SALT Cap not long for this world?

From CNBC:

House passes bill to lift $10,000 cap on state and local tax deductions

The Democratic-controlled House passed a bill on Thursday that would do away with the $10,000 limit on the itemized deduction for state and local taxes for two years.

Legislators narrowly voted in favor and did so largely along party lines: 218 to 206.

The measure, dubbed the “Restoring Tax Fairness for States and Localities Act” or HR 5377, proposes increasing the so-called SALT cap to $20,000 for married taxpayers who are filing jointly in 2019.

It also calls for the elimination of the SALT cap in 2020 and 2021.

The bill, sponsored by Rep. Thomas Suozzi, D-N.Y, along with Reps. Bill Pascrell, D-N.J., and Mike Thompson, D-Calif., marked the latest effort by blue states to fight back against certain provisions in the Tax Cuts and Jobs Act.

Though the bill is unlikely to get much further in the remaining weeks of the year, there’s always the possibility it may return in 2020.

“There is no chance that this bill is getting through the Senate, but I think Democrats will continue to talk about the impact of the SALT deduction,” Kaeding said.

Legislators in support of the bill plan to continue pushing.

“This is going to continue to be an issue that comes up every year until we pass and sign it into law,” said Rep. Josh Gottheimer, D-N.J. “It’s a hit to so many parts of the country, a tax hike for my district and for a lot of us in the Northeast and on the coasts.”

Posted in National Real Estate, New Jersey Real Estate, Politics, Property Taxes | 46 Comments

Delinquencies at 20 year low

From CoreLogic:

The States Leading in Nationwide Delinquency Rate Drops

The overall delinquency rate was 3.8% nationwide in September, down from 4.4% a year earlier and the lowest for the month of September in more than 20 years, according to the latest CoreLogic Loan Performance Insights Report. Five states, CoreLogic notes, reported even larger decreases in their delinquency rates.

Year-over-year, the states that logged the largest decreases included: Mississippi (-1.1 percentage points), North Carolina (-1.1 percentage points), Louisiana (-1.0 percentage points), New Jersey (-1.0 percentage points) and South Carolina (-1.0 percentage points). CoreLogic notes that the decreased activity in the Carolinas may be due in part to a recovery from the elevated levels in 2018 in the wake of Hurricane Florence.

While overall delinquency fell, serious delinquency rates have begun to flatten out at low levels. The serious delinquency rate, defined as 90 days or more past due, including loans in foreclosure, was 1.3% in September 2019, down from 1.5% in September 2018. Likewise, the share of mortgages that were 30 to 59 days past due—considered early-stage delinquencies—was 1.9% in September 2019, down from 2.2% in September 2018. The share of mortgages 60 to 89 days past due was 0.6% in September 2019, down from 0.7% in September 2018.

Some of the highest delinquency rates were in metro areas including New York and Miami, though Miami still experienced annual declines. The New York metro had the highest rate at 5.1%, while Miami, with the second-highest rate at 5%, saw a sharp decrease in the overall delinquency rate, falling from 6.1% in September 2018.

Posted in Economics, Foreclosures, National Real Estate, Risky Lending | 67 Comments

Idiots in Trenton

From the Star Ledger:

High-cost, high-tax New Jersey is no place for old men – or old women

You might have seen that Fairleigh Dickinson poll released last week in which a sample of New Jersey residents were asked, “Are you considering a move out of New Jersey in order to improve your standard of living?”

The pollsters reported that 44 percent of New Jerseyans said they have considered leaving the state at some point in their lives.

More important, it showed that a third of those approaching retirement age said they were considering moving out within a mere five years.

The deal called for an increase in the gas tax. That is offset by a small reduction in the sales tax as well as elimination of the estate tax.

There was also a change in the way the state taxed retirement income, a change that created that cliff.

Until that deal went through, the state taxed retirement income as regular income. That was an open invitation for retirees to leave the Garden State for greener pastures, such as Pennsylvania, which excludes pension income from its state income tax, or Florida, which has no state income tax at all.

But there was some good news and some bad news in that 2017 deal.

The good news is that the first $100,000 of retirement income is exempt from the tax.

The bad news is that if you earn one penny over $100,000 then your entire pension is taxed from the first dollar.

