But are we ready to change?

From the comments the other day, but good enough to get top page billing. From the NY Times:

As Office Parks Empty, Towns Turn Vacancies Into Opportunities

Perched off a busy road in northern New Jersey with sweeping vistas of a vast reservoir sits a new relic of the suburban panorama: the international headquarters of Toys “R” Us slogging through its final days after the company announced that it would be shutting down for good.

The decline of the toy giant prompted wistful recollections across the country of the increasingly bygone era of brick-and-mortar retail, but concern in this town quickly turned to the exoskeleton that the company leaves behind — a roughly 200-acre plot with multiple office buildings scattered across the land that once housed as many as 1,600 workers.

While the worry locally is focused in part on what an extended vacancy might mean for the town’s tax base, the fate of the once thriving headquarters illustrates a much broader reality confronting many towns across America: the era of the suburban office parks is coming to an end.

Outside Silicon Valley and other areas that have benefited from the technology boom, what were once the lifeblood of many suburbs have now become eyesores, forests of empty glass and concrete boxes that communities must figure out what to do with.

“The model as it played out in New Jersey is now seemingly obsolete,” said Louise A. Mozingo, the chairwoman of the department of landscape architecture and environmental planning at University of California, Berkeley.

Suburban office parks have lost their luster for a variety of reasons, including a growing preference among younger workers for life in more dynamic urban centers than in sometimes staid and sleepy suburbs. And the rapid pace of technological advancement has made the need for many clerical and processing jobs and the real estate to house those workers increasingly obsolete.

But it was the recession and its aftermath that sounded the death knell for many suburban parks; New Jersey lost about 100,000 office-related jobs since 2008, according to James W. Hughes, a professor at Rutgers University. By 2010, the majority of the state’s suburban office inventory was between 20 and 30 years old, built during a much more primitive information technology era.

“So, not only do we have a lot of obsolete space, but we also have workplace densification occurring at the same time,” said Mr. Hughes, referring to the move by many companies toward smaller, shared work spaces. “That’s the dilemma that really burst onto the scene maybe three years ago or four years ago.”

In the 1980s, about 90 to 100 million square feet of suburban office space was built in New Jersey, accounting for 80 percent of the state’s inventory, Mr. Hughes said. By contrast, only 50 percent of the national suburban office inventory was built in the same period.

New Jersey currently has over 6.5 million square feet of vacant office park space, according to CoStar, a commercial real estate company. In northern New Jersey, 23 percent of office space is listed as available, which includes vacant spaces and buildings that are emptying out as leases end, according to Newmark Knight Frank, a commercial real estate firm.

But vacant office parks are important to municipal coffers because they remain on property tax rolls. Yet the longer they sit vacant, the faster their assessments plummet, forcing municipalities to find other sources of revenue and in some cases raise real estate taxes in a state that already has the country’s highest property taxes.

“None of these millennials want to work in a corporate campus in western Morris County and have to commute long distances to meet their friends at a bar,’’ said Carl Goldberg, a developer who has been vocal about the redevelopment of office parks. “It’s just not the lifestyle that they’re interested in.”

In Wayne, where the Toys “R” Us logo still welcomes passers-by to the campus, Mayor Christopher P. Vergano said he believed the site would prove desirable, though possibly as something far different.

“I think there will be change,’’ he said, “only because we don’t see big corporate tenants buying 200-acre properties anymore.”

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 158 Comments

Another month, another jump in prices

From MarketWatch:

Home prices are still on a tear, Case-Shiller says

The numbers: The S&P/Case-Shiller national index rose a seasonally adjusted 0.4% and was up 6.5% compared to a year ago in March. The 20-city index rose a seasonally adjusted 0.5% and was 6.8% higher than a year ago.

What happened: Home-price growth showed no sign of slowing down. Demand is strong, supply is short and favorable economic conditions are making it possible for many people to bid prices up.

In fact, yearly price gains in the closely-watched 20-city index have accelerated every month since last June. The annual gain in the March report, which actually covers the three-month period ending in March, was the strongest since mid-2014.

Big picture: Many economists have expected headwinds like the recent tax law changes that changed home-ownership itemization, not to mention the sheer lack of inventory, to stifle the housing market, but that hasn’t showed up in pricing yet.

