No Suburb Left Behind

Posted in Demographics, Economics, Employment, New Development, North Jersey Real Estate, Property Taxes | 91 Comments

From the WSJ, hat tip Chi:

Casualty of Cities’ Resurgence: The Suburban Offices Left Behind

Companies from General Electric to Weyerhaeuser are pulling their headquarters out of leafy suburban campuses and moving to downtown high-rises, giving cities an economic jolt.

But figuring out what to do with the vacant corporate campuses left behind is a quandary for civic leaders and landlords across the U.S. Towns have pondered turning them into gyms, community centers or education facilities, but finding large tenants for such spaces has proven difficult, and nearby residents often resist plans to build dense apartment complexes on empty sites.

Upper Saddle River, N.J., 30 miles northwest of Manhattan, is a prime example of the headaches involved. The wealthy town of about 8,000 people is locked in a standoff with a landlord over how to reuse the former U.S. headquarters of publisher Pearson Education.

The bunkerlike structure of gray concrete, set on a grassy 47-acre plot, was built in 1973 for Western Union when the telegraph company decamped from Manhattan, instantly becoming a fixture of the town.

That began to change four years ago, when the division of U.K.-based Pearson PLC, the building’s last tenant, decided to move its operations to Manhattan and Hoboken, N.J., in a bid to be closer to public transportation and appeal to a younger, urban-dwelling workforce. That left landlord Mack-Cali Realty Corp. with an empty 470,000-square-foot building—and few prospects in sight.

The site had earlier brought Mack-Cali annual revenue of about $8.6 million, but after testing the market, the landlord found no demand for an aging, isolated building in a region already inundated with empty office space. So it pushed a plan to demolish the structure, built to hold as many as 2,000 workers, and replace it with a mixed-use development mostly consisting of apartments.

But for a town filled with large houses and winding streets, the idea of replacing the office building with a dense collection of 240 apartments was less than welcome.

Residents and borough officials including the mayor have been outspoken in their opposition, and locals overwhelmingly rejected the landlord’s plan in a 2014 vote. Mack-Cali sued the town in federal court, alleging racial bias over opposition to its apartments, which include some units for low-income residents.

“It looks out of place—you’re going to overpopulate the area,” said Eric Halpern, a resident whose property abuts the complex. He prefers a mixed-use development but one that is less dense, an idea Mack-Cali has avoided in part because it would mean losing some value.

Similar clashes are flaring up around the country as the preferences of American corporations undergo a shift. A number of companies that once followed their workers to the suburbs in the second half of the 20th century are reverting to urban areas as major cities have revitalized and become magnets for a generation of young professionals.

Not all suburbs are struggling. Silicon Valley, for example, is booming thanks to growth by U.S. technology giants.

But the roster of well known companies moving back to cities is growing. The latest was General Electric Co., which recently said it would leave Fairfield, Conn., for Boston. Packaged-foods company ConAgra Foods Inc. announced a move last year from a spacious Nebraska campus to downtown Chicago. Timber giant Weyerhaeuser Co. opted to leave a bucolic headquarters south of Seattle for the downtown.

Northern New Jersey has been the epicenter of this trend, dotted with abandoned homes of corporate giants.

Communities and landlords throughout the area are struggling with finding new uses for the buildings. A developer in Holmdel, N.J., has an ambitious plan to turn the 2-million-square-foot former Bell Labs headquarters into a mix of apartments, shops and offices for multiple tenants.

German chemicals company BASF’s former North American headquarters in Mount Olive, N.J., sits vacant, as does the 500-acre former home of drugmaker Merck & Co. in Readington, N.J.

Adding to the quandary, the once-thriving office parks often were big tax- revenue generators, while uses like apartments tend to bring in substantially less. In Upper Saddle River, the Pearson site brought in more than $900,000 a year, a big chunk of tax revenue for the small town.

