Building 200,000 Affordable Homes

From the Record:

Senate passes bill to overhaul how NJ towns will meet affordable housing mandate

How much affordable housing will New Jersey towns be required to zone for, build, convert or renovate over the next decade? 

Gov. Phil Murphy is expected to sign a bill the Legislature passed Monday that aims to streamline the process that determines how municipalities fulfill a constitutional mandate to provide their “fair share” of homes that low- and moderate-income families can afford.

The bill would codify a formula to help towns come up with the number of units they must allow to meet their constitutional mandate.

The bill passed the Senate 22-14 along party lines, to the sound of applause in the chamber. The Assembly approved amendments that had been added since it passed the bill 51-28 in February. 

Under what advocates hail as landmark legislation, A4/S50 shifts court negotiations over town affordable housing quotas to the Department of Community Affairs, which will rely on a formula based on a 2018 state Supreme Court decision to give towns initial numbers of units they are required to zone as affordable.

It maintains a ban on regional contribution agreements, a practice that let towns pay cities or other towns to rehabilitate affordable housing instead of building their own units, and abolishes the Council on Affordable Housing, a defunct agency that ceased operations in 2015, after failing for 16 years to adopt rules for towns to follow. 

A series of significant state Supreme Court cases beginning in 1975 created the Mount Laurel Doctrine, which said municipalities must zone for and provide a “fair share” of affordable housing for low- and moderate-income families, which typically means that a household would spend no more than a third of its monthly paycheck on housing expenses. The fourth “round” of negotiations is scheduled to start in July 2025. 

“Under the current system, towns have to hire their own experts to calculate the numbers,” Singleton said. “Now the Department of Community Affairs will calculate the numbers using the same framework and methodology that has been used for the last eight years.

“Towns can either choose to accept it or come up with their own, consistent with the standards in this bill, based on that methodology,” he said. 

Posted in Demographics, Economics, New Development, New Jersey Real Estate, Politics | 1 Comment

NY Metro Rents Skyrocket

From the Record:

Rents are skyrocketing. This report breaks down just how much

Housing prices just don’t seem to be letting up.

In February, rentals saw the largest increase in price nationwide in more than a year, according to Rent.com’s March Rent Report. Average rent prices rose by 2.25% last month compared with February 2023, marking the first time rent prices have increased by more than two percentage points since January 2023.

The median price of an apartment across the country in February was $1,981. Though this is still 21% higher than rental prices seen before the pandemic, it is lower than when median rents peaked at $2,053 in summer 2022.

“Factors contributing to rising rental prices in February include pressure from the housing market, with significant annual gains in home prices — which marked the highest increase in more than a year — coupled with high interest rates,” the report said.

The report also credited February’s 3.2% increase in inflation for the increased rental prices, affecting the Federal Reserve’s decision on lowering interest rates, keeping more individuals renting rather than buying.

The report said the Northeast saw the largest regional increase in rent prices in the country as of February. With rates in this area currently standing at their highest point since August 2023, median rent prices in the Northeast rose by 5.3% — from $2,357 to $2,481 — from prices seen at this time last year.

In the New York metropolitan area specifically, the median cost of an apartment is $4,166 — a 6.09% increase from February 2023 and a 1.30% increase from January 2024.

Posted in Demographics, Economics, Employment, Housing Bubble, New Jersey Real Estate, NYC | 90 Comments

Commergeddon

From the WSJ:

America’s Office Fire Sale Has Barely Begun

If offices are in such hot water, where are all the forced sellers?

Office-building owners have been under pressure since the Covid-19 pandemic hollowed out their buildings in early 2020. According to data from real-estate consulting firm 

Colliers, the U.S. vacancy rate has risen from 11% in late 2019 to 17% today, higher than at any point in the 2008 global financial crisis.

But forced sales are still surprisingly rare. In 2023, only 3.5% of all office deals in the U.S. involved a distressed seller, based on analysis by MSCI Real Assets. The most recent numbers available show the share slipping to 2.7% in January. Distressed sales ramped up much faster in the GFC. 

A strong economy is helping to delay the day of reckoning, as most tenants are still paying the rent. Pressure is building slowly as leases expire: Many companies are reducing their space by 30% to 40% when their contracts end.

