Who to blame?

From National Mortgage News:

Thank Landlords for the Home Price Recovery: Attom

Small investors, not first-time homebuyers, are driving home prices to unaffordable highs, according to a new report from Attom Data Solutions and Clear Capital.

Real estate investors drove the home price recovery, but a different segment of this market is poised to continue to shape the housing markets.

At first, it was the institutional investors that took advantage of the housing downturn, buying properties as home prices hit their bottom. But as prices rose, these investors cashed out and were replaced by smaller investors.

Rather than flip these properties, many of these investors turned to the rental market for money making opportunities.

The report shows though that over time the smaller investors became the main driving force behind home price appreciation, particularly as the homeownership rate remained low and the buyer share comprising Federal Housing Administration borrowers flattened out.

“Because the driving force behind this housing recovery has been real estate investors, home prices have risen higher and more quickly than if the recovery had been driven more heavily by first time homebuyers,” Attom and Clear Capital wrote in the report.

Posted in Demographics, Economics, National Real Estate | 31 Comments

How high do rates need to be to slow home sales?

From HousingWire:

FHFA: Rising interest rates not slowing down home prices…yet

Home prices increased during the fourth quarter and, despite rising interest rates, showed no sign of a slowdown, according to the Federal Housing Finance Agency’s House Price Index.

Home prices increased 1.5% from the third quarter and 6.2% from the fourth quarter of 2015, the report showed. FHFA’s seasonally adjusted monthly index increased 0.4% from November to December.

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

“Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown,” FHFA Deputy Chief Economist Andrew Leventis said.

“Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains,” Leventis said.

Posted in Economics, Mortgages, National Real Estate | 92 Comments

Should I stay or should I go?

From HousingWire:

Here’s the inventory crisis smothering Millennial homebuying

Posted in Demographics, Economics, National Real Estate | 79 Comments

Somebody believes in AC

From the AP:

Showboat Owner Blatstein Buys Land Nearby in Atlantic City

Bart Blatstein, the Philadelphia developer who’s been buying up distressed Atlantic City properties and re-opening them, has added three more Boardwalk parcels for about $6 million.

Blatstein, who last year reopened the former Showboat casino as a non-gambling hotel, has added land nearby as part of the future development of the site.

He bought the Garden Pier across from the shuttered Revel casino, which is also near the Showboat, along with a volleyball court between Revel and the Showboat. Blatstein also bought land in the Inlet district next to a new $40 million Boardwalk repair project.

“It shows my continuing confidence in the renaissance of Atlantic City,” he said. “It’s a great opportunity to expand the holding.”

Blatstein said the parcels near the Showboat will increase outdoor uses for the site. He said the Inlet land is prime property in a redeveloping area.

“It affords even more of an outdoor element for the Showboat, and the land near the Inlet is wonderful land abutting a new $40 million Boardwalk,” he said. “It’s beautiful real estate.”

The deals closed Friday.

Blatstein has taken a contrarian stance regarding Atlantic City, rushing in while many are running out. He bought the former Pier Shops at Caesars and reopened it in 2015 as The Playground. Last year, he reopened the former Showboat as a non-gambling hotel two years after Caesars Entertainment shut down the still-profitable casino.

Blatstein said he’s still working on an overall concept for the Showboat, adding he’s not close to being ready to reveal it.

But expanding the reach of the Showboat would go a long way toward revitalizing the northernmost part of Atlantic City’s Boardwalk, which has drawn little foot traffic since the 2014 closure of the Showboat and Revel, two of the four casinos that went belly-up that year.

Posted in New Development, New Jersey Real Estate, Shore Real Estate | 115 Comments

The other South Jersey market

From the Press of Atlantic City:

South Jersey beach construction booming

John Van Duyne heads into a house he recently finished building, a few doors off the beach in Ventnor.

He points out the quartz shower seats and countertops in the downstairs bathrooms. In the living room, a giant TV is recessed into the wall, and rows of speakers are built into the ceiling.

The master bedroom includes a bar and refrigerator hidden under a sink. And when Van Duyne approaches a separate room that houses the toilet, the lid lifts automatically as soon as he reaches the door.

This could be a dream beach house to almost anyone. Van Duyne figures that on the grand scale of today’s luxury homes, this one is maybe a 4 out of 10.

