Rockland and Westchester slow

From LoHud:

After a robust year, there are signs the housing market is in correction mode

The residential market in the Lower Hudson Valley shows signs of a slowdown.

The number of sales in the third quarter slipped from a year ago while inventory increased slightly, according to a recent market report.

The report, issued by the Hudson Gateway Multiple Listing Services, a subsidiary of the Hudson Gateway Association of Realtors (HGAR), signals a departure from the trend in recent quarters when the lack of inventory was blamed for a sales slowdown in the heated market.

In Westchester, the number of overall sales from July to September was 3,022, the lowest in the past four years, or a decrease of 5.2 percent from a year ago when the figure was 3,189.

Meanwhile, the end-of-quarter inventory slightly increased to 4,175 from a year ago when the figure was 4,135, reversing a downward trend since 2014.

In Rockland, the number of overall sales in the third quarter was 811, down 1.2 percent from a year ago when the figure was 821.

Rockland’s end-of-quarter inventory was 1,289, up 3.6 percent compared to a year ago when the figure was 1,244, reversing the downward trend since 2013.

Jennifer Mallory, regional vice president of HGAR and associate broker with Keller Williams in Rockland, said the market, which has been heating up in the past few years, is in correction mode.

“The market runs in cycle, and you can’t have the entire time upward. At a certain point it goes down,” she said, “It’s part of the natural cycle.”

She added that the inventory has increased because homeowners decided to put their houses on the market as mortgage rates start rising.

Mortgage rates recently hit 5 percent for the first time since February 2011.

“Savvy homeowners would know that the best time to put their homes on the market is when the purchasing power of buyers is still strong,” she said.

The slowdown has yet to be translated into pricing.

Posted in Economics, Housing Bubble, North Jersey Real Estate, NYC | 64 Comments

Oh baby, now we’re talking

From CNBC:

Thousands line up for zero-down-payment, subprime mortgages

Magdalene Altidor lost her home to foreclosure during the subprime mortgage crisis, but this week she was first in line at a four-day event in Miami where borrowers with poor credit were offered no-down payment, low interest rate loans.

“I left home, it was about 4 a.m.,” she laughed. “I’m ready to purchase a home.”

The event is one of several being held in cities across America this year, run by the nonprofit, Boston-based brokerage Neighborhood Assistance Corporation of America, or NACA.

“It’s a national disgrace about the low amount of homeownership, mortgages for low- and moderate-income people and for minority homebuyers,” said Bruce Marks, CEO of NACA. “In the loans that we’ve originated in the past 6 years, zero foreclosures.”

Marks and NACA were front and center during the subprime mortgage crisis, holding mass mortgage modification events across the country with banks and servicers. Bank of America was there then and the bank is with NACA now, backing the program with $10 billion in mortgage commitments.

“It’s total upside,” said AJ Barkley, senior vice president of consumer lending at BofA. “We have seen significant wins in this partnership. Just to be clear, when we get those loans with all the heavy lifting here, we’re over a 90 percent approval, meaning 90 percent of the people who go through this program that we actually underwrite the loans.”

Borrowers can have low credit scores, but have to go through an education session about the program and submit all necessary documents, from income statements to phone bills. Then they go through counseling to understand their monthly budget and ensure they can afford the mortgage payment. The loans are 15- or 30-year fixed with interest rates below market, about 4.5 percent.

“That’s what’s going to help people who’ve been locked out of homeownership to really become homeowners and to build wealth,” said Marks.

Posted in Housing Bubble, Mortgages, Risky Lending | 16 Comments

Big Spender

From the Star Ledger:

$170M Bayfront plan given final OK by Jersey City council

A $170 million plan that city officials say will give them more control over the redevelopment of a formerly contaminated swath of waterfront land cleared a major hurdle on Wednesday when the City Council gave the plan its approval.

The council voted 7-2 to authorize the city to borrow $170 million, enter into an agreement with the autonomous Jersey City Redevelopment Agency to partner on the project and approve of the city’s plan to purchase some of the land from Honeywell. The site is known as Bayfront.