“All of a sudden it’s very hard to replace that tax base,” said Mr. DeMarco of Mack-Cali. Offices, he added, “are an innocuous use—they don’t bother you on the weekend. It’s not like retail or hotels.”

Exodus

Posted in Demographics, Economics, Politics, Property Taxes | 85 Comments

From MyCentralJersey:

Outta here! Garden State residents look to retire in greener pastures

Have you noticed more moving trucks on your block recently?

Well, here’s why.

The recent National Movers Study released by United Van Lines pointed to New Jersey leading the way among all states and the District of Columbia for outmigration, with 67 percent outbound.

And according to several different studies and organizations, a major reason for this significant exodus is that many retirees cannot afford to live in New Jersey. The state also ranks among the worst states for retirees when it comes to tax policies.

For more than a decade, New Jersey has had the highest death taxes in the nation. The Garden State is one of only two states (along with Maryland) that has both an estate tax and an inheritance tax and, unlike most states, New Jersey never hiked its $675,000 exclusion to match the federal exclusion of $5.1 million, according to the New Jersey Society of Certified Public Accountants (NJCPA). A recent survey by the NJCPA found that 74 percent of NJCPA respondents actually have advised clients to relocate to another state because of New Jersey’s estate and inheritance taxes. A strong majority (85 percent) think these taxes impact the state’s middle class just as much as the affluent.

The relatively low retirement-income tax exemptions is another key factor in New Jersey’s poor ranking.

New Jersey currently allows residents age 62 older who make under $100,000 annually to exempt up to $15,000 of their retirement income from state income taxes. The exemption is capped at $20,000 for couples in New Jersey. The cap is $40,000 in New York, while Pennsylvania does not tax retirement income at all.

“The tax policies in our neighboring states offer a real temptation for seniors to leave New Jersey,” said NJCPA CEO Ralph Albert Thomas. “Keeping New Jersey retirees in New Jersey by providing tax-fairness measures is critical to helping improve the state’s economy and business climate.”

Up Up and Away!

Posted in New Jersey Real Estate, Politics, Property Taxes | 29 Comments

From the Star Ledger:

Here’s how much property taxes went up (again) in N.J. last year

The already steep property tax bill for New Jersey residents jumped again in 2015, topping $8,300 for the first time and increasing at the fastest rate since 2011.

The average residential bill rose from $8,161 in 2014 to $8,353 in 2015 — a 2.4 percent hike, according to annual data released Friday afternoon by the state’s Department of Community Affairs.

The state aggressively tightened the cap on local property tax hikes in 2011 after property taxes were rapidly rising for several years. However, the data showed the rate of increase in 2015 was higher than the previous three years.

For homeowners, the $191 average increase comes on top of what were already the highest real estate taxes in the country. Property taxes consistently rank New Jerseyan’s top concern.

The real estate website Zillow looked at median property taxes across the U.S. last year and found that seven of the 10 counties with the highest property taxes — Bergen, Essex, Passaic, Union, Morris, Hudson and Hunterdon — are in New Jersey. The remaining three were in New York.

Christie boasted in his January State of the State address that reforms he and the Legislature put in place helped cut the average tax bill increase under Corzine to 1.9 percent during his own tenure.

“We could do even better,” he said.

Of the 565 municipalities in New Jersey, taxes decreased in about 11 percent. Increases were less than 1 percent in another 9 percent, according to the state, which also noted that adjusted for inflation, the statewide hike was 2.1 percent.

Setting aside Atlantic City and Paterson, which lost nearly a third of its assessed property value after a revaluation, the statewide increase would have been 1.7 percent, officials say.

Another step towards normalcy? Cash buyers declining

Posted in Economics, Housing Recovery, National Real Estate | 88 Comments

From HousingWire:

Share of cash sales fell in October to 34%

Cash sales accounted for 33.9% of total home sales in the month of October 2015, according to CoreLogic, compared to 36.4% in October 2014.

