New Jersey Real Estate Report

Nothing to see here

Posted on October 3, 2023 by grim

From the NY Post:

US office real estate prices headed for ‘severe crash,’ investors say

The commercial real estate market is headed for a severe collapse due in large part to sky-high interest rates and declining property values, according to a survey of investors.

Around two-thirds of those who responded to a Bloomberg News survey said they believe that the commercial real estate market will recover only after a crash.

When asked when they believe the price of office properties will hit bottom, 44% said they expect that to happen in the second half of next year while 22% said it will be in the first six months of 2024, according to Bloomberg News.

Just 6% of the 919 respondents said that prices would bottom out this year while 29% predicted that it would happen in 2025 or beyond.

The Fed has raised interest rates aggressively, which is increasing the cost of financing commercial properties at a time when there is also reduced need for them, which has hit rent levels.

Investors are bracing for a possible crisis triggered by default on $1.5 trillion in debt that is coming due by the end of 2025,.

Some $270 billion in commercial real estate loans held by banks are set to mature in 2023, according to Trepp.

Over the next four years, commercial real estate properties must pay off debt maturities that will peak at $550 billion in 2027, according to analysts at Morgan Stanley.

Earlier this month, a study released by economists from NYU Stern Business School, Columbia Business School and the National Bureau of Economic Research showed that vacancy rates are at 30-year highs in many American cities.

In New York City, the vacancy rate was 22.2% in Q1 of 2023.

Posted in Crisis, Demographics, Economics, National Real Estate, New Development | 104 Comments

Do mortgage rates even matter anymore?

Posted on October 2, 2023 by grim

From the APP:

Mortgage rates double. Here is why that hasn’t killed Jersey Shore home bidding wars

With mortgage rates rising to 22-year highs, the prospects for the sale of the house at 321 14th Ave. in Belmar could have dimmed. But within a week of going on the market, its owners had shown the home to nearly 60 prospective buyers and were left to decide among 10 written offers.

By the end of the process, the listing’s agent, Eric Bosniak with Coldwell Banker Realty in Rumson, said the big surprise wasn’t that the home sold above its asking price of $899,000, but that it didn’t receive even more offers given the interest.

“I feel that, yes, mortgage rates are ticking higher, but there’s still significant buyer demand with still limited inventory,” Bosniak said. “And here’s the kicker: limited good inventory.”

The conflicting data has puzzled real estate veterans, who can’t remember a set of conditions like this. It was only two years ago that home buyers and owners took advantage of record-low mortgage rates. Now, they seem frozen in place, leaving real estate agents and mortgage brokers to wait for rates to begin to decline and for the market the thaw.

Less clear is how long the head-scratching environment will last. And they wonder: If homes are getting above asking price despite high interest rates, what will happen to prices when rates fall?

“All of a sudden, rates go down to, say, the mid-5’s, well, then are you going to be bidding against 20 other people?” asked Kenneth Gunther, senior loan officer for NJ Lenders Corp., a mortgage banker in Shrewsbury. “So that’s the unknown question that I think about at night. … What is the market going to look like down the road?”

Posted in Demographics, Economics, Housing Bubble, Mortgages, New Jersey Real Estate, Shore Real Estate | 44 Comments

The new New York City

Posted on September 30, 2023 by grim

From Business Insider:

NYC and its suburbs won’t build new housing, so New Yorkers are flooding into Jersey City and driving up prices

New Yorkers have been taking notice of Jersey City real estate for years, and its popularity as an alternative to the ever-less-affordable housing market in the city is growing. These days, fans call it the sixth borough, largely thanks to Jersey City’s efforts to build a ton of new housing — and at a much faster rate than the actual five boroughs.

Between 2010 and 2018, Hudson County, which includes Jersey City, built housing at more than twice the rate that New York City did. Jersey City’s population grew by nearly 60% from 2010 to 2020. Many of the old rail yards and factories on the city’s waterfront have been replaced with luxury high-rises.

But amid the city’s home-construction boom — a “renaissance,” as the city’s mayor, Steven Fulop, previously described it to Insider — rents are rising fast. The rental platform Zumper lists Jersey City as the second-most-expensive US city to rent an apartment, and rents for a two-bedroom apartment are up 25% year over year.