The city’s plan is the latest for the property, a formerly contaminated 100-acre site that sits west of Route 440 and is owned by the city and Honeywell. The city intends to buy Honeywell’s portion, pay for infrastructure improvements and slowly sell portions of it to real-estate developers to pay off the debt.

The final vote was not a surprising one, with the six allies of Mayor Steve Fulop — Rolando Lavarro, Joyce Watterman, Daniel Rivera, Denise Ridley, Mira Prinz-Arey and Jermaine Robinson — joining James Solomon in favor. Council members Rich Boggiano and Michael Yun voted no.

Boggiano cited fears that the city would botch the project, citing the 11 years it took the city to build a police station in the west district.

“Mark my words, I will be right. This will be a fiasco with the City of Jersey City running it,” he said.

Yun expressed concern about the amount of borrowing. This year’s budget shows the city has $574 million in outstanding bonds, up from $499 million in 2015. In that time, the city’s net debt per capita has decreased from $1,947 to $1,596.

The initial plan for Bayfront was for Honeywell to sell the property once it was remediated of chromium. That sale is expected to occur later this year.

In May, Fulop announced this new plan, which he said would allow the city to dramatically increase the share of affordable housing at Bayfront, which could have as many as 8,000 residential units. Fulop said by doling out the parcels in pieces and acting as a “master developer,” the city could push for a share of affordable housing as high as 35 percent. The old plan had the one-site share at 5 percent.

Posted in Gold Coast, New Development, New Jersey Real Estate, Politics | 33 Comments

Mortgage rates touch 5% again

From CNBC:

Mortgage rates jump past 5%, signaling more home price cuts ahead

Millennials are in their prime homebuying years, and they’re used to cheap credit. So they might be in for a rude awakening as mortgage rates jump.

The average rate on the 30-year fixed loan sat just below 4 percent a year ago, after dropping below 3.5 percent in 2016. It just crossed the 5 percent mark, according to Mortgage News Daily. That is the first time in eight years, and it is poised to move higher. Five percent may still be historically cheap, but higher rates, combined with other challenges facing today’s housing market could cause potential buyers to pull back.

“Five percent is definitely an emotional level inasmuch as it scares prospective buyers about how high rates may continue to go,” said Matthew Graham, chief operating officer of MND.

Home sales have been sliding for much of this year, and total annual sales are expected to come in lower than last year. Affordability is the clear culprit. With rates now more than a full percentage point higher than a year ago, that adds at least $200 more to a monthly mortgage payment for a $300,000 loan. It also knocks some borrowers out of qualification because lenders are strict on how much debt a borrower can carry in relation to his or her income.

“For buyers that are inclined to buy now, they’re doing the same things they’ve been doing: Looking at the appalling lack of available inventory, seeing if any of it meets their needs, and deciding whether or not they can afford the monthly payment. In that sense, 5 percent takes some buyers out of some markets, and it plays a supporting role in the leveling-off process that’s already well underway for home sales,” Graham said.

Posted in Mortgages, National Real Estate | 80 Comments

Can NJ buy it’s way into a startup economy?

From the Star Ledger:

Murphy’s risky plan to spark Jersey’s sagging economy

Is New Jersey’s government smart enough to invest $250 million in venture capital projects, and come out a winner? Should a government that is not competent to run the trains on time take that risk with taxpayer money?

The proposal comes from Gov. Phil Murphy, who described it as “the big idea” behind his new effort to revive New Jersey’s sputtering economy, which he unveiled Monday. It’s an aggressive use of government, which is no surprise coming from an audacious liberal like Murphy.

The surprise is that even conservative business groups like the Chamber of Commerce and the New Jersey Business and Industry Association welcomed the plan, pending a review of details.

“Maybe this is the time we can get something right,” says Michele Siekerka of the NJBIA. “Sometimes we have to try new things, go outside the box.”

The governor’s plan is sprawling, with initiatives in transportation, housing, and job training. But it’s the venture capital idea that crosses into new territory.