Construction is still busy on the islands that stretch along the South Jersey coastline. And builders say much of their market now is for high-end homes with elevators and pools and luxury gadgetry built right in, from automatic vacuum systems to automatic irrigation systems for the plants that decorate the decks.

News about South Jersey real estate often includes fair amounts of gloom and doom. Atlantic County is still the national leader in mortgage foreclosures. And sales figures from New Jersey Realtors, the trade group, show the median value of a single-family home in Cape May County dropping last year by 5.8 percent to $290,000.

For those reasons and more, a local home-building industry that boomed for decades along with Atlantic City’s casino business has slowed almost to a halt in much of the region. But building hasn’t stopped entirely. It just moved to the beach.

“The focus is always on the water, whether it’s beachfront or bayfront,” says Van Duyne, a Ventnor native who builds on Absecon Island.

“They’re basically two separate markets now, with outsiders buying up the islands,” says Richard Perniciaro, a veteran Atlantic Cape Community College economist. “The two housing markets — mainland and island — are very separate and influenced by different housing trends.”

“The investors, or second-home owners or retirees from outside the area, are making housing decisions based on the value of their homes in (Philadelphia), North Jersey or Cherry Hill,” he says.

Those markets have largely recovered from the housing debacle that fed the national recession, he said.

With home values growing in those areas, Perniciaro said, “The shore is a bargain to them.”

Posted in New Development, Shore Real Estate | 51 Comments

Montclair pretty much the most unequal place in NJ

Haven’t gotten a chance to post this one, but it needs to be posted. From the Star Ledger:

How every town in N.J. rates on income inequality

Despite what Montclair wants you to believe, outside of the typical wealth enclaves like Saddle River, Far Hills, Deal and the like, Montclair ranks as pretty much the most unequal large town in New Jersey. There are few towns in NJ that show such a blatantly obvious amount of geographic segregation as Montclair, less than 1 mile separates some of the wealthiest residents of NJ from some of it’s poorest.

So what’s more important, creating an image of being inclusive and equal, or actually being it? Turns out, there are large swaths of Essex, Passaic, Bergen, and Hudson counties that are more diverse, and more equal, than Montclair.

So what gives? How did Montclair manage to create an image of itself that is almost entirely undeserving? The inclusive educational system? The town’s wealthiest residents have no problem packing Montclair Kimberly full, despite the fact that the yearly tuition is $30,000, making it one of the most expensive private schools in NJ. Sending 3 kids to MKA will cost you north of a million dollars, by the way. Good number of 4th Ward residents probably don’t even make $30,000 a year, let alone pay that for school.

Seems like a load of bullshit to me, especially when neighboring Clifton is more diverse and integrated. Are there towns that are less diverse and wealthier than Montclair? Absolutely, but they aren’t hell bent on creating an image that really appears to be completely manufactured marketing, and not reality. Having just come back from Brazil, I’ve got to say, the wealth gaps are pretty similar.

Seems like a great place to live if you are rich and want to feel good about yourself.

Posted in New Jersey Real Estate | 69 Comments

So Close!

NY State on the verge of taking the #1 foreclosure spot:

Posted in Foreclosures, New Jersey Real Estate | 173 Comments

Christie kicks the can

From the Star Ledger:

Christie signs bill to give Sandy victims some protection against foreclosure

New Jersey homeowners facing foreclosure while they’re still trying to rebuild from Hurricane Sandy now can be protected from losing their homes.

A bill signed Friday by Gov. Chris Christie gives certain homeowners affected by Sandy the potential to ward off foreclosures for up to three years while they try to recover financially from the storm.

In his signing statement, Christie indicated he wasn’t completely happy with the bill (S-2300, A-333), which he said was too broadly written to include foreclosures not precipitated by Sandy.

But the signing was welcome news to members of the New Jersey Organizing Project, a grass-roots group of Sandy victims and other housing advocates who have been waiting two years for the governor to take action.

Last fall, Christie incurred the wrath of Sandy victims at an appearance in Seaside Heights where they complained many were still not home and faced financial ruin because of the state’s slow process in disbursing federal Sandy aid to rebuild.

At that time, Christie said he would take another look at the foreclosure bill, but many, including Mangino, said they were skeptical Christie would sign it.

