Pounding salt

From LoHud:

Housing market in Lower Hudson Valley slows as SALT impact weighs on high-end

The housing market in the Lower Hudson Valley region has shown a slight slowdown in the second quarter, and experts blame the decline on the new tax law that limits the total state and local tax deduction. 

“There was a slight decrease in activity and sales for the first time in quite a while,” said Ron Garafalo, president of the Hudson Gateway Association of Realtors, as he looked at the region’s second-quarter market reports issued recently by the Hudson Gateway Multiple Listing Service. “We’ve seen a larger level of decrease in the very high-end market.” 

In Westchester, the number of single-family homes sold in the second quarter was 1,500, down by 3.9% compared to a year ago.

To compare, 1,643 single-family homes were sold in Westchester in the second quarter of 2016, the highest second quarter in recent years. The number of sales has gradually declined since, and experts have said the lack of inventory was to be blamed. The inventory of lower-to-mid priced properties is recovering, but it’s still lower than where it should be, experts said. 

The median price of single-family homes in Westchester was $705,000 in the second quarter, down slightly by 0.7% from a year ago when the median was $710,000. 

Rockland’s single-family home sales followed the similar pattern: The number of sales in the second quarter was 459, down by 2.3% from a year ago when the figure was 470. 

The median price of single-family homes was $450,000, down by 4% from 2018 when the figure was $468,750. 

“What irritates homeowners and buyers in Westchester and Bergen, and the other high-priced counties in the region, is that the tax reform was supposed to dramatically help them,” Rand said. “And instead of helping them, it’s done really nothing for them because what they’ve got in the lower (federal income tax) rate, they lost it in the SALT cap.” 

Posted in Economics, New Jersey Real Estate, NYC, Property Taxes | 10 Comments

NJ bounces back

From the APP:

NJ jobs: Unemployment rate drops to record low 3.5%, leaving employers in a pinch

While help-wanted signs abound, employers say they are scrambling to fill jobs in an exercise that could get more difficult as the giant Baby Boomer generation continues to reach retirement age.

“We’re very busy, and some people retired out,” said Mark Curcio, president of Encur, a Keyport manufacturer that has struggled to keep up with some of its shipping commitments.

The monthly jobs report released Thursday showed New Jersey added 10,200 jobs, bouncing back from May, when it lost 7,000 jobs. It helped the jobless rate reach a milestone, dropping below its previous low of 3.6% in June 2000.

New Jersey’s economy had struggled since then, through the Great Recession, superstorm Sandy and millennials moving to the cities. But it has shown resilience in recent years.

From May 2018 to May 2019, the state ranked 24th in job growth nationwide. And its economy is expected to remain stronger than its neighbors during the next six months, a report by the Philadelphia Federal Reserve Bank said. 

The improved labor market is tipping the balance of power in favor of workers, namely, millennials and Generation Z that were raised in the digital age and are putting their stamps on the economy, according to a new report by Rutgers University economists James W. Hughes and Joseph J. Seneca.

It leaves New Jersey on the cusp of a new era that is changing the state’s landscape from one that was largely suburban to one that looks more like a city: high-density housing; vibrant downtowns; and restaurants and bars that are in walking distance, they said.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 31 Comments

Median price hits new high (but not everywhere)

From HousingWire:

Median home price climbs to all-time high

The median price of single-family homes in the U.S. has climbed to a record high, reaching $266,000 in the second quarter.

That’s up 10.8% from the previous quarter and up 6.4% from a year ago, according to the latest report from ATTOM Data Solutions.

Median home prices in 89% of the 149 metros analyzed in the report saw price appreciation gains in Q2, the report showed.

Those with the greatest increases were Atlantic City, New Jersey (up 16%); Boise City, Idaho (up 14%); Chattanooga, Tennessee (up 13.9%); Mobile, Alabama (up 11.2%); and Madison, Wisconsin (up 10.8%).

Moreover, 74% of the metros analyzed saw median home prices climb above their pre-recession peak.

