height of the crisis down to 4.5 percent, which is essentially back to normal when put in terms of foreclosure starts (46 percent) according to Yun. The thin shadow inventory compared with rising home values has caused the share of distressed home sales to drop to single digits. Since there will be fewer properties sold at deep discounts, this will cause home prices to strengthen, Yun said.

“It also means that those practitioners who specialize in foreclosures or short-sales need to start thinking about a change in business models to normal home buyers and normal positive-equity home sellers,” Yun wrote on the blog.

Since real estate is local, there are outliers to the general nationwide trend of shadow inventory decline. Shadow inventory remains high in some places such as New York and New Jersey, Yun said, and home prices will rise slowly in these areas. But since shadow inventory doesn’t figure to convert into visible inventory in the foreseeable future, what needs to happen to solve the short housing supply problem?

“Investor-owned properties through a flip could show up on the market,” Yun said. “However, most institutional investors who bought a few years ago are indicating a long-term hold to get rent gains which have been nice and profitable. The only true source of more supply is from homebuilders. Unfortunately, they are still not ramping up production to meet the market needs. Consequently, home price gains this year could be too fast for the country, easily rising double or triple the rate of income growth.”

Most expensive dirt in the country

Posted in Economics, New Jersey Real Estate | 133 Comments

From the Star Ledger:

Look down, N.J., the land you live on is the most valuable in America, study finds

New Jersey’s land is worth more per acre than any other state, according to a report, and the state’s overall land value ranks among the top in the nation.

The value of an acre of land in New Jersey, excluding buildings or other structures, clocks in at $196,410, according to a Wall Street Journal analysis of a new federal study. Only three other states — Rhode Island, Connecticut and Massachusetts — have land worth more than $100,000 per acre, according to the report.

The report shows the top five states for land value per acre are:

New Jersey: $196,410
Rhode Island: $133,730
Connecticut: $128,820
Massachusetts: $102,210
Maryland: $75,430

The report was based on findings from a paper released earlier this month by the U.S. Bureau of Economic Analysis. The paper notes that New Jersey and Rhode Island are the two most developed states, with roughly 31 percent of land developed in both states.

The paper estimated land values for the contiguous 48 states and the District of Columbia and found the 1.89 billion acres of land that make up that territory are worth about $23 trillion.

The more than 4.7 million acres of land in New Jersey is worth $930 billion, according to the paper. Just four other states had greater land value overall, the paper shows. Those states are: California, Texas, New York and Florida.

Shut up and pay me…

Posted in New Jersey Real Estate, Politics, Property Taxes | 76 Comments

From the Star Ledger:

7 of the 10 counties in America with the highest property taxes are in N.J., study says

It’s no secret that New Jersey homeowners are hit with some of the highest property taxes in the nation. But just how high, relative to other parts of the country, might be a bit of a shock.

A typical homeowner in Bibb County, Ala., paid just $228 in property taxes in 2013, according to an analysis by Zillow, the real estate website. Compare that to someone paying the median in Paramus or Ridgewood in Bergen, who shelled out $9,546 — about 45 times as much.

Bergen and Bibb lie on opposite ends of a list of median property tax rates nationally. Bergen was third-highest in the country, and the highest in New Jersey, while Bibb joined several other Alabama counties boasting some of the very lowest property tax bills for single-family homes.

Bergen, meanwhile, is one of several New York City-area counties dominating the top 10. Those counties had annual property taxes several times the 2013 national median of $2,132, based on the Zillow analysis, which examined counties in the 50 largest metro areas for which sufficient data was available.

Elsewhere in New Jersey, however, property tax bills, while nowhere near the lowest in the country, were somewhat closer to the national median, according to figures compiled by NJ Advance Media in February (NJ Advance Media looked at average county bills, not the median figure used by Zillow). The average bill in Cumberland in 2013, for instance, was just a little over $3,700 a year, while in nearby Salem, the average was about $4,800.

