National asking prices continue to rise (not so much here)

Posted on May 3, 2012 by grim
Posted in Economics, Housing Recovery | 147 Comments

From the WSJ:

Report: Asking Prices Bode Well for Spring Sales

A report out Thursday says that strengthening asking prices for homes point to higher sales prices as early as June, which would be a welcome turn for the beleaguered sector.

Asking prices nationally were 0.5% higher in April than in March on a seasonally adjusted basis, said Jed Kolko, chief economist for home-listings company Trulia. Similarly, seasonally adjusted asking prices rose 1.9% over the quarter. Compared with this point last year, however, home price tags have only risen 0.2% nationally.

“When we look back years from now and try to figure out when the turnaround in prices actually happened, September 2011 is the time when prices look like they stabilized,” Mr. Kolko said.

The market may stabilize but it has a long way to go to reach pre-bust housing prices. As of February, the S&P/Case-Shiller indexes showed home prices dropping to new post-bubble lows. The 20-city composite index is hovering near late-2002 levels.

Trulia’s report tracks the most recent listing-price data in the largest 100 metro markets and takes into account comparable property types for a more apples-to-apples comparison. Month-to-month and quarterly data are seasonally adjusted to discount the typical springtime bump in prices. It also records year-over-year rent changes.

“It’s been a strong few months for housing, but some of that was frontloaded” during the winter months, when home construction and sales picked up because of unseasonably warm weather, Mr. Kolko said.

On the tenant side, rents have risen a more robust 5.6% nationally, according to Trulia, driven by job growth and a tightening rental supply in several markets. Would-be buyers are also being deterred by strict lending standards.

From Forbes:

Rising Home Prices: Coming to a Market Near You

Nationally, housing prices have bottomed and are on the rise. Asking prices on for-sale homes were 1.9% higher in April than one quarter ago. A 0.5% month-over-month rise in April, on top of month-over-month price increases in March and February, makes for three months in a row of rising asking prices, after adjusting for typical seasonal trends. In fact, prices have been stable or rising for the past eight months, except for a dip in December 2011. This marks a new milestone: asking prices were 0.2% higher in April than a year ago. Before April, prices were still falling year-over-year.
…
Even within a metro area, neighborhoods have their own price and rent trends. This month we looked at trends within five large metros: New York, Los Angeles, Chicago, Washington DC and the San Francisco Bay Area.

In the New York area, prices rose year over year in Brooklyn, Manhattan and Staten Island, while declining in the rest of the region. But rents rose everywhere – both in the City and suburban areas.
…
New York City Area
Borough or County Y-o-Y % Change in Asking Price Y-o-Y % Change in Rent
Brooklyn 2.4% 5.7%
Manhattan 1.1% 6.8%
Staten Island 0.8% *
Hudson, NJ (Jersey City) -0.2% 7.7%
Queens -1.6% 7.1%
Bronx -1.7% 4.7%
Nassau, NY (Long Island) -2.1% 4.5%
Bergen, NJ (Hackensack) -3.0% 2.0%
Westchester, NY -3.1% 3.4%

Do renters really want to be owners?

Posted on May 2, 2012 by grim
Posted in Economics | 237 Comments

Or is Pulte just pushing a load of crap? From the WSJ:

Renters Really Prefer Owning, Builder Survey Says.

A survey from PulteGroup — one of the nation’s largest home builders — has found a surprising result: Many renters want to buy homes.

Given the source, some caution is in order. Still, this comes as many builders and real-estate agents say the previously moribund housing market is reviving. In some markets, bidding wars – not seen since the housing market crashed – have returned. Rising rents may also be pushing people to consider buying, particularly given low home prices and mortgage rates.

Pulte’s survey found that, among renters who plan to purchase a home in the future, 60% have “increased their intent” to do so from a year ago, meaning they are inclined to hop off the sidelines. Half of those surveyed apparently “like being able to call themselves homeowners,” while 44% “view it as a good financial investment.” (That figure seems a bit high since home values are down by a third or more from the peak.)

More believable are the survey’s findings on why people aren’t buying: More than half think they don’t have enough money for a down payment, while nearly 30% believe renting is cheaper than buying. More than 20% cite uncertainty with employment status as a deterrent to buying a home.

