I think she just called you lazy … and boring.

Posted on March 13, 2013 by grim

From HousingWire:

Millennials prefer a ‘fixer-upper’ to a cookie cutter home

The Millennials, recently deemed the next generation of homebuyers, have earned a new nickname for themselves: the Fix-It Generation.

According to a national survey released by Better Homes and Gardens Real Estate, 72% of Millennials (those born between 1982 and 2002) consider themselves just as handy — if not more so — than their parents.

Of those surveyed, 77% would prefer purposeful homes equipped with the technological capabilities many of us have grown accustomed to versus the “cookie cutter” luxury homes our parents’ generation wanted.

As soon as I read this, it made sense. I’ve written before about my personal home search experience. You see, I am a part of the Fix-It Generation, as we’re apparently being called now. My husband and I are targeting homes in an established North Texas suburb.

My preferred suburb is notorious for housing the wealthy and is considered a very safe and settled city. About 15 minutes up the road is a much newer city, where you can get more home for your money. You’re also farther from major highways as well as inconveniently farther from our favorite sushi place.

So my husband and I made a decision to look for an older home in the established – closer to work – suburb, which we considered a much better location, rather than finding a newer home a few miles up the road.

Posted in Demographics, Economics, National Real Estate | 166 Comments

Thank the Rich

Posted on March 12, 2013 by grim

From NJ Spotlight:

Christie’s Luck: Income Tax Surge Bails Out Budget

Three months ago, Gov. Chris Christie’s budget was in deep trouble. His revenue forecasts for FY2012 and FY2013 had come up a total of $750 million short. Standard & Poor’s had downgraded New Jersey’s revenue picture from “stable” to “negative,” and nobody knew what the real budget impact of Hurricane Sandy would be.

Today, however, thanks to a surge in income tax payments by wealthy taxpayers cashing out before federal tax hikes and cashing in on a bull market, it’s clear that Christie has dodged what could have been a major fiscal nightmare heading into his November reelection.

Yes, the Republican governor had to downgrade his revenue forecast for the year by $406.3 million and push off paying $396 million in property tax rebates until August, giving Democrats ammunition for the fall campaign. And yes, he did have to give up the income tax cut that was the centerpiece of last year’s budget speech.

But it could have been a lot worse.

Christie’s bold projection of an 8.3 percent revenue surge in FY2013 was built on assumptions of a broad-based “New Jersey Comeback,” an economic boom that would transform a state that had the fourth-highest unemployment rate in the nation and had ranked 47th in economic growth for two years in a row.
Christie’s bullishness led him to certify a budget built on more than 25 percent growth in corporate taxes and realty transfer fees, an 18 percent jump in casino revenues, 15 percent more from the lottery, 13 percent higher inheritance taxes, a 6.1 percent jump in sales taxes, and 5.7 percent in income taxes.

Eight months into the fiscal year, corporate taxes, inheritance taxes and casino winnings are all running lower than last year, and even motor vehicle and gas taxes are down, reflecting a weak economy. But despite an unemployment rate that still ranks among the highest in the nation, New Jersey’s income tax collections are soaring.
…
It is just the latest example of the disconnect between New Jersey income tax collections and the overall economy in a state whose highly progressive income tax structure and heavy reliance on healthy Wall Street financial markets creates its own boom-and-bust state budget cycle.
…
Wealthy taxpayers in New Jersey and other states pushed hundreds of millions of dollars of income into 2012 to avoid paying higher taxes in 2013 and future years. On January 1, the top tax bracket on individuals earning over $400,000 and families above $450,000 rose from 35 percent to 39.6 percent, and capital gains taxes jumped from 15 percent to 20 percent.
…
New Jersey’s approximately 16,000 millionaires paid $2.289 billion — or 26.4 percent — of the $8.686 billion in income taxes collected in 2010, the last year for which the Department of Treasury provided its detailed Statistics of Income report.

Overall, the top 20 percent of taxpayers, who make over $100,000, paid $7.263 billion, or more than 85 percent of total income taxes that year.
…
Most states, including New York, have significant income tax rates kick in at $25,000 or less, but not New Jersey, whose effective income tax rate on those earning under $75,000 is the lowest of any of the 43 states that have a state income tax.