Highest:

Westchester, N.Y., $13,842
Rockland, N.Y., $10,550
Bergen, NJ, $9,546
Essex, N.J., $9,288
Nassau, N.Y., $9,091
Passaic, N.J., $8,978
Union, N.J., $8,926
Morris, N.J., $8,549
Hudson, N.J., $8,407
Hunterdon, N.J., $8,392

March Case Shiller

Posted in Economics, Housing Recovery, National Real Estate | 115 Comments

From the WSJ:

Case-Shiller Home Price Index Climbs Modestly in February

Home prices continued to rise modestly in February, according to a report released on Tuesday, a continued upward push in home values which underscores concerns that buyers’ incomes aren’t keeping pace.

The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.2% in the 12 months ended in February, weaker than a 4.4% increase in January.

The housing market has been gaining strength in recent months, but some economists fear the improvement is fragile because wages haven’t kept pace with price increases.

“Home prices continue to rise and outpace both inflation and wage gains,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

Still, Mr. Blitzer cautioned that only two markets—Denver and Dallas—have surpassed their prerecession housing boom peaks. “If a complete recovery means new highs all around, we’re not there yet,” he said.

Both the 10-city and 20-city indexes saw larger year-over-year increases in February than in January. The 10-city index gained 4.8% from a year earlier, up from 4.3% in January. The 20-city index gained 5% year-over-year, compared with a 4.5% increase in January.

Economists surveyed by The Wall Street Journal expected a 4.8% increase in the 20-city index.

What would have been worse – stalling or foreclosing?

Posted in Economics, Foreclosures, Housing Recovery, New Jersey Real Estate | 41 Comments

From the Philly Inquirer:

New Jersey still caught in foreclosure nightmare

The foreclosure nightmare that haunted U.S. homeowners during and after the Great Recession has loosened its grip considerably in most states.

In New Jersey, the bad dream just gets scarier.

Foreclosures there are 17 percent higher than they were in 2014, and bank repossessions of homes are up 18 percent, the housing-analytics firm RealtyTrac reported last week – even as the rest of the country logged the lowest foreclosure numbers in eight years.

One in every 234 homes in the state with a mortgage is in some stage of the foreclosure process – the fifth-highest rate in the nation.

New Jersey “should really be compared to where everyone else was two years ago,” said William Hall, manager of housing programs at the nonprofit credit-counseling agency Clarifi, which has an office in Cherry Hill and offered advice to 769 South Jersey homeowners in 2014.

In the first three months of this year, RealtyTrac reports, 14,524 houses were in the foreclosure pipeline in Burlington, Camden, and Gloucester Counties alone. The data show that 4,535 of those properties were vacant – “zombies” abandoned by their owners on lenders’ orders but for which the foreclosure process was never completed.

Philadelphia and its four suburban Pennsylvania counties have four times the number of homes as the three South Jersey counties but had just 12,046 foreclosures in the first quarter, RealtyTrac reports.

In the Sicklerville zip code, 08081, which spans Winslow and Gloucester Townships, RealtyTrac data show 1,088 houses are in foreclosure – more than in any other zip code in those three South Jersey counties.

Foreclosure numbers in greater Atlantic City rose 46 percent in the first quarter over the same period in 2014, meanwhile, giving it the highest foreclosure rate of any U.S. metro area over 200,000 population – one in every 113 houses.

New Jersey’s foreclosure issues push chances for a complete housing-market turnaround further out of reach, industry observers say.

“In my view, the aftermath of the crisis is still with us,” said Bruce M. Sattin, a lawyer with Szaferman, Lakind, Blumstein & Blader in Lawrenceville who represents clients fighting foreclosure.

“While the number of new foreclosure cases spiked after the real estate market crashed in late 2007, there are still cases from back then in the system,” Sattin said.

How did New Jersey end up in such a mess?

New Jersey’s continued high foreclosure volume has created problems for neighbors who are up to date with their mortgages but who find out their houses are worth less than they owe, Busler said.

About 50 percent of Clarifi’s clients said they, too, were “underwater,” Hall said, and those borrowers are more likely to default.

