Where could they all be hiding?

Posted on June 19, 2014 by grim

From NPR:

Sluggish Housing Market A Product Of Millions Of ‘Missing Households’

A year ago, the housing market looked like it was finally recovering. Sales and prices were picking up. But then home sales fizzled. Currently, they are down about 7 percent from last spring.

A big part of why housing remains so stunted is that there are more than 2 million “missing households” in the U.S. That’s how economists describe the fact that fewer people are striking out on their own to find places to live.

Instead of renting an apartment or buying a home, a large number of Americans in their 20s and early 30s are living with family or tripling up with roommates. That’s because younger Americans are having an especially tough time since the recession.

“We would love to buy a house right now, but we just don’t have anything saved currently,” says 26-year-old Marissa Szabo.

Szabo works in Boston at the Office of the State Auditor. At lunch, she sits outside Massachusetts’ grand State House, with its big golden dome. But in the evening, she crams into an apartment she’s renting with several roommates who are also in their 20s.

“At the most, I’ve had five [roommates]. I currently have three,” Szabo says. “I’ve never been able to consider getting a place by myself just because of how high the rent is.”

The high cost of renting is one of the things that have made life tougher for Szabo and other millennials.

Szabo is ready to settle down and move in with her boyfriend. He is 28 years old and they are talking about getting married and having kids. They feel like they are done with the roommate stage of life.

“We’re starting our lives together,” Szabo says. “We wanted it to be together and not together plus eight or three or however many.”

But high rents, combined with student debt and stagnant wages, have made it very tough for young people to save money for a down payment to buy a house.
…
So, like other millennials, they turned to their friends and family. Szabo and her boyfriend have decided to move in with her mother, who has an extra bedroom. That will let them save up for a down payment to buy a house in a year or two.

“My mom has been so awesome and supportive about it,” Szabo says. “She doesn’t want rent or anything like that. We’ll help with utilities and we’ll do some repairs around the house for her.”

In the past few years, economists have said millennials who live with parents or roommates represent pent-up demand. They argue that soon these young people will move out and become first-time homebuyers. This, in turn, creates more jobs and helps the whole economy.

The only problem with this scenario: It hasn’t actually happened yet.

Posted in Demographics, Economics, Housing Recovery | 97 Comments

May housing construction disappoints

Posted on June 18, 2014 by grim

From the WSJ:

U.S. Housing Starts Fall 6.5% in May

A gauge of new-home construction fell in May after several months of gains, the latest sign of the housing sector’s uneven recovery.

Housing starts fell 6.5% in May to a seasonally adjusted annual pace of 1.001 million, the Commerce Department said Tuesday. That marked the first decline in four months and was bigger than the 3.7% drop forecast by economists.

The decline was broad-based across regions and type of construction. Single-family housing starts fell 5.9%, while multifamily fell 7.6%. April’s surge in home building was revised down slightly to 12.7% growth from 13.2%.

“Housing has yet to establish clear upward momentum again,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Newly approved applications for building permits, an indicator of future construction, fell 6.4% in May to 991,000 on a sharp decline the volatile multi-family segment.

But in one bright spot, single-family permits jumped 3.7% to 619,000, their fastest rate of increase since September 2012. Single-family construction represents the bulk of the housing market and is considered a better gauge of demand.

In a note to clients, economists from IHS Global Insight described the rise in single-family permits as “one nugget of very good news.”

Overall, Tuesday’s report showed that the road to recovery for the housing industry remains a bumpy one. Home building came roaring back in 2012 and the early part of 2013, only to be derailed by a rise of mortgage rates and a run-up in home prices that sidelined many prospective buyers. An unusually cold winter further depressed housing-market activity over the winter months.

Posted in Demographics, Economics, Employment, Housing Recovery | 66 Comments

Firming up, or temporary blip?

Posted on June 17, 2014 by grim

From HousingWire:

FNC Residential Price Index shows home prices are firming up

Home prices are beginning to stabilize despite weaker-than-expected home sales in the recent months, according to FNC.

The FNC Residential Price Index, which does not include distressed properties, recorded a growth of 0.6% from March to April. According to FNC’s report, the index’s year-over-year change has moderated for a second consecutive month since February. FNC suggests that this is a sign that the annual rate of home price appreciation has peaked.