Where the wealth is

Posted on May 1, 2012 by grim
Posted in Economics, National Real Estate | 73 Comments

From CNBC:

America’s 10 Richest Counties

10. Westchester County, N.Y.
Average income: $128,127
…
9. Morris County, N.J.
Average income: $128,371

Morris County, located about 25 miles from New York City, is another county within easy commuting distance to Manhattan. It includes Harding Township once named one of the richest zip codes in the U.S. by Forbes.

Morris County has numerous Revolutionary war-era historic sites, such as Washington’s Headquarters and Jockey Hollow, where the Continental army endured the brutal winter of 1779-80. The county’s unemployment rate for 2011 was 7.3, nearly 3 points lower than the state average of 10 percent according to the N.J. Department of Labor and Workforce Development.
…
8. Marin County, Calif.
Average income: $128,544
…
7. Somerset County, N.J.
Average income: $129,222

Somerset County is another wealthy location in the New York metropolitan area. Area companies include Johnson & Johnson, Verizon, Pfizer and UPS. Somerset includes the picturesque hilly town of Bernardsville, location of the former estates of Jackie Onassis, Mike Tyson and Malcolm Forbes.
…
6. Fairfield County, Conn.
Average income: $130,074
…
5. Hunterdon County, N.J.
Average income: $130,723

Hunterdon County is located in the northwestern part of New Jersey between this list’s No. 9 county, Morris, to the northeast, and No. 7, Somerset County, to the east. It’s more rural than its Central Jersey neighbors and is a destination for fishing and hunting white tail deer. In Hunterdon, commuters are split between New York City and Philadelphia.
…
4. Fairfax County, Va.
Average income: $132,662
…
3. Loudoun County, Va.
Average income: $134,098
…
2. Pitkin County, Colo.
Average income: $134,267
…
1. Nantucket County, Mass.
Average income: $137,811

The fear is gone?

Posted on April 30, 2012 by grim
Posted in Economics, Housing Recovery, National Real Estate | 136 Comments

From the WSJ:

Housing Ends Slide but Faces a Long Bottom

Nearly six years after home prices started falling, more U.S. housing markets appear to be nearing a new phase: a prolonged bottom.

Hitting a bottom, of course, isn’t the same as a full-fledged recovery, which is still years off for many housing markets—as well as for millions of people who purchased homes or took cash out during the bubble.

The good news is that housing construction and home sales appear to have hit a floor. Home builders cut back heavily in the past four years and began construction on just 434,000 single-family homes last year, the lowest level on record. Research firm Zelman & Associates estimates builders will start construction on 540,000 homes this year, a 24% increase.
…
Sales of previously owned homes, meanwhile, are up 32% from their low point of mid-2010, when sales plunged following the expiration of home-buyer tax credits.

That leaves prices as the last measure that hasn’t yet stopped falling. But there are signs of progress on that front, too, as the pace of declines is slowing.

In February, home prices fell by 2% from their level of a year earlier, according to CoreLogic Inc., a real-estate-data firm. But after excluding foreclosures and other distressed sales, prices were down by just 0.8%, the smallest year-over-year decline since May 2010.

“If you remove the distress, you’re looking at housing prices not falling much further,” said Jonathan Miller, president of Miller Samuel Inc., a New York-based appraisal firm.

The problem, of course, is that foreclosures are still a very high share of sales in many of the hardest-hit markets.
…
Housing economists are debating whether that shadow inventory will spoil any housing recovery. “That’ll be like a ball and chain,” said Mark Fleming, chief economist at CoreLogic. “It won’t prevent a recovery, but it could drag it out over several years.”
…
Ms. Zelman, who was among the first to warn that the air had begun seeping out of the housing bubble six years ago, said the shadow inventory is “not going to result in the double dip that people always talk about.” She points to a burgeoning appetite for housing from investors, who are scooping up homes that can be converted to rentals, and six years of pent-up demand from traditional buyers who feel better about their financial prospects. “The fear is gone,” she said.
…
Ms. Zelman, who was among the first to warn that the air had begun seeping out of the housing bubble six years ago, said the shadow inventory is “not going to result in the double dip that people always talk about.” She points to a burgeoning appetite for housing from investors, who are scooping up homes that can be converted to rentals, and six years of pent-up demand from traditional buyers who feel better about their financial prospects. “The fear is gone,” she said.