Cash sales increased by 1.4% compared to cash sales recorded in September, but that uptick is typical for October over September, CoreLogic reported. Further, the property data analytics firm said that the best gauge in determining cash-buyer trends is through yearly change, as opposed to focusing on month-to-month numbers.

When cash sales peaked in January of 2011, cash transactions accounted for 46.6% of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%.

If the cash sales share continues to fall at the same rate it did in October 2015, the share should hit 25% by mid-2018.

Distressed sales, which include real estate-owned properties and short sales, accounted for 9.4% of total home sales nationally in July 2015, down 2.1 percentage points from July 2014 and down 0.4 percentage points from June 2015, CoreLogic reports.

REO cash sales share increased in October to 59.7%, short sales made up 31.3% and newly constructed homes at 16.7%. While the REO percentage of cash sales was high, REO transactions only accounted for 7.3% of all sales in October 2015. When cash sales peaked in January 2011, REO sales represented 23.9% of total home sales.

Per the report, Alabama had the largest cash sales share of any state at 51.7%, followed by Florida (46.7%), New York (46.3%), West Virginia (44.4%) and Indiana (40.8%).

Of the nation’s largest 100 Core Based Statistical Areas measured by population, Miami-Miami Beach-Kendall, Fla. had the highest cash sales share at 51.6%, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (50.9%), Detroit, Mich. (50%), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (49%) and Philadelphia, Pa. (48.9%). Syracuse, N.Y. had the lowest cash sales share at 13.9%.

NJ has a bigger lead problem than Flint

Posted in New Jersey Real Estate | 222 Comments

From the Star Ledger:

Why 11 N.J. cities have more lead-affected kids than Flint, Michigan

Eleven cities in New Jersey, and two counties, have a higher proportion of young children with dangerous lead levels than Flint, Mich., does, according to New Jersey and Michigan statistics cited by a community advocacy group.

With the eyes of the nation focused on the brain damage and other problems associated with lead-contaminated water in Flint, several community advocacy organizations in New Jersey banded together this week to draw attention to New Jersey’s lead problem, asking for a renewed focus on solving it.

In New Jersey, children 6 years of age and younger have continued to ingest lead from paint in windows, doors and other woodwork found in older homes, particularly in older, poorer cities, said Elyse Pivnick, director of environmental health for Isles, Inc., a community development organization based in Trenton.

“In light of the Flint debacle, we wanted people to understand that water is not the only thing that’s poisoning children,” she said. “Most people think the lead problem was solved when we took lead out of gasoline and new homes in the 1970s, but that’s not true.”

The communities with the high lead levels include Irvington, East Orange, Trenton, Newark, Paterson, Plainfield, Jersey City, Elizabeth, Atlantic City, New Brunswick and Passaic, along with Salem and Cumberland counties.

“You can breathe it in from dust and you can swallow it,” Pivnick said.

Also, Pivnick pointed out, in 2015, there were more than 3,000 new cases of children under the age of 6 in New Jersey with elevated levels of lead in their blood. Overall, advocates said, about 225,000 young children in the state have been afflicted by lead since 2000.

Home prices keep moving upwards

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 71 Comments

From HousingWire:

CoreLogic: Home prices maintain pace, increase 6.3%

Home prices nationwide, including distressed sales, posted similar results to last month, increasing year-over-year by 6.3% in December 2015 compared with December 2014, according to the most recent report from housing data and analytics provider, CoreLogic.

On a monthly basis, home prices are up 0.8% in December 2015 compared to November 2015.

“Nationally, home prices have been rising at a 5% to 6% annual rate for more than a year,” said Frank Nothaft, chief economist for CoreLogic.

“However, local-market growth can vary substantially from that. Some metropolitan areas have had double-digit appreciation, such as Denver and Naples, Florida, while others have had price declines, like New Orleans and Rochester, New York,” said Nothaft.