“Low interest rates and continued declines in home foreclosures contribute to the price gain amid weak housing activity and modest economic growth,” FNC’s report says.

FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes. As a gauge of underlying home values, the RPI excludes final sales of REO and foreclosed homes, which are frequently sold with large price discounts, likely reflecting poor property conditions.
…
FNC’s RPI reports that May’s average asking price rose 2.3% from April and the month’s asking-price discount was 2.2%, down from April’s 2.4%.

Posted in Demographics, Economics, Housing Recovery | 55 Comments

Jersey Underperforms

Posted on June 16, 2014 by grim

From the Record:

New Jersey’s economic recovery still wobbly

The New Jersey economy has so far replaced just about 40 percent of the jobs it lost from the recession.

In contrast, Connecticut has replaced 55 percent, Pennsylvania has replaced nearly all, and New York had done so by late 2012, adding 150,000 jobs since.

So how does New Jersey’s lackluster job creation square with figures released by the federal government last week that showed the state’s economic output grew faster last year than any of its three neighbors?

Economists say the longer-term trend shows that New Jersey’s GDP and job growth — as well as those of some nearby states — still clearly trail the nation’s. And the state’s recovery remains stymied by a lack of room for growth and the declines of key industries.

These issues are central to New Jersey’s economic picture as the state struggles with a jobless rate that — at 6.9 percent — is worse than those of all but eight states.

Because the GDP figures released by the U.S. Bureau of Economic Analysis will be revised, economist say the difference between New Jersey and its neighbors is not very meaningful. The state’s GDP grew 1.1 percent in 2013, while Connecticut’s grew 0.9 percent, and New York and Pennsylvania’s grew 0.7 percent. GDP represents the monetary value of all finished goods and services produced.

Yet the three-year trend, from 2011 to 2013, also shows New Jersey’s output was stronger than its employment performance would suggest. The trend shows that New Jersey’s output growth — about 3.2 percent over the period — was only slightly behind Pennsylvania’s growth of 3.3 percent and New York’s 3.7 percent. All three outpaced Connecticut’s growth of 1 percent over three years.

That doesn’t convince Joel Naroff, chief economist at Naroff Economic Advisors of Pennsylvania, who said the figures merely show that the states are all behind the nation, which had GDP growth of 1.8 percent in 2013. The national GDP grew by 6 percent from 2011 to 2013.

New Jersey and Pennsylvania in particular are “underperforming,” he said.

“Jobs are being created, but at a very disappointing pace in both,” he said. “It is just a weak economic recovery, both in absolute terms and in comparison with the nation.”

Patrick O’Keefe, director of economic research at CohnReznick in Roseland, said New Jersey’s weakness is demonstrated by the state’s faltering GDP growth since the start of the recession, at the end of 2007.

New Jersey’s inflation-adjusted GDP is still slightly below the 2007 figure, while the U.S. GDP is 4.7 higher than the pre-recession peak, O’Keefe said. New York’s also is higher than the pre-recession figure, by 5.9 percent, as is Pennsylvania, which is 3.5 percent higher. Connecticut, meanwhile, is 5.2 percent below the 2007 level.

The figures also showed that New Jersey’s GDP in 2012, 2.6 percent, matched the national growth of 2.5 percent, but when the U.S. GDP declined to 1.8 percent in 2013, New Jersey’s plunged faster, to 1.1 percent.

“Objectively, there is no question that in 2013, New Jersey grew at a faster pace than Connecticut, New York and Pennsylvania,” O’Keefe said. But, he added, “cumulatively, one year is not a trend.”

New Jersey and Connecticut’s poor performance stems in part from their being high-income, high-cost states that have little easily developable land available, and that makes it tough to attract new businesses, O’Keefe said.

Posted in Demographics, Economics, Housing Recovery, New Jersey Real Estate | 99 Comments

Mr. Makowsky builds his dream house

Posted on June 14, 2014 by grim

From the NYT:

A ‘Money Pit’ No More

The Long Island mansion used for “The Money Pit,” the 1986 comedy starring Tom Hanks and Shelley Long about the ultimate fixer-upper fiasco, is poised to go on the market for $12.5 million. The annual property taxes on the home are $65,992.