Posted in Housing Bubble, Housing Recovery, National Real Estate | 129 Comments

Up Up Up Up Up

From Mortgage Professional:

Mortgage rates keep climbing

Mortgage rates continued their steady climb through the week ending May 24 to reach their highest level since May 5, 2011, according to the Primary Mortgage Market Survey released by Freddie Mac.

Rates for the 30-year fixed-rate mortgage averaged 4.66%, with an average 0.4 point, up from the previous average of 4.61%. The latest average also marks an increase from the 3.95% average a year ago at this time.

The 15-year fixed-rate mortgage averaged 4.15%, with an average 0.4 point, up from 4.08%. A year ago at this time, the mortgage averaged 3.19%.

The average rate for the 5-year Treasury-indexed hybrid adjustable-rate mortgage was 3.87%, with an average 0.3 point, an increase from the previous 3.82% average. In the year ago period, the mortgage averaged 3.07%.

“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years,” Freddie Mac Chief Economist Sam Khater said. “Through May, rates have risen in 15 out of the first 21 weeks (71%), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”

Posted in Mortgages, National Real Estate | 74 Comments

Fix it, Sell it, or Get Out

From the APP:

A tool for targeting the ‘zombie houses’ of Toms River, throughout the Shore

They’re called “zombie houses,” and they can suck the life out of any neighborhood.

Zombie homes are properties whose owners have walked away from them during the foreclosure process. With New Jersey’s foreclosure process one of the longest in the nation – more than 1,000 days – abandoned houses that are in foreclosure often aren’t maintained.

Grass becomes overgrown, roofs collapse, and animals, like raccoons, possums, and even feral cats, can move in.

Just ask JoAnn Petruzel, who owns Barnacle Bill’s Amusements in Ortley Beach with her husband, Bill. Near the amusement arcade are at least two properties that haven’t been repaired since superstorm Sandy struck the beachfront community more than five years ago.

One small house on Route 35 north, shoved off its foundation by Sandy’s surge, is boarded up, its utilities disconnected. Neighbors have heard it’s for sale.

“It’s right on the highway,” Petruzel said of the small house. “It’s a shame, people come through Ortley beach, and yes, the whole landscape has changed a lot. People have built bigger, nicer homes. But when you are driving on the highway and see that, it doesn’t have a good representation.”

Toms River joins other towns, including Asbury Park and Neptune, that have adopted similar ordinances that enforce the state’s Abandoned Property Rehabilitation Act. The measure, signed into law in 2004, expedites a town’s right to intervene when owners fail to maintain their property.

Under a newly adopted ordinance, the township will create a registry of abandoned properties. Owners will be billed a $750 registration fee during the first year; that fee will rise to $2,000 if the property is still abandoned the next year, and $3,000 in the third year.

The idea, according to Township Administrator Don Guardian, is to give property owners an economic incentive to either sell the distressed home or make improvements.

The ordinance enforces the state’s Abandoned Property Rehabilitation Act, a 2004 that makes it easier for towns to intervene when owners fail to maintain their properties. Other towns along the Shore, including Neptune, Asbury Park and Brick, have adopted similiar ordinances.

“If they are going to do something positive with the house, like selling it or fixing it up, these are not the property owners we’re going to target,” Guardian said. “It’s these financial institutions, that are sitting on it for months and years, hoping that the value goes up so they can sell it.”

Posted in New Development, New Jersey Real Estate, Politics | 21 Comments

Hey Democrats, where’s our pot?

From the Washington Post:

N.J. Democrats loved the idea of taxing the rich — until they actually could do it

Democrats in the New Jersey state legislature approved a tax hike on millionaires five separate times under then-Gov. Chris Christie (R) — knowing he would veto it.

But now that the state has a liberal governor eager to sign the bill, Democratic legislators are backing off the “millionaire’s tax,” echoing some of the concerns once expressed by Christie.

“This state is taxed out. If you know anything about New Jersey, they’re just weary of the taxes,” said New Jersey State Senate President Steve Sweeney (D), lead advocate of the millionaire’s tax during Christie’s tenure, in an interview.