Typically, a big increase in housing supply would be expected to push prices down, but the sheer magnitude of the New York metro area’s housing deficit has kept Jersey City from experiencing that. As the region suffers a severe housing-affordability crisis, North New Jersey is “carrying the entire tristate area’s housing-supply burden,” said Alex Armlovich, the senior housing-policy analyst at the Niskanen Center, a nonpartisan think tank.

“Jersey City is unique. It’s one of the YIMBY-ist cities in the country in terms of actual building permits per person,” Armlovich told Insider. “They’re one of the only reasons that New York, generally as a region, is not more unaffordable than it is.”

Posted in Crisis, Demographics, Economics, Gold Coast, New Development, New Jersey Real Estate, NYC | 56 Comments

Sorry renters

Posted on September 29, 2023 by grim

From RentCafe:

Competition for Apartments Intensifies in Midwest This Rental Season, but Miami Holds Onto 1st Place

While the Midwest is flexing its muscle in peak rental season, we’re seeing rising competition in the Northeast,as well. The main reason for this is New York’s remarkable progress in recovering from the pandemic’s economic effects: The city is very close to fully restoring its employment levels, according to a recent report by the NYC Economic Development Corporation.

However, New York is not an affordable place to live, so North Jersey (RCI score 113) is the perfect choice for people who want to live close to the attractions in the Big Apple, but who are not willing to pay steep living costs. Thus, North Jersey is the third-most competitive rental market nationwide and the hottest renting spot in the Northeast.

Including places like Jersey City and Newark — as well as smaller locations scattered across the counties of Bergen, Essex, Hudson, Morris, Passaic, Sussex and Union — America’s third-most competitive rental market is still seriously undersupplied, even with a 1.19% increase in recently built apartments. That’s why 71.4% of renters here renewed their leases, pushing the occupancy rate to 96.3% in peak rental season. On average, available units are occupied within 34 days, with 15 prospective renters competing for one vacant apartment.

Coming in 11th nationwide, Brooklyn, NY, is a hot renting spot for those who love the thrill of New York Cityas it offers a great combination of more affordable housing than Manhattan, in addition to convenience and amenities. Here again, the borough’s supply of apartments is far from keeping up with demand: Recently built units only account for 0.16% of the total housing stock, which prompted two-thirds (66.2%) of renters to stay put this summer. This led to an occupancy rate of 96.1% in peak rental season. Meanwhile, the average vacant apartment is filled within 38 days, with nine people competing for it.

What’s more, the number of office workers returning to Manhattan is on the rise, which is helping boost the local economy and create jobs — all while fueling competition for rental apartments. So, Manhattan joins our top 20 for the first time since the pandemic, claiming 13th place. Plus, with zero apartments opened recently, 66% of apartment dwellers chose to stay put during peak rental season. As a result, Manhattan has an occupancy rate of 94.7%. There are also nine renters vying for each vacant unit, which becomes occupied within 38 days, on average.

Posted in Demographics, Economics, Employment, Housing Bubble, New Jersey Real Estate, NYC | 119 Comments

GenX poised to take the lead

Posted on September 28, 2023 by grim

From the NYT:

The Greatest Wealth Transfer in History Is Here, With Familiar (Rich) Winners

Trillions of dollars in family wealth are set to be passed down in the next few years — and the transfer will largely reinforce U.S. inequality. Total family wealth in the U.S. has tripled since 1989, reaching $140 trillion in 2022.

Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred in the next decade. The top 10% of households will be giving and receiving a majority of the wealth. The top 1% — with about as much wealth as the bottom 90%, — will dictate the broadest share of the money flow. The bottom 50% will account for 8% of transfers. A reason there are such large soon-to-be-inherited sums is the uneven way boomers benefited from price growth in the financial and housing markets. The average price of a U.S. house has risen about 500% since 1983, when most were in their 20s and 30s.

There are few aspects of economic life that will go untouched by the knock-on effects of the handover: Housing, education, health care, financial markets, labor markets and politics will all inevitably be affected.

Posted in Demographics, Economics, National Real Estate, Unrest | 112 Comments

Welcome Back!