The eight-bedroom 1898 house in Lattingtown, N.Y., has been totally redone, meticulously designed and decorated with a Versace-esque flair. The three-story white clapboard home has a center hall and is reached through a gated entrance and down a quarter-mile-long rhododendron-lined drive to a white-pebble motor court. “It’s now the anti-‘Money Pit,’ ” said Shawn Elliott of Shawn Elliott Luxury Homes & Estates, the listing broker. “The home was restored at the highest quality.”

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When the movie was shot, the home was owned by Eric Ridder, a publisher and a member of the American yachting team that won the gold medal at the 1952 Olympics. Front and back exteriors of the home, which is bracketed by symmetrical wings and is known as Northway, appear in the movie; most of the interior scenes were staged in a studio. Still, the current homeowners, Rich and Christina Makowsky, who bought the 5.4-acre estate in 2002, said their experience imitated art.

“We didn’t realize how bad it was,” said Mr. Makowsky, a shoe manufacturer and distributor. “The house was falling apart when you went from room to room. We definitely could have done the sequel.”

A crew of 30 spent a year and a half gutting the house, taking down ceilings, ripping out the cast-iron radiators, redoing the plumbing, heating and electrical systems, installing a cedar roof that cures to gray, not brown, and restoring the home to the splendor of Long Island’s Gilded Age.

Posted in Humor | 38 Comments

So when do we see the boomer migration?

Posted on June 13, 2014 by grim

From HousingWire:

Where are Baby Boomers moving? Absolutely nowhere

Some 10,000 Baby Boomers reach retirement every day, exiting a world dependent on jobs and kids and into a new lifestyle that drastically adjusts their housing choices, a commentary by Patrick Simmons, director with the Economic and Strategic Research Group of Fannie Mae, said.

The common perception is that the generation born between 1946 and 1964 is starting to downsize from suburban single-family homes to urban multifamily residences as they become empty nesters.

But this assumption is not true, and in fact, the truth is quite the opposite.

Simmons explained, “Despite these life transitions, one key metric of boomer housing consumption – the proportion of the population residing in a single-family detached home – has yet to decline.”

And instead of the downsizing perception, the percent of Baby Boomers residing in single-family detached homes was at least as high in 2012 as at any time since the onset of the housing crisis.

This trend even includes the oldest members of the boomer generation, who have largely exited the childrearing stage and begun to retire in large numbers.
…
Furthermore, boomers are increasingly stepping away from the workforce. Between 2006 and 2012, the proportion of all boomers who were not in the labor force increased by 9 percentage points.

But despite all these variables, this generation is not leaving their detached single-family homes, but why?
…
1. They could simply love their current home.
…
2. Economic conditions and housing conditions force Baby Boomers to stay put.
…
3. They might not be able to find a home to buy.

Posted in Demographics, Economics, National Real Estate | 45 Comments

Job growth or corporate welfare?

Posted on June 12, 2014 by grim

From the NYT:

A Tug-of-War of Tax Breaks Tightens Across the Hudson

Late last fall, bankers from BNY Mellon went to state officials in New York and New Jersey with a proposition: The bank was planning to sell its headquarters on Wall Street and was looking for office space on either side of the Hudson River for more than 1,100 employees.

The bankers wanted to know who would cut the best deal.

In New Jersey, Gov. Chris Christie’s administration responded quickly with a hefty offer — nearly $100 million worth of tax credits — if the bank would move one mile west to Jersey City.

New York countered with its own incentive package that real estate executives say is worth millions of dollars if the bank remains in Lower Manhattan.

The bank is leaning toward New York, real estate executives say, but no victor has been announced and officials on both sides of the Hudson refused to discuss the high-stakes negotiations.

The tug-of-war is the latest skirmish in what is becoming a fierce competition between New York and New Jersey to heap subsidies on some of the country’s wealthiest corporations as enticements. With a struggling labor market, jobs are precious to both states, but in New Jersey there is also a political factor: Mr. Christie is widely presumed to be a contender for the Republican presidential nomination and has promoted himself nationally as a prudent financial steward.
…

So while offering incentives to businesses is a common practice across the country, New Jersey has been extraordinarily generous under Mr. Christie, awarding over $4 billion in subsidies — tax breaks and credits — since 2010 to JPMorgan Chase, Forbes, American Dream Meadowlands, RBC Capital and other corporations. But that also raises questions about how well Mr. Christie is managing the state’s economy, since many critics argue subsidies are an ill-advised use of taxpayer money that fail to yield significant economic benefits.