This blue state’s sudden allergy to taxing the rich is an ominous sign not just for Democratic Gov. Phil Murphy, who swept to office last fall promising to fund a suite of new social programs via a millionaire’s tax, but for other liberals running for statewide office this year.

Democratic candidates in several states are campaigning on higher taxes on millionaires to pay for the robust social programs increasingly demanded by the party’s base, such as universal prekindergarten, expanded health-care benefits and free community college. But the unexpectedly rocky reaction to the plan in New Jersey underscores the difficulty in implementing higher taxes on the rich, even when Democrats have full control of the government.

“It’s easy to gain popular support for the millionaire’s tax on the campaign trail, since most people wouldn’t be impacted by it,” said Elaine Maag, a tax expert at the Tax Policy Center, a nonpartisan think tank. “But in reality, it’s very difficult to raise taxes on high-income people because they tend to be very well politically connected and vocal.”

The fight in New Jersey suggests that higher taxes on the rich may be easier to campaign on than to enact.

Murphy ran for office promising universal prekindergarten and free community college. To fund these initiatives, he is partly relying on the millionaire’s tax, which would start taxing income over $1 million at a new rate of 10.75 percent. That would raise $765 million annually for state coffers, according to Murphy’s office.

Now the plan is being tested as New Jersey works to complete a budget by June 30 — or risk shutting down the state government. The budget, which also directs funding to New Jersey’s transit system, wouldn’t fulfill Murphy’s campaign promises on their own without additional tax hikes. Murphy is also pushing a sales tax hike and new taxes on ride-hailing services such as Uber and Lyft. The combined package amounts to about $1.5 billion in new taxes.

Democratic leaders in the statehouse say that is untenable. They have blamed the tax law passed by Congress last December for their reversal, saying the tax overhaul already punishes wealthy New Jersey taxpayers by capping at $10,000 the amount of state and local taxes they can deduct from their federal taxes. (Previously, the deduction was limitless.)

About 40 percent of New Jersey’s richest 1 percent also do not benefit from the tax cut on “pass-through” business entities and will therefore see a “sizable” tax hike under the law, said the spokesman, Mark Magyar.

Imposing a second round of new taxes could force many of these millionaires to leave the state, Sweeney said.

“The Trump tax increase for New Jersey changed the game for us here,” said Sweeney, who tweeted on election night last year that the millionaires tax should be the party’s first priority. “Circumstances change.”

Tax experts disagree about whether a millionaire’s tax would help New Jersey, with some conservative economists agreeing it will force rich taxpayers to flee the state. In turn, they say, that would shrink the state’s tax base and saddle the remaining middle-class taxpayers with a greater tax burden.

“We’re the most unaffordable state and least competitive, business-wise, by many metrics,” said Tom Bracken, president of New Jersey’s Chamber of Commerce. “Increasing taxes on job creators doesn’t help the situation.”

Posted in New Jersey Real Estate, Politics | 59 Comments

Fed not taking the juice away … yet

From HousingWire:

Fed changes tune on raising interest rates this year

The Federal Reserve has been forecasting an average two to four rate hikes in 2018, however the minutes from its latest meeting reveal a more dovish approach.

Many experts have been more bullish in their approach to increases to the federal funds rate in 2018, forecasting a total of four rate hikes for the year. Last year, experts even predicted the President Donald Trump’s selection for Federal Reserve Chair wouldn’t matter – the market would still see four rate hikes.

And after the administration passed tax reform at the end of last year, experts again forecasted an increase in the federal funds rate, saying it could cause the Fed to speed up rate hikes.

Now, Fed funds futures are forecasting the chances of four rate hikes in 2018 at 37%, down from the previous 40%.

This decrease in confidence for four rate hikes is due to minutes from the Federal Open Markets Committee’s May meeting, which revealed a more dovish approach to raising rates. The minutes showed that while the Fed still holds that the economy warrants gradual increases to the federal funds rate, in several Districts, contacts expressed concern about the possible adverse effects of tariffs and trade restrictions, including the potential for postponing or pulling back on capital spending.

Now, that number remains relatively unchanged as most still expect to see a rate hike next month. Traders in the federal funds futures market currently see more than a 90% chance of a June rate hike.