Add job losses and lower wages to the mix, Busler said, and “all of this means that recovery in real estate will be very slow.”

Embrace the Millennial

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

Great read from the APP:

Why New Jersey needs millennials

Conversation and laughter blend with the beat of the music permeating the stylish bar that is intimately lit with votive candles and glass fixtures.

Jennifer Keleman, 28, and her fiancee, nestled together on an oversized sofa, clink their wine glasses. It’s her birthday and they are celebrating at one of their favorite Asbury Park hot spots. Even if the celebration includes multiple glasses of wine, they’re only a short walk from their oceanfront apartment. No driving involved.

“In Asbury Park I feel that I can walk to bars and restaurants. I can go to the beach in the same day. I can go back to my apartment for lunch to walk my dog,” Keleman said. ” I can do that all without having to necessarily get in my car and drive somewhere and that’s really appealing to me.”

The urban landscape offered in towns like Asbury Park and Jersey City make them more attractive to millennials, aka Generation Y. But the rest of New Jersey is unappealing to them.

There’s a lot at stake for the Garden State. The generation has 75 million people, and they aren’t drawn to the landscape of malls and homes that suited WWII and Boomer families migrating from inner cities to safe, quiet suburbs.

Millennials amassed billions in student loan debt due to the sky rocketing cost of college tuition. The scarcity of high paying jobs makes it difficult to pay down the debt faster. Four of 10 millennials in New Jersey are in such dire straits that they live in their childhood home, U.S. Census data shows.

“They’ve delayed being launched,” said Cliff Zukin, a Rutgers University professor who has studied generational changes on American society. “They’re going to delay marriage, having jobs, kids, buying houses.”

The combination of problems is causing New Jersey millennials to migrate out of state, a Rutgers University study found.

With fewer members of Generation Y in New Jersey, there will be fewer people to buy houses, pay taxes, start families and spend money.

Makes too much sense, what am I missing?

Posted in Economics, Employment, Mortgages | 98 Comments

From Housingwire:

Radian now offering an industry first – job loss insurance

Radian Guaranty, the mortgage insurance subsidiary of Radian Group (RDN), is offering a new program that’s the first of its kind in the industry – job loss insurance.

Radian’s new program, called Radian MortgageAssure, will pay a borrower’s mortgage if they suffer an involuntary job loss and fall behind on their mortgage payments. Plus the program will be automatically provided to certain borrowers with no additional cost to the borrower.

According to Radian, the program is designed to “provide homeowners peace of mind” after an involuntary job loss. Radian notes that the program has dual benefits, for both the borrower and the lender, because the program reduces the risk of job loss-related late or missed mortgage payments, while offering lenders further protection against default.

Radian said that its new MortgageAssure program is the only program of its kind currently offered by a mortgage insurer and will be offered exclusively to Radian’s lending partners.

Under the program, if a participating homeowner falls behind on their mortgage payments due to an involuntary job loss and meets the conditions of the program, Radian MortgageAssure will provide up to six monthly mortgage payments, with a maximum monthly benefit of up to $1,500, or total protection of $9,000 during the two-year coverage period.

“At Radian, we are continually innovating to help Americans realize the dream of affordable, sustainable homeownership,” said Brien McMahon, chief franchise officer, Radian. “As the spring buying season begins, we are pleased to be able to offer a new level of protection – at no additional cost – that is designed to provide peace of mind to those interested in purchasing a home.”

March Sales Hit 18 Month High

Posted in Economics, Housing Recovery, National Real Estate, New Jersey Real Estate | 85 Comments

From the Record:

Jobs recovery boosts demand for homes

Fueled by a stronger job market, housing sales activity is picking up steam, with existing home sales up 6.1 percent nationwide in March, the National Association of Realtors said Wednesday.

A separate report, from the Federal Housing Finance Agency, said that home prices nationwide were also on the rise — up 5.4 percent in the 12 months ending in February. But prices were up only 2.6 percent in the Middle Atlantic region, which includes New Jersey.

That story was reflected in Bergen and Passaic counties, which saw little price improvement but an increase in sales activity.