Lenders are also eager to kick the can down the road. They don’t want to force borrowers to sell buildings into a weak commercial real-estate market, which would lead to punishing losses. 

This might explain why debt maturities aren’t triggering the kind of distress that some property watchers expected. Of the $35.8 billion of office loans that came due in the commercial mortgage-backed securities market last year, only a quarter were paid off in full, according to data from real-estate analytics firm CRED iQ. Other loans were extended or sent to a special servicer—a third party that tries to find the best outcome for the debt, which may include modified payment terms or foreclosure. 

Office loans are more complex today than they were during the 2008 crisis, which is delaying distressed sales. As there are more lenders involved—especially on the big buildings owned by institutional investors—getting everyone to agree to foreclose or sell a property is difficult. 

Offices will be “the buying opportunity of our generation,” provided investors pick the right locations, says Mike McDonald, a senior managing director at real-estate firm 

JLL. Ultrawealthy families and local property developers are among the earliest investors gearing up to buy cheap buildings.

A flood of “For Sale” signs looks inevitable, but they are taking longer than expected to arrive. 

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 36 Comments

Yeah, but will it really change?

From CNN:

The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement

The 6% commission, a standard in home purchase transactions, is no more.

In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.

The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.

The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.

By some estimates, real estate commissions are expected to fall 25% to 50%, according to TD Cowen Insights. This will open up opportunities for alternative models of selling real estate that already exist but don’t have much market share, including flat-fee and discount brokerages.

Shares of real estate firms Zillow and Compass both fell by more than 13% Friday as investors feared that lower commission rates for agents could lead to less business for real estate platforms.

In a 10-K filing last month, Zillow warned that, “if agent commissions are meaningfully impacted, it could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry, which could adversely affect our financial condition and results of operations.”

Shares of real estate brokerage Redfin also fell nearly 5%.

Meanwhile, homebuilder stocks rose on the news: Lennar shares gained 2.4%, PulteGroup shares added 1.1% and Toll Brothers shares added 1.8%.

Homesellers who brought lawsuits against the NAR have argued that in a competitive market, the cost of the buyer’s agent’s commission should be paid by the buyer who received the service, not by the seller. The sellers who brought the lawsuit against the NAR and the brokerages said that buyers should be able to negotiate the fee with their agent, and that the sellers should not be on the hook for paying it.

This settlement, which is subject to a judge’s approval, opens the door to a more competitive housing market. Realtors could now compete on commissions, allowing for prospective buyers to shop around on rates before they commit to buying a home. Brokers could begin to advertise their fees, allowing customers to choose lower-cost agents. The NAR, in its announcement, did not set a suggested fee.

This marks the biggest change to the housing market in a century, said Norm Miller, professor emeritus of real estate at the University of San Diego.

“I’ve been waiting 50 years for this,” Miller said.

Posted in National Real Estate, Politics, Unrest | 24 Comments

Even AI wants to live in NJ

From ROINJ:

CBRE: New Jersey data centers find AI operators are dominant occupiers of space

Strong demand for data center space during the second half of 2023 resulted in a new all-time low vacancy rate for the New York tri-state region, including New Jersey, as the rate dropped to 6.5% from 9.8% in the first half of 2023, according to CBRE’s recent North America Data Center Trends report.

Much of that demand came from artificial intelligence operators, which also impacted rental rates, pushing them to $130-$150 per kilowatt for a 3-10 megawatt requirement per month.

“New Jersey continues to experience strong demand and leasing activity by cloud-based and co-location operations. During the second half of 2023, demand remained extremely high, with per-kilowatt pricing increasing 20% to 30% or more,” CBRE Senior Vice President Jon Meisel said.

“In addition to high demand and limited supply, publicly traded operators are seeking higher per-kW pricing due to rising capital costs,” CBRE’s William Hassan added. “Power procurement issues are also delaying expansion plan timelines for existing campuses by 24 to 36 months, further putting a crimp on supply.”

During the second half of the year, AI companies pre-leased over 40 MW, with further expansions currently in negotiations.

The CBRE data also said that notable activity in New Jersey during the second half of 2023 included the completion of leasing at QTS’ Piscataway facility; and the preleasing of its building in East Windsor campus to an AI company. It is under construction to accommodate at least 20 megawatts.