And May’s minutes seemed to confirm this outlook.

“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes stated.

And while many expected about three to four rate hikes in 2018 followed by about three more in 2019, Dallas Fed President Robert Kaplan said the central bank may only have four more total rate hikes before it reaches the desired neutral level.

Posted in Economics, Mortgages, National Real Estate | 124 Comments

Start looking to sell?

From MarketWatch:

Thinking of selling your home? Do it before 2020, economists say

Prospective home buyers these days are probably feeling pressure to lock in a deal quickly given skyrocketing home prices across most of the country. But those who wait a couple of years may be rewarded.

Real-estate website Zillow and research firm Pulsenomics surveyed more than 100 real-estate experts and economists — and roughly half of them predicted that the next recession will begin sometime in 2020, most likely in the first quarter. That’s actually later than the panel’s previous prediction of late 2019.

This prediction dovetails with a survey of economists carried out by The Wall Street Journal earlier this month. The economic growth that started in 2009 and is the second-longest in U.S. history will likely end in 2020, they said. “The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,” according to Scott Anderson, chief economist at Bank of the West, and one of the economists predicting a 2020 recession. Some 59% of private-sector economists in the Journal’s survey forecast a 2020 recession.

While the housing bubble prompted the last recession, experts generally agreed that real estate won’t play a major role in the next one. Indeed, the Zillow survey’s respondents estimated that home values will increase another 5.5% in 2018 to a median value of $220,800. “Housing affordability is a critical issue in nearly every market across the country, and while much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn,” Zillow senior economist Aaron Terrazas said in the report.

Even though the housing market likely won’t be the cause of the next recession, an economic downturn would still have an impact on real estate.

“Any time there are widespread job losses, particularly if these job losses are protracted, the housing market softens — even if the housing market isn’t the central cause or most prominent casualty of the downturn,” Terrazas said. “The spillover to the housing market will depend on the depth, length and severity of the next recession and, if some parts of the country feel the impact worse than others, some localized regional housing markets could see deeper effects.”

Posted in Economics, Employment, National Real Estate | 188 Comments

If you thought the Russians were sneaky…

From NJ101.5:

If you’re looking to buy a house in New Jersey be forewarned – the people selling the house may have you under secret surveillance.

As the price of video security systems like nanny cams continues to drop and the units get smaller and smaller, an increasing number of home sellers are using the devices to record the conversations of prospective buyers in order to get information that may be useful to them in the event an offer for the home is made and negotiations follow.

“I had a listing where the owner was giving me a hard time during negotiations, indicating he was staying firm on his price because he knows the buyer loved the house,” said Dekanski. “When I asked him how do you know that, he said I was watching them on the nanny cam. And since then we’ve heard of it happening time and time again.”

He said this has become such an issue that “if we know that the property is being surveilled we do have to disclose it, the problem we have sometimes is that every homeowner isn’t forthcoming with that.”

He said a growing number of homeowners do have these systems, “so we do ask, and if they do say yes then, of course, we do disclose that they (the buyers) may be under surveillance when walking the property inside and out.”

Dekanski says under New Jersey law, if someone is going to have a surveillance system operating while prospective buyers are in their home they do have to disclose and it’s illegal to record somebody on your property without them knowing.

“You absolutely have to disclose to us as agents and to the buyers and anybody walking the property that there’s a possibility they may be under surveillance.”

He notes some individuals still may keep this information a secret so when someone on his team is showing a home, “I make sure I do instruct them when they first get going with us to tell the buyer to not speak their mind as far as motivation and pricing.”

“We don’t want to necessarily discuss our motivation, how much we like the home. We don’t want to show our cards, we want to negotiate as best we can.”

Dekanski says real estate agents aren’t thrilled about the uptick in surveillance recording devices being used because it can be deceptive — but also misleading.

“The reality is a conversation somebody has in your home, from the time they have that conversation to the time they maybe actually make an offer on the property, a lot can change.”