“After a quiet start to the year, sales activity picked up greatly throughout the country in March,” said NAR economist Lawrence Yun. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”

Existing-home sales nationwide in March were at an annual level of 5.19 million.

“As we continue to see improvement and strengthening in the labor market, we’re seeing better household formation numbers,” said Anika Khan, an economist with Wells Fargo Securities in Charlotte, N.C. “Jobs are the key to housing demand.”

In March, the unemployment rate was 5.5 percent nationally, and 6.5 percent in New Jersey.

In Bergen County, the number of single-family home sales rose 12.6 percent in March compared to a year earlier. Single-family sales were up 22 percent in Passaic, though town house and condo sales dropped in both counties, according to the New Jersey Realtors.

But home values were up only slightly in the region, compared to March 2014. Single-family prices ticked up 1.7 percent in Bergen in March, to a median $437,500, and were flat in Passaic, at a median $285,000.

“Sales seem to be definitely on the rise, especially in the $500,000 range,” said Robert Funabishi, an agent with Terrie O’Connor Realtors in Saddle River. “My listing in Park Ridge had 30 showings in four days and [the owners] took an offer above the asking price. There’s a lot of pent-up demand out there from 2014, so it appears that anything that’s priced well and is clean is getting a lot of attention.”

Beth Freed, an agent with Prominent Properties Sotheby’s International Realty in Ridgewood, said the inventory of homes for sale remains tight.

“It would be really great if more homeowners decided to come on the market,” she said. “There are plenty of buyers out there.”

Foreclosure starts spike in February?

Posted in Foreclosures, Housing Recovery, National Real Estate | 82 Comments

From HousingWire:

Black Knight: March foreclosure starts skyrocket 18% from February

The March delinquency rate dropped 12% month-over-month, the largest monthly decline in nine years, but at the same time foreclosure starts skyrocketed 18% in March, according to the Black Knight Financial Services report for March.

Foreclosure starts were up 18% from February. Approximately 94,100 foreclosures were started in March, a roughly 7% increase from last year.

March didn’t see quite as many foreclosure starts as there were in January when there were 94,400, but it was the second highest number of starts since the end of 2013, which was 105,000.

The foreclosure rate continues its long-term trend of improvement, down over 27% from this time last year.

The drop in the monthly delinquencies helped to drive delinquencies below 5% for the first time since August 2007.

It won’t ever sell…

Posted in Foreclosures, New Jersey Real Estate | 103 Comments

From the Star Ledger:

Bank foreclosing on Joe, Teresa Giudice’s Montville mansion

The same day the new real estate agent for “Real Housewives of New Jersey” star Teresa Giudice vowed to aggressively market their enormous Montville Township mansion, the bank that holds their mortgage started foreclosure proceedings against the couple.

Community Bank of Bergen County filed a notice of foreclosure in Morris County Superior Court Wednesday on their Indian Lane property, according to court papers obtained by NJ Advance Media. The couple had returned to the mansion to the market this week with a $2.99 million listing price.

Community Bank was listed as one of the couple’s creditors in its 2010 bankruptcy filing, with a $1.7 million claim on the property. The couple eventually abandoned their bankruptcy claim after the trustee representing their creditors alleged they hid assets and income, which led to a federal prosecution that netted Teresa 15 months in prison (she’s expected to be out in February 2016) and Joe 41 months. The trustee closed out the bankruptcy proceedings last year after only collecting $7,500; the end of the proceedings gave banks and other credits free reign to seek repayment.

The couple also had two other properties on the market since last year: a vacation home in Manahawkin and a modest three-bedroom home they rented out in Lincoln Park. But they pulled those homes off the market earlier this month. According to Zillow.com, the two homes are in pre-foreclosure, although there has been no notice of foreclosure for the Manahawkin home filed with Ocean County Superior Court. In May 2014, a mortgage holder on the Lincoln Park property filed a notice in Morris County Superior Court, but no further action has been taken.