It didn’t start out that way. New Jersey’s original 1977 income tax, pushed through by Democratic Gov. Brendan T. Byrne under a school-funding order from the state Supreme Court, was a virtual “flat tax,” with a 2 percent rate on income under $20,000 and 2.5 percent above that – not much different from the 3.07 percent flat rate that Pennsylvania currently imposes on both families and individuals.

Each of the five elected governors that succeeded Byrne made changes in the state income tax structure that made the system more progressive and thus increased reliance on wealthy taxpayers.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 131 Comments

Deep pockets needed to cash in on Sandy deals

Posted on March 11, 2013 by grim

From the AP:

Homebuyers Searching for Real Estate Deals in Hurricane Sandy Wreckage

It sounds like the premise for a new reality TV series: “Hurricane House” — people scouring waterside communities looking to buy homes damaged by Hurricane Sandy at a deep discount. While there are bargains out there, ranging from 10 percent off pre-storm prices for upscale homes on New York’s Long Island and the Jersey Shore to as much as 60 percent off modest bungalows on Staten Island and Queens, it’s still very much a game of buyer beware.

Not only are buyers on the hook for repairs and in some cases total rebuilds, they’re also wading into a host of potentially expensive uncertainties about new flood maps and future insurance rates, zoning changes and updated building codes. “It’s totally changed the way I sell real estate,” said Lawrence Greenberg, a sales associate with Van Skiver Realtors, whose own Mantoloking, N.J., office was wrecked in the storm.
…
There is no sign of a mass exodus from shoreline communities. The number of for-sale listings in January in the 380 Zip codes hit by the storm was about 2 percent below the same time last year, according to online real estate information company Zillow. That indicates that most homeowners are rebuilding, or have not yet decided how to proceed. But real estate agents in New York and New Jersey say the majority of homes for sale in these areas have some damage from the Oct. 29 storm, and it appears to them that a rising number are being put on the market as the spring home-buying season approaches.

New listings range from destroyed oceanfront properties being sold for the land, to flooded bayside homes untouched since the storm that must be gutted. Even the few undamaged homes in affected neighborhoods are listing at prices about 10 percent lower than they would have been pre-storm. Some sellers are overwhelmed by the daunting prospect of restoring a damaged home. Some are older homeowners who had stayed in the houses where they raised their families, but now are relocating. Some didn’t have flood insurance.

“They either don’t have the funds or don’t have the energy to go through the renovating and rebuilding process,” said Jeff Childers, a broker with Childers Sotheby’s International Realty in Normandy Beach, N.J.

Posted in Housing Recovery, Shore Real Estate | 74 Comments

How to get paid to live in a $1m house

Posted on March 10, 2013 by grim

From MarketWatch:

How luxury-home owners dodge foreclosure

When the owners of high-end homes fall way behind on their mortgage payments, foreclosure is not a foregone conclusion.

Lenders can be more willing to craft a new payment plan to make high-dollar homes more affordable. Paperwork and procedures are also often delayed, keeping homeowners in some states in their homes for two or more years after they’ve stopped making mortgage payments. And in some cases, lenders are offering homeowners tens of thousands of dollars in cash in exchange for their agreeing to a short sale, in which a home is sold for less than the borrower owes on the mortgage.

Repossession rates show the difference. Last year, roughly 85% of homes worth up to $1 million that received default notices were eventually repossessed, according to RealtyTrac, which tracks real-estate data. For homes worth more than $1 million, about 28%, or around 1,400 homes, were repossessed.

