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

Millennials take the market

From HousingWire:

Millennials have officially entered the housing market

It’s long been projected that Millennials are destined to dominate the housing market in upcoming years. Now, new data from Realtor.com reveals that it’s finally happening. Millennials are buying houses. Lots of them.

According to Realtor.com, in January 2017, Millennials surpassed Generation X as the group that was responsible for the most new mortgages. Since then, Millennials’ share of the mortgage market has continued to rise. By the end of 2018, Millennials represented 45% of all new mortgages, compared to 36% for Generation X, and 17% for Baby Boomers.

What’s new is that Millennials also finally surpassed older generations in the total dollar amount of those mortgages. According to the data, Millennials now represent the largest dollar volume by age group as well.

“In November 2018, Millennials finally overtook Generation X as having the largest share of new loans by dollar volume, with a share of 42% in December, compared to a share of 40% for Generation X and 17% for Baby Boomers. This indicates Millennials are willing to take on larger mortgages than any other generation to fulfill their dreams of homeownership,” the company writes.

Realtor.com’s Director of Economic Research Javier Vivas said Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power, and hence, their footprint in the market.

“The stereotype that Millennials primarily choose to buy homes and live in large metro areas isn’t the reality,” Vivas said. “Results show Millennials’ expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful.”

Posted in Demographics, Economics, Employment, National Real Estate | 154 Comments

Did we elect the wrong guy?

From the Star Ledger:

Steve Sweeney’s winning the war with Governor Murphy over taxes

Last June we had a fight on taxes in the state budget.

On one side was Gov. Phil Murphy. He wanted to raise the income tax to go after rich people.

On the other side was Senate President Steve Sweeney. He wanted to raise the corporate tax on businesses.

They compromised. Each got a somewhat smaller version of the type of tax hike he demanded.

Last month we found out who won that fight:

Sweeney – and by a knockout.

The decision came when the Treasury Department released revenue figures for the final quarter of the 2018 calendar year, which had to be paid by Jan. 15, 2019.

The report said corporate tax revenues were up 74.5 percent compared to the prior year after Sweeney’s 2 percent surcharge went into effect. So that was good news.

Meanwhile on the income tax side, Murphy got some bad news about the hike to 10.75 percent in the top rate of the so-called “millionaire’s tax.”

How much did income-tax receipts go up? 

Zero. In fact, revenue dropped 6 percent compared to the prior year – despite the booming economy and the tax hike.

When I asked Sweeney about this last week, he said there was nothing surprising about that result. It was entirely predictable after the Trump tax reform ended federal deductions for state and local taxes – “SALT” for short.

“Tax the rich, tax the rich, tax the rich – and then the rich leave,” Cuomo said on one of the many talk shows he’s been appearing on lately.

Posted in Economics, New Jersey Real Estate, Politics | 21 Comments

In the old days, we’d have had a rebellion

No worries people, Murphy is on the job. He’s mad and he’s making phone calls. From the Star Ledger:

‘This is a big deal’: Murphy joins growing effort to restore your property tax deduction

They’ve gone to court. They’ve spoken out. They’ve even developed new ways to get around the rules.

Now a group of Democratic governors, including New Jersey Gov. Phil Murphy, announced plans to lobby for passage of legislation restoring the full federal deduction for state and local taxes.

The Governors Coalition for Tax Fairness plans to work with their representatives in Washington and try to convince other lawmakers to end the Republican tax law’s $10,000 cap on the deduction.

“I’ll call anybody,” Murphy said. “This is a big deal.”

Murphy joined the governors of New York, Connecticut, Illinois and Oregon on the first day of the National Governors Association’s legislative conference here to speak out against the tax bill signed into law by Republican President Donald Trump that targeted high-tax states. Except for Oregon, all of the states send billions of dollars more to Washington than they receive in services.

“This is politics masquerading as tax policy,” Murphy said. “It’s appropriate we are having this discussion in the middle of tax season because it is gutting our middle class. It is just plain wrong.”

U.S. Sens. Robert Menendez, D-N.J., and Rep. Bill Pascrell Jr., D-9th Dist., members of the congressional tax-writing committees, have introduced bipartisan legislation to restore the full deduction and pay for most of the costs by re-imposing a 39.6 percent tax rate on the richest Americans.