Posted in Humor, New Jersey Real Estate | 243 Comments

Hot or Not

From the Star Ledger:

These 15 N.J. real estate markets are sizzling hot right now, spring edition

15. Hoboken
Current home value: $788,190
Yearly growth: 8.16
Hoboken is a strong city for working millennials. It’s is a little younger than the rest of the state and is almost half non-family households.

14. Spring Lake
Current home value: $1,840,061
Yearly growth: 8.82
This one’s for the retirees: a third of Spring Lake’s population is over the age of 65.

13. Alpine
Current home value: $3,044,317
Yearly growth: 10.28
Alpine is the priciest municipality measured by Zillow, so it’s surprising it has room to grow. It’s also the smallest municipality on the list, with a population of only 1,500.

12. Westfield
Current home value: $752,887
Yearly growth: 10.56
This town of 30,000 is one of the wealthiest in Union County. It also has a higher-than-average percent of married couple households, at 82 percent.

11. Montclair
Current home value: $676,734
Yearly growth: 10.62
Montclair has made a name for itself as a millennial hub with a walkable downtown area.

10. Verona
*BARGAIN ALERT*
Current home value: $484,090
Yearly growth: 10.64
Verona has the lowest home value on this list, indicating that it could be a relative bargain before its home values go up further.

9. Bradley Beach
Current home value: $558,114
Yearly growth: 10.68
Bradley Beach, a town 4,300, has a median income below the rest of the state — a rare quality on this list.

8. Summit
Current home value: $942,536
Yearly growth: 11.31
Summit’s home values are well above the rest of Union County.

7. Cresskill
Current home value: $624,987
Yearly growth: 11.96
This borough of 8,700 is nearly 90 percent married-couple households. Its median household income was $117,000, well above the New Jersey median but far from the highest in Bergen County.

6. Glen Ridge
Current home value: $678,930
Yearly growth: 12.48
This borough between Montclair and Bloomfield outpaced the growth of both towns this year, although Bloomfield is close behind.

5. Cranbury
Current home value: $730,387
Yearly growth: 12.69
This township has only 3,800 residents in its 13 square miles, and leans older and wealthier than the New Jersey average.

4. New Providence
Current home value: $659,631
Yearly growth: 14.29
New Providence has a median income almost double the rest of New Jersey. About 80 percent of its households are married couples.

3. Berkeley Heights
Current home value: $637,622
Yearly growth: 15.76
This town of 13,000 also has a median income almost double the New Jersey average.

2. Weehawken
Current home value: $734,698
Yearly growth: 19.27
Weehawken has benefitted from the gains in its Jersey City neighbor. The borough, one of the most expensive in Hudson County, is a close drive to New York City.

1. Jersey City
Current home value: $447,300
Yearly growth: 25.25
Jersey City remains at number one despite many changes to the list. Its more than 25 percent annual increase has been a boon to its population, but it came at a cost: The city recently conducted its first property assessment in decades, raising taxes in the downtown area.

Posted in Housing Bubble, Housing Recovery, New Jersey Real Estate | 141 Comments

You buyin’ this?

From the Star Ledger:

Murphy’s state bank would help working families, boost local economy

New Jersey has an investment problem.

The Garden State’s numerous credit downgrades, budget shortfalls, crumbling infrastructure, chronic underfunding of critical programs and priorities are well known. The source of these issues isn’t a lack of capital or wealth. New Jersey is among the nation’s wealthiest states with a growing millionaire population.

Many argue that Jersey’s credit woes stem from former Gov. Chris Christie’s continuation of ill-advised tax cuts that weakened state coffers, along with an underfunded pension system dating back to the Gov. Christie Whitman years. This irresponsible fiscal policy reinforced backwards, yet persistent notions that hedge funds and enormous corporations should be appeased before tax dollars are invested in small businesses, public services, and working families. New Jersey deposits taxpayer funds directly into Wall Street and foreign banks, coupling tax giveaways with misdirected investments and high fees.

Consider for a moment: whether you believe that our taxes should be lower or higher, your tax money, which is intended specifically to provide public services, ideally aimed at helping residents and maintaining public infrastructure, is filtered through Wall Street bankers and instead used as bonuses for financiers.