For lenders, it’s worth the extra effort to avert foreclosure on luxury properties. They incur substantial expenses holding these homes, including paying property taxes, maintenance costs and, often, homeowners’ fees. The homes are also more difficult to sell, since fewer buyers can afford to purchase them. And when lenders eventually unload them, it’s often at a loss. “Lenders have more of an incentive to work out payment plans for these borrowers than with the ones [whose homes] may move quickly,” says Jon Maddux, co-founder of YouWalkAway.com, which helps borrowers, including luxury homeowners, in default or foreclosure.
…

Separately, some lenders will encourage owners to consider a short sale. Armando Tiongson Jr. of Rockaway, N.J., says Bank of America recently offered him and his wife up to $30,000 in cash to sell their 4,100-square-foot home, which they purchased for roughly $1 million in 2006, in a short sale. Tiongson, an IT program manager, says he and his wife haven’t paid their mortgage in 18 months after the monthly payments on their loan, which initially required just interest payments, spiked. By offering this cash in exchange for a short sale, Bank of America says it can reduce the losses that would kick in if the loan goes to foreclosure. (The bank adds that it has been making such cash offers to homeowners of all loan levels since last year.)

The Tiongsons are going to take the bank up on its offer and sell. “We are going in for the short sale mainly to avoid foreclosure,” Tiongson says. “The cash option is really just a benefit.”

Posted in Foreclosures, New Jersey Real Estate | 33 Comments

Bailouts finally working?

Posted on March 9, 2013 by grim

From HousingWire:

Programs save 1.5 million homeowners: Obama Housing Scorecard

The Obama Administration’s foreclosure mitigation programs continue to provide relief for millions of homeowners in the housing recovery.

As a result, the Making Home Affordable Program has assisted more than 1.5 million distressed borrowers since its inception in 2009, the Obama Administration said in its February Housing Scorecard report.

HOPE Now lenders alone offered families and individuals more than 3.4 million proprietary mortgage modifications from the program’s beginnings through December 2012.

The Home Affordable Refinance Program also grew, continuing to offer homeowners affordable and sustainable relief to avoid foreclosure.

As of January, more than 1.1 million homeowners received a permanent modification through Home Affordable Modification Program, saving $546 on their monthly mortgage payments, and an estimated $17.9 billion altogether, the report noted.

Homeowners currently in permanent HAMP modifications were granted about $9.2 billion in total principal reduction. Of all non-agency loans eligible for principal reduction entering HAMP in January, 69% received a principal writedown.

The Federal Housing Administration has offered more than 1.6 million in loss mitigation and early delinquency interventions since the launch of HAMP.

In January, more than 105,000 second-lien modifications were completed through the Second Lien Modification Program. Additionally, more than 114,000 homeowners exited their homes through a short sale or deed-in-lieu of foreclosure with the assistance of the government’s Home Affordable Foreclosure Alternatives Program.

Posted in Economics, Housing Recovery, National Real Estate, Politics | 20 Comments

March Beige Book

Posted on March 6, 2013 by grim

From the Federal Reserve:

Beige Book – March 6, 2013 – Second District–New York

Economic activity in the Second District has continued to expand at a moderate pace since the last report. Business contacts report some pickup in input price pressures but relatively few say they are increasing their selling prices. The labor market has shown scattered signs of improvement: manufacturers report an upturn in hiring, and a major employment agency notes increasingly strong demand for temps. Retailers report that sales have generally been strong and ahead of plan in January and early February. Auto sales in upstate New York were also described as robust since the beginning of the year. Tourism activity has been mixed but generally strong thus far in 2013, with hotels getting an additional boost from displaced residents and recovery workers in the aftermath of Superstorm Sandy. Both residential and commercial real estate markets showed signs of improving since the last report. Finally, bankers report increased loan demand, no change in credit standards, further narrowing in loan spreads, and lower delinquency rates on commercial loans and mortgages.
…
Construction and Real Estate

Residential real estate markets in the District have shown signs of improvement in recent weeks. A major appraisal firm reports that New York City’s co-op and condo market has remained surprisingly active in early 2013, following an exceptionally strong fourth quarter. Apartment sales are up strongly from a year ago, and tight inventories are starting to nudge up prices across the board. One contact notes that year-end inventory levels were the lowest he has seen in more than 12 years. The apartment rental market, however, has leveled off; after rising at a roughly 5-10 percent rate in 2012, rents on apartments in both Manhattan and the outer boroughs are estimated to be running just 1-2 percent ahead of a year ago in early 2013.