Posted in Economics, Politics, Property Taxes | 12 Comments

Will housing lead or follow?

From the NYT:

The United States has had 11 recessions since the end of World War II. All but two were preceded by a big decline in the housing market.

Inside that bit of trivia lie some fundamental insights into housing’s outsize role in the business cycle, along with clues to suggest that the economy is on firmer footing than the increasingly pessimistic forecasts make it seem. The gist is this: The United States may or may not enter a recession this year, but if it does, housing is unlikely to be the cause, because it never really recovered in the first place.

“Housing is not in a position to lead this thing down,” said Edward Leamer, an economics professor at the University of California, Los Angeles.

How much it can help prolong the overall recovery is another matter. Home sales and prices have been sluggish in the face of rising interest rates. Still, the pace of construction, combined with pent-up demand from young adults, suggests that the sector should at least remain stable in the face of uncertainty elsewhere.

Even though housing does not account for all that much of the economy, its role in recessions is huge, because it is highly cyclical and sensitive to interest rates. Think of expansions and recessions as the cycle of things that go up and down a lot. Housing is a big determinant of where that cycle is headed because, unlike many other sectors, it has wide swings.

Sometimes downturns have other causes, but they only underscore housing’s role in economic cycles. The 1953 recession followed a decline in government spending after the Korean War, and the 2001 recession was driven by a decline in business spending after the dot-com bubble popped. Both were relatively brief and shallow — the 2001 recession was the least severe since World War II — in part because housing investment remained stable.

The most recent recession, from 2007 to 2009, offered one of the more exaggerated examples of housing’s guiding role in downturns. A recent report from the Federal Reserve Bank of St. Louis found that the construction sector accounted for a little over a third of the decline in output in the past recession, and about half of the job losses (a figure that includes laid-off construction workers and job losses in connected industries).

How does housing look now? Mixed, but mixed in such a way that the things most important to economic growth are the most stable.

In other words: Housing is in recession already. It might not get better soon, but it probably won’t get worse.

Posted in General | 138 Comments

Thank Trump for fixing NJ’s property tax issue

From CNBC:

One surprising way to beat the SALT deduction cap: Move to a nearby town

A few years ago Dawn Donaghy and her husband, Raymond, made a decision that many residents in high-tax states make. They wanted to move.

The couple, then residents of Old Tappan, New Jersey, a town less than 30 miles outside of New York City, loved where they lived.

But Raymond’s three children were now adults, and no longer needed the school system. And the taxes that came with that high-quality public school education were high.

The couple considered moving as far as Connecticut, so they were surprised at what they found in their own backyard.

In June 2017, the Donaghys moved to a neighboring town, Saddle River, just about eight miles away.

“We started looking and we could not believe some of the homes that we saw and the tax bracket,” Dawn said. “We just looked at each other in amazement. We’re going to have more property, a larger home and one of them was half the taxes.”

While the couple did not end up choosing that house, they still were able to bring down their tax bill substantially — by about $10,000.

The property taxes they were paying in Old Tappan were around $37,000 at their highest, according to Dawn. Today, they’re paying around $27,000.

More residents of high-tax states are reportedly looking to move in light of changes ushered in by the Tax Cuts and Jobs Act. Notably, that includes a lower cap — $10,000 — for deductions for state and local taxes.

Posted in New Jersey Real Estate, Politics, Property Taxes | 110 Comments

Stop making sense

From the APP:

Making NJ competitive will do more than $15 minimum wage

New Jersey routinely places at or near the bottom in almost every economic analysis of states in America. It’s one of the worst places in the country to do business; it has among the highest business and personal taxes; it’s overregulated; it’s electric utility rates are high and it has one the highest debt loads in the country. And its high property taxes make home ownership unaffordable for the middle-class.

Instead of addressing crucial structural issues with the state’s economy — like lowering corporate and property taxes, the leadership in this state has determined that it’s more important to boost the minimum wage to $15, raise taxes on job-producing people, legalize marijuana and lay down a welcome mat for illegal immigrants — at taxpayers’ expense.

The Murphy administration tried to lure Amazon to Newark with an outrageous $7 billion incentive. Amazon thumbed its nose at New Jersey’s enticement and decided to spend its money in two other places — which combined offered billions less than New Jersey.  That says a lot about the state’s economic reputation.