CBRE also added that, during the quarter, Equinix purchased a new building in Secaucus, and a databank facility in nearby Orangeburg, New York, currently under construction, was fully preleased to an AI company.

Posted in Economics, New Development, New Jersey Real Estate | 102 Comments

Transit-based redevelopment

From Newsweek:

Housing Market Solution Could Help New Jersey

New Jersey might have just found a solution to its affordable housing crisis, and it involves the undeveloped land outside of its transit system.

The Regional Plan Association found 74,000 acres of land were underutilized around the commuter rail stations within New Jersey and New York.

Today, the median rent in New Jersey is $2,500, $470 more than the national median, according to Zillow data.

Already, land has been rezoned in Metuchen for mixed-use development, and this could continue into the larger area, according to Jay Muldoon, the former director of economic development in Metuchen.

“We have great neighborhoods in Metuchen, but we now have a more vibrant, engaging and inviting downtown, where 25 years ago it was a pretty much a dead downtown,” Muldoon told NJ Spotlight News.

Around 150 transit stations in New Jersey could see rezoning and redevelopment that would bring more affordable housing to the area, but some challenges remain.

In order for the plan to gain traction, experts say tax credits and subsidies will need to make it more financially feasible for developers to build affordable housing in these areas.

“While New Jersey’s plan shows promise, there are potential obstacles that could hinder its success,” real estate consultant and Pavel Buys Houses founder and CEO Pavel Khaykin told Newsweek. “One major challenge is the high cost of land and construction in the state, making it difficult for developers to build affordable units without significant financial support.”

Local communities might also come out against the new developments in their neighborhoods with concerns of safety or property value impact down the line.

Posted in Demographics, Housing Bubble, New Development, New Jersey Real Estate, Politics | 95 Comments

Thanks Mom and Dad!

From Coldwell Banker:

2024 Consumer Survey Key Findings – March 2024

Over a quarter (26%) of surveyed consumers have not provided or do not plan to provide financial support for their child(ren)’s first home, compared to 38% who said they would, 15% who said they have and 25% who do not have children.

Posted in Demographics, Economics, Mortgages, National Real Estate | 103 Comments

Unexpected demand for Gold Coast rentals

From NorthJersey.com:

Short-term rental demand rose in New Jersey after Airbnb restrictions in New York City

It’s been just about six months since New York City placed major restrictions on short-term rental properties like Airbnb — and North Jersey is reaping the benefits.

In September, New York City enacted the Short-Term Rental Registration Law. The policy requires short-term rental hosts to register their property to the Mayor’s Office of Special Enforcement and prohibits booking service platforms from facilitating transactions for unregistered short-term rentals. Additionally, hosts on platforms like Airbnb cannot rent out an entire apartment or home for bookings of less than 30 days, and instead can only rent out a room in a space that permanent residents are living in.

Because of this, there are now fewer than 5,000 short-term rentals on Airbnb in New York City, according to Inside Airbnb, a housing advocacy group that compiles data from Airbnb’s website. In contrast, there are more than 34,000 rentals available for stays of 30 days or more — which do not require registration for short-term rental licenses.

While there has not be an increase in short-term rental listings in New Jersey, these restrictions have created a higher demand for short-term rentals here as visitors consider other options for places to stay nearby.

In fact, areas like Jersey City, Hoboken, Weehawken and Union City have seen a dramatic increase in demand for short-term rentals because of their proximity to New York City and their ability to offer quick access to Manhattan. According to AirDNA — a short-term rental intelligence firm — demands for short-term rentals rose by 84% in Jersey City, 59% in Weehawken, 40% in Union City and 35% in Hoboken in February 2024 compared to this time last year.

Posted in Economics, Gold Coast, New Jersey Real Estate | 88 Comments

Say YES! to $56k in property taxes

From the Record:

Daybreak, an updated 100-year-old brick mansion in Montclair, hits market for $7.5M

Posted in New Jersey Real Estate, Property Taxes | 26 Comments

Jobs Day!

From the WSJ:

Jobs Report Today: What to Watch

Investors’ eyes are on the jobs report today.

February’s jobs data are due at 8:30 a.m. ET. Economists expect that hiring cooled from January. A softer labor market could translate into less spending power for consumers, and lower inflation, making the case for interest-rate cuts.

