In favor of which buyers?

From MarketWatch:

Housing market is tipping in favor of buyers, real-estate agents say

It’s been a long winter in the housing market. Economic unease, uncertainty about taxes, fluctuating mortgage rates, and rain and snow have kept buyers and sellers on the sidelines throughout much of the country.

Those insights – and more detailed observations – come from investment bank Credit Suisse, which polls real estate agents around the country every month. Its February edition, released a few days ago, paints a more uniform picture of housing conditions around the country, though some distinctly local matters, like the impact of the government shutdown on Washington, D.C., or the “red tide” in Gulf Coast Florida, stand out.

New York/Northern New Jersey“Buyers are out in force, but seem reluctant to purchase as prices creep higher.” “Majority of home buyers are in first-time price ranges.” “Some concern about taxes and the possibility of declining home prices in the future.”
Posted in National Real Estate, New Jersey Real Estate, Property Taxes | 95 Comments

Expect the worst

From Bloomberg:

Trump Tax Reform Hits Home in Wealthy New York Suburbs

Nick Boniakowski’s clients bought a home in Northern New Jersey in 2016. Now they want to move again.

They found a house they liked. It wasn’t the charm of new construction, an upgrade in location, better schools or a swimming pool that attracted them.

It was the lower property taxes.

Like many of Boniakowski’s clients at Redfin Corp.’s Hoboken office, these two are looking at their returns for the first time since President Donald Trump’s tax changes took effect and, despite more than a year of lead time, experienced a mild freakout. Maybe buying a new house –- the rare financial ordeal that’s more maddening than the annual April 15 ritual –- could be the solution.

….

The Tax Cut and Jobs Act promised to, well, cut taxes. For many, it does. But a new limit on the amount of state and local levies that can be deducted has costly and confounding implications for some, especially in high-income-tax, high-property-tax places like the New York City area.

Nearly 11 million taxpayers will be affected by the new cap on so-called SALT deductions on the taxes they file this year, and could lose out on a cumulative $323 billion, according to a February estimate from the U.S. Treasury Inspector General for Tax Administration.

For those people, the April 15 deadline carries a greater sense of dread than usual. New rules include a higher standard deduction and changes to the Alternate Minimum Tax, and it can be hard to say, even for experts, how they’ll affect individuals until they file.

The situation wasn’t made any simpler by state lawmakers, who argued that the cap on the SALT deduction was intended to hurt states that tend to elect Democrats, and concocted a series of elaborate workarounds that were shot down by the Internal Revenue Service.

People with more money and thus more complicated tax returns tend to file later in the season, meaning that the triggering has just begun.

“A lot of my clients are very surprised by what’s happening,” said Ann Callari, tax partner at RotenbergMeril, an accounting firm in Saddle Brook, New Jersey. “That’s the nature of taxes. People hope for the best and don’t pay attention. They don’t notice until it affects them.”

In the meantime, plenty of taxpayers are expecting the worst.


Posted in Economics, New Jersey Real Estate, Property Taxes, Unrest | 65 Comments

Facebook attempts to stop discrimination, after supporting it, and profiting from it, for years.

From HousingWire:

Facebook making massive changes to ad platform after being accused of enabling housing discrimination

Facebook is making significant changes to its advertising platform after the social media monolith was accused of enabling discrimination in housing, employment, and lending.

The changes come after years of scrutiny into Facebook’s ad practices, which appeared to allow advertisers to purposefully exclude certain people from seeing housing, employment, or lending ads.

Last year, the Department of Housing and Urban Development filed a complaint against Facebook, claiming that the social media giant’s advertising platform enabled property owners to discriminate against prospective renters and buyers based on their race, color, religion, sex, familial status, national origin, disability, or other factors.

HUD’s investigation began in response to a ProPublica article in October 2016, which said Facebook gave advertisers the ability to exclude certain ethnic groups from seeing the ads.

Fair housing groups later filed a lawsuit against Facebook in March 2018, saying its ads still discriminate against protected groups under the Fair Housing Act, including women, veterans with disabilities and single mothers.

After HUD filed its complaint against Facebook, the site announced that it was removing more than 5,000 ad target options to “help prevent misuse.” The site claimed that the removed options include “limiting the ability for advertisers to exclude audiences that relate to attributes such as ethnicity or religion.”

But Facebook announced Tuesday that it is undertaking a massive overhaul of its advertising platform that goes well beyond any of the previously announced changes.

According to Facebook, it will no longer allow anyone or any company to target housing, employment, or credit ads by age, gender or zip code.