This so-called “tax cliff” has the perverse effect of discouraging people from earning the income they need to survive in a high-tax state like New Jersey.

It’s possible to find yourself on the hook for $3,000 or so in taxes for a mere dollar in income.

Posted in Demographics, Economics, New Jersey Real Estate, Unrest | 190 Comments

Nobody wants to sell?

From the Real Deal

Home prices accelerate nationally as owners stay longer

The pace of rising home prices quickened in September and existing home sales ticked up 1.9 percent.

Average home prices in cities across the nation rose 3.2 percent compared with the same period in the previous year, the Wall Street Journal reported. The year-over-year rise in August had been 3.1 percent.

The gains mark a two-month departure from a long period of slowinggrowth in home prices.

The gains were more moderate — just 2.1 percent — in the large urban areas tracked by the composite S&P CoreLogic Case-Shiller U.S. National Home Price Index.

A separate report released last week by the Federal Housing Finance Agency echoed those findings, while the National Association of Realtors said existing home sales increased by 1.9 percent in October.

Homeowners are choosing to stay in their homes longer, in part because of a dearth of affordable options and tax abatements for older homeowners, according to a Redfin study, the Washington Post reported. Owners in homes where walkable amenities are available are also less likely to move, and houses with higher walkability scores sell faster, the study found.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 21 Comments

No recession without housing?

Home price gains accelerate in September, S&P Case-Shiller Index says

Sales of new U.S. single-family homes unexpectedly fell in October following recent strong gains, but the overall housing market remains supported by lower mortgage rates.

After shrinking for much of this year, home price gains are now growing again.

On a national level, prices rose 3.2% annually in September, up from a 3.1% gain in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. The 10-City Composite annual increase was 1.5%, unchanged from the previous month. The 20-City Composite rose 2.1% annually, up from 2.0% in August.

Of the 20 cities covered, Phoenix, Charlotte, North Carolina, and Tampa, Florida, saw the highest annual gains, with 6.0%, 4.6% and 4.5% annual gains, respectively. Ten of the 20 cities saw larger price increases in the year ended in September 2019 versus the year ended in August 2019.

Home prices are rising most in the Sun Belt, where housing is generally more affordable than in the East or West. San Francisco was the only city in the composites to show an annual decline in home prices (-0.7%).

“After a long period of decelerating price increases, it’s notable that in September both the national and 20-city composite indices rose at a higher rate than in August, while the 10-city index’s September rise matched its August performance,” Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, wrote in a release. “It is, of course, too soon to say whether this month marks an end to the deceleration or is merely a pause in the longer-term trend.”

Other measures of home prices have shown multiple months of reacceleration in prices, and other factors in the housing market point to price strength going forward.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 33 Comments

No housing crisis yet…

From MarketWatch:

Existing-home sales rebound 1.9% in October as low mortgage rates continue to provide a lift

Sales of previously-owned homes rose 1.9% in October — the latest housing statistic to demonstrate the upward lift low mortgage rates have provided to the U.S. real-estate market.

Existing-home sales occurred at a 5.46 million seasonally-adjusted annual pace in October, up from a 5.38 million rate in September, the National Association of Realtors said Thursday. On a year-over-year basis, overall sales were up 4.6%.

Economists polled by MarketWatch had expected the average annual rate of existing-home sales to increase slightly more to 5.47 million.

The median sales price ticked up 6.2% over the past year to $270,900, as prices increased across all parts of the country. Unsold inventory was at a 3.9-month supply, down from 4.1 months in September and 4.3 months a year ago. Nearly half (46%) of homes sold in October were on the market for less than a month.

Sales volume varied from region to region, the National Association of Realtors reported. Sales rose in the Midwest and the South, but fell in the more expensive regions of the Northeast and the West.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 77 Comments

How low can inventory go?

From HousingWire:

U.S. housing market experiences largest inventory decline since 2018

In October, America’s home sales rose by 3.9%, marking the fourth month of the past six to post a year-over-year increase in sales, according to the RE/MAX National Housing Report.

“October continued a recent win streak for home sales, and the market is positioned much better than it was a year ago,” said RE/MAX Holdings CEO Adam Contos. “Demand is strong, due in part to low-interest rates, but buyers have limited options because inventory remains such a challenge.”