An expert on northern New Jersey’s housing market reports a pickup in activity and an improvement in the general tone of the market, describing the current season as the best since 2007. Residential builders are reported to be increasingly optimistic–they anticipate a substantially better year than 2012 and are investing more heavily in new projects. Single-family construction is seen as picking up, as multi-family construction retains momentum. While there remains a large overhang of foreclosed and distressed properties, many of these are expected to be snapped up by investors. Realtors in the Buffalo area report continued favorable conditions in the housing market: prices have risen steadily at a moderate pace, inventory levels are fairly low, and sales activity has been steady.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 169 Comments

CoreLogic: New Jersey Home Prices Positive (Case Shiller to follow)

Posted on March 6, 2013 by grim

From CoreLogic:

CoreLogic Home Price Index Rises by Almost 10 Percent Year Over Year in January

CoreLogic® (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its January CoreLogic HPI® report. Home prices nationwide, including distressed sales, increased on a year-over-year basis by 9.7 percent in January 2013 compared to January 2012. This change represents the biggest increase since April 2006 and the 11th consecutive monthly increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 0.7 percent in January 2013 compared to December 2012*. The HPI analysis shows that all but two states, Delaware and Illinois, are experiencing year-over-year price gains.

Excluding distressed sales, home prices increased on a year-over-year basis by 9.0 percent in January 2013 compared to January 2012. On a month-over-month basis, excluding distressed sales, home prices increased 1.8 percent in January 2013 compared to December 2012. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that February 2013 home prices, including distressed sales, are expected to rise by 9.7 percent on a year-over-year basis from February 2012 and fall by 0.3 percent on a month-over-month basis from January 2013, reflecting a seasonal winter slowdown. Excluding distressed sales, February 2013 home prices are poised to rise 11.3 percent year over year from February 2012 and by 1.8 percent month over month from January 2013. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

“The HPI showed strong growth during the typically slow winter season,” said Mark Fleming, chief economist for CoreLogic. “With these gains, the housing market is poised to enter the spring selling season on sound footing. The improvements are materializing across the country, with all but Delaware and Illinois showing increasing HPI and 15 states within 10 percent of their peak values.”


Posted in Economics, Housing Recovery, New Jersey Real Estate | 96 Comments

Fiserv – Bold Forecast?

Posted on March 5, 2013 by grim

Hat tip to the reader who provided me with the Fiserv Home Price forecast data:

Metro Area / 2013-2014 Forecast / 2012 – 2017 Annualized Forecast
Atlantic City-Hammonton, NJ Metropolitan Statistical Area / 0.4% / 1.9%
Camden, NJ Metropolitan Division / 6.4% / 4.5%
Edison-New Brunswick, NJ Metropolitan Division / 2.1% / 2.6%
Newark-Union, NJ-PA Metropolitan Division / 5.9% / 4.1%
Ocean City, NJ Metropolitan Statistical Area / -0.3% / 2.1%
Trenton-Ewing, NJ Metropolitan Statistical Area / 7.5% / 6.5%
Vineland-Millville-Bridgeton, NJ Metropolitan Statistical Area / 6.6% / 5.3%

From UPI:

Home prices expected to rise at least 3.3 percent annually through 2017

Both home prices and home sales volumes increased steadily last year, making 2012 the first positive year for both prices and sales since the housing market crash, excluding gains induced by the home buyer tax credits in 2009 and 2010.

“Although some recent real estate activity has been speculative, it seems as if buyers have more realistic expectations about housing market returns after having lived through the largest housing market crash in U.S. history”

“2012 was the first year since 1997 that the housing market has resembled something recognizable as normal. For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology,” said David Stiff, chief economist, Fiserv. “Back in 1997, housing prices grew 3 percent, just below the 5 percent long-term average rate of appreciation. From 1998 to 2006, prices appreciated at levels above 5 percent, with double-digit price increases in many of those years. Then, after 2006, the market collapsed as euphoria turned to panic. It took until the end of 2011 before housing markets finally started to stabilize. The latest Case-Shiller results show a return to a historically normal pace of price appreciation in the last year.”