Doesn’t make it any easier to swallow

Posted in Economics, New Jersey Real Estate, Property Taxes | 144 Comments

From Time/Money:

8 Reasons Your Property Taxes Are So Damn High

A Monmouth University survey released last fall showed that more than half of New Jersey residents want to leave at some point, with 26% saying that it’s “very likely” they’ll move away from the Garden State. The most popular reasons cited for were the costs of housing and property taxes—the high cost of property taxes in particular. “The chief culprit among these costs is the New Jersey’s property tax burden,” Patrick Murray, director of the Monmouth University Polling Institute, explained.

New Jersey isn’t the only state at risk of losing residents to Florida, Pennsylvania, or another state with lower taxes. Stories pop up regularly speculating about the likelihood of homeowners jumping ship from high-tax states like New York and Connecticut as well.

The community has good schools. Or at least extremely well-funded ones. According to Zillow, the median residential property tax bill in New York’s Westchester County is $13,842, highest in the nation. A Westchester Magazine feature focused on why the leafy, desirable county holds this dubious distinction. The piece draws a comparison to Virginia’s Fairfax County, which is similar in many ways to Westchester: They’re both suburbs of big cities (New York and Washington, D.C.), they have similarly high home values, and they educate about the same number of students in public schools, which in both places have a good reputation.

State workers make good money too. By most measures, New Jersey homeowners have the country’s highest property taxes. Tax Foundation data shows that the Garden State has the highest effective property tax rate (percentage of home value) and the highest property taxes per capita. The average property tax bill in the state hit $8,161 in 2014, also tops in the U.S. In fact, one study indicates that less than 1% of American homeowners pay more than $8,000 annually in property taxes.

Your state relies heavily on property taxes. The above-referenced editorial also points out that 48% of state and local revenues collected in N.J. come from property taxes, which is off-the-charts high: “No other state derives more than 41 percent of its revenue from that source; the U.S. average is 33.1 percent.”

This state of affairs would be more acceptable to locals if the tradeoff for high property taxes is low taxation in other areas. Indeed, New Jersey has one of the country’s lowest gas taxes, and it’s in the middle of the pack in terms of taxes on wine, spirits, and beer. Unlike many other states, people in New Jersey don’t pay any vehicle property taxes either. Then again, New Jerseyans do pay the second highest state sales tax rate (7%, only California is higher).

Little or no tourism. A recent WalletHub study named Hawaii as the state with the lowest property taxes. New Jersey property taxes are eight times higher than their counterparts in the Aloha State. And a big reason why homeowners get off (relatively) easy in Hawaii is that the state collects so much from outsiders, thanks to high taxes on hotels and other tourism expenses. Likewise, taxes paid by casinos and tourists in Nevada are often credited as a reason why state property taxes aren’t high.

Little or no industry. The more that industrial and commercial businesses pay in taxes in a state or town, the less it’s necessary for homeowners to cover the government’s tab. According to the Wyoming Taxpayer Association, 69% of property taxes in the state are paid by mineral production businesses. Therefore, residential property taxes can remain low—the state has no income tax either. The city of Marlborough, Mass., recently estimated that it were it not for local commercial taxpayers, the average homeowner would see his property tax bill (now averaging $4,791) shoot up by $1,164 per year.

Your property is worth a bundle. Your property tax bill is based on multiplying the local tax rate times the assessed value of your home. So, generally speaking, the owners of more valuable homes pay more in property taxes. Marin County has the most expensive real estate in California, on average, so it should come as no surprise that it has the highest (or among the highest) average property taxes too. In New Jersey, the 10 towns with the highest property tax bills all averaged over $18,000 per year, and five out of the ten had average residential property values over $1 million.

First American: No equity, no sales

Posted in Economics, Housing Recovery | 21 Comments

From HousingWire:

Lack of equity drags down existing home sales

The existing home sales report for March from the National Association of Realtors isn’t due until next week, but Mark Fleming, chief economist for First American, said his early look suggests that a lack of equity is continuing to dog the housing market.