Posted on September 27, 2023 by grim

From CNN:

US home prices rose in July to record-high levels

US home prices continued to rise in July, hitting a new record high and marking the sixth successive month of gains, as historically low inventory pushes up the cost of a home.

Prices rose 0.6% from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index released Tuesday.

Compared to a year ago, the national composite index also rose, with prices up 1% from July 2022, the prior peak, according to Case-Shiller data. It was followed by home prices that fell through January of this year, declining by 5% over those seven months.

“The increase in prices that began in January has now erased the earlier decline, so that July represents a new all-time high for the National Composite [index],” said Craig Lazzara, managing director at S&P Dow Jones Indices, in a statement.

What’s more, he added, the recovery in home prices is broadly based. As was the case last month, 10 of the 20 cities in the sample have reached all-time high levels. In July, prices rose in all 20 cities after seasonal adjustment.

Cities with the most price appreciation in July from the year before were Chicago, up 4.4%; Cleveland, up 4.0%; and New York, up 3.8%. The same three cities also saw the most appreciation in June.

At the other end of the spectrum, the cities with the largest price year-over-year price drops in July were in the West. Prices in Las Vegas were down 7.2% from a year ago and in Phoenix prices were down 6.6%.

The Midwest, where prices were up 3.2% in July from a year ago, continues to see the most price strength. It is followed by the Northeast, up 2.3%. The West, where prices are down 3.8% from a year ago, and the South, with prices down 3.6%, continue to see annual price declines.

National home prices have risen 5.3% since January, but the monthly increases are not as big as they were earlier this year. This is because higher mortgage rates have put pressure on affordability, said Selma Hepp, chief economist at CoreLogic.

Posted in Crisis, Economics, Housing Bubble, National Real Estate | 117 Comments

Because Garden State Plaza Needs 1400 Housing Units

Posted on September 26, 2023 by grim

From Costar:

Unibail Seeks To Add Roughly 1,400 Housing Units to New Jersey Flagship Mall

Unibail-Rodamco-Westfield said it plans to build up to nearly 1,400 residential units as part of the major redevelopment and diversification of its large mall in North Jersey, one of the flagship U.S. properties that the global retail landlord decided to keep and is now looking to spruce up.

Paris-based URW and its co-developer Mill Creek Residential, based in Boca Raton, Florida, have kicked off the process of seeking local approvals from the Paramus Planning Board for their reimagining of the Westfield Garden State Plaza, one of the largest malls in New Jersey and a top-performing mall in the United States. The next borough hearing on the development is slated for Oct. 5.

URW, the owner and operator of shopping malls and other real estate in Europe and the United States, unveiled plans for the mall’s transformation into a mixed-use property in May 2019, with Mill Creek coming on board in August 2022. The vision is to create a town center, a community hub for a sprawling suburb, with new residences and green space complementing Garden State Plaza’s existing retail, dining and entertainment offerings.

The first phase entails the construction of about 575 luxury apartments that “will be integrated with the shopping center via a one-acre town green for residents, visitors, and shoppers to enjoy, and will also introduce a main street outdoor district featuring restaurants and everyday conveniences and services,” according to URW. An additional 809 residential units are on the horizon, the company said.

URW is one of a number of large retail landlords — a group that includes Simon Property Group and Pennsylvania Real Estate Investment Trust — that are busy diversifying their malls by adding new uses such as multifamily housing, fitness centers, hospitality properties, office space and healthcare locations. The goal is to attract foot traffic for the site’s retailers and other tenants.

Posted in Economics, Housing Bubble, New Development, New Jersey Real Estate, Where's the Beef? | 150 Comments

Good or Bad?

Posted on September 25, 2023 by grim

From NJ Spotlight:

Reconciling rising unemployment and strong job growth: NJ’s uncertain fiscal outlook

New Jersey’s unemployment rate has steadily risen over the past year and now ranks among the highest in the nation. But while some economists and others suggest that’s a cause for concern, the topline numbers may not tell the full story.

The state unemployment rate has soared from 3% to 4.2% over the past year, according to the latest jobs report released by the state Department of Labor and Workforce Development.

That easily tops the national jobless rate of 3.8%. It also puts New Jersey among the states with the highest unemployment rates in the country, with Nevada topping out at over 5%.