Posted in Demographics, Economics, Employment, Mortgages, National Real Estate | 46 Comments

A new tax for property owners

From the Star Ledger:

The controversial ’rain tax’ bill designed for N.J. flood defense has been signed into law 

Local authorities in New Jersey now have a new tool to manage stormwaters and flooding.

Gov. Phil Murphy on Monday signed into law the Clean Stormwater and Flood Reduction Act, which authorizes municipalities, counties and certain authorities in the state to establish stormwater utilities.

The goal of the move is to help local authorities prevent future flooding, and manage sources of runoff pollution. But opponents of the measure have long derided the effort as little more than a “rain tax.”

If a town decides to create a stormwater utility, that utility would bill property owners based on the amount of impermeable surfaces like roofs and parking lots on their land. The goal of that fee system is to ensure that property owners are being charged proportionally based on their contribution to stormwater runoff. But it’s because of the potential for new utility fees that opponents of the new law, mostly Republicans, have labeled the measure a “rain tax.”

“This law adds yet another tax on our already overburdened residents and businesses, though there is no language to define how much people will be charged, how the funds will be collected or how the funds generated by it will actually address stormwater issues,” said Ray Cantor, the vice president of government affairs for the New Jersey Business and Industry Association.

It is unclear how much these new utilities, if created, would cost for property owners.

Posted in New Jersey Real Estate, Politics, Property Taxes, Unrest | 78 Comments

NJ a bit more unequal

From the Star Ledger:

The gap between rich and poor in N.J. keeps getting bigger. See how bad it is in your town.

New Jersey is becoming a more unequal place to live.

Over the past five years, the gap between the rich and the poor has widened, according to new U.S. Census data. The state now ranks in the top ten in the nation for income inequality.

Edmond Berisha, an assistant professor of economics at Montclair State University, said this was because middle class families weren’t making enough to keep up with inflation, while the richest 10 percent were actually bringing in more money than a decade ago.

About half of all income in the state was going to that richest 10 percent, he said, and an improving stock market only widened that divide.

While Essex ranks as the most unequal county in New Jersey, there are high concentrations of wealth across the state.

In the map below, the darker areas are the more economically segregated. Click on an area to see whether it has become more or less equal over the past decade.

Income Inequality Across NJ – Map

Posted in Demographics, Economics, New Jersey Real Estate | 89 Comments

Blame it on the parents

From CNBC:

Here’s how many millennials got money from their parents to buy their homes

Millennials aren’t buying homes like their parents and grandparents did. That’s largely because it’s harder to afford a house these days: high real estate prices, stagnant wages and student loans hold young people back.

And a good chunk of those who have been able to purchase a home haven’t done so on their own. New data from financial services company Legal & General finds that 43 percent of homeowners age 34 and younger got money from family or friends.

Likewise, just over half of prospective homeowners 34 and under expect to benefit from financial assistance when they do take the plunge, L&G finds.

“House price growth in the U.S. has outstripped wage growth in 2018, meaning that on average across the U.S.A., houses are becoming more unaffordable,” the survey says. “This suggests the need for assistance [from family or friends] with a home purchase is on the rise. ”

One reason so many millennials aren’t able to afford homes is because of the rising cost of college. Between 1988 and 2018, the average price of tuition at a public four-year institution rose by more than 200 percent.

The L&G survey found that 35 percent of college graduates who are carrying debt and don’t already own say their student loans have made it “much more difficult” to save up to buy a home.

As a result, “many millennials have effectively given up on owning their own home — at least in the near term,” the survey says. “Of those under 35 who don’t already own, 43 percent say they don’t expect that to change in the next five years — most often (40 percent) because it’s simply not feasible to save for a down payment in that time frame.”

Apart from real estate, many millennials also routinely get help from their families to cover education costs, bills and child care expenses, reports Hannah Seligson for the The New York Times.

And many parents are willing to step in. Around 90 percent say they would give their adult children money to pay off debt if they asked for it, for example, a 2018 survey from CreditCards.com found. More than 50 percent of parents said they’d be willing to give their kids $1,000 or more.

Posted in Demographics, Economics, National Real Estate | 168 Comments

Crisis officially over?

From Inman:

Delinquency rates fall to pre-housing crisis levels: CoreLogic

The number of homeowners failing to make mortgage payments has dipped to levels unseen since before the 2008 housing crisis.

Nationwide, only 4.1 percent of homeowners were delinquent on their mortgage in December, according to CoreLogic’s latest Loan Performance Insights report released Tuesday. Down from 5.3 percent in December 2017, the latest rate is the lowest since January 2000.