“As warmer weather brings a rush of house hunters to the market, the latest spike in median home prices marked the largest quarterly increase since the second quarter of 2015 and the third biggest increase since the market started climbing out of the Great Recession in 2012,” said Todd Teta, ATTOM’s chief product officer.

But Teta said he expects prices to slow down in the second half of the year.

“In looking at historical trends, the second quarter of every year has always shown a quarterly increase, going as far back as 2005,” Teta noted. “So, with mortgage rates dipping to new lows, it’s no surprise that people were wanting to buy a home, even if prices were at their peak. We expect to see milder home prices in the coming quarters.”

Posted in Economics, National Real Estate | 45 Comments

Most stable market in…forever?

From CNBC:

Housing-market distress is at its lowest in at least 20 years — can it hold? 

In the aftermath of the housing crisis, lenders and regulators clamped down hard to make sure we’d never have another bubble like the one that inflated in the middle of the last decade. 

That’s led to a borrowing environment that many housing-market observers describe as too pristine, one absent normal fluctuations. And many have warned that with delinquencies and other housing distress at long-time lows, it can only get worse from here.

Or can it?

In May, the “foreclosure inventory rate,” or the percentage of homes currently in any stage of the foreclosure process, was at its lowest in over 20 years — for the sixth month in a row. 

Overall delinquencies are also at the lowest since 1999, CoreLogic said, citing “a 50-year low in unemployment, rising home prices and responsible underwriting.”

Notably, that long-time low in all delinquencies comes alongside small local spikes in what’s called the “serious delinquency” rate, or loans that are more than 90 days past due. For example, one year past the massive California Camp Fire, serious delinquencies in the Chico, Calif., metro area jumped 21%.

That’s a small reminder of the housing market as it existed before the bubble inflated and then burst. All real estate is local, in part because natural disasters, microeconomies and municipal policies are particular to a region.

Posted in Demographics, Economics, Employment, Foreclosures, National Real Estate | 98 Comments

Industrial is hot in NJ

From GlobeSt:

NJ’s Industrial Market Continues to be a Record-Breaker

The industrial real estate market in New Jersey continues to see strong demand, higher rents and low availabilities.

Commercial brokerage firm CBRE in its latest market report on the industrial sector in the Garden State, states that the market continues to see a rise in rents, with transactions approaching $13.00-per-square-foot in Northern New Jersey and $10.50-per-square-foot in Central New Jersey, well above average asking rates.

The second quarter saw average asking lease rates hit record highs, reaching $7.39-per-square-foot. This was an approximately 2% increase above the first quarter and marked the fifth quarter in the last six in which the rate indicated quarter- over-quarter growth, CBRE reports.

The report also noted that in the Northern New Jersey portion of the market, the average asking lease rate broke the $8.00 per-square-foot barrier for the first time, increasing $0.10 per-square-foot over the prior quarter to an average of $8.01 per-square-foot. Central New Jersey also bested its previous high, jumping $0.24-per-square-foot to $6.66 per-square-foot.

CBRE notes that those asking rates are misleading since the majority of newer product is offered without a published asking rent. With that in mind, CBRE believes the spread between average asking rents and actual taking rents will continue to expand.

The overall market experienced a 20-basis-points drop quarter-over-quarter in its availability rate to 6.2%—the lowest rate seen in the New Jersey industrial market since the first quarter of 2005.

Leasing activity of 6.7 million square feet, while robust and the highest ever recorded for a second quarter since CBRE began tracking the New Jersey industrial market in 2001, was slightly lower than the 6.9 million square feet posted in the first quarter of 2019. Net absorption was also lower than the first quarter at 3.6 million square feet, which was more than 900,000 square feet than three months earlier. However, the second quarter total marked the 10th consecutive quarter with a positive result.

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 19 Comments

Maybe we should have chosen another option?