The $4 billion is also far higher than the $1.2 billion in incentives the state granted in the previous 10 years. The figures are included in a report published on Wednesday by New Jersey Policy Perspective, a liberal policy organization whose analysis was based on data from the New Jersey Economic Development Authority.

Some of the subsidies went to companies already in New Jersey — Panasonic got $102.4 million to move its headquarters nine miles within the state. New York State, by comparison, has provided more modest incentives.

Mr. Christie has used every deal to trumpet his success at job creation. “JPMorgan Chase Bank’s decision to choose New Jersey exemplifies our enhanced ability to compete in the regional, national and global economy,” the Economic Development Authority said in a news release issued last month after the state’s decision to provide the bank with $224.8 million in tax credits over 10 years.
…
The average cost of the subsidy package has soared to $75.9 million from $10.1 million and the amount of tax forgiveness per promised job has jumped to $47,916, from $16,430, according to New Jersey Policy Perspective. Just this week, the state announced $82 million in tax breaks to the Philadelphia 76ers basketball team to move its training facility from Pennsylvania to Camden.

“We’ve never seen anything like this,” said Gordon MacInnes, the president of Policy Perspective, “where such large chunks were granted to a handful of corporations.”

Posted in Economics, Employment, Politics | 90 Comments

Getting better?

Posted on June 11, 2014 by grim

From CNBC:

Americans finally feel better about economy: Survey

After seven long years of sharp recession and tepid recovery, the CNBC All-America Economic Survey found some key measures of U.S. public opinion finally regained their precrisis levels.

Ninety-one percent of Americans now believe their home prices will either be stable or rise over the next year, the highest since March 2007. And for the first time in three years, Americans picked real estate ahead of gold as the best investment.

Respondents also said they will spend about as much on a summer vacation as they did before the recession, following a sharp drop during the financial crisis.

That optimism comes with greater hopes among respondents for their paychecks: Thirty-eight percent believe their wages will rise in the next year, the highest percentage since December 2008.

Meanwhile, pessimism declined. Only 33 percent of those polled judge the current state of the economy as poor, equaling the December 2007 low and a five-point decrease from the March study’s results.
…
The survey wasn’t all good news, though. It also showed that some critical measures of optimism continue to lag. Just 18 percent say the economy is good or excellent, virtually unchanged from March and eight points below the prerecession level.

Americans expect home price gains of just 2.2 percent over the next year, a little more than half of the expectation from the more optimistic days in 2007. The outlook for wage gains is a healthy 3.5 percent for the postrecession period. But before 2008, Americans regularly expected wage gains between 5 percent and 7 percent annually.

Posted in Demographics, Economics, Employment, Housing Recovery | 102 Comments

The Screwed Generation?

Posted on June 10, 2014 by grim

From the WSJ:

Lost Generation Casts Shadow Over Housing Market

President Barack Obama’s executive order Monday expanding student-debt relief is the latest sign policy makers recognize the serious economic burdens young adults face. But the modest change is unlikely to move the needle in ways that matter to investors.

The financial crisis exacted a heavy toll on the generation of Americans now entering their 30s. Facing difficult job prospects, little-to-no income growth and a historically unprecedented level of student loans, their finances are in a more precarious state than those of prior generations. That has cut into their ability to buy a first home, and is a major reason the housing recovery continues to disappoint.

Nor is the situation likely to improve. The possible results: Banks will see tepid demand for mortgages. Home sales and single-family home construction will be stuck below historic norms. Demand for goods like furniture and appliances, as well as services such as home repairs, will grow only slowly. And housing will continue to add less to the economy than in the past.

Start with the balance sheet of people in their 20s. Thanks to the expansion of the number of students attending college, and its rising cost, the share of 25-year-old Americans with student debt has grown to more than 44.7% last year from 25% in 2003, according to the Federal Reserve Bank of New York. The average amount of that debt expanded by 69.2% over that period.

Meanwhile, the drag from that debt on the ability of younger Americans to get a home loan has been growing. Before the crisis, the average credit score for people in their 20s and early 30s with student loans exceeded peers without such debt.
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Together, these numbers mean it is more difficult for Americans to get a mortgage and make their initial home purchases. Ten years ago, 32% of those aged 27 to 30 years old had home loans. By last year, that had fallen to 21%. Homeownership rates for 25- to 34-year-olds have fallen from 49% in 2003 to 41.6% last year, according to the Commerce Department, steeper than the drop for older groups of Americans.