Housing has seen a weak start to the year overall. Mortgage applications have been soft – more down than up – and indicators like sales, starts, and new home purchases have underperformed. This is despite the fact that buying is cheaper than renting in three out of four markets nationwide.

Existing home sales were tepidly positive in February, and the primary reason cited was tightening inventory.

Fleming says the main reason for the weakness in the existing home sale market is lack of equity.

“Lack of equity remains a significant constraining factor for market participants and is the primary reason the existing-home sales market is underperforming. Existing homeowners are the largest share of the existing-home sales market, and they can’t be home buyers if they don’t have the sufficient equity to be home sellers,” Fleming says. “This is one of the key reasons we are observing tight inventory in many markets.

“Yet the appreciation we do observe, returning equity to existing homeowners, is the most significant key driver of the improvement in expected sales,” Fleming said.

“Lack of equity is a reason, but it is not the only reason,” Sanders said. “Dismal wage growth and real median household income continues to weigh down the housing market.”

How to win a bidding war? – 9 tips from a f*cking idiot

Posted in Humor | 47 Comments

From Housingwire:

How to win a bidding war in today’s outrageous housing market

1. Offer Full Price or More. Money is a major factor in a seller’s decision, but not the only one. Holy shit – what are we paying this guy for this kind of insight. Surefire way to find yourself with the winner’s curse

2. Eliminate Seller Paid Closing Costs/Points. It is not full price if you then ask the seller to pay your closing costs. If you need to the closing costs covered, make sure your offer Nets the seller at least what a full price offer would. So basically, offer more money, no different than point 1 above.

3. Large earnest money up front. Show the seller you are committed and putting up risk to stand by your “word” (purchase agreement) to buy the home. Should more clearly indicate that what you are doing here is trading the potential loss of earnest money for a potential discount, there is a significant cost to this should the buyer find themselves in a position needing to walk away. Husband killed in a car accident a week before closing? Sorry lady, you are out of luck.

4. Cash is King. Go in with cash if possible to eliminate problems of appraisals and financing. Appraisals are a problem as prices are increasing. New regulations make it difficult for appraisers and banks to meet the market changes. How exactly does this help someone to win a bidding war? It’s idiotic to even mention this. If someone could afford the property without financing, why would they finance?

5. Closing date should match seller’s preferred date. Buyers agent should ask Seller’s agent what date the seller would like close on. Probably the only realistic suggestion in the bunch

6. Allow seller a couple extra days possession after closing this gives them time to move out and lowers their stress. (frowned on by attorneys.) Absolutely terrible idea, of course it’s frowned on by attorneys, because now if they decide they like the house and want to stay, you’ll need to go through the eviction process to kick them out. They could be in there for months, if not years, depending on the jurisdiction.

7. If buyer is financing, include a statement that the buyer will make up the price difference in cash if the home doesn’t appraise out for purchase price. (if buyer can do so) If buyer can’t pay cash, this will also relieve the concern of an appraisal problem. Oh, for f*ck’s sake, now we aren’t just going to risk getting the winner’s curse, we’re going to go ahead and guarantee it

8. If buyer is doing an inspection, have buyer provide a statement that they will not nit-pick any items to re-negotiate price, but only structural or mechanical failures. Inspections were intended to be a way for the buyer to make sure they were not purchasing a major problem. Too often this is now being used as a way to re-negotiate the price with the seller. Remove this potential concern for the seller. C’mon man, just all out with it, why not just suggest to eliminate the inspection contingency outright? Also, you’ve never heard of death by a thousand cuts? I assure you, those houses exist

9. If buyer is financing, have a well prepared Pre-Approval letter from the lender. Make sure it does not come across as a pre-qualification letter. Most buyer’s have no clue, if it’s got the bank’s logo up top, it’s official. Besides, pre-approval don’t mean shit if the deal can’t make it through underwriting anyway

Gold Coast rises again?

Posted in Housing Recovery, New Development, New Jersey Real Estate | 85 Comments

From the Jersey Journal:

Jersey City sees building boom

Jersey City is about to get a lot more crowded.