Tim Sullivan, the EDA’s executive director, says that the program is designed to rely on the expertise of private venture capital firms, who will have their own skin in the game. The state would supply half the money, matching an equal investment from private firms, for a total investment of $500 million over five years. “They are putting up their own money alongside of us,” Sullivan said.

Still, there is room for error. Start-ups are inherently high risk, and the state will still have to choose among competing proposals from private firms.

A second question: Murphy noted that venture capital investments in New Jersey dropped by half during the last decade, while they increased in states like New York and Massachusetts.

But doesn’t that suggest the core problem is New Jersey’s rotten business climate, rather than a shortage of venture capital? Why else would venture capitalists choose other states first?

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 127 Comments

Murphy taxes online sales

From InsiderNJ:

Now Law: Burzichelli & Moriarty Bill to Require Marketplace Facilitators & Certain Remote Sellers to Pay NJ Sales Tax

Legislation sponsored by Assemblymen John Burzichelli and Paul Moriarty to ensure a level playing field between brick-and-mortar businesses and online marketplace providers like Amazon, and bring in needed revenue to the state has been signed into law.

The new law (A-4496) will require certain remote sellers and online marketplace facilitators to collect and remit sales tax. It was signed today by Gov. Murphy.

“This will help provide parity among brick-and-mortar businesses and online marketplaces and provide the state with needed revenue,” said Burzichelli (D Cumberland/Gloucester/Salem). “Online marketplaces have made it easier for interstate and international commerce, allowing many businesses to circumvent state sales tax requirements. New Jersey based businesses have to abide by the sales and use tax law, and so should any company who does substantial business in the state.”

New Jersey could gain between $216 million and $351 million as a result of this legislation—about 2 to 4 percent of total 2016 state and local government general sales and gross receipts tax revenues— according to the United States Government Accountability Office (GAO) study in November 2017.

Forty-five states and the District of Columbia levy taxes on the sale of goods and certain services, including those sold remotely, such as over the Internet.

Under the law, if a seller does not have a physical presence in the state but has revenue from sales into the state in the calendar year, or prior year, in excess of $100,000, the seller must collect taxes. The same rule will apply to a seller with 200 or more separate transactions into the state in a calendar year or in the prior year.

Posted in Economics, New Jersey Real Estate, Politics | 128 Comments

Rent a shore house, pay a new tax, unless you use a realtor

One of the most disgusting pieces of protectionist legislation I’ve ever seen.

From the APP:

NJ Airbnb users now must pay tax, unless they use a real estate agent

Visitors to the Shore who want to avoid paying a new occupancy tax have a loophole: Find a place to stay through a real estate agent.

Otherwise, guests who book rooms directly from owners through online sites such as Airbnb and VRBO are scheduled to begin paying a 5 percent tax on Oct. 1.

“Since 50 percent of bookings are direct by owner, it’s going to affect a large part of the Jersey Shore,” said Duane Watlington, owner of, which has more than 800 listings on Long Beach Island.

The law signed by Gov. Phil Murphy will force owners who put their homes, or rooms, up for the short term to collect the state’s 6.625 sales tax and 5 percent occupancy tax. Municipalities also can collect taxes of up to 3 percent.

It’s a bid by government agencies to adjust to the digital age that is disrupting long-standing businesses.

“They’re acting like hotels, they should be paying the same tax,” said Marilou Halvorsen, president of the New Jersey Restaurant and Hospitality Association, a trade group that represents hotel and motel owners.

The New Jersey Division of Taxation was still finalizing the rules late Friday to ensure the tax would be applied specifically to to online sites like Airbnb.

Still, the department said homeowners who rent their property directly to consumers by word of mouth still would have to collect the tax because federal rules prevent state and local governments from discriminating against electronic commerce.

Posted in New Jersey Real Estate, Shore Real Estate, Unrest | 38 Comments

Otteau: September Update

From the Otteau Group:

September MarketNews

Home purchase contracts in New Jersey declined in August by 2% compared to the same month last year. Almost half of the markets in NJ have seen a decline in the pace of home sales on a year-to-date basis. As a result, the number of year-to-date purchase contracts (January-August) in New Jersey is up marginally by 0.8%, or roughly 600 contracts. While this is partially attributable to an under-supply of housing inventory, a growing affordability gap due to rising prices and interest rates is a significant factor.