Otteau: Big jump for March contracts

Posted on April 28, 2012 by grim
Posted in Economics, Housing Recovery, New Jersey Real Estate | 76 Comments

From Otteau:

NJ Home Sales Up 25% YTD (Click for graph)

Home sales continued to surge in March as combined purchase-contracts for resales and new homes rose by 20% in March. YTD sales are now running 25% ahead of 2011 through Q1 2012 due to the combined effects of higher consumer confidence, low home prices and low mortgage rates. Another key driver for the increase is that home purchase affordability in New Jersey rose from 131% in Q4 2011 to 136% in Q1 2012, resulting in record high purchasing power for home buyers.

Through the first 3 months of 2012, home buyers have signed contracts to purchase 17,683 homes compared to 14,104 during the same period in 2011. Still more positive news comes from Unsold Inventory in New Jersey which stands 17% lower than one year ago. At the end of the 1st quarter there were 60,965 homes being offered for sale compared to 73,263 one year ago. This reflects a reduction of 12,298 homes including both resales of existing homes and new construction. The combined effects of a 25% increase in purchase demand with a 17% decline in Unsold Inventory are expected to stabilize home prices in 2012 and lead to modest price increases in 2013. One cautionary note is that sales pace has slowed in April due to rising asking prices.

Home buyers remain highly resistant to price increases at this stage of economic recovery which appears to be reducing the sales pace this month. Also affecting the April sales pace is that both Easter and Passover occurred during the month which had the effect of deferring some purchase demand into May.

Northeast pending home sales up 18.4% YOY in March

Posted on April 27, 2012 by grim
Posted in Economics, Housing Recovery, National Real Estate | 151 Comments

From Bloomberg:

Pending Sales of U.S. Existing Homes Increased 4.1% in March

Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.

The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
…
“It’s good news,” said Sean Incremona, senior economist at 4Cast Inc. in New York. “It does suggest that improvement in the housing market is continuing.”
…
Compared with a year earlier, March pending home sales climbed 10.8 percent after a 14.9 percent surge in February.

From Reuters:

Pending homes sales near two-year high in March

Contracts to purchase previously owned homes increased solidly to a near two-year high in March, suggesting the spring selling season got off to a firmer start and offering hopes of a pickup in housing.

The National Association of Realtors said on Thursday its Pending Home Sales Index, based on contracts signed in March, jumped 4.1 percent to 101.4, the highest level since April 2010.

Economists polled by Reuters had expected signed contracts, which lead existing home sales by a month or two, to rise 1.0 percent after a previously reported 0.5 percent fall.

March’s strong rise in signed contracts pointed to a pick up in home resales after they stumbled in the past two months.
…
Signed contracts were up 12.8 percent in the 12 months to March.

Property taxes are too damn high!

Posted on April 26, 2012 by grim
Posted in Economics, New Jersey Real Estate, Property Taxes | 110 Comments

From the Philly Inquirer:

Realtors’ group poll: Property taxes irk N.J. residents

If you want to rile a New Jersey resident, two words will do it: property taxes.

Most state residents — 89 percent of the 800 registered voters surveyed in early April by the state’s Realtors, according to the poll’s results — maintain that property taxes are too high, but they are less united about proposals to lower them.

“Property taxes continue to be a major concern, even ahead of the economy and jobs,” said Joe Goode, senior vice president of American Strategies, who has been conducting the poll for the New Jersey Association of Realtors for the last five years.

What changed this year is the mood of the voters polled, Goode said.

Forty-seven percent said the state was headed in the right direction, while 42 percent disagreed, he said. In 2009, just 19 percent said the state was on the correct path; in 2010, 31 percent said it was.

Gov. Christie’s proposal to cut the state’s income tax by 10 percent was supported by 63 percent of the voters the Realtors’ group polled this year.
…
When asked why housing cost so much in their areas — 49 percent had complained about it — the largest percentage, 28 percent, blamed home sellers and builders trying to make too much profit.

Nearly half those polled said foreclosures remained a huge problem in the state. There was virtually unanimous support, Goode said, for a program that would renovate foreclosed properties into affordable housing.