Yearlong delinquency rates, which have been falling steadily since the start of 2018, have not been this low since early 2006 – just before the housing and financial crisis of 2008-2009.

Foreclosures, in which property is seized due to an owner’s inability to pay, fell to 0.4 percent from 0.6 percent the year before.

“Our latest home equity report found that the average homeowner saw a $9,700 increase in their equity during 2018,” said Dr. Frank Nothaft, chief economist for CoreLogic, in a prepared statement. “With additional ‘skin in the game,’ rising equity reduces the chances of a foreclosure, helping to push the foreclosure rate down to its lowest level since at least 2000.”

Posted in Economics, Foreclosures, Mortgages, National Real Estate, Risky Lending | 61 Comments

Shore Uprising

From the NYT:

The Jersey Shore, a storied summer vacation spot, has become the newest national battleground over regulating and taxing the internet economy.

New Jersey is one of the first big states to adopt a surcharge on short-term rentals — a so-called Airbnb tax. It kicked in Oct. 1 and is causing vacationers to rethink their summer travels and stirring anxiety among the homeowners who rely on them.

The fallout over the 11.6 percent tax has inserted New Jersey into a broader debate as states and communities grapple with the explosive growth of the online home-sharing economy. A patchwork framework of local ordinances has failed to keep pace with the rapid rise of Airbnb, the largest home-sharing site, which was valued at $31 billion two years ago and has upended the rental market around the world.

Much like Uber’s dominance has caused a regulatory challenge for cities and Amazon’s ascent has prompted states to adopt internet sales taxes, the popularity of Airbnb has begun to push lawmakers to impose new rules even as they find ways to tap the enormous revenue it generates.

George Triebenbacher, 56, grew up on Long Beach Island in New Jersey and now owns seven properties there that he’s been renting out since 2010. His weekly rates vary — three homes rent for $1,650, three go for $5,500 and a larger home fetches $10,000.

In past years, by this point in March, all his homes had typically been reserved for the summer. But this year, about one-fourth of his rental weeks are still available, he said, and some people who had initially reserved are backing out.

“People are actually canceling and forgoing deposits to get away from the taxes,” he said. “There’s no question that there’s all kind of upheaval being created by this tax.’’

Passage of the short-term rental tax flew largely under the radar last summer, overshadowed by the battle between Mr. Murphy and Democratic legislative leaders over a different tax — on the wealthy — that nearly shut down the state’s government.

But now many along the shore say the rental tax places one of the state’s main summer economic engines in its crosshairs. The 11.6 percent tax applies to all rentals fewer than 14 days, including those made on home-sharing sites or directly between a renter and an owner. The only exceptions are rentals arranged through a realtor, which are not subject to the tax.

John Brennan owns a home on Long Beach Island that he is listing on Airbnb for $2,200 a week. By late winter he said he typically has 70 percent of the season booked. But so far, nothing has been rented. “They can’t just keep taxing us,” he said.

Maria Vitale, who has rented out her home in Lavallette for nearly 10 years, is charging the same weekly price, $2,400, as last year, but said many would-be renters had been turned off by the additional $280 in taxes.

“New Jersey people, we’ve been taxed enough,” she said.

The tax is taking hold at a time when the coast is still not fully recovered from Hurricane Sandy, Ms. Vitale noted. Still, there are signs of optimism: Her kitchen is being used less, she said, as renters seek out restaurants that have begun to reopen after the devastating 2012 storm.

“Knowing what the Jersey Shore went through six-plus years ago,” she said, “I don’t think this is the opportune time to tax them even more.”

Posted in Demographics, Economics, Politics, Shore Real Estate | 78 Comments

Our own little Disney

From the Star Ledger:

Inside the N.J. town where retail spending beats Hollywood and tourism rivals Disney

Name any brand, and it probably has at least one location in Paramus — some have two or three.

At a time when retail all over the world is struggling to survive, it seems that nothing — not even local laws that prohibit stores from actually being open seven days a week — can stop Paramus. The former farming community already sees more retail sales than any other zip code in the country (yup, it even beats Beverly Hills’ luxurious Rodeo Drive) and it’s continuing to add more shopping complexes.

Paramus is home to four major malls and a slew of other retailers that line the bustling highway routes 4 and 17 that bisect the town. And, no site sits stagnant for long. An office building was razed and a shopping center, called Paramus Crossroads, is being built near the intersection of Route 17 and the Garden State Parkway, between PC Richards and a PGA Superstore.