RE/MAX reports that although sales increased last month, the nation’s housing inventory posted a steep decline. According to the company, housing inventory fell 9% year-over-year across the report’s 54 housing markets, representing the largest retreat since May 2018.

Furthermore, October posted a 3.1-month supply of inventory, marking the lowest October amount in the report’s 11-year history. RE/MAX indicates homes spent 49 days on the market, which is the second-lowest figure for October in report history.

Posted in Demographics, Economics, National Real Estate | 120 Comments

NJ adds jobs in Oct – unemployment up to 3.2

From InsiderNJ:

NJDOL: New Jersey Payrolls Grow in October

Hiring by New Jersey employers picked up in October while New Jersey’s unemployment rate edged higher for the month, according to estimates produced by the U.S. Bureau of Labor Statistics. Total nonfarm wage and salary employment in the state increased by 10,200 to reach a seasonally adjusted level of 4,205,800. The state’s unemployment rate edged higher by 0.1 of a percentage point to 3.2 percent for the month, remaining below the national unemployment rate of 3.6 percent. The increase was due, in part, to more New Jersey residents entering the labor force seeking employment.

Looking at the longer term, over the year, October 2018 – October 2019, employment in New Jersey was higher by 30,200 jobs. Gains were recorded in the private sector (+32,400) of the New Jersey economy but losses were recorded in the public sector (-2,100). Since February 2010 (the low point of the last recession), New Jersey’s private sector employers have added 414,100 jobs.

Based on more complete reporting from employers, the previously released total nonfarm employment estimate for September was revised lower by 1,600 to show an over-the-month (August – September) decrease of 1,800 jobs. Preliminary estimates had indicated an over-the-month decrease of 200 jobs. The state’s revised September unemployment rate was unchanged at 3.1 percent.

In October, employment increases were recorded in seven out of nine major private industry sectors. Industry sectors that gained jobs include leisure and hospitality (+5,900), education and health services (+2,300), other services (+2,000), trade, transportation, and utilities (+1,900), professional and business services (+1,100), construction (+300), and information (+200). The manufacturing sector recorded a job loss for the month (-1,400), while the financial activities sector was unchanged. Over the month, public sector employment was lower by 2,100 jobs, mainly at the local level (-1,300).

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 76 Comments

What could possibly go wrong?

From the Star Ledger:

Murphy pushes taxpayer-funded bank for N.J. No state has done that in a century. 

Gov. Phil Murphy on Wednesday took the first steps to make New Jersey the first state in a century to open a state-owned bank.

The Democratic governor signed an executive order to form a 14-member board to oversee the taxpayer-funded institution, which was a centerpiece of his campaign in 2017.

The public bank, which would invest millions of dollars in state deposits usually kept in commercial banks back into New Jersey communities and stimulate the economy, would be owned by the state’s taxpayers, Murphy said Wednesday.

“I still believe in the ability of public banks owned by the people of New Jersey to be a force for good in helping small businesses succeed, in providing student loans at affordable rates and opening lines of credit to municipalities needing long-term infrastructure and affordable housing,” the governor said before signing the order at an event in Newark.

The announcement did generate some controversy. The board, which will be chaired by state Commissioner of Banking and Insurance Marlene Caride, is comprised of nine administrative members and four public members, including Derrick Green, who became embroiled in a financial scandal for his political work in Bermuda, which came to light last year. That appointment drew criticism from Republican lawmakers.

Posted in New Jersey Real Estate, Politics, Where's the Beef? | 116 Comments

Pay up suckers

From HousingWire:

Are homes under $250,000 nearing extinction?

A recent report by economic research consultancy Capital Economics shared a stunning statistic: The number of vacant single-family homes for sale priced under $250,000 has halved since 2012.

According to the report, at the start of the third quarter of 2019, there were only 550,000 vacant homes on the market priced under $250,000. That’s half as many as there were just seven years ago.

Capital Economics attributes part of this to lower housing inventory, in general, stating that the overall number of vacant single-family homes for sale has dropped 25% in the last seven years. 

“The homeowner vacancy rate, that is the number of vacant homes for sale (which account for just over half of all homes for sale) as a share of all owner-occupied homes did see a marginal rise to 1.45% in the third quarter,” the report stated, citing the latest U.S. CensusHousing Vacancies and Homeownership survey. 