Fifty-two percent of those polled said they want the state to abolish its real estate transfer tax, and they strongly opposed proposals to allow municipalities to levy their own transfer taxes and impose a sales levy on vacation rentals.

A small majority favored managed-growth policies as a way to combat sprawl, the poll results showed.

February Home Prices

Posted on April 25, 2012 by grim
Posted in Economics, Housing Recovery, National Real Estate | 159 Comments

From Bloomberg:

US home prices drop for 6th straight month

Home prices dropped in February in most major U.S. cities for a sixth straight month, a sign that modest sales gains haven’t been enough to boost prices.

The Standard & Poor’s/Case-Shiller home-price index shows that prices dropped in February from January in 16 of the 20 cities it tracks.

The steepest declines were in Atlanta, Chicago and Cleveland. Prices rose in Phoenix, San Diego and Miami. They were unchanged in Dallas.

The declines partly reflect typical offseason sales. The month-to-month prices aren’t adjusted for seasonal factors.

Still, prices fell in 15 of the 20 cities in February compared with the same month in 2011. That indicates that the housing market remains far from healthy despite the best winter for sales in five years.

The steady price declines have brought the nationwide index to its late 2002 level. Home prices have fallen 35 percent since the housing bust.
…
Stan Humphries, chief economist for housing website Zillow.com, attributed the declines in part to heavy sales of foreclosed homes, which are usually sold at super-low prices. Foreclosures made up about one-fifth of February’s sales.

“We think home sales will continue to trend upward, which ultimately will result in a slower rate of home value depreciation,” Humphries said. “But any housing recovery will be dependent on job growth.”

Is distressed the new normal?

Posted on April 24, 2012 by grim
Posted in Economics, Foreclosures, Housing Recovery, National Real Estate | 133 Comments

From CNBC:

Short Sales Higher, Prices Lower

Buyer traffic is strong, supply of homes for sale is low, and yet home prices continue to defy the usual formula, falling again in March. Prices usually rise as supply shrinks, but demand is still too low to make those historical “norms” compute, not to mention that the type of supply available is largely distressed.

Foreclosures and short sales (when the home is sold for less than the value of the mortgage) accounted for 47.7 percent of sales, in a three month running average measured by Campbell/Inside Mortgage Finance. That’s the 25th month in a row that distressed sales have topped 40 percent of the market.

“With nearly half of the market being distressed, we’re a long way from a return to a normal market,” said Thomas Popik, research director at Campbell Surveys. “Agents responding to our survey say that homeowners with well-maintained properties in good locations are very reluctant to list at today’s prices. That’s why inventory is low—and also why forced REO and short sales are such a big proportion of the remaining market.”

Home prices for non-distressed properties fell 5.7 percent in March year-over-year, according to the survey. Prices for “damaged” REO (bank-owned properties) fell 5.7 percent and for move-in ready REO fell 2.5 percent during the same period. The real sticker shock is in short sales. Prices of those homes fell 14.3 percent from March of 2011.
…
That share is likely to grow, as the conservator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA), last week announced it was directing the two mortgage giants to “develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.” It includes a requirement that mortgage servicers review and respond to short sale requests within thirty days.
…
“This could put short-term downward pressure on home prices, as short sales by their nature occur more quickly than foreclosures,” writes Jaret Seiberg, analyst at Guggenheim Partners. “That could raise questions about the status of the housing recovery, which could be negative for those with housing exposure. That would include homebuilders, mortgage lenders and mortgage insurers.”

On the plus side, short sales tend to sell at higher prices than foreclosures. It appear, however, that regardless of the FHFA edict, banks are already ramping up the short sales. Some began doing so in the aftermath of the robo-signing scandal, as foreclosures stalled. Even now, foreclosures falling as short sales rise. The good news is that sales of distressed properties are rising, but the headlines will likely focus more on the falling prices, than the much-needed clearing of these homes.

How North Jersey came to be

Posted on April 23, 2012 by grim
Posted in Economics, New Development, North Jersey Real Estate | 113 Comments

From the Record:

Our growing ‘City of North Jersey’: How we got here and where we are going

It’s not surprising that Englewood chose to name its high school for Dwight Morrow, a city resident who was a U.S. senator, an ambassador to Mexico and a powerful Wall Street banker. However, Morrow’s most enduring influence might have come through a position that doesn’t even rate a mention in his Wikipedia entry.