“Paramus is one of the most dynamic and desirable retail markets in the country, and has been for many years,” said Jared Minatelli, director of asset management for Advance Realty, which along with Invesco Real Estate developed Paramus Crossroads.

More than $6 billion in retail sales happen in Paramus each year.

The biggest of the Paramus malls (which is also the largest mall in New Jersey) is Westfield Garden State Plaza. It spans more than 2 million square feet and was named one of the most lucrative malls in America. It sits on 198 acres at the intersection of routes 4 and 17.

Garden State Plaza alone gets about 20 million visitors per year. Compare that to the number of visitors to the Eiffel Tower (7 million) or the number of annual guests at Disney World’s Magic Kingdom (20.5 million).

What makes Paramus’ retail powerhouse status even more impressive is almost all of its stores are only open six days a week. Retailers are forced by county — and town — Blue Laws not to sell pretty much anything but food on Sundays.

Posted in Economics, New Development, New Jersey Real Estate | 50 Comments

Fiscal … Death … Spiral

From the Star Ledger:

N.J. is in a ‘fiscal death spiral’ and Murphy call for new tax on millionaires isn’t the answer, top Democrat says 

New Jersey’s Democratic state Senate president, who is steadfastly opposed to the Democratic governor’s call to hike taxes on the wealthy, said Thursday that the Garden State is in a “fiscal death spiral” that can’t be repaired by raising taxes.

State Senate President Stephen Sweeney’s opposition to Gov. Phil Murphy’s plan to generate an estimated $447 million in new tax dollars through a millionaires tax complicates upcoming state budget negotiations, to say the least.

Murphy’s $38.6 billion proposed budget, which he unveiled Tuesday, proposes expanding the top marginal tax rate of 10.75 percent enacted last year to income over $1 million. During last year’s budget battle, Murphy sought the millionaires tax but agreed to a tax increase on income over $5 million.

“I’m not supporting it,” Sweeney, D-Gloucester, said of the millionaires tax during an interview with NJ Advance Media Thursday at the Statehouse in Trenton. “I’m not raising the income tax.”

Despite this conflict, Sweeney acknowledged the note of reconciliation Murphy struck Tuesday and said they’re already starting off on better terms than last year, when Murphy proposed raising more than $1.6 billion in taxes, including the gross income tax and the sales tax, and slashed $123 million for Democratic priorities.

Posted in Economics, New Jersey Real Estate, Politics | 17 Comments

Going up again?

From CNBC:

Home prices could be on the verge of heating up again, according to CoreLogic

Home prices in January rose at the slowest pace in nearly seven years, but buyers shouldn’t feel too confident just yet. Prices might be on the verge of picking up yet again.

Home values in January were 4.4 percent higher than a year earlier, smaller than the 4.7 percent annual gain in December, according to CoreLogic. Price gains have been shrinking since April, when they peaked at a 6.6 percent gain. January’s read was the smallest gain since August 2012.

“The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth,” said Frank Nothaft, chief economist for CoreLogic. “Fixed-rate mortgage rates have dropped 0.6 percentage points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid homebuying season this spring.”

The average rate on the 30-year fixed mortgage rose above 5 percent at the start of November but then began sliding. It now sits around 4.5 percent, right around where it was a year ago, when price gains were in the 6 percent range annually.

So that could mean the end of the current price chill, as more buyers this spring compete for a still-slim supply of listings for sale. Inventories have started to rise nationwide, but mostly on the higher end of the market, which is not where the bulk of current demand is. The supply of entry-level homes for sale is still very, very low, as builders continue to focus on more expensive homes, given today’s high costs for land and labor.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 171 Comments

Minimum wages up – Property taxes up

Oh, you’ll find a way. From NJTV:

How will NJ’s new $15 minimum wage affect local governments?

Middletown has a population of 66,000. The Monmouth County city has horse farms, the beach and Big Mike’s Little Red Store. Middletown Mayor Tony Perry says raising the state’s minimum wage to $15 an hour will have a massive impact.

“We have estimated that over the course of the 5-year phase-in period that the minimum wage is set to evolve over, it has a $750,000 impact on our budget. That’s 1.5 percent of our budget,” said Perry.

Perry says that’s not just for wages but for added Social Security taxes and pension contributions. But how will Middletown pay for it?

“The taxpayers of Middletown can be assured that we’re doing everything that we can, budget meetings every single day about how to confront this mandate from Trenton and decide how we’re going to face it. And I can assure you services are not going to be cut, but we’re going to find a way, the best ways, to address this $15 minimum wage,” he said.