While the number of year-to-date home sales has increased by 0.8% overall, that is not the case for all price ranges. Contract activity for homes priced under $400,000 have declined due to supply shortages, with unsold inventory having dropped by 12% year-to-date. Sales have stagnated in the $1+mil-$2.5mil range. At the opposite end of the spectrum, contract activity for luxury priced homes over $2.5-Million has increased by an impressive 12% (243 in 2017 vs. 272 today).

Shifting to the supply side of the equation, inventory remains restricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey continues to be at its lowest point since 2005, having declined by 760 (-2%) over the past year. This is also 42% (31,000) less than the amount of homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to just 4.1 months of sales (non-seasonally adjusted), which is the same as this time last year.

Currently, all of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Middlesex and Essex Counties have the strongest market conditions in the state with just 3.1 months of supply, followed by Union (3.4), Passaic (3.5), Monmouth (3.5) and Camden (3.8), which all have fewer than 4.0 months of supply. The counties with the largest amount of unsold inventory (6.5 months or greater) are concentrated in the southern portion of the state including Cumberland (6.7) and Salem (6.8).

Demand for rental apartments remains strong in NJ with statewide occupancy rates being among the highest in the US, which has allowed for average asking rents to rise for 33 consecutive quarters. The Central NJ region has the lowest vacancy rate in the state at 2.7%, which is slightly higher from the prior quarter’s 2.5%.

In spite of these strong metrics, vacancy rates have been rising recently, except for NYC where vacancy declined from 5.6% to 5.3% in the Q2. The vacancy increases in New Jersey is attributable to the staggering pace of new construction deliveries. In 2008.Q2, there were 6,400 apartment units being constructed, which has increased to over 30,000 units presently, equating to an astounding 368% rise in apartment construction over the past decade. The pace of new construction deliveries in key markets like Hudson County is especially rapid with almost 15,000 apartment units currently in construction compared to just 4,300 in 2008, representing a 248% increase.

Posted in Demographics, Economics, New Jersey Real Estate | 120 Comments

NYC transitions into a cooling market

From CNBC:

NYC has moved into a buyer’s market, and is experiencing a housing trend last seen in 2009

New York City’s pricey real estate has become a “buyers market,” new data suggests, characterized by lowball offers and a rise in the number of properties staying on the market for longer.

The latest figures from Warburg Realty show that among higher-priced homes, New York City is in the throes of a “major shift” that reflects a cooling market, the likes of which hasn’t been seen in almost a decade.

“Offers 20 percent and 25 percent below asking prices began to flow in, a phenomenon last seen in 2009,” wrote Warburg Realty founder and CEO Frederick W. Peters in the report, which surveys real estate conditions around the city.

Warburg’s report dovetails with separate data showing a definitive cooling in New York’s housing market. The number of homes for sale in the city recently hit a record, according to StreetEasy data, amid fewer sales transactions. Meanwhile, September’s report from real estate firm MNS showed Manhattan apartment rental prices — the most expensive in the city — on the decline.

In today’s market, sellers should not expect multiple offers, he added. “The majority of deals result from a single offer,” Peters said — nor should they expect things to move quickly. “The days on market average has soared during 2018.”

Posted in Demographics, Economics, Housing Bubble, Lowball, NYC | 46 Comments

The middle class was an anomaly

Great read from Ritholtz at Bloomberg:

Why America Has a Two-Track Economy

Which of these two scenarios describes the U.S. economy?

No. 1. The economy is better than ever: The stock market is near a record high, wages are rising, there are more job openings than applicants, household wealth has hit a record, gross domestic product is growing briskly, house values have recovered from the bust, and consumer confidence is back — and so is America!