The recovery in home prices has been solid and broad-based. At the end of the 2012 third quarter, prices were rising in approximately 62 percent of all U.S. metro areas, compared to 12.5 percent in the same period a year ago. Average U.S. home prices increased 3.6 percent from the third quarter of 2011 to the comparable period of 2012. Many of the metro areas that suffered the most severe declines during the housing market crash enjoyed the highest price increases in that period.

Fiserv Case-Shiller projects that by the end of 2013, home prices will be rising in nearly every metro area in the U.S. Some markets may experience short-term double-digit price jumps that could be partially reversed by price declines as large tranches of bank-owned inventory (REO) are liquidated. In other markets, price appreciation will slowly return to normal rates as home buyers regain confidence that the market has found its footing.
…
The Fiserv Case-Shiller Indexes, which include data covering thousands of zip codes, counties, metro areas and state markets, are owned and generated by Fiserv. The historical and forecast home price trend information in this report is calculated with the Fiserv proprietary Case-Shiller indexes, supplemented with data from the FHFA. The historical home price trends highlighted in this release are for the 12-month period that ended September 30, 2012. One-year forecasts are for the 12 months ending on September 30, 2013. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 87 Comments

People still want to live here?

Posted on March 4, 2013 by grim

From the Star Ledger:

Brooklynites planting roots in the Garden State

It’s almost like a dating service for people looking for a home. It starts with answering an involved questionnaire that poses the usual questions, such as how many bedrooms and bathrooms are you looking for.
But then it gets a bit more personal: Where did you grow up? What did you love-hate about it? What’s your work schedule like? How do you spend your summers? What type of commute do you prefer — train, boat, bus, car?

It’s a holistic approach to house shopping for people who want to leave the big city hassles, but not the city experience. It’s for folks who want to live in a neighborhood where the barista knows their name.

James and Samantha Cordon filled out the questionaire by Suburban Jungle Realty Group, a Manhattan-based real estate brokerage geared exclusively to helping New York City dwellers adjust to a move to the ’burbs.

According to U.S. Census Bureau data, about 41,450 New Yorkers crossed the Hudson River to plant their roots in the Garden State in 2011.

The Cordons were among the 2012 crop of transplants. They lived in the Park Slope section of Brooklyn for 10 years. He’s originally from Minnesota, and she grew up in Randolph. They met in college at Colgate University, found jobs in Manhattan, married and moved to Brooklyn.

“It was a great neighborhood,” James Cordon said. “It had old brownstones, great restaurants, great bars, great everything.”

But then along came their daughter, “and as soon as she started to walk,” he said, “we felt the walls collapse on us. It was a space issue.”

Alison Bernstein, founder of Suburban Jungle Realty Group, said a significant portion of her business comes from Brooklyn, the once-trendy but now almost-as-pricey alternative to Manhattan.

“We work with a significant number of Brooklyn buyers,” she said, “and typically what I hear is, ‘I don’t want to be in the suburbs, I want a Brooklyn-y type environment.’ ”

She points them north to Connecticut, east to Long Island, and west toward New Jersey.

“New Jersey is always very popular with us,” she said, mentioning towns like Montclair and Cedar Grove that have a chic feel and easy access into Manhattan.

The Cordons found their home in Glen Ridge and moved from a “great”-but-cramped condo into a six-bedroom house with a fenced-in yard.

“We loved Park Slope,” said Cordon, a financial adviser with Morgan Stanley, “but we also loved Glen Ridge because it had a nice urban vibe that hearkened back to Brooklyn.”

Posted in Demographics, Economics, New Jersey Real Estate | 147 Comments

North Jersey Contracts – February 2013

Posted on March 2, 2013 by grim

Here it is! The first look at pending home sales (contracts) for Northern NJ.