“But that was up from a 40-year low in the second quarter,” the report continued. “Sales are therefore being held back by a lack of homes on the market, and in particular a shortage of cheaper homes.”

Capital Economics cites that in the past two years since this year’s Q3, 2.9 million new households were formed. For comparison, only about 1.9 million households were formed in the two years to the third quarter of 2017. 

Household formation could lead to more people being ready to buy a home, but the report issues a warning there as well. 

“New households will have found it increasingly hard to find an affordable home to buy,” the report states. “The share of vacant single-family homes for sale priced under $250,000 has been on a steady downward trend since 2014, and averaged just 57% in the year to Q3 2019.”

“Moreover, with credit conditions relatively tight, and getting tighter, potential homebuyers will not be able to stretch their budgets to buy a more expensive home,” the report continued. “…until homebuilders ramp up production of cheaper properties, home sales, and in particular sales to first-time buyers, will see only minimal growth.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 154 Comments

Democrats lose NJ

From the Star Ledger:

How Gov. Murphy helped Republicans win

Assemblyman Jon Bramnick, the Republican leader, says he is grateful that Gov. Phil Murphy engaged so heavily in this week’s election because it helped Republicans like him win close races.

“Did Murphy help me?” Bramnick asked. “Absolutely and without a doubt. The last thing Democrats wanted was his face on TV.”

Murphy has a lock on the progressive wing of the Democratic Party, but he is not a popular governor overall. The latest Monmouth University poll put his approval rating at 41 percent, and after two years in office, 20 percent have no opinion.

The gift he gave to Republicans in this election was to remind voters that Democrats are likely to raise taxes. That came during a talk at Rowan University when he answered a question with this gem: “If you’re a one-issue voter, and tax rate is your issue…we’re probably not your state.”

In his defense, he spoke the truth about taxes New Jersey has the highest property taxes in the country, and we rank #9 in combined state and local taxes, as a share of income.

But it was another rookie mistake by our sophomore governor, because it sounded like he was telling people to quit whining and accept punishing taxes as a fact of life. Republicans saw an opportunity and pounded it over and over, especially in the swing districts they were worried about losing, like Bramnick’s in Union County.

Murphy then helped more by purchasing $2 million in TV ads featuring his face, barnstorming in suburban districts where he’s deeply unpopular, and even claiming credit for his imaginary fix of NJ Transit’s woes.

The bottom line in this election is that Democrats missed an opportunity and lost some ground. Republicans picked up a Senate seat and at least two Assembly seats. That doesn’t challenge Democratic control, but it will make it tougher to win close fights, like the effort to legalize marijuana or extend voting rights to those on parole and probation.

Posted in New Jersey Real Estate, Politics, Property Taxes, Unrest | 144 Comments

So Much For Reurbanization

From Forbes:

Millennials With Families Are Leaving Major Cities For The Suburbs, Transforming Them Into ‘Hipsturbia’ 

Just as their parents flocked to the suburbs, city-loving Millennials are doing the same yet transitioning some areas to “Hipsturbia,” a phrase revealed in the Urban Land Institute’s  (ULI) joint report with PwC, Emerging Trends in Real Estate® 2020. The data comes from interviews and surveys of over “2,200 real estate, development, and investment experts.” 

Millennials are transforming suburbs as they seek out walkable downtowns where they can live, work, play and raise families. Urban planners, municipalities, large employers and developers are paying attention. As Millennials face the realities of raising children and growing their families, the big cities they love are losing their shine. No surprise there. 

Listen to Anita Kramer, SVP, Center for Capital Markets and Real Estate at ULI. “It’s kind of coming from a few different directions. We know that Millennials are attracted to urban core living which is a major reason for the revitalization of suburbs into an urban walkable lifestyle and all the liveness that comes with that.”

The ULI-PwC report explains that “our interviewees and focus groups have uncovered the desire of the suburbs to create their own versions of the live/work/play district.” The key to Hipsturbia is a having a happening downtown, just as the cities these Millennials are leaving do. The report cites New Jersey communities including Maplewood and Summit as “well along the path,” to Hipsturbia. 

Does this mean hip cities will soon lose scores of Millennials waiting in line for Sunday brunch at their fave neighborhood places amid stroller gridlock? “We don’t see the cities emptying. Hipsturbia can happen best in suburbs closer in,” Kramer said.  