While the governor pursues his progressive “fairness economy” his tax policies are destroying the opportunity to unlock New Jersey’s potential to attract investments that create jobs that support middle-class families.

According to a recent report, the average salary in New Jersey ($57,000) is not enough to afford the average rent of $2,062. A $15 minimum wage will not help. State property taxes now average $8,700 a year; New Jersey has the sixth-highest personal income tax rate in the nation (8.97 percent) and the third-highest per capita tax ($6,709) and the sixth-highest debt.  Consequently, young people and retirees are fleeing the state — and business owners are taking note that the state is failing to address affordability issues.

If the governor is seeking a “fairness economy,” shouldn’t he be focusing on creating an environment that attracts good-paying jobs for millennials and older adults?  Technology and manufacturing jobs that lift people out of poverty are going to less expensive states. Companies like Mercedes Benz and Honeywell are taking their high-paying jobs to Georgia and North Carolina and it’s not hard to figure out why.

Posted in Demographics, Economics, New Jersey Real Estate, Politics | 21 Comments

Uh oh.

From the Star Ledger:

N.J. revenues continue to slump, and Trump tax reforms are blamed

New Jersey’s state budget is really feeling the effects of the federal tax reform hangover now.

Last month, Gov. Phil Murphy’s administration warned tax revenues were falling behind because taxpayers were altering their behavior in response to federal tax changes. An updated report released Thursday shows the state’s growing risk of running a shortfall that could force mid-year cutbacks.

In total, the state’s major tax revenues were forecasted to increase by 7.5 percent over the last fiscal year, but growth has slowed to just 3 percent.

Thursday’s report would look worse if it weren’t for a tax amnesty program that brought in $282 million in delinquent tax payments. That winter amnesty program well exceeded its $200 million goal as taxpayers settled up with the state in exchange for waived penalties and reduced interest.

Without the amnesty bump, growth would have clocked in at just 1.3 percent.

The gross income tax — New Jersey’s largest source of tax revenue — is a big source of the trouble. Income tax collections for the first seven months of the fiscal year are down about $500 million compared to this same period last year. That’s a 6 percent decrease year-over-year, when the budget forecasts gross income tax collections are supposed to increase by 5.4 percent.

Posted in Economics, Employment, New Jersey Real Estate, Politics, Property Taxes | 105 Comments

No deals in 2019

From CNBC:

Here’s why the housing market, while still risky, won’t be all bad for buyers in 2019

With spring on the way, many home buyers are starting their hunt for a new home. But with the housing market in transition, will they be able to find what they’re looking for?

Thus far this year, the 30-year-fixed has averaged 4.46 percent, down from 4.54 percent in 2018. The dip in interest rates, combined with modest gains in home prices, have helped turn some parts of real estate into a buyer’s market – but one clouded by at least some uncertainty.

“Going forward, it won’t be the record number of sales we saw in 2017, but we have seen mortgage rates come down considerably over the course of even the new year,” Nela Richardson of Edward Jones Investments and former chief economist at Redfin, told CNBC’s “On the Money” in an interview. “That is a good advantage for buyers.

However, it wasn’t just interest rates that caused buyers to pull back in 2018. Many home buyers couldn’t find a home that fit in their budget, and Richardson said that’s not likely to change this year.

“That’s going to be the myth in the housing market you are going to see play out in 2019. You’ll see reports that inventory is increasing, but it’s increasing at price points that are not affordable to millennials or first time buyers,” she said. “And that has been persistent for the last five years.”

Posted in Demographics, Economics, National Real Estate | 99 Comments

Thank goodness Cuomo’s our governor … wait

From Newsday:

Cuomo to meet with Trump to seek end of cap on SALT deductibility

Gov. Andrew M. Cuomo said he is scheduled to meet with President Donald Trump on Tuesday to press his effort to overhaul Trump’s tax plan, which is driving up federal income taxes for high-income, highly taxed New Yorkers.

Trump’s tax cut package, passed in December 2017, provides a long-term corporate tax break, but helps pay for it by capping the deductibility of state and local taxes, or SALT, on federal income taxes. That is increasing many New Yorkers’ federal income tax bills in areas with high local property taxes and income taxes, such as Long Island, Westchester County and Manhattan.

“To me, there is no more vital, long-term issue for this state than SALT,” Cuomo said.