Already one senator, Kristin Corrado, has introduced a bill to restore the exemption, saying, “The new minimum wage law is forcing local leaders to make impossible choices.”

The New Jersey League of Municipalities says it’s unlikely towns and townships and boroughs across the state will raise property taxes because of the 2 percent cap to make up for having to pay higher wages.

“And this is all going to fit underneath that cap. I think what it will do, is it will certainly for some services that have a great deal of interface with the public, such as recreation programs, youth programs, beach badges, it’ll likely increase registration fees. It might result in a decrease in hires or a streamlining of the services,” Cerra said.

Posted in Economics, Employment, New Jersey Real Estate, Politics, Property Taxes | 68 Comments

Single women second largest group of homebuyers

From the Press of Atlantic City:

In New Jersey, more single women are buying homes. Here’s why

Angela Cottrill likes having control over the place where she lives.

The single hairstylist wanted the investment of owning a condo, so she put in extras hours at her job and saved money to buy her own home after living with roommates in apartments and in a small house in Linwood.

“After a couple of years renting, it sort of became a little silly to throw money out or spend time fixing up the place when I know when my lease is up or when I left, I would essentially be left with nothing,” said Cottrill, 28, who bought her Somers Point condo in September.

After married couples, the next largest demographic group of homebuyers is single women, according to the National Association of Realtors and New Jersey Realtors.

“Unmarried couples, single females and single males, they all seem to be a growing share, especially among younger, first-time buyers,” said Jessica Lautz, vice president of demographic and behavior insight for the Realtors group.

More single women are purchasing homes each year due to their increased job stability, said Angela Desch, broker manager, residential and commercial, Coldwell Banker Argus Real Estate in Ventnor, and vice president of the Atlantic City and County Board of Realtors.

“For example, some professions, like nursing, where there is a shortage and wages seem to be quite competitive, those in that industry are able to finally afford a home on one income. First-time homebuying grants are also helping,” Desch said.

Posted in Demographics, Economics, New Jersey Real Estate | 38 Comments

Millennials don’t understand the concept of repair.

You have an entire generation that grew up in a culture of disposable everything. Why would anyone think houses should be different? You don’t fix things, you get the new version. From CNBC:

Most millennial homeowners have buyer’s remorse, a new survey shows

Millennial homeowners have a bad case of buyer’s remorse, according to a new survey.

Nearly two-thirds, or 63 percent, of millennial homeowners surveyed by Bankrate.com said they had regrets about buying. That is more than any other age group, defined in the survey as people aged 23 to 38, and nearly double the regret rate of baby boomers. Overall, about 44 percent of U.S. homeowners say they have regrets about their purchase.

Millennials have been slow to enter the ranks of homeowners, thanks to the last recession and the housing crash that caused it. Now, as they age into marriage and parenthood, they are buying at a faster pace. Many, however, are regretting it.

What seems to irk millennials most is maintenance. They didn’t factor in the high costs of fixing what breaks. Young buyers may have been renters previously, and not even considered maintenance since it was never a factor financially.

“Repairs and maintenance costs are something all homeowners face,” said Bankrate analyst Deborah Kearns. “Consumers should expect to set aside 1 percent of their home’s purchase price each year to keep in a savings account to cover these expenses. Budgeting early on can prevent dipping into emergency savings or going into debt to handle these added expenses.”

Other regrets include the type and location of the home purchased. About 12 percent of those surveyed said the house they bought was too small, while 5 percent said it was too large. Despite the old real estate adage, “location, location, location,” 8 percent said they bought in the wrong location.

Posted in Demographics, National Real Estate, Unrest | 112 Comments

Still rising?

From CNBC:

Home prices in December rose at the slowest pace since August 2015: S&P Case-Shiller index

Homebuyers have a limit to what they can afford, and sellers are slowly having to adjust to that new reality.

Home prices increased 4.7 percent annually in December, down from 5.1 percent in November, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That is the slowest pace since August 2015.

The 10-city composite annual increase came in at 3.8 percent, down from 4.2 percent the previous month. The 20-city composite rose 4.2 percent year over year, down from 4.6 in the previous month.

“Even at the reduced pace of 4.7 percent per year, home prices continue to outpace wage gains of 3.5 percent to 4 percent and inflation of about 2 percent,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales.”

The average rate on the 30-year fixed jumped to just over 5 percent at the start of November but then began falling in December. It has been hovering at just below 4.5 percent for the past two weeks, according to Mortgage News Daily. Lower rates not only help potential buyers afford a new home, they also help more buyers qualify for a mortgage.

Posted in Demographics, Economics, National Real Estate | 70 Comments