Looking ahead, CoreLogic’s HPI Forecast predicts that home prices will increase by 5.4% on a year-over-year basis from December 2015 to December 2016, and on a month-over-month basis home prices are expected to increase 0.2% from December 2015 to January 2016.

Central Jersey prices up, inventory down – but still far from peak

Posted in Economics, Housing Recovery, New Jersey Real Estate | 106 Comments

From MyCentralJersey:

Central Jersey home sale values rising: Is it enough?
(click for tables)

The good news is that home sale prices improved last year in more than half of Central Jersey municipalities.

The bad news is that home values remain nowhere near prices in 2006, before the market collapse and recession, a Gannett NJ review of home sales data shows.

In Monroe, for example, the median price of 583 homes sold during the first nine months of 2015 climbed 29 percent over the previous year, but the $280,000 median value was still 7 percent less than in 2006.

Branchburg’s $429,500 median sale price among 106 sales for the first nine months last year was 18 percent higher over the same months in 2014, but still 6 percent short of 2006 levels.

Nevertheless, the state’s real estate market was the strongest last year since the recession, according to Jeff Otteau, chief executive officer of the East Brunswick-based Otteau Evaluation Group, which analyses real estate data for developers.

“There’s good cause for optimism for the real estate markets in 2016, especially in New Jersey,” Otteau said. “The glass now appears half full.”

The Central Jersey counties of Union, Middlesex, Somerset and Hunterdon counties all saw inventories of unsold homes shrink as more people are buying homes. The faster pace of the state’s job gains in 2015 and improvement in the financial markets has led to a significant rise in demand across all of its real estate sectors, Otteau said.

According to Otteau, Union County had a 5.3-month inventory of homes in December 2014, meaning if homes continued to sell at the same pace, it would take 5.3 months to sell all the homes on the market. In 2015, that inventory had shrunk to 4.2 months’ supply. In Middlesex County, the inventory went from 5.4 to 4.9 month’s supply from December 2014 to December 2015. Somerset County saw its December 2014 inventory of 5.1 months in December 2014 shrink to 4.2 months in December 2015 and Hunterdon County saw its inventory contract from 6.7 months’ worth of homes in December 2014 to 6 months in Dec. 2015. This tightening of the market helped to drive prices higher.

Otteau’s figures show that Union County sales increased by 24 percent in volume from 2014 to 2015 but only 12 percent in price increases. Middlesex County saw a 9 percent increase in the number of sales from 2014 to 2015, but the market prices swung only 4 percent higher. In Somerset County, contract sales increased by 21 percent, but the market swung 12 percent higher. And in Hunterdon County, contract sales rose 24 percent, but prices increased 11 percent.

Limited supply the biggest hurdle for 2016 market

Posted in Economics, Housing Recovery, New Jersey Real Estate | 54 Comments

From Prudential Fox and Roach:

Low inventory fuels real estate market

Buyers and sellers in the New Jersey-Pennsylvania region will enter a highly competitive housing market in 2016 as the economy continues to get stronger, according to a survey of Berkshire Hathaway HomeServices Fox & Roach Realtors agents.

Forty-one percent of agents reported that both buyers and sellers will have equal power in 2016, an increase from 37 percent last year, while buyers’ power decreased from 44 percent to 34 percent in the survey. The online survey of 347 BHHS Fox & Roach agents was conducted from Nov. 3 to 20, 2015.

Agents feel positive about current regional market conditions for both buyers and sellers, but the sellers position is strengthening, as 53 percent of agents feel it is a good time to sell (up from 48 percent in 2015), while the percentage of agents that feel it’s a good time to buy remained the same as last year (77 percent).

Data from the BHHS HomExpert First Nine Months report shows monthly average inventory has remained relatively stagnant since 2012. Limited housing options will continue to fuel competition, with 30 percent of agents reporting that limited supply/inventory will be the biggest hurdle homebuyers will face in 2016.