As a result, the state of New Jersey paid more than $1 billion in fees and $3 billion in interest to Wall Street for debt services in 2016. Payment of debt costs have been prioritized over meeting the public purpose for which they were borrowed. This system isn’t just immoral – it’s inefficient and irresponsible, a final blow in a line of schemes that Wall Street uses to steal our wages and our tax dollars, and it’s contributed to the stagnation of investment.

Murphy’s budget begins to address this, reinstating tax fairness and investing state dollars in priorities like education and transportation, but intractable structural issues remain.

A publicly owned bank which makes affordable loans to small businesses, directly finances public infrastructure, invests in green energy and efficiency programs, and refinances student loans, would put tax dollars to work properly: supporting New Jersey’s economy from the bottom up.

Posted in Economics, New Jersey Real Estate, Politics | 261 Comments

“This time it’s different”

Podcast from NPR:

Rising Home Prices Lead To Worries Of Another Housing Market Bubble

GOLDING: Is the area affordable? The bubbles are when you’re getting away from the fundamentals – when the demand is sort of outstripping the supply, but that demand can easily disappear.

VANEK SMITH: Ed and his team found that, nationally, the median household can afford the median house. So overall, housing in the U.S. is affordable, and that was not the case back in 2006.

GOLDING: Nationally, there’s really no sign of a bubble. But as real estate is local, we tried to focus on a few metropolitan areas that at least bore watching.

VANEK SMITH: In other words, there’s no national housing bubble, but there are, you know, baby bubbles.

GOLDING: I’m not using the bubble word. These are just cities that, based on our measure, show lack of affordability and a rapid rise in house prices. Many…

VANEK SMITH: OK, so this isn’t a bubble. This is just a little overheated maybe.

GOLDING: These are things – things are places to keep an eye on.

VANEK SMITH: These are places where housing is just way more expensive than the average resident can afford. Top cities – the top baby bubbles – were San Francisco and San Jose. In San Francisco, the Urban Institute concluded fewer than a quarter of local residents could afford to buy a home. Miami, Portland, Seattle and Los Angeles showed similar numbers, and so did Riverside, Calif., where developer Randall Lewis has seen business triple over the past couple years. And I asked Randall if this worried him.

LEWIS: Look, I remember going to a conference, and someone said the four most dangerous words in real estate are this time it’s different.

Posted in Housing Recovery, National Real Estate | 120 Comments

Are mortgages finally back to a solid level?

From National Mortgage News:

Mortgage delinquency rates down annually, a sign of a healthy economy

Despite an especially strong hurricane season last year, the national mortgage delinquency rate fell on an annual basis, signaling a healthier economy, according to CoreLogic’s Loan Performance Insights Report.

About 4.8% of mortgages nationwide were in some stage of delinquency in February, marking a 0.2 percentage point decline from a year ago.

The foreclosure inventory rate also fell 0.2% year-over-year in February, dipping from 0.8% to 0.6%. The foreclosure inventory rate has held steady at this reading since August 2017, the lowest level seen since it was also 0.6% back in June 2007.

“Overall delinquency rates fell in the U.S. over the past year, driven by a long run of stringent underwriting, higher employment and wages,” Frank Martell, president and CEO of CoreLogic, said in a press release.

“At the same time, our CoreLogic U.S. Home Price Index showed a 6.4% increase in home-price appreciation for the 12 months, which ended in February 2018. These factors bode well for the fortunes of both homeowners and mortgage servicers,” he said.

The share of early-stage delinquencies, describing loans that are 30-59 days past due, hit 2.1% in February, an uptick from 2% a year ago. The rate of mortgages that were 60-89 days past due remained unchanged at 0.7% on an annual basis, but did decline 0.1% from January.

Delinquency rates varied by state as factors like natural disasters took a toll on affected areas, namely Texas and Florida. Still, impacts from Hurricanes Harvey and Irma weren’t enough to negatively impact the national trend of decreasing delinquencies.

Posted in Economics, Foreclosures, Mortgages, National Real Estate | 156 Comments

No tax doomsday? Yet?

From Bloomberg:

Million-Dollar Home Values Gain Even as Tax Deductions Shrink

Adam Blaylock was pretty sure he overpriced his Santa Clara, California, home by offering it in February for $1.48 million, since tax deduction changes would keep buyers away. But within a week, the 1,280-square-foot ranch-style house was in contract for $155,000 above asking.