From the Press of Atlantic City:

NJ wage support complicated, less effective than stronger economy

New Jersey lawmakers have hobbled the state economy with the worst business tax and regulatory climate in America. That costs residents a lot of prosperity and quality of life.

Rather than address the government actions that keep New Jersey lagging behind the national economy, they choose more spending, more debt and making a show of trying to help some. Raising the state’s minimum wage eventually to $15 is one of these attempts to provide symptomatic relief instead of working toward a cure.

This month marks the start of the complex multiyear process, with the minimum for nearly a quarter million workers rising to $10 an hour from $8.85. Even they won’t see $15 an hour until 2024. And the burdens of paying the higher wages will begin later for many, including taxpayers, as lawmakers try to avoid or delay harms to the state’s economy.

Since the wage boost is expected to eliminate jobs for young and inexperienced workers, a bill in the state Senate would give employers of teenagers as much as $10 million in tax credits to offset their higher wages and payroll taxes. That would mean a loss of some corporate and gross business income taxes, which presumably would be made up by other taxpayers since state spending only increases.

Under the just-enacted state budget, taxpayers are already paying $65 million to cover the increased costs of some employers, including nursing homes, home health and personal care firms, providers of child care to Work First New Jersey recipients, and providers of services to the disabled.

Taxpayers actually will pay twice, since one of the ways businesses will adjust to state-mandated higher wages is by raising prices. Another will be to cut employees.

These efforts to mitigate the negative effects of government-mandated higher wages raise a couple of questions. Might it have been easier, more direct and more effective to provide a suitable earned-income tax credit (or increase for those already getting that) to heads of households in minimum wage jobs?

Better still, New Jersey could reduce its tax and regulatory burden, unleashing years of strong economic growth that would create more jobs and compel employers to pay more to fill them. That would put more low-wage workers on the path to the middle class.

Instead, starting-wage jobs will pay better but be scarcer, hurting some of the people lawmakers are trying to help. State officials should at least take another NJBIA suggestion and study the impact of their wage-mandate regime. In its complexity and conflicting effects, it may be more of a drag on New Jersey’s economy and residents than they realize.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 114 Comments

NJ’s glimmer of hope

From the Star Ledger:

Wages up, unemployment down in N.J.’s largest counties as economic recovery continues

Wages in Mercer County rose by 7.1 percent last year, the largest increase in New Jersey and one of the biggest in the country, according to a report released Friday.

The U.S. Bureau of Labor Statistics released its numbers for the state’s 15 largest counties, defined as those with at least 75,000 workers on average. The report came out on the same day that the bureau said that 224,000 new jobs were created nationwide last month.

Wages increased in 14 of the 15 large counties, and employment rose in 12 of the 15, continuing an economic trend that began under President Barack Obama and kept going under his successor, President Trump. The 15 counties account for 91 percent of the state’s jobs.

The increase in wages in Mercer County in the fourth quarter of 2018 compared with the same period a year ago was the 13th biggest boost among the 349 largest counties nationwide.

The average percentage increase in employment in New Jersey in December 2018 compared with December 2017 was 0.8 percent and the average boost in wages was 2.7 percent. That trailed the national averages of 1.5 percent and 3.2 percent respectively.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 72 Comments

Home prices pick up speed

From HousingWire:

Annual home-price growth reverses course, finally rises

After 14 months of slowing home-price gains, the pace of growth finally picked up speed in May, increasing by 3.6% on an annual basis, according to the latest from CoreLogic.

And, it seems things may pick up steam, with CoreLogic’s forecast predicting home prices will rise 5.6% by May next year.

On a month-over-month basis, home prices rose 0.9% in May, with the forecast predicting a 0.8% increase in June. That would bring single-family home prices to an all-time high, CoreLogic said.

“Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May,” said Dr. Frank Nothaft, chief economist at CoreLogic. “This has been a shot-in-the-arm for home sales. Sales gained momentum in May and annual home-price growth accelerated for the first time since March 2018.”

 A recent CoreLogic survey revealed the dual nature of rising home prices, as it can be both a benefit and a drawback.