In spite of the competitive atmosphere, agents are still seeing 67 percent of buyers submitting an offer below asking price, hoping the seller sees they overpriced the home, and 11 percent are willing to walk away if they need to increase their offer that will increase their mortgage from their current home.

December Pending Home Sales Disappoint (except the NE)

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 52 Comments

From CNBC:

Pending home sales rise just 0.1% in December

A lack of homes for sale is keeping potential buyers at bay. Signed contracts to buy existing homes rose just 0.1 percent in December from a downwardly revised November reading, according to the National Association of Realtors (NAR).

Taking the revision into account, sales were flat. Only the Northeast, likely due to warmer-than-average weather, saw gains. These so-called ‘pending’ home sales are now 4.2 percent higher than December of 2014. Pending sales are a forward indicator of closed sales one to two months later.

“Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon,” said Lawrence Yun, chief economist for the NAR.
Demand is growing, but the supply of homes for sale is now at a ten-year low. Supplies usually increase during the slower winter months, but that was not the case. Inventory fell over 3 percent in December, according to the NAR. Low supply is driving prices higher at a pace that Realtors are calling unhealthy and unsustainable.

Regionally, pending home sales saw gains only in the Northeast, up 6.1 percent for the month and up 15.3 percent from a year ago. In the Midwest, sales decreased 1.1 percent for the month and are 3.6 percent above December 2014. Pending home sales in the South declined 0.5 percent and are 1.0 percent higher than last December. Sales fell 2.1 percent in the West monthly and are 3.4 percent higher than one year ago.

Blue skies ahead for NJ?

Posted in Economics, Employment, Housing Recovery, New Jersey Real Estate | 84 Comments

From NJBIZ:

NJBIA says 2015 jobs data ‘good news’ for N.J. economy

The New Jersey Business & Industry Association said last week’s report from the state Department of Labor and Workforce Development indicating that New Jersey added approximately 64,500 private-sector jobs last year is more than just some good news.

It’s potentially a game-changer, according to NJBIA President Michele Siekerka

“Growth in New Jersey’s private sector is accelerating,” Siekerka said. “Job growth is reaching the point where it not only shows confidence in the economy, but also feeds confidence in the economy. There can be no mistake that we have game-changing job growth now.”

The state contends that last week’s data point to 2015 being the strongest year for private-sector job growth in the last 15 years.

“New Jersey rings out the old year on a very high note, capping a year of the strongest job growth in 15 years and a sustained period since 2010 of the most robust private sector job growth since the turn of the century,” state Department of the Treasury Chief Economist James Wooster added last week.

Furthermore, new BLS data released Tuesday indicates that New Jersey’s unemployment rate, currently at 5.1 percent, saw one of the largest drops in the nation over the past year.

State seizes AC to stall bankruptcy

Posted in Demographics, Economics, Employment, New Jersey Real Estate, Politics | 117 Comments

From the Record:

State plans to take reins of Atlantic City

After years of trying to ignite an economic revival in Atlantic City — only to see four of its 12 casinos close in 2014 — Governor Christie was back at the drawing board Tuesday with a sweeping new plan to take over the city’s finances and cut down the size of its government.

Christie’s announcement at a State House news conference with Senate President Stephen Sweeney and Mayor Don Guardian came hours before the Atlantic City Council was scheduled to consider a bankruptcy filing as a last resort to avoid defaulting on the city’s debt.

Instead of bankruptcy, which no New Jersey municipality has entered since Fort Lee during the Great Depression, Christie said state officials could right-size Atlantic City by taking over many of its government powers for five years. A series of “tough choices” would ensue, he said, such as slashing costs, privatizing services, selling city assets and possibly “amending or terminating” collective-bargaining agreements with local unions.

“The bottom line is that Atlantic City’s municipal finances are now the greatest threat to the city’s well-being,” Christie said.