Investors got a shot of optimism Thursday after Federal Reserve Chair Jerome Powell said the central bank wasn’t far from being able to cut interest rates. Across the Atlantic, the European Central Bank’s fresh inflation forecasts signaled the possibility of earlier rate cuts, although no earlier than June.

February’s job report is expected to show the U.S. economy added 198,000 jobs and that the unemployment rate held at 3.7%. Last month, job creation came in hotter-than-expected, forcing investors to rethink their expectations for rate cuts this year.

Posted in Demographics, Economics, Housing Bubble | 144 Comments

This is the top 20?

From NJ1015:

The top 10 hottest towns in New Jersey to buy a home

Posted in Economics, Housing Bubble, New Jersey Real Estate, Where's the Beef? | 33 Comments

Spring has sprung

From NorthJersey.com:

Real estate update: Is North Jersey finally seeing more housing inventory?

In February, 19 of New Jersey’s 21 counties saw an increase in new listings over January. Additionally, 12 New Jersey counties saw more new listings this year than they did in February 2023.

In North Jersey, Morris and Passaic counties saw the highest increases in new inventory, at 378 and 246 new listings, respectively. These are increases of 48.82% and 36.67% from January, and 4.42% and 4.24% increases from February 2023.

Sussex County had 184 new listings in February — 19.48% more than January and 5.75% more than February 2023. Bergen and Hudson counties had 608 and 374 new listings, respectively, in February. While this is 13.43% and 6.25% more than in January, it is 7.03% and 11.37% less than in February 2023.

Essex County was the only North Jersey county to see a decrease in new listings compared with January. With 362 new listings, Essex County had slip of a 3.72% and an 8.59% decline from February 2023.

All 21 counties saw home listings stay on the market for a shorter period than that in January.

In Sussex County, listings typically stayed on the market for 45 days before being sold — the most time in North Jersey. In contrast, listings typically stayed on the market for 27 days in Morris County — the least time in North Jersey.

Homes typically stayed on the market for 31 days in Essex County, 33 days in Bergen County, 34 days in Passaic County and 41 days in Hudson County.

While median home listing prices have decreased slightly in some counties from January, every New Jersey county saw an increase in median listing prices compared with February 2023.

Passaic and Sussex counties had the highest increases in North Jersey, at 11.47% and 11.19%, with median listing prices of $478,750 and $402,500, respectively. In Bergen County, prices increased by 10.57%, with a median listing price of $779,495. This is the third-highest median listing price in the New Jersey, behind Cape May and Monmouth counties.

In Hudson and Morris counties, there was an increase of 8.5% and 7.57%, with median listing prices of $649,925 and $675,000, respectively.

Posted in Demographics, Economics, Housing Bubble, New Jersey Real Estate | 141 Comments

Boomers back on top

From Philadelphia Magazine:

Boomers Are Downsizing — and Dominating Philly’s Real Estate Market

Take a walk through the Laurel, the recently completed luxury condo tower at Rittenhouse Square’s northwest corner, and you might mistake it for a retirement community.

When you consider how many aging baby boomers call it home, that makes sense.

As of the end of January, 60 percent of the Laurel’s 65 condos had been sold. And 65 percent of those buyers were baby boomers.

The baby-boom generation has been the pig in the demographic python ever since World War II GIs and their wives made like rabbits the moment the warriors returned home. And as that cohort has aged, it has shaped and reshaped the way Americans live. From mass-produced suburbs like Levittown aimed at their parents to more upscale suburbs targeted at them as they rose through the workforce, the boomers have had their needs, desires, tastes and preferences determine what our communities look like.

That’s certainly been the case locally. And though the boomers are done raising families and are exiting the workforce, they’re still reshaping the way we live. Or, at least, reshaping the way they live.

The boomers are no longer the largest generation; millennials surpassed them in 2019, and Generation Z is nipping at their heels, if it hasn’t outgrown them already. But according to the National Association of Realtors, boomers last year overtook millennials as the single largest segment of the home-buying population — a designation those millennials had held since 2014.

Several trends contribute to this rise in boomer buying.