According to the homeowners surveyed, 28% said they were concerned they would be unable to afford the purchase of a new home. And, 40% of homeowners who are thinking of selling said they’d have to move outside of their current market to afford another home.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 32 Comments

NJ – $10 minimum wage today

From NJ Spotlight:

NJ’S MINIMUM WAGES RISES TO $10 TODAY IN FIRST STEP TOWARD $15

Today more than 200,000 New Jerseyans are getting a raise to $10 an hour, the first in the state’s multi-year move toward a $15-an-hour minimum wage.

The Democratic-controlled Legislature passed and Gov. Phil Murphy signed the new wage into law five months ago as a way to provide all workers with a living wage in one of the highest-cost states in the nation. Last year’s ALICE report from the United Way of Northern New Jersey found that close to 40 percent of all households in the state, or 1.2 million, were either living in poverty or working poor and unable to afford such basic needs as food, clothing and shelter, with ALICE defined as Asset Limited, Income Constrained, Employed.

The minimum wage for most hourly employees will reach $15 by 2024, making New Jersey one of only five states plus the District of Columbia to have enacted a $15 minimum. DC will be the first to reach that mark, next July 1, followed by California in 2022.

Progressive groups fought hard for the higher wage and it was one of Murphy’s campaign promises. Business organizations opposed it. Neither side has changed its mind, with businesses saying it is going to lead to higher costs for consumers and could force some shops to close their doors, while supporters say it will both make it a little easier for workers to make ends meet and boost the economy as people have more money to spend.

“People have been pushed behind in this economy for far too long,” said Brandon McKoy, president of the progressive-leaning New Jersey Policy Perspective. “We are finally starting to get on the road to get to the true value of the work they are doing. It will help them better be able to take care of their families. And there will be gains in the local economies as they are able to afford to buy more things.”

“Generally and not surprisingly, we’re seeing many of the same concerns we had noted while advocating for a phased in and limited increase — that they’ll need to raise costs or cut expenses to accommodate the higher rate,” said Michele Siekerka, NJBIA’s president and CEO. “Obviously, smaller businesses will be more impacted by this increase to $10 an hour. Whether that includes a small increase for the cost of a burger, as an example, will probably depend on the business.”

Most workers can be paid no less than $10 per hour starting today, an increase of $1.15 over the current minimum. A second increase to $11 is scheduled for January 1, 2020. 

Posted in Demographics, Economics, Employment | 63 Comments

The first cracks?

From Curbed:

SF home prices drop, still unaffordable for all

On Thursday, Orange County-based data firm Core Logic reported that the median home price in San Francisco is down year over year, dropping four percent in May.

Earlier this year, the firm recorded the first drop in the Bay Area’s median price year over year since 2012, diminishing an almost comically small yet still significant 0.1 percent for March. However, the price of a home in SF rose more than five percent within that period.

Now the firm’s most recent San Francisco Bay Area home sales report once again found prices down across the Bay Area, showing a decline of 1.7 percent across in all nine counties, including a four percent depreciation in SF.

Across 637 homes, the SF price (as calculated via MLS sales) declined from $1.38 million this time last year down to $1.32 million now. 

Other resources have also shown small but significant dips in SF’s median year over year, but this is the first time Core Logic’s data has agreed. Last time the firm recorded a year over year decline in SF was in April 2017—at the time, a much larger decline of 7.3 percent.

The problem with these monthly figures is the uncertainty as to which ones are blips and which ones might be part of or the beginning of real trends. 

For example, the 7.3 percent SF price drop in April 2017 was big but didn’t last, with median rices soaring for the rest of the that year. 

“San Francisco is a relatively small market compared with some of the larger counties, and the median sale price tends to be a bit more volatile,” a Core Logic spokesperson tells Curbed SF.