“For all the families struggling to keep their heads above water, there’s hope,” said Staci Berger, president and chief executive officer of the Housing and Community Development Network of New Jersey. “Our families, friends, and neighbors deserve better than what they’ve been forced to endure over the last four years. Because of the hard work and dedication of our legislative leaders, Sandy survivors, and advocates, there will finally be some relief and the chance to rebuild.”

The law creates a forbearance period for up to three years for Sandy victims who have either been approved for help through the Reconstruction, Rehabilitation, Elevation and Mitigation Program or the Low-to-Moderate Income Program or those who have received rental assistance through the Federal Emergency Management Agency for damage to their primary residence.

Those approved would receive a certificate of eligibility for mortgage forbearance from the state Department of Community Affairs, allowing them to tack onto the end of their mortgage the months they missed paying during their Sandy recovery.

They would still be responsible for paying their taxes and insurance.

Thousands of homeowners would be eligible for help under this law, Mangino said.

That includes Sandy victims who were facing foreclosure before the storm hit or whose mortgage default problems were unrelated to storm damage. Christie said he didn’t want it as part of the law because he said it would cause “mountains of damage” to “our federal funding flow and our state housing market.”

“I am very concerned these new requirements may adversely impact the state’s recovery efforts, jeopardize federal Sandy funding, increase borrowing costs and ultimately delay Sandy-impacted residents’ return to their homes,” he wrote.

Calling the bill “sloppily written” and “ill conceived,” Christie accused its Democratic sponsors of “politically pandering” to Sandy victims during to get re-elected.

Posted in Foreclosures, New Jersey Real Estate | 408 Comments

Think warm thoughts – shore rentals already up 33% YOY.

From the Philly Inquirer:

The rush is already on for rentals at the Jersey Shore

From the second-story deck of his aunt’s rental property near 20th and Central, real estate agent Bill Godfrey points out the ocean view a block away and the surrounding Gold Coast neighborhood as just two of the unit’s special amenities.

But what potential summer renters really want to know about the place is how the flatware looks and what kind of wine glasses are in the cupboard, Godfrey said.

“Oh, and how new the mattresses are,” Godfrey notes as among the nitty-gritty details that customers want to know before they are willing to plunk down as much as $4,000 for a week’s stay in this unit during the summer’s “high season.”

And getting precisely what they want when they walk through the door may be what is driving those renters to sign on the dotted line seemingly earlier and earlier each year. Rentals in Ocean City’s prime “high season” — from mid-July to mid-August — start at around $1,500 a week for a one-bedroom condo and go as high as $18,000 a week for a seven-bedroom house on the beach.

Marr Agency, where Godfrey works, and other real estate agencies in this Cape May County barrier island resort — and in towns from Long Beach Island south to Cape May — report that the number of signed contracts and deposits on summer rentals by the beginning of February were up by as much as 33 percent over the same time last year.

And while the bottom line on rental profits may ultimately stay mostly stagnant year to year because there are only so many units and so many weeks in the summer, an early rush on rentals may signal a strong 2017 Shore summer season with regard to tourism spending in other sectors, like restaurants, amusements, retail, and activities, according to experts.

Tourism is big business in New Jersey. The state’s second-largest industry attracted 95 million people to the Garden State, raked in a whopping $43.4 billion, and accounted for 318,000 jobs in 2015. And those numbers have been on a steady increase over the last decade.

Posted in Economics, New Jersey Real Estate, Shore Real Estate | 54 Comments

How low can inventory go?

From HousingWire:

Realtors: Majority of metros hit peak levels in 2016

The fourth quarter of 2016 saw the best quarterly sales pace of the year, but also pushed housing inventory to record lows, and many markets to home prices with record highs, according to the latest quarterly report from the National Association of Realtors.

Actually, home prices in over half of measured markets either hit or surpassed their previous peak level, according to the report. The median existing single-family home price increased in 89% of measured markets. While 158 of metro areas saw gains from the fourth quarter of 2015, the remaining 20 metros recorded lower home prices than the year before.

“Buyer interest stayed elevated in most areas thanks to mortgage rates under 4% for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” NAR Chief Economist Lawrence Yun said. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

This is more than the third quarter, when 87% of metros reported annual price increases. Also, of the metros that saw price gains, 17% of them were in the double digits, compared to 14% in the third quarter.

“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets,” Yun said. “The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

The national median existing single-family home price in the fourth quarter was $235,000, which is up 5.7% from the fourth quarter of 2015’s $222,300.