The older half of the generation (the youngest members of this half turn 69 this year) is largely out of the workforce. And while medical advances allow aging boomers to live longer, healthier lives, no one has yet found a way to halt aging entirely. These older boomers, then, are looking at the day when they may need help performing everyday tasks — and looking for communities where they can get it.

The younger half includes many who, like me, remain in the workforce and have no plans to retire anytime soon. (I was born in the second-highest year for births in the baby boom, 1958, and celebrated my 65th birthday in October.) Most of this group needs space for working from home, since the pandemic drove so many of us to work where we live at least part of the time. But our kids have also flown the coop, so we’re looking to jettison the extra bedrooms we needed for them.

And some of us want to get rid of the yards around our houses as well. We’re finding it harder to climb stairs, fueling a demand for main-floor bedrooms. New-construction houses increasingly have those, but for boomers who don’t want to buy a new house (and another yard), that usually means buying a condo, like those at the Laurel.

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

NJ rents only up 2.3%?

From the Bergen Record:

Here’s what rent prices look like in NJ, and the US, at the start of 2024

As home prices have continued to soar and mortgage rates remain high, many would-be first-time buyers are opting to stay in the rental market longer.

This might be the more doable financial option for many — with median rent prices continuing to decline across the nation for the sixth month in a row −— but those living in the Northeast have experienced consistent price increases in comparison, according to Realtor.com’s January 2024 Rental Report.

Compared to big Western rental markets like Phoenix, Riverside and Las Vegas — which all saw rent prices decline for eight months before seeing their first year-over-year price growth in January 2024 — the New York metropolitan area has experienced faster rent growth.

This region — which includes the North Jersey counties of Hudson, Bergen, Passaic, Morris, Essex and Sussex — has median rents of $2,844. This is 2.3% more than median rent prices seen in our area this time last year.

The report credits the steady increase in rent prices in our area to expensive home prices and high mortgage rates are keeping buyers in the rental market, boosting demand and putting pressure on rents in popular areas.

A strong labor market and the slowing growth of new multi-family homes is also said to play a role in increasing prices.

“Consequently, the stronger labor market in the Northeast is likely contributing to an increased demand for rentals, rendering it more competitive compared to the rental market in the West,” according to the report.

“Although both regions saw record-high new multi-family starts in 2022, we expect a significant portion of 2022 starts in the Northeast to be completed in 2024,” the report reads.

Posted in Demographics, Economics, Employment, Housing Bubble, New Jersey Real Estate | 66 Comments

Huh?

From the LA Times:

Forget California exodus. New Jersey residents lead an influx back into the Golden State 

After a half decade of Californians moving to places like Texas and Florida, an unlikely state has been supplying California with new residents.

New Jersey, a similarly expensive and densely populated state, saw more residents move to California than the other way around in 2022 — a rarity amid the state’s population exodus. It was one of only eight states to be part of a reverse exodus phenomenon, and the state with the largest net number of transplants to California.

In recent years, California has experienced a net exodus to most other states, with experts attributing the population shift primarily to California’s high housing costs. But a handful of states have bucked that trend, sending transplants into the Golden State at a time when more people are moving out. New Jersey, one of the nation’s most densely populated states, has recently recorded the biggest net exodus of residents moving to California. 

In 2022, the so-called California exodus resulted in 818,000 Californians leaving for other states, while 476,000 moved in, resulting in a total domestic loss of 342,000 in the Golden State. 

The exodus was highlighted by the droves who left for Texas. The five states that saw the most net arrivals from California — Texas, Arizona, Nevada, Florida and Idaho — each had between 20,000 and 60,000 more people arrive than leave for the Golden State.

By contrast, the eight states that were net contributors to California’s population added to a net contribution under 15,000 people. In other words, the size of the net exodus to each state has been much larger than the number of transplants moving into California.

More than 13,000 New Jerseyans moved to California in 2022, and fewer than 7,000 Californians moved to New Jersey. The net migration into California — nearly 7,000 people — was the highest of any state. Illinois was second, with net in-migration to California of around 4,000 people.

Nebraska, with 2,000 more leaving for California than arriving, was the third highest. 

In total, 41 of 49 states saw more Californian arrivals than departures for the Golden State.

Posted in Demographics, Economics, National Real Estate, New Jersey Real Estate, Where's the Beef? | 16 Comments