No. 2. Real Americans are suffering: Inflation-adjusted wages are stagnant or even declining, economic mobility is nonexistent, gasoline is getting expensive as oil prices rise, labor force participation rates are stuck at levels not seen since the late 1970s, health care is brutally expensive and getting more so, and rents have been rising. There is a looming retirement crisis coming, as households have too little savings, and pensions are underfunded — the average American is getting crushed!

In reality, this binary choice is a false construct and both of these scenarios are very true. But who you are, where you live, your job and educational background very much determines which of those two descriptions you relate to more. And while there has always been a divide between rich and poor, it has grown especially acute during the past decade.

Posted in Economics, Employment, Housing Recovery, National Real Estate | 125 Comments

Foreclosure problem, or borrowing problem?

From MarketWatch:

A decade after the housing crisis, foreclosures still haunt homeowners

Maria Landi, a 75-year-old retired insurance specialist, and her husband John, had been making payments on their East Brunswick, New Jersey home for 40 years when Wells Fargo foreclosed on it in 2010.

At the time, John Landi was forced into early retirement by the financial crisis from his job as a producer at ABC and 20/20. The couple could no longer afford to make the monthly payments on the home where they raised five children, and were forced out in 2013 after three years of trying and failing to apply for loan modifications from Wells Fargo.

“We had countless holidays, baptisms, communions, confirmations and birthdays in that home,” Maria Landi told MarketWatch. “We had graduations, engagements, weddings and, of course, end of life moments. Our blood, sweat and tears went into this structure. Renovations, additions and many accommodating improvements were put into this, what some may call just a building.”

The home was initially purchased for $49,000 and was later valued at $750,000 after the Landis renovated it and made additions to the home. But after the Landis got the foreclosure notice from Wells Fargo, it was appraised at just $450,000, far below what the Landis owed on their mortgage.

Posted in Economics, Foreclosures, New Jersey Real Estate | 98 Comments

Ah hell, they went and said it…

From MarketWatch:

Home-price gains decelerate to 11-month low as housing market tries for a soft landing

The numbers: The S&P CoreLogic Case-Shiller 20-city index rose 0.1%, seasonally adjusted, in July, and was up 5.9% compared with a year ago.

What happened: Home-price gains were weaker in the three-month period ending in July than in the prior month. The Case-Shiller national index rose a seasonally adjusted 0.2% and was up 6.0% for the year in July, down from a 6.2% increase in June. The more closely-watched 20-city index had notched a 6.4% gain last month. Those were the slowest paces of growth since last summer.

In July, Las Vegas was the number-one metro area yet again, with a 13.7% annual increase. It was followed by Seattle, at 12.1%, and San Francisco, at 10.8%. Only five cities had stronger price gains in July versus in June.

Big picture: “Rising home prices are beginning to catch up with housing,” said David Blitzer, who chairs the committee that compiles the price indexes. If would-be buyers balk at sky-high prices and stay away, prices should reflect that. The question now is whether this slight dip will lure more buyers back and kick-start more price growth.

What they’re saying: “Amidst homebuyers’ budget constraints and slight improvements in supply levels, home prices grew at a slower pace last quarter,” economists at mortgage financier Freddie Mac said Monday, before the Case-Shiller release. “For the year, we anticipate that home prices will increase 5.5%, with the growth rate moderating to 4.5% in 2019.”

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 94 Comments

Home rule crippling NJ’s future

From NJ Spotlight:


Could suburban communities really empty out if officials don’t plan better to meet the demand for vibrant, walkable neighborhoods?

If recent population settlement patterns continue, and local officials do not change their planning patterns, some of New Jersey’s suburban communities could find themselves approaching ghost-town status, with few residents, many vacant houses, and countless empty stores.

So far this decade, population growth in urban areas in north Jersey has outpaced that of suburban areas, with Hunterdon, Monmouth, Sussex and Warren counties actually losing population between 2010 and 2017, U.S. Census data shows. The reason, according to many experts in planning and demographics, is because many people — including young millennials and aging baby boomers — want to live in vibrant places where they can walk to restaurants and recreation. Those McMansions on multi-acre lots that are a car ride away from everything in many suburbs largely have fallen out of fashion.