(Source GSMLS, except Bergen- NJMLS) – Updated with 2011 Data

February Pending Home Sales (Contracts)
——————————-

Bergen County
February 2011 – 490
February 2012 – 564
February 2013 – 682 (Up 20.9% YOY, Up 39.2% Two Year)

Essex County
February 2011 – 221
February 2012 – 313
February 2013 – 364 (Up 16.3% YOY, Up 64.7% Two Year)

Hunterdon County
February 2011 – 90
February 2012 – 92
February 2013 – 126 (Up 40.0% YOY, Up 40.0% Two Year)

Morris County
February 2011 – 264
February 2012 – 320
February 2013 – 403 (Up 25.9% YOY, Up 52.7% Two Year)

Passaic County
February 2011 – 138
February 2012 – 153
February 2013 – 215 (Up 40.5% YOY, Up 55.8% Two Year)

Somerset County
February 2011 – 176
February 2012 – 201
February 2013 – 270 (Up 34.3% YOY, Up 53.4% Two Year)

Sussex County
February 2011 – 68
February 2012 – 106
February 2013 – 125 (Up 18.0% YOY, Up 83.8% Two Year)

Union County
February 2011 – 204
February 2012 – 273
February 2013 – 292 (Up 7.0% YOY, Up 43.1% Two Year)

Warren County
February 2011 – 59
February 2012 – 69
February 2013 – 92 (Up 33.3% YOY, Up 55.9% Two Year)

Posted in Economics, Housing Recovery, North Jersey Real Estate | 24 Comments

January Otteau Report

Posted on March 1, 2013 by grim

From the Otteau Group:

NJ Contract-Sales Activity Starts Off Strong in 2013

Following 2 consecutive months of single digit gains, home purchase activity in New Jersey soared in January with a 23% y-o-y increase in signed purchase-contracts. The smaller gains in November and December were attributable to after-effects of Hurricane Sandy. What makes this rise especially impressive is that it occurred so early in the year, signaling an early start to the seasonal Spring surge in home purchase demand. Considering that purchase-contracts recorded a 31% y-o-y increase in January-2012, demand has increased by an astounding 61% over the past 2 years.

Shifting to the supply side of the equation, unsold inventory began the year at its lowest level since the housing crisis began in 2006.Unsold Inventory in the state has declined by 19% since January of last year, equating to 11,000 fewer homes on the market. The current level of Unsold Inventory equates to 8.1 months of sales (non-seasonally adjusted) compared to 12.3 months one year ago. Expect the home purchase market to continue to strengthen despite the cloud of sequestration that is currently hanging over Washington. That mortgage interest rates have drifted slightly higher recently is likely to accelerate this trend as buyers rush to take advantage of lower rates.

Further evidence of the housing rebound comes from rising home prices. After lagging the rest of the nation, home prices in New Jersey increased in the 4th quarter of 2012 by 2.91%. This follows steady improvement in the home purchase market over the past 18 months, and marks the first home price increase in the state since the 4th quarter of 2010.

A separate analysis in Northern New Jersey has indicated that home prices have held up better in northern New Jersey towns with train station service to Manhattan. Since peaking in 2006, the decline in commuter towns like Glen Rock and Ridgewood has been about half as much compared to other drivable-suburban places. This dynamic is consistent with a European model for housing demand wherein transportation efficiencies are of increasing importance.

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

January Pending Sales up 9.5% year-over-year

Posted on February 27, 2013 by grim

From Bloomberg:

Pending Sales of U.S. Existing Homes Rise More Than Forecast

Contracts to purchase previously owned U.S. homes climbed more than forecast in January, a sign the industry will keep strengthening this year.

The index of pending home resales increased 4.5 percent to 105.9, the highest level since April 2010, after a revised 1.9 percent drop the prior month, a report from the National Association of Realtors showed today in Washington. The median forecast in a Bloomberg survey called for a 1.9 percent advance.
…
“Things are getting better in housing,” Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. JPMorgan was the second-best forecaster of pending home sales over the past two years, according to data compiled by Bloomberg. “Low mortgage rates, an improving economy and an improving job market are helping demand. With home prices rising, most people who’d waited for prices to bottom will want to buy now.”

From HousingWire:

Pending home sales hit two-year high: NAR

Pending home sales rose in January and continued a 21-month trend of growing from year ago levels, the National Association of Realtors said.

The company’s latest pending home sales index suggests the housing recovery is gaining momentum.

The January NAR Pending Home Sales Index hit its highest reading since April 2010 when the index reached 110.9. Aside from spikes induced by homebuyer tax credits in 2010, the last index high before 2010 occurred in February 2007 when NAR’s index reached 107.9, the association said.