Posted in Economics, Housing Bubble, National Real Estate | 31 Comments

May contracts tick higher

From MarketWatch:

Pending home sales roar higher, but the housing market is still in low gear

Pending home sales jumped by a seasonally adjusted 1.1% in May but were 0.7% lower than a year ago, the National Association of Realtors said Thursday. The May increase beat the consensus forecast for a 0.6% rise.

NAR’s index, which tracks home-contract signings, has seesawed up and down every month this year, but through the noise, it’s clear that the housing market is shuffling. May marked the 17th straight month of annual declines.

Contract signings precede closings by about 45-60 days, so the index is a leading indicator for upcoming existing-home sales reports.

In May, pending sales in the Northeast were 3.5% higher, and in the Midwest, they were 3.6% higher. In the West, they dropped 1.8%. In the South, they edged up 0.1%, but were slightly higher than year-ago levels, the only region in which that was the case in May. 

Posted in Economics, National Real Estate | 30 Comments

Blame the Boomers

From The Atlantic:

The Boomers Ruined Everything

The Baby Boomers ruined America. That sounds like a hyperbolic claim, but it’s one way to state what I found as I tried to solve a riddle. American society is going through a strange set of shifts: Even as cultural values are in rapid flux, political institutions seem frozen in time. The average U.S. state constitution is more than 100 years old. We are in the third-longest period without a constitutional amendment in American history: The longest such period ended in the Civil War. So what’s to blame for this institutional aging?

One possibility is simply that Americans got older. The average American was 32 years old in 2000, and 37 in 2018. The retiree share of the population is booming, while birth rates are plummeting. When a society gets older, its politics change. Older voters have different interests than younger voters: Cuts to retiree-focused benefits are scarier, while long-term problems such as excessive student debt, climate change, and low birth rates are more easily ignored.

But it’s not just aging. In a variety of different areas, the Baby Boom generation created, advanced, or preserved policies that made American institutions less dynamic. In a recent report for the American Enterprise Institute, I looked at issues including housing, work rules, higher education, law enforcement, and public budgeting, and found a consistent pattern: The political ascendancy of the Boomers brought with it tightening control and stricter regulation, making it harder to succeed in America. This lack of dynamism largely hasn’t hurt Boomers, but the mistakes of the past are fast becoming a crisis for younger Americans.

Posted in Demographics, Economics, Employment, National Real Estate | 139 Comments

Blame Millennials? For what?

From the Guardian:

Like it or not, ‘Generation Snowflake’ has got a raw deal

The idea of generational conflict has come to prominence in the last few years, but few seem to agree on its shape and causes. Public discussion of young people, for instance, is so contradictory that they can appear to the casual viewer like a kind of Schrödinger generation; simultaneously both Generation Snowflake, the most over-entitled and coddled generation in history, and Generation Screwed, the most disadvantaged age cohort in modern times. Advocates for the latter can point to trends such as the collapse in home ownership among the under-35s. Proponents of the former argue that young people can’t afford a house because they are irresponsible and frivolous, spending their money on avocado toast rather than saving for a deposit.

A new report from the Resolution Foundation, described as an intergenerational audit, has provided the necessary data to decide which narrative is true. The findings are conclusive. The incomes of young people have been severely constrained, while housing costs have risen steeply compared with previous generations at a similar stage of life.

The report also finds that, far from being spendthrifts, people under 30 are spending less on non-housing consumption than the same age group in 2001. Indeed, out of that reduced sum they are spending more than their predecessors on essentials and less on luxuries. Yet, despite this irrefutable debunking, the Generation Snowflake stories won’t disappear, and play too important a role in obscuring the true causes of generational tension.

The Resolution Foundation insists that it has no wish to pit generations against each other. The problem is, when we look at voting patterns and political opinion, it’s apparent that the generations are already in conflict. Over the last five to six years a yawning political generation gap has opened up with the young moving left and the old moving right. While sizeable minorities still buck the trend, the scale of shift is unprecedented. Even more curiously, it’s a phenomenon that has arisen at the same time across several different countries, most notably the UK and US. As we know from inequalities around gender and race, you can’t deal with divisions by simply denying their existence. Instead, they must be recognised and their causes identified if they are to be tackled.