The city is expecting nearly 3,000 residential units to come online before the end of the year, while developers are expected to break ground on another 3,000 in the next 10 months.

The new additions will include a 950-foot condominium tower on Hudson Street that will be the tallest building in New Jersey, a 50-story high-rise outside the Grove Street PATH station and a 448-unit tower in Liberty Harbor North that will rise 44 stories.

And the changes aren’t only in the Downtown, where most of the new large-scale development has taken place for the last three decades. Hundreds of units are set to go online by the end of the year on Senate Place, just south of Canco Lofts, and at the Beacon.

Developers Eric and Paul Silverman have been building in Jersey City for over 30 years — before it was cool. The brothers’ new building, Charles and Co., a 99-unit Grove Street building with office and retail space, is opening this summer. Eric Silverman told The Jersey Journal the city’s newest boom is part of a global trend of more people choosing city living over suburbia.

More than that, he said, Jersey City is special.

“People have finally recognized that Jersey City has a lot of natural assets: good architecture, a good grid pattern, the multiple modes of transportation,” he said. “It has everything.”

The list of buildings opening or breaking ground in Jersey City this year changes so rapidly it’s hard to keep track.

All told, the city expects the new developments opening this year to contribute to an expected 8,000 increase in the city’s population. By next year, Mayor Steve Fulop says, the city will be the largest in the state.

Jersey City has seen building booms before, but Fulop said this one is different because it is “benefiting every neighborhood.”

Less lucrative tax abatements for Downtown residential buildings are allowing the city to grow its rateable base, he said, leading to more residents sharing the tax burden. And more lucrative tax deals for developers outside of Downtown, which was home to the city’s last building boom, are helping lure developers to build elsewhere in the city, he said.

Buy or rent, can’t win either way right now

Posted in Demographics, Economics, Employment, National Real Estate | 107 Comments

From the Record:

Why your rent will rise again this year

Living in an apartment? Expect your rent to go up again.

Renting has gotten increasingly expensive in the past five years. The average U.S. rent has climbed 14 percent to $1,124 since 2010, according to commercial property tracker Reis Inc. That’s four percentage points faster than inflation, and more than double the rise in U.S. home prices in the same period.

Now, even with a surge in apartment construction, rents are projected to rise an additional 3.3 percent this year, to an average $1,161, according to Reis. While that’s slower than last year’s 3.6 percent increase, the broader upward trend isn’t going away.

“The only relief in sight is rents in the hottest markets are going to go up at a slower pace, but they’re still going to go up,” said Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm.

The main reason: More people than ever are apartment hunting.

Young people who have been living with their parents are increasingly finding jobs and moving out. Rising home prices are leading many longtime renters to stay put.

In addition, most of the new apartments coming on the market are aimed at affluent tenants and carry higher-than-average rents. That’s especially true in cities where new buildings are going up in urban core areas, which means builders need to recoup higher land and development costs.

During the last recession, many workers who lost their jobs moved in with relatives or took on roommates. About 32 percent of U.S. adults were living with roommates or adult family members in 2012, up from 27.4 percent in 2006, according to Zillow, an online real estate firm.

Stepped-up hiring has begun to reverse that trend. About 2.8 million more Americans have jobs than 12 months ago.

“The share of young adults with jobs has climbed in the past year, and that will help many of them move out of their parents’ homes,” said Jed Kolko, chief economist at online real estate firm Trulia. “Most of them will be renters first.”

Developers added 238,000 apartments nationwide last year, a 14-year high, with an additional 210,000 expected this year, according to Marcus & Millichap.

In theory, more apartment construction should help bring down rents because landlords would compete for tenants. But 80 percent of new complexes, Nadji estimated, are high-end projects aimed at renters willing to pay a premium for amenities like gourmet kitchens and concierge service.

How much of a premium? The average rent for apartments completed last year was $1,721. That’s 46 percent higher than the average apartment rent for older units, according to Marcus & Millichap and data provider MPF Research.

“There’s very little new supply being added anywhere else,” said Nadji, “so that’s why there’s so much pressure on rents and very little choice for the average renter.”