What’s more, the median income for Americans aged 25 to 34 has advanced more slowly than incomes overall, and has fallen over the past decade, adjusting for inflation. As a result, the recent rise in home prices has made homes less affordable for them relative to other Americans, despite mortgage rates that are still low by historical standards.

Their travails could have knock-on effects. Since the housing ladder’s bottom rung is in bad repair, demand for homes—as well as mortgages, furniture and appliances—may remain depressed for some time. Current homeowners may have a tougher time selling in the future.

Posted in Demographics, Economics, Employment, National Real Estate | 124 Comments

Spring market a success or a bust?

Posted on June 9, 2014 by grim

From the Record:

Spring housing market: Prices are up but number of sales is down

Two weeks after the Vermeulen family put their Woodcliff Lake home on the market this spring, they had a signed contract.

The Burghoffer family also sold their house, on Greenwood Lake in West Milford, this spring — but that sale took more than a year and a half.

As the two deals suggest, this spring’s housing market has been uneven, with some towns that are hot and some that are not. Overall, prices are up, but the number of sales is down from 2013, which was the healthiest spring since before the housing bust.

“There’s no question that home-buying activity is slower this year than last year,” said Jeffrey Otteau, a widely followed East Brunswick appraiser who tracks the market statewide. He said that from January through April, home sales were down about 10 percent statewide. (The New Jersey Association of Realtors reports a similar sales drop for Bergen and Passaic counties.)

The slowdown in activity surprised Otteau, who said, “I thought the momentum in 2013 was going to carry over to 2014.”

The spring market is an important bellwether for real estate because it’s traditionally the busiest time of year. Many people like to move in the summer, so their children can start at their new schools in September.
…
Even with the drop in sales, Otteau said prices are up statewide about 4.8 percent in the first quarter over the comparable period last year — and up a stronger 9.6 percent in Bergen County and 5.8 percent in Passaic.

A lot of real estate agents blame the cold, snowy winter for delaying the start of the spring market, which — despite its name — typically gets under way in February.

“It took sellers a lot longer than expected to get their homes ready for the spring market because of the long, harsh winter, so many sellers are just getting their homes on the market now,” said Ron Aiosa, a Coldwell Banker agent in Butler.

“You might get a delayed spring market,” said John Pordon, a Century 21 agent in Totowa. “The spring market might be in the summer.”

But Otteau said that other factors were at play this spring, including higher prices, which made homes less affordable; tight inventory, which gave buyers fewer choices; mortgage lending standards that remain strict, which have shut many potential buyers out of the market.

The market’s overall profile masks a patchwork — some towns are hot, agents say, and some are not. Buyers snap up properties in towns with lower property taxes, commuter-rail access to New York City or the highest-ranked school systems. A number of real estate agents say they’ve never been busier and that well-priced, well-maintained homes often attract multiple offers because there are not enough of them on the market.
…
“This has been my best spring since the crash in 2008,” said Rita Lutzer, a Re/Max agent in Saddle River, who sells a lot of homes in Ramsey.

“Once the warmer temperatures hit in March, activity went through the roof on listings and sales, especially in the price range of $300,000 to $450,000,” said Barbara Ostroth of Coldwell Banker in Oradell.

Other agents see a more subdued market.

“I just don’t think it’s as busy as it should be for this time of year,” said Margrit Vogler, a Coldwell Banker agent in Oradell. She sees a lot of activity in towns with lower property taxes, like Paramus, but less movement in others.
…
But those buyers have fewer choices this year. Inventory has been tight, especially of well-priced, well-maintained homes.

According to the New Jersey Association of Realtors, the supply of homes for sale in April was down 12.5 percent from a year earlier in Bergen and down 8.6 percent in Passaic. The reason: Homeowners are unwilling to list their homes because they can’t get the prices they need or want. In particular, homeowners who bought during the housing boom often owe more on their mortgage than the home is worth.

“They can’t sell their houses for a price high enough to pay off the existing mortgage and leave them with equity,” Otteau said.