Yet at the same time, New Jersey has also enjoyed healthy employment gains over the past year. Nearly 70,000 jobs have been added over the prior 12 months, according to the latest jobs report.

Also running slightly ahead of last year’s pace in August were monthly state income tax collections, reflecting what Department of Treasury officials called a “steady job market” in a recent news release.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 71 Comments

All your money are belong to us

Posted on September 24, 2023 by grim

From CNBC:

These are the U.S. states with the highest property taxes—New York and California aren’t in the top 10

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 46 Comments

Sales slump, prices still rising

Posted on September 22, 2023 by grim

From ABC News:

Home sales fell again in August as homebuyers grapple with rising mortgage rates

Sales of previously occupied U.S. homes fell for the third month in a row in August, as higher mortgage rates, rising prices and a dearth of properties on the market shut out many would-be homebuyers.

Existing home sales fell 0.7% last month from July to a seasonally adjusted annual rate of 4.04 million, the National Association of Realtors said Thursday. That’s below the 4.10 million pace that economists were expecting, according to FactSet.

Sales slumped 15.3% compared with the same month last year and are down 21% through the first eight months of the year versus the same stretch in 2022.

Meanwhile, prices rose again last month, propped up by buyers competing for a near-record low inventory of homes on the market.

The national median sales price rose 3.9% from August last year to $407,100, marking the third month in a row that the median price remained above $400,000. Last month’s median sale price is also the fourth-highest on records going back to 1999.

“Home prices continue to march higher despite lower home sales,” said Lawrence Yun, the NAR’s chief economist. “Supply needs to essentially double to moderate home price gains.”

Even as rising mortgage rates force many buyers to the sidelines, the shortage of homes for sale has kept the market competitive, driving bidding wars in many places, especially for the most affordable homes.

Buyers snapped up homes last month typically within just 20 days after the properties hit the market, and about 31% of homes sold for more than their list price.

“Sales are down, people are struggling to buy a home, but prices are going up,” Yun said.

Posted in Demographics, Economics, Housing Bubble, Mortgages, National Real Estate | 115 Comments

Can’t afford to buy here, can’t afford to rent here

Posted on September 21, 2023 by grim

From Patch:

Most Expensive Places To Rent In NJ: Some Pay Over $3K Per Month

Here are the 20 most expensive places to rent in New Jersey:

Demarest Borough (Bergen County): $3,501
Shrewsbury Borough (Monmouth County): $3,403
Short Hills (Essex County): $3,279
Harrington Park (Bergen County): $3,188
Liberty Corner (Somerset County): $3,075
Oakhurst (Monmouth County): $3,068
Packanack Lake (Passaic County): $3,059
Finesville* (Warren County): $3,050
Pompton Plains (Morris County): $2,987
Tenafly Borough (Bergen County): $2,985
Mountainside Borough (Union County) $2,926
Franklin Lakes Borough (Bergen County): $2,866
Troy Hills (Morris County): $2,820
Cedar Knolls (Morris County): $2,790
Ho-Ho-Kus Borough (Bergen County): $2,773
Blackwells Mills (Somerset County): $2,697
Cliffwood Beach (Monmouth County) $2,640
Oceanport Borough (Monmouth County): $2,639
Florham Park Borough (Morris County): $2,632
Ten Mile Run (Somerset County): $2,605

Posted in Economics, New Jersey Real Estate | 140 Comments

Wages Up!

Posted on September 20, 2023 by grim

Seems like given the current inflation conditions, we’re in a politically advantageous time to push for minimum wage increases without much noise:

Florida’s minimum wage increases this month

Montgomery County Introduces Bill To Phase Out Tipped Minimum Wage

Connecticut’s minimum wage to increase on Jan. 1. What will the new wage be?

Industry and Labor Serve Up $20 Minimum Wage Deal For Fast Food Workers

Chicago’s tipped workers to get minimum wage

Galloway: Biden should raise minimum wage to $25

Minimum wage could raise to $25 for California health care workers

Ohio Democrats introduce bill that would raise the state’s minimum wage

Maine minimum wage to increase in 2024

Sen. Cassidy backs bill to raise federal minimum wage

In a Hot Job Market, the Minimum Wage Becomes an Afterthought

Posted in Economics, Employment, National Real Estate | 24 Comments

Hike or Stay?