Morrow served on the influential 10-member committee that fashioned the 1929 “Regional Plan of New York and Its Environs,” the first master plan for any city or region in the country. That multivolume agenda became a seminal blueprint for the growth of New York City and the entire metropolitan area, and, in the eyes of many, codified the strategy that perpetuated the city’s role of dominance on the world scene.

As it turned out, by virtually laying out the structure of roads that serves as the region’s circulatory system and projected path of development, it also helped to create something unanticipated. Call it the City of North Jersey, the place we live and work in now.
…
The plan consisted of two parts: a highway system west of the Hudson and around New York City, and an economic transformation that turned New York City from an industrial-era engine comprising small manufacturers employing low-paid factory workers into a world-class city of concrete and glass office towers where banks, investment houses, insurance companies, real estate and legal firms did business and their mostly well-off workers lived.

These “clean” enterprises were the designated “highest and best uses” of the valuable real estate in Manhattan’s massive central business district. Spreading out from it in spokes and in concentric rings would be the highways — the plan paid scant attention to mass transit systems — that would filter factories and lower-priced residences through a megalopolis designed to serve Manhattan’s needs.

But a funny thing happened. North Jersey developed — in a big way, and pretty much according to the original highway design, tripling the population of the communities served by those highways since 1930.
…
The highway grid in the plan looks much the way it appears today: A big peripheral highway, 287; highways sprouting from one existing Hudson River crossing (the Holland Tunnel) and five anticipated crossings (three eventually became reality), Routes 4, 46, 208, 3 and 280, 80 and 95; and four north-south highways, the New Jersey Turnpike, the Garden State Parkway, Routes 17 and 9. Highways that fed into the George Washington Bridge and the Tappan Zee Bridge connected to the eastern half of the larger peripheral system that moved vehicular traffic around New York City.
…
North Jersey adopted its own version of “highest and best use.” Single-family housing soaked up blank spaces between the highway grid. Regional malls sprawled along the intersections. Midrise commercial buildings and hotels went up along the highways and in the Meadowlands. High-rise apartments came to Fort Lee, Hackensack and northern Hudson County.

Pretty soon, North Jersey had the looks of, well, a city. Not the dense, concrete-and-glass, high-rise prototype that identifies most of the world’s modern cities, but a hybrid that mixes those elements with the expansive, haphazard collection of housing, offices and malls typical of American suburbs.
…
To be sure, many pressures beyond the agenda of the 1929 plan pushed the development of the City of North Jersey. Already in place in 1930 were the industrial cities of Hudson, Bergen and Passaic counties. It was an era when Garfield was Bergen’s largest municipality, and Fairview was bigger than Paramus.

White flight, tax policies that favored home ownership over renting, the GI Bill and the rise of the automobile as the nation’s preferred form of mass transportation also encouraged the move out of the big cities to the more rural towns of North Jersey.

With the population growth, other development followed: Malls to sell merchandise to a ready and growing public; corporate headquarters to capitalize on a labor force unwilling to travel long distances for jobs (with lower real estate costs to boot for businesses). Between 1981 and 1986, Bergen County absorbed 13 million square feet of new office space, more than the 14 buildings of the original Rockefeller Center, completed a half-century earlier.

How much higher can NYC rents go?

Posted on April 21, 2012 by grim
Posted in Economics, NYC | 90 Comments

From the NY Times:

The City of Sky-High Rent

GARY L. MALIN, the president of Citi Habitats, the city’s largest rental brokerage firm, has seen the real estate market at its giddiest heights and its deepest despair. There should be little that surprises him.

But when Mr. Malin’s company was preparing its latest analysis of the rental market, he was taken aback.

In March, the firm found, the average rent in Manhattan — now $3,418 a month — surpassed the all-time high set in the real estate frenzy of 2007.

“Right now, landlords can go for pie in the sky — why not?” he said. “But when are people going to say enough is enough and look at other options?”

The last time rents shot up in a similar fashion, they were tied to a strong economy, low unemployment and booming business on Wall Street.