A week ago, Cuomo blamed the SALT provision and Trump for a $2.3 billion hole in state income tax revenue for December alone. Cuomo said the loss in estimated income tax payments by high-income earners indicates that many top earners may be leaving the state, threatening a long-term loss of revenue. Fiscal analysts, however, have also noted that Wall Street bonuses are down and the economy is slowing.

Last week, Trump said he was open to discussing changes in his tax package. He provided no specifics.

Cuomo said that in his midafternoon meeting with Trump he will press for a full repeal of the SALT provision. He said he has no alternative or compromise to offer, but said Trump would simply have to find another way to fund his corporate tax break.

Posted in New Jersey Real Estate, Politics, Property Taxes | 108 Comments

Publicity stunt worked, but will it sell?

In case you’ve been living in a cave, or basement…

From the Star Ledger:

Big uproar erupts over house with sex basement, just 30 minutes outside of N.J.

We’re not recommending you leave the Garden State, but if you’re looking to stay close by and you happen to have a fascination with some of the things that go on in “Fifty Shades of Grey,” a recent real estate listing in the Philadelphia suburb of Maple Glen could be the right fit.

From the outside, the big brick Colonial looks like it fits in with many upscale suburban neighborhoods. But the listing has gone viral since it was posted Thursday afternoon — because of one not-so-common feature.

The house has a fully furnished pleasure room, straight out of the popular series of erotic romance novels and movies.

Realtor Melissa Leonard has been fielding media requests and angry neighbors since the listing was posted. But she had no hesitations in taking on the project, she told Slate. She has since dubbed the house “50 Shades of Maple Glen.”

“I saw the first two of the movies. I only read maybe a couple of chapters of the book. That was the first thing that came to mind when I saw it: This guy has ‘Fifty Shades of Grey’ going on his basement!” Leonard told Slate. “But I know that it’s a way of life for people. Philly has clubs for this. I go out, I know about nightlife, they nickname me Philly Socialite on Instagram, so I go out all the time. Nothing bothered me.”

If you’re interested, the asking price for the home is $750,000. And once it’s yours, you can do whatever you want to the basement.

Posted in Lowball, Philly | 65 Comments

Tax those who attempt to leave

From Fox News:

Mansion sales rise in Florida as wealthy buyers are drawn to its low taxes and sunshine

Is bigger really better? It’s true to Florida buyers. Many wealthy buyers are moving to the Sunshine State for higher ceilings — and a lower tax bracket.    

Luxury Florida homes have wealthy Americans making the move from high tax areas like New York, New Jersey and California, cutting their tax bill and increasing the size of their homes. It’s a movement many are calling “tax migration.”

Jay Parker, CEO of Douglas Elliman Florida brokerage, one of the largest residential brokerage firms in Florida and Manhattan, said New Yorkers are the new “foreign” buyers.

“We have really created the perfect storm. The age of our population, the tax benefits of moving to South Florida. Someone that wants lifestyle, amenitization, really an experience in their living environment. Larger units, higher ceiling space,” Parker said.

The Tax Cut and Jobs Act — passed by Congress and signed by the president in December 2017 — capped the federal deduction for property, state and local taxes at $10,000. As a result, high-income earners are fleeing their home states and looking to the Florida real estate market for a better quality of life.

New York Gov. Andrew Cuomo on Monday blamed Trump’s tax law on the number of people leaving the state, saying it had contributed to the state’s deficit.

….

“People that are moving here, they are moving quickly, they are moving consistently. They are looking for opportunities, they are evaluating the market and I think all of these things combined really are very favorable to us in the state of Florida,” said Parker.

But Parker said it’s not like New York is losing ground to Miami — it’s still the hotting market in the country.

“I still believe New York is still positioned to be the most important real-estate market in the country, if not the globe. It is just an opportunity for us now to expand our luxury market and to become a safe haven,” Parker said.

Posted in Demographics, Economics, Property Taxes | 140 Comments

See ya!

From the NY Post:

As revenue drops, concern about the proposed state budget rises

Gov. Andrew M. Cuomo on Monday announced a dramatic drop in state income tax revenue of $2.8 billion, which he says will prompt him to revise his 2019-20 budget and reconsider spending on schools, health care and repairs to roads and bridges.