The NAR pending home sales index – which measure contract signings on homes – increased 4.5% to 105.9 in January, compared to a score of 101.3 in December. That index score is also still 9.5% above January 2012 when the index hovered at 96.7.

The data reflects only signed contracts, not actual property closings.

Inventory is the key to this year’s housing market, said Lawrence Yun, NAR’s chief economist.

Posted in Economics, Housing Recovery, National Real Estate | 100 Comments

Deeper look into local home prices

Posted on February 27, 2013 by grim

From the WSJ:

Housing Signals Mixed

While buyers have been fighting over expensive Manhattan apartments and prices rose across the rest of the country, single-family home prices were drifting lower across the New York metropolitan area, according to new data reported by Standard & Poor’s Case-Shiller index.

The index differed significantly from more-upbeat local reports in both New York and New Jersey toward the end of last year. The other reports showed considerable signs of strength and an improvement in median sale prices, amid declining inventory in both states.

Analysts attributed the contrasting results to differences in methodology and timing, as well as a faster pace of foreclosures in New York and New Jersey, at a time when they are slowing elsewhere in the country. Sales delayed by superstorm Sandy may have also had an impact.

The Case-Shiller index found that home prices across the region fell by just over 0.5% in the 12 months through December compared with a year earlier. Prices rose in all of the other 19 metropolitan areas tracked by the index during the same period, signaling a stronger national housing market.
…
Sales in the New York region fared better than much of the country during the downturn, but the area has performed worse in recent months, according to the Case-Shiller report. It showed local prices sliding each month since August, for a total decline of 2.7%.

Yet despite the ups and downs of the last decade, prices were up 43% in the New York metropolitan area since 2001, compared with 30% for the 20-city index as a whole during that period.

A few weeks ago, Jeffrey G. Otteau, an appraiser and founder of Otteau Valuation Group, reported that strong job growth had led to a “steady improvement in the home purchase market” in New Jersey over the last 18 months. He said median prices were up 2.9% in the fourth quarter, compared with the same quarter in 2011.

In an interview, Mr. Otteau said that monthly measurements of home prices “are unstable to begin with.” He said that Sandy had triggered a decline in sales both along the damaged shorelines and in many nearby communities as well.

Now, he said, the foreclosure process is accelerating as well, and distress sales often depress housing prices. New Jersey ranks second after Florida for largest percentage of mortgaged homes in the foreclosure process. It had 7% in foreclosure in December. New York ranked third with 5.8%, according to CoreLogic.

Last month, Douglas Elliman reported median sale prices were up 3.2% on Long Island, excluding the Hamptons, in the fourth quarter compared with the same quarter a year earlier, but prices were down from the third quarter.

Jonathan Miller, an appraiser and president of Miller Samuel Inc., who prepared the Elliman report, said that the Case-Shiller data tended to lag behind data available within a local market.

The Case-Shiller index is calculated from changes in prices on individual homes as they are resold during a moving three-month period. Craig Lazzara, a senior director at S&P Dow Jones Indices, said the index includes foreclosure sales conducted on the open market.

He attributed the weak local housing market to New York’s dependence on the financial sector, where the recovery in “its hometown” industry has been slow.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 98 Comments

Case Shiller Day!

Posted on February 26, 2013 by grim

Due out at 9!

From the WSJ:

Shiller’s Bottom Line: Risk Lingers in Housing.

WSJ: Did we finally hit a floor in home prices last year?

Mr. Shiller: The trend in home prices seems to be up now. It has been going up. That’s upward momentum, which by my general rule of forecasting has been good for the future. I’ve been tentative about that. It may well be the turning point.

But I’m not sure about that. I’m more worried than most people that it could be a short-lived turnaround. It could be like the 2009-10 upturn where we saw home prices rising right after President Obama took office and right after the home-buyer tax credit was instituted. In that upturn there were some cities that did quite spectacularly. And then that fizzled. I’m not too sure that this one will extrapolate either.

WSJ: Why are you more worried than most people?