“The challenge for the suburbs of New Jersey is that they must adapt in order to survive,” said James Hughes a Rutgers University professor and dean emeritus of the Edward J. Bloustein School of Planning and Public Policy, as he set the scene to open a forum last week on the topic.

Titled “Future of the ‘Burbs: Retrofitting and Repositioning for the 21st Century,” the discussion last Thursday at the Bloustein school featured a national expert giving examples of ways to revamp old offices parks and malls into more attractive, walkable neighborhoods, as well as a panel of New Jerseyans talking about how difficult it will be to make similar changes here.

“Our biggest problem is a lack of educated leadership,” said Carl Goldberg, a developer who is co-chair of the executive committee of the Rutgers Center for Real Estate. Goldberg built four major mixed-use projects in the center of Morristown that have helped its revitalization. But when he approached other communities with similar plans, he said, “I can’t tell you how many dozens of mayors won’t even open the door. That’s the horror of home rule here in the state of New Jersey and why it is really crippling the future.”

Posted in Demographics, Economics, New Development, New Jersey Real Estate, Politics | 118 Comments

Existing home sales flat in August, prices up, inventory up slightly

From HousingWire:

Existing home sales held steady in August

After falling for four consecutive months, existing home sales held its ground in August, according to the latest report from the National Association of Realtors.

Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, remained unchanged from July at a seasonally adjusted rate of 5.34 million in August. The report showed sales are 1.5% below August 2017’s rate.

NAR Chief Economist Lawrence Yun said that the decline in existing home sales seen in previous months appears to have hit a plateau with robust regional sales.

“Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum,” Yun said. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”

The median existing home price for all housing types increased to $264,800, surpassing last August’s $253,100. This is a 4.6% increase from August last year and marks the 78th straight month of year-over-year gains.

Total housing available for sale held steady at the end of August at 1.92 million existing homes on the market and is up from last year’s total of 1.87 million. Unsold inventory rests at a 4.3-month supply at the current sales pace, remaining unchanged from last month’s total but up 4.1 months last year.

“While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” Yun said. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory – especially moderately priced, entry-level homes – would propel sales.”

Properties stayed on the market an average of 29 days in August, rising from 27 days in July but still down from 30 days in 2017. The report states that 52% of homes stayed on the market for less than a month.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 57 Comments

Good thing it never rains in NJ

From WHYY:

New Jersey unprepared for next economic downturn, say ratings agencies

Ten years after the Great Recession, more and more states are bulking up their financial reserves to prepare for another economic downturn.

But not the Garden State.

According to two new reports from Moody’s Analytics and S&P Global Ratings, New Jersey is one of several states with minimal budget surpluses and empty rainy day funds, vulnerable to the next major economic decline.

“If it’s into the 10th year, and they still haven’t replaced their reserves, how much time do they have left to do that?” said Gabriel Petek, a credit rating analyst at S&P Global Ratings. “We don’t know for sure.”

Economists say it is important for states to have substantial reserves so they can continue to fund the government in times of financial crisis — as well as absorb the added costs of an economic downturn, such as increased Medicaid enrollment.

That could be difficult for New Jersey. The state has only about a 2 percent budget surplus — the amount of taxes raised minus expenditures — which is slightly less than what experts recommend. Its rainy day fund is empty.

New Jersey has a progressive income tax structure, which means wealthy New Jerseyans pay a higher tax rate than poorer residents. When the economy slides, the richest taxpayers do not contribute as much money to state coffers.

The state also has one of the most underfunded public pension systems in the country.

“Those states that have the big pension shortfalls, who have the big structural issues where people have been just kicking the can down the road for years — they’re not in any position where they can start building up those rainy day reserve funds,” said Dan White, director of fiscal policy research at Moody’s Analytics.

According to Moody’s, New Jersey ranks 47th in states most capable of handling an economic downturn without raising taxes or cutting spending.

Posted in Economics, New Jersey Real Estate | 74 Comments