Cuomo, a Democrat, blamed the shortfall on a federal tax plan backed by Republican President Donald Trump. Cuomo said the law’s cap on deductions for state and local taxes at $10,000 was to blame and suggested it is, anecdotally, triggering high-earners to leave New York. 

“At this point there is no doubt that the budget we put forward is not supported by the revenues,” Cuomo said at a State Capitol news conference. “It’s as serious as a heart attack.”

Cuomo said he’s not certain what areas might need to be cut, but said the biggest spending areas now are education, health care, infrastructure and another phase-in of a previously approved middle-class tax cut.

The hole in revenues in December, which some analysts have called a December surprise, and continued poor performance in January have created a $2.3 billion drop in anticipated revenues, according to the Cuomo administration. Add that to the $500 million drop in revenues for December that the Cuomo administration had previously projected and the revenue hole is $2.8 billion, according to Cuomo Budget Director Robert Mujica.

Posted in Demographics, Economics, New Jersey Real Estate, NYC | 159 Comments

Another hit to the shore

From Shorebeat:

Legislators: N.J. Minimum Wage Hike A ‘Death Sentence’ for Jersey Shore Economy

Shore area businesses will be forced to either raise prices, cut workers or close down entirely in the wake of the state’s proposed law that gradually increases the minimum wage to $15 per hour, the state lawmakers who represent the boardwalk towns of Seaside Heights and Point Pleasant Beach said Friday.

The Shore will take a decidedly hard hit from the law because many young workers are likely to spurn the traditional summer job – where wages will increase at a slower pace – in favor of what is expected to be higher-paying jobs at non-tourism-based businesses. As a consequence, tourism-based businesses that often operate on low margins and must generated revenue in a short amount of time could find themselves overwhelmed by labor costs.

If the legislation is signed into law next week as expected, beginning Jan. 1, 2020, seasonal businesses need to pay their employees at least $10.30 an hour, and then increase that wage each year until it reaches $15 an hour in 2026.

“Restaurants, bars, boardwalks and amusement parks on the Jersey Shore will be the hardest hit,” added Assemblyman Dave Wolfe. “Even with the delayed increase, the mom and pop shops on the boardwalk will have to pay a competitive wage to attract young workers, who will undoubtedly choose to find higher-paying jobs at a supermarket or coffee shop chain instead. This is devastating to the Jersey Shore economy no matter how you slice it.”

Wolfe, along with his 10th district GOP colleagues state Sen. James Holzapfel and Assemblyman Gregory P. McGuckin, blasted the proposal, saying it would hurt the Shore area the most – doubling down on a separate tax on rental properties that is expected to increase the cost of a Jersey Shore vacation.

“This bill is yet another attempt by Governor Murphy to force residents and business owners out of the state,” said Holzapfel. “Small businesses are the backbone of the Jersey Shore and this wage increase will send ripple effects throughout our Shore economy.”


Posted in Economics, Employment, Shore Real Estate | 79 Comments

$15 here we come

From the Star Ledger:

N.J. minimum wage set to rise to $10 in July and $15 by 2024 after big votes

The Democrat-controlled state Legislature on Thursday gave approval to an historic increase in New Jersey’s minimum wage to $15 an hour over five years, with a $1.15 raise coming this July.

The votes seal the deal reached earlier this month by Gov. Phil Murphy, state Senate President Stephen Sweeney and state Assembly Speaker Craig Coughlin — all Democrats — on a bill to boost the Garden State’s minimum wage by 70 percent for most workers while putting agricultural, seasonal and small business employees on a slower path to $15.

The bill passed the Assembly 52-25 and the Senate 23-16 on Thursday.

Murphy said he will sign the bill Monday, putting the trio of Democrats within striking distance of a major progressive policy achievement.

“History has shown us that raising the minimum wage is actually good for the business community, it’s good for New Jersey, and most importantly it’s good for the people that benefit from it,” Coughlin, D-Middlesex, said before the Assembly vote.

Under the bill, the minimum wage for most workers would increase to $10 an hour on July 1, to $11 on Jan. 1, 2020, $12 an hour on Jan. 1, 2021, $13 in 2022, $14 in 2023 and $15 in 2024.

New Jersey Policy Perspective, a liberal Trenton think tank, estimated more than 1 million workers will benefit from the wage hike. But about 10 percent of those employees will be put on a slower path.

Posted in Economics, New Jersey Real Estate, Politics | 73 Comments