Although the low supply has begun pushing up prices, buyers are wary of overpaying after seeing how earlier buyers were hurt in the recent housing boom and bust. Even with recent increases, property values in the region are still an average 20 percent below their peaks, according to Otteau and the S&P/Case-Shiller home price index — though Otteau said prices have recovered more in Bergen County than in the state as a whole.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 75 Comments

Ahh, to be young again

Posted on June 7, 2014 by grim

From the NYT:

Young and in Debt in New York City

For young people, moving to New York City hasn’t made much mathematical sense for decades. The jobs don’t pay enough, the internships don’t pay at all, and the rents are prohibitive by any sane standard.

But now add a new economic fact of life to that list: soaring student loan debt. More students are taking out bigger loans than ever before, and in the last 10 years alone, education debt tripled, reaching over $1 trillion. A record number of college students are graduating knee deep in a financial hole before they begin their adult lives.

Still, new research suggests that college is working, economically. Four years on campus nets the average graduate almost twice as much in wages as someone without a degree. Those odds may be comforting in the long run, but not when you’re young, deeply in debt and trying to nest in New York City.

For many people in college and recently out of it, the pressure of debt seems to be colliding in new ways with the problem of finding a place to live in the city, adding a layer of complication to something that was already plenty complicated.
…
Data released by the Federal Reserve Bank of New York suggests that the relationship between student loan debt and the housing market has turned ugly fast. People with student debt used to buy homes at higher rates than peers who had not taken out loans, partly because going to college meant earning more money, according to the report.

But in 2012, the New York Fed reported that for the first time in at least a decade, 30-year-old student borrowers were less likely to take out home mortgages than other young people. Among people around 30 years old, homeownership was plunging fastest for student debtors.

Economists are worried. Last month, former Treasury Secretary Lawrence Summers said that student loan debt was taking the life out of the housing recovery, and the Nobel laureate Joseph Stiglitz called the rising debt “an educational crisis” that is “affecting our potential future growth.”

Posted in Demographics, Economics, Employment, Housing Recovery | 30 Comments

Trulia: Asking prices begin to slow

Posted on June 6, 2014 by grim

From HousingWire:

The home price explosion has stopped

Everyone loves it when home prices go up, right? Higher asking prices mean that homeowners will get more out of their existing homes, which makes them more likely to sell and upgrade to a larger home. Larger home means larger mortgages. And that’s a win-win for everyone in this business, right?

But exploding home prices aren’t necessarily a good thing. “Extreme price increases create unrealistic expectations, encourage flipping, and might discourage some owners from selling if they expect big increases to continue,” said Trulia’s chief economist Jed Kolko.

However, here’s the good news. The asking prices for homes are still increasing, but prices are beginning to stabilize. According to Trulia’s Price Monitor report for May, none of the 100 largest metros had a year-over-year price gain of more than 20%. That’s the first time that’s happened since July 2012.

Kolko said that’s a very good thing.

“Today, with no markets seeing price gains of more than 20% and only four markets seeing price declines, home price changes are looking more balanced, sustainable and widespread than at any point since the price recovery began,” Kolko said.
…
The four markets where asking prices are on the decline are El Paso, Texas; Hartford, Connecticut; Albany, New York; and Little Rock, Arkansas.

Posted in Economics, Housing Recovery, National Real Estate | 103 Comments

June Beige Book

Posted on June 5, 2014 by grim

From the Federal Reserve:

Beige Book – June 4, 2014 – New York

Economic activity in the Second District has continued to grow at a moderate pace since the last report. Prices of finished goods and services remained generally stable, and businesses report modest upward pressure on input prices. Manufacturers report that business activity has picked up considerably in recent weeks, while service sector firms indicate a mixed performance. Labor market conditions have shown signs of firming across a broad range of industries, with scattered reports of labor shortages. Both general merchandise retailers and auto dealers report that sales have been steady to stronger since the last report. Tourism activity has strengthened, no longer held back by harsh weather. Housing markets showed further signs of improvement, while commercial real estate markets were generally steady. Finally, banks report fairly widespread increases in demand for loans–especially mortgages; credit standards are little changed, while delinquency rates are steady to down modestly.
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Economic activity in the Second District has continued to grow at a moderate pace since the last report. Prices of finished goods and services remained generally stable, and businesses report modest upward pressure on input prices. Manufacturers report that business activity has picked up considerably in recent weeks, while service sector firms indicate a mixed performance. Labor market conditions have shown signs of firming across a broad range of industries, with scattered reports of labor shortages. Both general merchandise retailers and auto dealers report that sales have been steady to stronger since the last report. Tourism activity has strengthened, no longer held back by harsh weather. Housing markets showed further signs of improvement, while commercial real estate markets were generally steady. Finally, banks report fairly widespread increases in demand for loans–especially mortgages; credit standards are little changed, while delinquency rates are steady to down modestly.
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The labor market has strengthened further since the last report. A growing proportion of both manufacturers and service-sector firms say they have added workers in recent weeks, and considerably more business contacts plan to expand than reduce employment in the months ahead. Separately, two major New York City employment agencies report that hiring activity has continued to pick up, driven in part by the financial sector. One contact says hiring is stronger than it has been in six years. There continues to be a shortage of IT workers, while companies are also having increased difficulty finding other workers whose skills closely match the job description. While salary increases remain subdued, one employment agency contact notes that many candidates are getting multiple offers and that this may be starting to put some upward pressure on salaries.