But this spring, Manhattan rental prices seem to be divorced from the larger economic picture. While the city has added jobs in recent months and growth in businesses like technology has helped make up for losses in the financial sector, much of country is still struggling.

That disconnect has only increased resentment levels among many tenants, already reeling from a year or more of rent increases.
…
There is evidence that rising rents are driving perspective renters into the sales market. But for those who find buying a home in New York City is not an option — whether because of bad credit, tougher lending standards or lack of a down payment — the choices are limited and often unappealing.
…
The uncoupling of the national economy from New York rents is not typical, said Jonathan J. Miller, the president of the appraisal firm Miller Samuel. “When you see rents rising, it is usually reflective of a strong economy,” he said. “That is not the case now.”

Instead, he said, prices are being driven up by a tight credit market that forces people to stay in the rental market and limits new construction.

Some renters feeling the squeeze have resigned themselves to paying more for less.
…
Rental averages are up in every category, with one-bedrooms rising the most, by 6.5 percent over the past year, to $2,747, according to the Citi Habitats report. Studios rose 3.6 percent, to $1,953; two-bedrooms climbed by 6.1 percent, to $3,865; and three-bedrooms rose 4 percent, to $5,107.

New Jersey loses jobs in March

Posted on April 20, 2012 by grim
Posted in Economics, New Jersey Real Estate | 129 Comments

From the Record:

Loss of 8,600 NJ jobs clouds economic picture

Optimism that New Jersey’s economy is on the rebound took a beating Thursday with the release of figures showing the state lost 8,600 jobs in March, the first decline since August.

The state lost 11,600 private sector jobs, the most since the recession ended in June 2009, while adding 3,000 government jobs, according to the monthly jobs report by the state Department of Labor and Workforce Development.

Unemployment stayed at 9 percent, well above the national rate of 8.2 percent.

The sudden darkening of the state’s economic picture caught economists off guard, and raised questions about Governor Christie’s claim that the state is on a “comeback” fueled by strong private sector growth that will help balance the state budget by boosting tax revenue.

“This was a kind of a shocker,” said James Hughes, a Rutgers University economist. “This is really a break in trend. Hopefully, it’s a one month blip on the long term trend.”

Further bad news came in revised figures for February that showed the state added 7,000 jobs, not 8,700.

“Today’s job report for New Jersey was just plain ugly,” Rutgers economist Joseph Seneca said. “Almost all the private sector employment gains of the first two months were wiped out, leaving the state with a net gain of only 3,500 jobs for the year.”

The figures followed a prediction Wednesday by another Rutgers economist, Nancy Mantell, that the state’s economic recovery is lagging the nation’s, and that New Jersey would not recover all the jobs lost in the recession until mid-2016.

March Existing Home Sales

Posted on April 19, 2012 by grim
Posted in Economics, Housing Recovery, National Real Estate | 154 Comments

From Bloomberg:

U.S. Existing-Home Sales Probably Rose

Sales of previously owned U.S. homes probably increased in March as a drop in mortgage rates propelled demand to its strongest quarter in almost two years.

Purchases climbed 0.7 percent to a 4.62 million annual rate from 4.59 million in February, according to the median estimate of 72 economists in a Bloomberg News survey. Sales in the first three months of the year would average 4.61 million at an annual pace, the best since April through June 2010. Jobless claims declined last week, other data may show.

An improved labor market, mortgage rates near historic lows and cheaper properties are shoring up an industry that’s been the economy’s soft spot. At the same time, further progress in residential real estate is being challenged by distressed properties and the threat of more foreclosures.

“Better jobs, better income, better affordability and lower mortgage rates mean you will sell more homes,” said Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh.

The National Association of Realtors’ data are due at 10 a.m. in Washington. Economists’ estimates range from 4.5 million to 4.75 million.

Existing-home sales, tabulated when a contract closes, climbed to 4.26 million last year, from 4.19 million in 2010. Demand peaked at 7.1 million in 2005 during the housing boom. In 2008, sales totaled 4.1 million, the least since 1995.