Thinking about the situation has made me question the traditional way we talk about generations, in which a new one simply comes along every 20 years. In fact, generational differences aren’t often important factors in political and social life. They only become prominent when a specific event, a period of sudden, ruptural change, produces very different generational perspectives. In my book, Generation Left, I argue that the financial crisis of 2008 fits the bill as an explanation for our current generational political divide.

In fact, we can see the current divergence as a consequence of the huge power the financial sector has held over the rest of society for the past 35 years. In the UK, this dominance dates to Thatcherite deregulation of finance in the mid-1980s. Alongside the sell-off of social housing this produced a dramatic rise in house prices in the late 1990s and early 2000s. The Generation Snowflake myth persists, despite all the evidence to the contrary, because it acts as an alibi for those old enough to benefit from this rise but who now mistake their generation’s good fortune for the results of their individual character.

The crash of 2008 should have put paid to this illusion, but governments responded not by punishing the financial sector but by giving it everything it wanted. The ocean of free money that countries threw at finance, in the form of bailouts, quantitative easing, etc has largely gone into asset price inflation. As asset ownership (primarily housing but also pensions invested in stocks) is so divided along generational lines, many people among the older cohorts have seen their material interests met, although almost by proxy. As a result, they are increasingly seeing their interests as aligned to the performance of the financial sector. The interests of younger cohorts, on the other hand, are aligned in a different direction, dependent on the levels of wages and social spending.

The last 10 years have been catastrophic in this regard. Indeed, the 2010s will be the worst decade for wage growth in over 200 years. Is it any wonder that the young are more open to left political projects, such as those of Jeremy Corbyn, Bernie Sanders and Alexandria Ocasio-Cortez, promising to rein in finance and rebalance power in favour of workers? As Generation Screwed turns into Generation Left, it’s likely that the right will hold ever tighter to the myth of the snowflake despite the mountain of countervailing evidence.

Posted in Demographics, Economics, Employment, National Real Estate | 137 Comments

NJ loses 7600 jobs in May

From the APP:

NJ jobs faltered in May: Spring slump or Trump tariffs?

New Jersey employers tamped down their hiring in May and are growing more pessimistic about their outlook, a series of reports released this week shows.

The New Jersey Department of Labor and Workforce Development reported Thursday that New Jersey lost 7,600 jobs in May. Its unemployment rate dipped to 3.8 percent — the lowest level since April 2001. But the jobless rate’s decline was due in part because fewer people were in the labor force.

And the Federal Reserve Bank of Philadelphia reported that manufacturing sector’s growth in the region that includes southern New Jersey and parts of Pennsylvania fell in June and showed muted optimism for the rest of the year.

Analysts hope it is simply a spring slump. But the state might be starting to feel the impact of higher tariffs.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 110 Comments

Murphy bribes voters to get his millionaire tax

From the Star Ledger:

Is a one-time $125 property tax credit really worth that much? Well, it would be a good start, Murphy insists.

Admittedly, a one-time $125 property tax credit for two million residents of the state with the highest property taxes in the nation isn’t much.

But it’s a good start, argued Gov. Phil Murphy, who has said New Jersey tax filers will receive the credit if state lawmakers pass his proposal to raise income taxes on the state’s millionaires.

Murphy said the one-time credit would be on top of other property tax credits, like the homestead credit.

But taxpayers shouldn’t start counting on the extra $125, because lawmakers are refusing to give Murphy his millioinaries tax. The Democratic-controlled state Legislature has not included it in the state budget its plans to pass Thursday.

Murphy floated the $125 credit as a way to incentive lawmakers in his own party to support a bump in the income tax for people who earn more than $1 million. 

Taxpayers — including both homeowners and renters — who earn $10,000 to $250,000 a year in gross income would qualify for the credit.

Posted in New Jersey Real Estate, Politics, Property Taxes | 89 Comments