Take Brookline, Massachusetts, long known as a desirable close-in suburb of Boston since it borders the city on several sides. Brookline’s streets are now clogged with Audis and Range Rovers packed with young families vying for parking spaces around core areas with restaurants of all types and coffee houses. Housing prices always high because of Brookline’s prime location continue to escalate. The biggest trend there which follows the report is developers snapping up older two-family homes, tearing them down and replacing them with family living condominiums, with asking prices of up to $3.2 million each.

Posted in Demographics, Economics, Housing Recovery, National Real Estate, New Development | 67 Comments

Will they buy?

From HousingWire:

The homebuyers are coming. The homebuyers are coming

A flood of first-time homebuyers is about to hit the market over the next three years, according to newly released analysis from TransUnion

TransUnion is currently projecting that at least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and 2022. 

That figure is more than any three-year period in the last decade, according to TransUnion’s report. 

On top of that, if economic growth exceeds expectations, the number of looming first-time homebuyers in the next three years could reach as high as 9.2 million. 

“While we’ve recently seen a boom in refi activity, actual homeownership rates are down. Challenges have included high home prices, sluggish wage growth and limited housing inventory,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion. 

“But we may be starting to see daylight as slowing home price appreciation, low unemployment, increased wage growth and low interest rates are helping affordability,” Mellman added. “As a result, we are optimistic that first-time homebuyers will contribute more to home ownership than at any time since the start of the Great Recession.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 83 Comments

Slay the Zombies

From HousingWire:

ATTOM: Zombie foreclosures are ticking down

The amount of vacant homes in the U.S. continues to sit at a lull, slowly ticking down, according to a new data set from ATTOM Data Solutions

In the fourth quarter of 2019, there were 1,527,142 single-family homes and condos left vacant, representing 1.5% of homes in the U.S.

In Q3, 1.6% of homes were vacant in the U.S., meaning there was a small tick down in the vacant home sector in this quarter.

“While pockets of zombie foreclosures remain, neighborhoods throughout the country are confronting fewer and fewer of the empty, decaying properties that were symbolic of the fallout from the housing market crash during the recession,” Teta said.

Washington, D.C. continues to have the highest percentage of zombie foreclosures, at 10.5%. Kansas (7.9%); Oregon (7.9%); Montana (7.4%); Maine (6.7%) and New Mexico (5.8%) are all states that sit above the national average of zombie foreclosures, which is 2.9%.

New York had the highest number of zombie properties, with 2,266. Florida followed with 1,461; Illinois with 892; Ohio with 823 and New Jersey with 398. However, these numbers were all lower than they were in Q3.

Posted in Economics, Foreclosures, Housing Recovery, National Real Estate | 95 Comments

August Case Shiller

From CNBC:

Home price gains heat up in August but slow in major markets, S&P Case-Shiller index says

Home prices are heating up again on a national level, but some of the largest cities are lagging. That may be due to already overheated prices in those cities as well as new tax laws that limit the amount of deductions homeowners can take.

Prices rose 3.2% in August, up from the 3.1% gain in July, according to the S&P CoreLogic Case-Shiller National Home Price Index. Prices in the nation’s 10 major cities rose 1.5%, down from the 1.6% gain in July. On the index’s 20-city composite, prices were 2% higher, unchanged from July’s gain.

Seven of the top 20 cities reported greater price increases in the year that ended in August versus the year that ended in July.

“A shift in regional leadership may be underway beneath the headline national index,” said Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices. “Phoenix saw an increase in its YOY price change to 6.3% and retained its leading position.”

Las Vegas, however, dropped from number two to number eight among the cities of the 20-city composite, falling from a 4.7% annual gain in July to just 3.3% in August.

“When you look at how gradually home prices have been going up lately, the rate of appreciation is more like what we considered to be normal for many years. In past decades, when prices went up by 3 to 5% per year, we thought that was pretty good appreciation,” said Janet Carpenter, president of the Greater Las Vegas Association of Realtors. “With demand staying strong and our local housing supply remaining tight, I wouldn’t be surprised to see this trend continue into the foreseeable future.”

Posted in Demographics, Economics, Housing Bubble, Housing Recovery, National Real Estate | 65 Comments