NY home prices hit new peak in November

Posted in Economics, Housing Recovery, National Real Estate | 196 Comments

From HousingWire:

Black Knight: Home prices maintain trend, move higher

Once again, home prices are trending higher, rising 0.1% from October, and 5.5% on a year-over- year basis, the November Black Knight home price report found.

As a result, national home prices are up 27% since the bottom of the market at the start of 2012 and are just 5.3% off the June 2006 peak.

Notably, New York led gains among the states for the fifth straight month, seeing 1.2% month-over-month appreciation, the report said.

The state accounted for five of the top 10 best performing in November, with NYC leading at 1% month-over-month growth.

Along with New York, Tennessee and Texas also hit new peaks in November:

New York ($357K)
Tennessee ($179K)
Texas ($216K)

And at the metro level, of the nation’s 40 largest metros, seven hit new peaks:

Austin, Texas ($286K)
Dallas, Texas ($221K)
Denver, Colorado ($329K)
Houston, Texas ($220K)
Nashville, Tennessee ($222K)
Portland, Oregon ($324K)
San Antonio, Texas ($195K)

Existing home sales rocket upwards in December, no inventory

Posted in Economics, Housing Recovery, National Real Estate | 119 Comments

From the WSJ:

U.S. Existing-Home Sales Rebound in December

The U.S. housing market entered 2016 after a year of strong sales, rising prices and dwindling inventories, factors supporting the economy but also likely to cap future gains for the sector.

Existing-home sales rose 14.7% in December from the prior month to a seasonally adjusted annual rate of 5.46 million, the National Association of Realtors said Friday. For all of 2015, sales reached 5.26 million, the highest annual level since 2006, underscoring the long slog back from the housing bust.

But new-home construction hasn’t been keeping up with demand, leading to tight supplies and rising prices.

“In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas,” said NAR Chief Economist Lawrence Yun. He is forecasting a meager 1% rise in existing-home sales for all of 2016.

Inventories of existing homes for sale fell 12% to 1.79 million in December. At 3.9 months’ worth of supply, inventories are at the lowest level in nearly a decade, the Realtors’ group said.

The national median home price, meanwhile, rose to $224,100, up 7.6% from a year earlier. That marks the 46th consecutive month of year-over-year price gains.

NJ UE dips to 5.1%

Posted in Economics, Employment, New Jersey Real Estate | 121 Comments

From the Record:

N.J. added 13,300 jobs in December, for 65,200 in 2015

New Jersey’s unemployment rate in December fell to its lowest level since six months into the recession, as New Jersey added 13,300 jobs for an annual total of 65,200 – the highest figure in 15 years.

The state added 12,500 private-sector jobs and 800 government jobs in December, according to the monthly employment report by the New Jersey Department of Labor and Workforce Development.

The jobless rate fell from 5.4 percent in November to 5.1 percent – a level the state has not seen since June 2008. New Jersey’s rate, which was for a long time far higher than the nation’s, is now only a tenth of a point above the national rate of 5 percent.

The state has now recovered just over 80 percent of the 258,000 jobs lost as a result of the recession.

James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, called it a “strong report.”

He noted that the jobless rate fell because people found jobs, rather than because they left the work force, as has happened in the past. He also welcomed the growth in the labor force – the number of people who either have a job or are looking for one.

“The unemployment rate went down for good reason,” he said. “The fact that the labor force is growing indicates that people are starting to sense that there are available jobs out there, and they are returning to the labor force.”

The report also revised the November figures, reducing the previously announced gain of 7,900 jobs to an increase of 4,800.

The full year figures showed that the state in 2015 gained the most jobs in the education and health services sector, the trade, transportation and utilities sector and the construction sector. All of the major sectors added jobs over the year.

“With these gains and with the unemployment rate hitting the lowest levels since before the recession, the Garden State begins the New Year on a very strong economic foundation,” said James Wooster, chief economist for the New Jersey Department of Treasury.

Huh?

Posted in Humor | 114 Comments