Posted in Economics, Employment, Housing Recovery, North Jersey Real Estate | 118 Comments

Most exciting places in Jersey? Discuss.

Posted on June 4, 2014 by grim

From Movoto:

These Are The 10 Most Exciting Places In New Jersey

If you’re in New Jersey and you’re bored, you’re obviously doing something wrong. Just look around—this state is absolutely full of awesome places to be and awesome things to do. Festivals, bars, theme parks, beaches, the list goes on and on.

So, who tops the list as the most exciting place in the state?
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1. City of Hoboken
2. Borough of Palisades Park
3. City of Long Branch
4. Atlantic City
5. City of Trenton
6. City of New Brunswick
7. City of Hackensack
8. City of Clifton
9. Union City
10. Jersey City
…
How We Got Excited About Getting These Results

First off, we made a list of the 50 most populated places in New Jersey, based on the 2010 U.S. Census. There were a few places we couldn’t find any data for, so if your city is missing, that’s why. We then used the Census and business listings to gather info in eight different criteria:

Nightlife per capita (bars, clubs, comedy, etc.)
Live music venues per capita
Active life options per capita (parks, outdoor activities, etc.)
Arts and Entertainment per capita (movie theaters, festivals, galleries, theaters, etc.)
Fast Food restaurants per capita (the fewer the better)
Percentage of restaurants that are not fast food (the higher the better)
Percentage of young residents ages 18 to 34 (the higher the better)
Population density (the higher the better)

Posted in Humor, New Jersey Real Estate | 123 Comments

Housing recovery for the one percenters

Posted on June 3, 2014 by grim

From Forbes:

Are The One Percent Making The Housing Recovery Look Stronger Than It Actually Is?
(Click for Graphs)

Like nearly every economist on the planet, I am reading Thomas Piketty’s Capital in the 21st Century. I am still getting my head around his theoretical argument, but his empirical analysis strikes me as quite strong, and it is grounded in remarkable scholarship (aka detective work).

One of the reasons I Piketty’s findings about growing wealth inequality easy to believe is the dynamics of the high-end real estate market around the world. Manhattan, Kensington in London, The Peak in Hong Kong, Altamont Road in Mumbai, etc. have stratospheric price levels, owing to the fact there is a limited supply of such places and that the people who want them have increasing wealth to purchase them.
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What does this have to do with measuring the housing recovery? The most commonly cited index, the Case-Shiller Index, is a value weighted index: million dollar houses have more weight in the index than $200,000 houses. So let’s do a simply example: suppose that two houses sell in 2013 and 2014. The first sells for $200,000 in both years; the second sells for $1,000,000 in the first year and $1,500,000 in the second year. If we were using a transaction weighted index, the average prince increase would be 25 percent (0 percent for the first house and 50 percent for the second). But with a value weighted index, we put together a “portfolio” of houses and see that the total value increased from $1,200,000 to $1,700,000, or a shade under 42 percent.
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Notice that while there has been substantial recovery from the trough, prices in the lowest tier have not gotten back to the pre-crash peak–in fact, they are still down 1/3 from their all time highs.
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The level is just below the all time peak. So the housing market at the top is doing much better than the housing market at the bottom (it is doing better than the middle, too). Even if all sectors of the housing market were weighted equally, a single index number of house prices in San Francisco will overstate the strength of the recovery for most people; with a value weighted index, that strength is overstated even more.

Posted in Demographics, Economics, Housing Recovery | 123 Comments