Expected the best, but worst still better than last year

Posted on April 18, 2012 by grim
Posted in Economics, Housing Recovery, New Development | 113 Comments

From Bloomberg:

Housing Data Disappoint … Again

So the latest housing number is kind of bad: 654,000 new units were started in March, 5.8 percent below the revised February numbers. Economists surveyed by Bloomberg were expecting something considerably higher. The median estimate of the 82 who ventured a guess was 705,000. Even the lowball forecast, 670,000, was too high. It’s the rare economic survey where the biggest bear isn’t bearish enough. Clearly we’ve been fooled by housing again: Just when it looked like he was getting out of bed, the perpetual sick man of the recovery rolls over with some phlegmy numbers.

But how disappointed should we be? Housing starts last month were still 10 percent higher than a year earlier. And building permits were strong, up 4.5 percent from February and 30 percent higher than they were a year earlier. Permits data tend to be the more dependable number anyway, compared with the choppy starts number that tends to get significantly revised. Of course, it’s a lot easier to file a building permit than to start building the thing.

So much of the recently nice housing data was apparently being goosed by the unseasonably warm temperatures over the last several months—which everyone knew. “I thought the weather would give us a bigger lift,” says Joe Lavorgna, chief U.S. economist at Deutsche Bank (DB), who forecast 725,000 housing starts in March.
…
Among those colored not surprised is Barry Ritholtz, whose “Debunking the Housing Recovery” series has done just that, fairly thoroughly. Ritholtz’s continued housing bearishness can be summed up thusly: There are still too many unsold homes on the market, they’re still too expensive for first-time buyers, there are still lots more foreclosures coming down the pike, and renting is too good an option for too many people, compared with owning.
…
Still, not everyone’s reading these numbers as bad.

Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce (CM), says the strong permits data refute the warm weather argument, and that construction will grow through the year. Shenfeld, who forecast 675,000 housing starts, believes housing will actually contribute to GDP this year, and that it might already be doing so, despite consecutive decreases in construction spending since December.

Still, even housing bulls are tepid in their enthusiasm. “This isn’t the big recovery in construction we’re waiting for. It’s merely a crawl off the bottom of low homebuilding levels,” says Shenfeld. “Still, the mini-bounce off the bottom has begun.”

Income or Property Tax Cut – Which would you prefer?

Posted on April 17, 2012 by grim
Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 168 Comments

Editorial on NJ Property Taxes from the Philly Inquirer:

N.J. needs property-tax relief, not income

The one thing that seems to get otherwise rational New Jersey residents to foam at the mouth is the state’s punishing property-tax system.

Property owners spend an average of $7,759 a year to support schools and municipal services. Sometimes they get tax rebates to offset the pain. Sometimes they don’t.

Now there is a dispute between state Senate and Assembly leaders, who want to give residents a property-tax credit on their state income taxes, and Gov. Christie, who wants to cut the income tax by 10 percent.

The governor’s plan would mean a $7,000 tax cut for millionaires, but only an $80 reduction for families earning $50,000. If that sounds wrongly skewed, it’s because it is. That paltry sum won’t help poor and middle-class New Jerseyans struggling with higher prices for food, gasoline, and health care.

The Christie plan also rests on a very shaky projection that state revenues will increase 7.3 percent next year, a figure that only the governor’s office seems to think is realistic in this fragile economy. His plan should be dismissed out of hand, so legislators can concentrate on meaningful property-tax cuts.

The Assembly’s proposal would give property owners earning less than $250,000 annually a 20 percent credit on their income taxes for property taxes paid up to $10,000. That would be paid for, in part, by raising the income taxes of millionaires.

The Senate plan would grant a 10 percent credit for those earning $250,000 or less, but relies on the governor’s revenue figures to cover costs. That’s too big a gamble.

The Assembly plan makes more sense. Only about 16,000 of New Jersey’s 2.6 million income-tax filers would see their tax rate increase from 8.97 percent to 10.75 percent. They can well afford to sacrifice a bit more than others who have shouldered the most in this down economy, with its job losses, wage cuts, and higher gas prices.

Both legislative plans would fold the property-tax credits into the state’s tax code. That means governors would no longer be able to dangle property-tax rebates in election years and pull them back when revenues fall.
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The legislative leaders are not that far apart. It’s time for them to work out their differences and speak in one voice. Divided, they will be conquered. New Jersey property owners deserve to win this argument.