While home prices were reaching new highs, housing inventory was reaching new lows. At the end of the fourth quarter there were 1.65 million existing homes available for sale, a decrease of 6.3% from the 1.76 million homes a year before to the lowest level since NAR began tracking home supply in 1999. The average supply during the fourth quarter was 3.9 months, down from 4.6 months the year before.

Posted in Demographics, Economics, National Real Estate | 103 Comments

Annual home prices accelerating … with rates higher?

From MarketWatch:

Home prices accelerating in the face of rising mortgage rates

U.S. house prices rose at an accelerated pace in December, a sign that higher mortgage rates aren’t yet diminishing outsize demand for properties.

Data provider CoreLogic said its home price index was up 0.8% during the month, and 7.2% compared to a year ago. That’s the fifth straight month in which the yearly price increase was higher, including during months that saw mortgage rates jump nearly a full percentage point.

Low supply is boosting prices higher and higher, and CoreLogic expects that prices will rise 4.7% during 2017. That would take its national index – now 3.9% below the high last set in 2006 – to a fresh high sometime this year.

But CoreLogic’s forecasts have fallen short over the past few months as price gains defy gravity.

There are some familiar faces among the states with the strongest price appreciation: prices rose 10.8% in Washington and 10.3% in Oregon. But they were stronger in Idaho, at 9.0%, than in Colorado, which saw a gain of 8.9%.

Only one state, Wyoming, had a yearly decline in December. Prices were down 0.3% there.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 146 Comments

Up or Down or Up or Down or Up or Down

From Marketwatch:

Housing demand may keep market afloat, even if rates rise

How will the housing market handle rising rates?

Ever since the November election, when the unexpected Trump victory sent bond yields flying and mortgage rates following closely behind, analysts have been preoccupied with that question. From overly cautious lending standards to extremely tight inventory, the housing market has plenty of challenges, and any additional constraint won’t help.

But new data from Black Knight Financial Services suggests that demand might be resilient enough to withstand higher borrowing costs in 2017.

The last time mortgage rates spiked was in mid-2013, when then-Fed Chairman Ben Bernanke warned markets that the central bank would shortly begin to unwind its extraordinary stimulus programs. Rates jumped a full percentage point between April and September, and mortgage applications plunged.

So did home price appreciation.

In an illiquid market like housing, it takes time for prices to respond – in this case, until August, when they were rising at an annual rate of 9%. Then appreciation fell every month for over a year until hitting bottom.

When price gains finally starting rising, in early 2015, they kept going. Lower rates helped boost demand, and that was reflected in stronger pricing, said Ben Graboske, Black Knight’s vice president of data and analytics.

It’s worth noting that there’s another factor driving prices up: extremely tight supply. Inventory of previously-owned homes fell to a 17-year low last month, and choices of both existing and new homes have been so scarce that analysts have assumed it will quench demand at some point.

But prices even spiked a bit in the last months of 2016 – even after rates surged post-election. Black Knight doesn’t have December home price data yet, and Graboske cautioned that it’s hard to predict the path of mortgage rates from here on, with so much uncertainty around policy and markets.

If rates go up enough, price appreciation could slow – and possibly even reverse, he told MarketWatch.

But there’s another big question mark hanging over the housing market: the path of regulatory reform. If there are big changes to the 2010 Dodd-Frank law, Graboske said, it could open up lending to far more Americans.

Posted in Demographics, Economics, National Real Estate, Politics, Risky Lending | 64 Comments

Shut Up Gen X

From the NY Times:

Generation X More Addicted to Social Media Than Millennials, Report Finds

We all know the stereotype: silly millennials, tethered to their phones, unable to accomplish the simplest tasks without scrolling their Instagram feeds, snapping their friends and/or tweeting inanely.

But a Nielsen report released last week shows that Americans from 18 to 34 are less obsessed with social media than some of their older peers are.

Adults 35 to 49 were found to spend an average of 6 hours 58 minutes a week on social media networks, compared with 6 hours 19 minutes for the younger group. More predictably, adults 50 and over spent significantly less time on the networks: an average of 4 hours 9 minutes a week.

Sean Casey, the president of Nielsen’s social division, said the finding initially surprised him because “the going thought is that social is vastly owned by the younger generation.”