Mr. Shiller: Part of the reason the indexes have gone up is because the foreclosure boom has receded. Foreclosed homes sell at a lower price, and the share of those sales has been falling. People might be deceived by this by looking at the indexes. The question is whether the gains will be sustained.

There isn’t any sign of the real enthusiasm we saw during the last bubble. The question is whether this could be the very vague beginning of a new boom? I guess it could. I just don’t know. Then there are issues with what the government does to support housing. They’re doing everything they can. They say they’re going to stop some day. When will people start worrying about that?

WSJ: There are some people who look at the double-digit annual price increases in Phoenix and elsewhere and wonder whether we’re seeing new “mini-bubbles.” Is that a concern you share?

Mr. Shiller: Home prices are back down to a reasonable level. Why should they go up a lot? It means you have to have a succession of eager buyers that would bid them up. Historically major bubbles tend to occur at widely separate intervals. Once it bursts, usually, historically, people are fed up for a long time.

WSJ: Could it be possible that prices are rising by double digits in these places simply because they fell below their long-term relationship with incomes and rents, and are now bouncing back off of that?

Mr. Shiller: Phoenix overshot. Prices got too low. In real terms it was down well over 50%, maybe close to 60%. Now it’s bumped up. It doesn’t look out of line either way now.

WSJ: What do you make of the investor activity in the market right now? A lot of these buyers are all cash buyers—no leverage—buying on rental return. Are you worried about any return of speculative purchases?

Mr. Shiller: In a housing debacle, I’m sure some houses are underpriced, and there is probably a profit opportunity for some people who are going to choose carefully. I’m not surprised that this is going on. There seems to be a shift in public tastes for the time being at least for rental. So this business doesn’t surprise me. It seems to be an appropriate response.

WSJ: For somebody with a stable job, who plans to live somewhere for more than a few years, is this a good time to buy a house?

Mr. Shiller: I think it’s OK, especially because mortgage rates are so low. This isn’t a time to get a flexible-rate mortgage! Get a 30-year, fixed rate mortgage. Rates are so low. They have gone up a little, but they’re still very low. That’s a real opportunity. Prices are not particularly low, but they’re not particularly high.

WSJ: What’s your outlook for home prices?

Mr. Shiller: It’s especially hard to say. We could be looking at a 1-2% increase a year for the next five years. That’s a reasonable scenario—1-2% a year, and it might go up more than that. I don’t know. My main message is that it’s a market with risk in it. We don’t know the future. That’s the most important message to convey.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 126 Comments

No inventory because folks just don’t feel like selling?

Posted on February 25, 2013 by grim

From the WSJ:

Unlocking of Housing Market Gets Going

The house party may just be getting started.

The recovery in housing that began taking hold last year caught most economists by surprise. Even though the overall economy made only middling progress, even though there was still a mess of homeowners underwater on their mortgages and even though banks remained reticent about lending to would-bebuyers, sales and prices picked up.

The welter of housing reports slated forthis week—January new-home sales and December home-price indexes are due on Tuesday, January pending home sales come Wednesday, and January construction spending is out Friday—should reflect further improvement in the sector.
…
Yet just because housing has gotten better doesn’t mean there isn’t a lot of room for improvement. Take Tuesday’s new-home sales report from the Commerce Department. Economists polled by Dow Jones Newswires estimate a seasonally adjusted 380,000 homes were sold last month, at an annual rate. That would be better than December’s 369,000 or the year-earlier level of 339,000, but stillabout half of the average level of the 1990s.

One problem for housing is that a lot of people, despite wanting to move, have stayed put because they couldn’t stomach the low price their old house would fetch. That has put a freeze on the market, leading real-estate agents around the country to complain about a lack of inventory.

The recent move higher in prices—economists estimate that the Standard & Poor’s/Case-Shiller 20-city index on Tuesday will show a 6.6% increase in December from a year earlier— should shake some of those homeowners off the fence, says Thomas Lawler, an independent housing economist in Leesburg, Va. The busy spring-selling season that will soon get under way should witness the first significant year-over-year increase in prices since 2006.

Posted in Economics, Housing Recovery, National Real Estate | 89 Comments