The $1.5 trillion tax overhaul President Donald Trump signed in December capped mortgage-interest deductions on loans up to $750,000, down from the prior limit of $1 million. It also set a $10,000 maximum for state and local tax deductions, which were previously unlimited. Those provisions prompted one of the most powerful lobbying groups — the National Association of Realtors — to warn that home prices in some high-end markets would tank.

So far though, those areas have proven to be resilient. There are 308 U.S. ZIP codes that have homes with median values in excess of $1 million — more than 92 percent of them saw their median home prices increase in March from a year earlier, according to data from online real estate database Zillow.

“We are seeing the opposite of what was expected,” said Aaron Terrazas, senior economist at Zillow. “We have certainly not seen the doomsday predictions play out.”

Posted in National Real Estate, Politics, Property Taxes | 163 Comments

The puff piece returns … oh how I missed you

Warning, make sure you’ve got your boots on, the bullshit is deep in here.

From the Record:

High demand will spark bidding wars for houses in North Jersey this summer

Prospective home buyers can expect to go to war this spring and summer.

A low housing inventory coupled with high demand will spark bidding wars for houses in the entry- to middle-level home sectors, say local realtors, continuing a years-long trend in the residential real estate market.

“It’s a great time to be a seller,” said Ted Crocco, owner and broker of Bergen County Realty. “It’s not a great time to be a buyer.”

In the Montclair area, the number of days a home is on the market has plummeted, dropping from 77 days in 2012 to 36 days in 2017, according to the real estate firm Stanton Company. Diane Russell, a realtor at the company, said houses can sometimes sell in mere hours.

“If you’re a buyer in the $600,000 to $900,000 range, it’s very competitive,” Russell said. “They’re going through multiple rounds of putting in offers.”

Russell said she frequently has to educate first-time buyers on how much the asking price and sale price can differ. Stanton Company sold one home at 18 percent above the asking price last year, she said.

Homes in Montclair, Maplewood, Glen Ridge and other towns with train stations consistently sell above the asking price, while homes in towns without stations lag behind, both in sales price versus asking price and days on the market, the company said.

For those wading into the residential real estate market for the first time, it will be tough to gain a foothold, said Crocco of Bergen County Realty.

“It’s a difficult time to be a young buyer right now,” Crocco said. “We have buyers that made several offers on several houses offering the asking price or more, and they’re turned down.”

Entry-level buyers are being forced into bidding wars and facing rising mortgage interest rates. The average rate on the 30-year fixed is at its highest level in more than four years and is not expected to fall back, as it did last year.

Higher mortgage rates usually cool home prices, as buyers can’t afford as much and sellers have to accommodate. The difference in today’s market is that there is so much pent-up demand from the largest generation, and the economy and employment are improving. That dynamic could outweigh higher rates, although at some level there has to be a breaking point, especially for young buyers with less cushion in their wallets.

“Affordability continues to slip away from the average buyer. Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis even worse,” said Frank Martell, president and CEO of CoreLogic.

Posted in Housing Bubble, Humor | 169 Comments

Feeling Hot Hot Hot

From MarketWatch:

Americans haven’t been this optimistic about house prices since just before the crash

House prices are soaring and, despite warnings from some analysts, most Americans believe they will continue to soar.

A majority of U.S. adults (64%) continue to believe home prices in their local area will increase over the next year, a survey released Monday by polling firm Gallup concluded. That’s up nine percentage points over the past two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s.

The level of optimism is edging closer to the 70% of adults in 2005 who said prices would continue rising. That, of course, was less than one year before the peak of the housing market bubble in early 2006, which was largely fueled by a wave of subprime lending. (Roughly one-quarter of respondents in both 2005 and 2018 said they believed house prices would remain the same.)

In 2009, during the depths of the Great Recession, only 22% of Americans believed house prices would rise. But optimism about the housing market has made a slow recovery—along with the market itself—in the intervening years. Today, only 10% in the Gallup survey believe prices will fall. That compares to 5% who felt similarly pessimistic in 2005, just two years before the crash.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 75 Comments