“It’s kind of synonymous,” said Mr. Casey, who wrote the foreword to the report. “When you think of millennials, you think of social.”

Again, in this category, it was Generation X that could not look away from its devices: On an average day, the report found, 42 percent of those interacting with television on Facebook were from 35 to 49; only 40 percent were millennials.

Posted in Demographics, Unrest | 33 Comments

Regulations killing Atlantic City

From the Star Ledger:

Casino bureaucracy Revels in red tape instead of fixing past mistakes in A.C.: Mulshine

I was driving across the country a few years ago when I decided to get off the Interstate and try some local roads through Iowa.

This brought me through the town of Waterloo, coincidentally enough the birthplace of Lt. Gov. Kim Guadagno.

Guadagno is now running for governor based on her accomplishments during her seven years as lieutenant governor. The chief – and perhaps only – such accomplishment is her position as head of the Red Tape Review Commission, a nine-member panel that set for itself the task of making it easier to run a business in New Jersey.

Let us consider how the state ranks compared to other states in red tape as it concerns the casino industry.

As I was reaching the western end of Iowa, I saw that if I went north a few miles I’d be in South Dakota. I’d never been there before so it seemed worth the trip.

It was, if only for what I saw when I pulled up to pump some gas.

When I went inside to pay, I found myself in a casino.

Here’s what I saw: slot machines, card games and booze.

Here’s what I didn’t see: A mandatory parking fee, lots of state employees standing around doing nothing and a massive hotel full of vacant rooms.

There’s a lesson in that, but I fear it is lost on Guadagno and the rest of the people who run New Jersey.

In 1976 we made history by becoming only the second state after Nevada to legalize casino gambling.

Over the ensuing years we again made history – by becoming the only state to ever screw up casino gambling.

What happened last week with the former Revel Casino represented just the latest effort by the state to strangle an industry that most people thought could not be killed.

Then last week the billionaire who bought this white elephant at a bargain-basement price, businessman Glenn Straub, saw his effort to reopen it stalled by the sort of red tape that the woman from Waterloo pledged to eliminate.

Straub told the Casino Control Commission that he wants to open some of the non-gambling sections of the building by Presidents’ Day and then contract the casino and other sections to a firm experienced in running casinos.

No dice, said the commission. Straub would still have to go through the miles of red tape needed to get that license. That’s the law.

It may well be, but that law has been an abject failure. The Casino Control Act was adopted at a time when the only other state to have legal gambling was Nevada. Casino operators would put up with anything to open in Jersey.

Posted in Politics, Shore Real Estate | 22 Comments

Foreclosure auctions beginning to normalize?

From HousingWire:

Third-party sales at foreclosure auctions now higher than ever

Investors are undaunted by rising home prices and increasing interest rates, and perhaps even encouraged by it, as the share of third-party sales at foreclosure auctions reached a new high.

In fact, third party buyers, those who are not associated with the lender or former owner, made up 28.5% of all completed foreclosure auctions in 2016, according to the Year-End 2016 U.S. Home Sales Report from ATTOM Data Solutions, a fused property database.

The remaining 71.5% went back to the foreclosing lender. This is up from 23.5% in 2015 and the highest point going back to the earliest data available in 2000.

“The increased competition at the foreclosure auction is resulting in higher sales prices there, which can even result in surplus proceeds going to the distressed homeowner in some cases after other lien holders have been paid,” ATTOM senior vice president Daren Blomquist said.

“Our analysis of sales prices at completed foreclosure auctions in 2016 shows the smallest average loss from the property’s previous sale price since 2007, with 29% of properties nationwide selling for more than the previous sales price at the foreclosure auction,” Blomquist said. “In a handful of markets such as Seattle, Los Angeles, Portland, San Francisco and San Diego, more than 50% of properties sold at foreclosure auctions in 2016 sold for more than their previous sale price.”

“The housing market hit several important milestones in 2016, with distressed sales at a nine-year low and home prices at a 10-year high, just barely below the pre-recession peak in 2006,” Blomquist said. “This was all good news for home sellers, who realized their biggest average profits since purchase nationwide in 2016.”

“Even distressed property sellers are benefitting from this hot seller’s market, with a record-high share of homes at foreclosure auction being purchased by third-party buyers rather than reverting back to the foreclosing bank,” he said.

Posted in Foreclosures, National Real Estate | 147 Comments