Posted on September 19, 2023 by grim

From the NYT:

Fed Creeps Toward Next Phase in Its Fight Against Inflation

Federal Reserve officials are expected to leave interest rates unchanged at their meeting on Wednesday, buying themselves more time to assess whether borrowing costs are high enough to weigh down the economy and wrestle inflation under control.

But investors are likely to focus less on what policymakers do on Wednesday — and more on what they say about the future. Wall Street will closely watch whether Fed policymakers still expect to make another interest rate increase before the end of the year or whether they are edging closer to the next phase in their fight against rapid inflation.

Central bankers have already raised interest rates to a range of 5.25 to 5.5 percent, the highest level in 22 years. By making it more expensive to borrow to buy a house or expand a business, they are trying to slow demand across the economy, making it harder for companies to charge more without losing customers and slowing price increases.

Officials predicted in their last quarterly economic forecast — released in June — that they were likely to make one more rate increase before the end of 2023. They have kept that possibility alive throughout the summer even as inflation has begun to fade meaningfully. But key policymakers have sounded less intent on making another move in recent weeks.

The Fed’s chair, Jerome H. Powell, had suggested in June that further adjustment was “likely.” More recently, including during a closely watched speech in August, he said policymakers could nudge rates up “if appropriate.”

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 119 Comments

I prefer the term over-asset’ed

Posted on September 18, 2023 by grim

From Fortune:

House poor is back: ‘the new normal for the foreseeable future’

While many first-time home buyers struggle to afford a down payment on a house in today’s market, one of the long-term affordability issues centers on monthly payments resulting from escalating mortgage rates. The current 30-year fixed-rate mortgage is 7.18%, according to Freddie Mac, a stark difference from the sub-3% rates seen during the early days of the pandemic.

The surging mortgage rate results in higher monthly payments for new buyers. Indeed, monthly payments are up 60% (or $871) year-over-year, according to real estate data and analytics firm Black Knight. The average monthly principal and interest payment for borrowers on a 30-year fixed rate loan in July 2023 was more than $2,300, which is the highest average principal and interest payment on record, according to Black Knight.

Now, more than half of homebuyers face a monthly mortgage payment of at least $2,000, while one-fourth are paying $3,000 or more, Black Knight data shows. Meanwhile, average U.S. monthly earnings in July 2023 were just $4,600, according to economic data firm CEIC. That means some home owners could be spending more than 60% of their paychecks on their mortgage.

Keep in mind that principal and interest figure is before factoring in expenses like property taxes and insurance.

“When did the $2,000 monthly mortgage payment become the norm?” questions Andy Walden, Black Knight vice president of enterprise research in the report. “Nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief.”

Based on current mortgage rates, average income levels, and home prices, most first-time home buyers using a “minimal” down payment could be paying more than 40% of their monthly income toward housing, says Buck Horne, director of equity research, homebuilding and residential REITS at Fortune 500 investment banking firm Raymond James.

“All else equal, that number certainly looks unsustainable relative to long-term averages closer to 30%,” Horne tells Fortune.

Posted in Crisis, Demographics, Economics, Housing Bubble, Mortgages | 60 Comments

Tick Tick Tick

Posted on September 17, 2023 by grim

From NJ1015:

NJ ADDS JOBS, UNEMPLOYMENT RATE EDGES UP

New Jersey’s unemployment rate ticked up in August.

The New Jersey Department of Labor and Workforce Development announced on Thursday that the number of jobs in the state grew by 12,300 in August, including a seasonally adjusted gain of 5,6000 public-sector jobs, mostly at the local level.

Meanwhile, the state’s unemployment rate increased to 4.2%, from 3.9% in July, due to more residents joining the labor force and fewer residents being employed, NJDOL said.

The state’s unemployment rate was 3% in August 2022.

In the private sector, job gains were recorded in seven out of nine major sectors: leisure and hospitality; professional and business services; education and health services; other services; manufacturing; information; and financial activities.

Over the past year, New Jersey added 67,300 “nonfarm jobs” — the distinction excludes certain groups such as farm workers and private household employees, but still accounts for 80% of workers who contribute to the economy.

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