This again?

Posted on May 10, 2024 by grim

From Quartz:

‘Fractional home ownership’ wants to fix real estate’s woes. What is it and could it work?

There’s more than one way to own a house these days.

Sites including real estate startup Pacaso are opening up a new market for people looking to own just a fraction of a house — for a fraction of its total price. Instead of laying claim to an entire single-family home, Pacaso sells luxury single-family homes to groups of buyers, a practice known as fractional home ownership. Someone could, for example, own one-eighth of a multi-million dollar mansion in Florida’s coveted Marco Island for just $736,000.

“There is a pressing issue: an affordable housing crisis,” Austin Allison, Pacaso’s CEO and co-founder, said in an emailed statement. The effect of fractional home ownership models like Pacaso’s is two-pronged, he said: They create additional inventory and optimize the use of existing housing to help keep up with demand and improve affordability, he said.
…
While Pacaso, which was founded in 2020, says it helps ease the affordability burden and supply constraints, it remains a niche part of the real estate market, Bankrate analyst Jeff Ostrowski said. And while it does address supply, he said, the effects are felt more in discretionary markets given that most of its listings are luxury properties.

“The real housing shortage problem is not a shortage of beachfront vacation homes,” Ostrowski said. “It’s a shortage of three-bedroom, two-bathroom homes, near schools and jobs that families can live in.”

Co-buying itself isn’t new: 62% of home buyers said they purchased and share ownership of their home with at least one other person, according to a 2023 report by real estate listing platform Zillow. But the fractional home ownership model as it exists today is aimed at wealthier individuals who are looking for a second home, Ostrowski said, rather than first-time buyers or those who are looking for their primary residence.

“I think this is pretty clearly targeted to the upper-middle class folks,” he said. “People who have enough wealth that they can own their primary home and they can consider buying a second home, but either don’t want to or don’t have the cash to go out and spend $1 million or $2 million on a second home.”

Other models of fractional homeownership have also cropped up allowing investors to own a share of homes much like retail investors can own shares of companies. Sites like Jeff Bezos-backed Arrived, and Fundrise, which received $770 million in financing from JPMorgan Chase, allow people to directly invest in residential real estate.
…
Kurt Carlton, president and co-founder of the real estate investment marketplace New Western, said these ventures are a net positive for the housing market. With 15.1 million vacant homes in the U.S., accounting for 10.5% of all housing inventory, there is a demonstrated need for innovative models to shore up investment in the sector, particularly when it comes to single-family residential units, he said.

For Carlton, anything that encourages investment in the single-family market is good — but it may not be the future of real estate investing just yet, given that their market share is still small. Instead, he sees the “real winner” as local independent real estate investors who are buying in neighborhoods they know and understand.

“They’re not nonprofits, but they’re completely aligned with the needs of the community in terms of they’re finding vacant inventory, returning it to market, and giving the builders a run for their money right now as well,” Carlton said. “And that’s what we need. We need supply.”

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 26 Comments

To be honest, there are some signs…

Posted on May 9, 2024 by grim

From Business Insider:

Home sellers are facing a summer from hell

The past few years were very good to people who decided to sell their homes. The massive relocation shuffle meant most homes hitting the market were the subject of bidding wars. Rich baby boomers jumped in with all-cash offers, and sellers scored huge windfalls as weary buyers pushed prices to new heights. There was no question who had the upper hand.

Now, sellers’ fortunes are changing. Home prices are still rising, at a modest pace, around most of the country, but gone are the days of throwing up a for-sale sign and waiting for the feeding frenzy to begin. As buyers’ options slowly increase, sellers may have to slash asking prices or wait longer for a viable offer to come along. Today’s home shoppers aren’t so willing to pass on inspections or give up other contingency rights to expedite a sale, either. Unlike their predecessors at the height of the pandemic, buyers can now afford to kick the tires before jumping into a deal.

Most painfully, mortgage rates have spiked to 7% from their record lows of less than 3% in 2021, which has not only deterred prospective buyers but also changed the calculus for many sellers. Since most people have to turn around and buy another property to live in, even the ones who profit handsomely off a sale are finding it hard to upgrade their digs, given the increased borrowing costs. It’s shaping up to be a cruel summer for sellers who aren’t ready to come to terms with this new reality.

Of course, it could always be worse. There are no signs that home prices are on the verge of collapse, and more sales are happening now than a year ago. After all, people have to move for a wide variety of life reasons; mortgage rates be damned. The number of homes for sale at any given moment is also growing, which means we’re inching closer to a “normal” market. The Housing Ice Age is slowly thawing.

But the peak months of home selling, which last from the spring into the middle of summer, may come with a rude awakening this year. Those who hoped that lower mortgage rates would grease the wheels of the housing market, nudging more buyers to get off the sidelines and bid up home prices, are realizing that dream scenario won’t come to pass. Sellers may still have an advantage, but it’s getting slimmer.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 50 Comments

Northeast the strongest?

Posted on May 8, 2024 by grim

From Fast Company:

As the Northeast housing market heats up, Florida’s is cooling down

Researchers at John Burns Research and Consulting (JBREC) publicly released the results from their March survey of real estate agents, and it paints an interesting picture.

It aligns with what inventory data has been telling us for months: There’s some softening of the housing market occurring in pockets of Florida and Texas, where active listings are close to pre-pandemic levels, while there’s still a great deal of competitiveness in tight inventory markets in the Northeast, Midwest, and Southern California.

According to the survey, 94% of resale agents in the Northeast said buyers outnumber sellers in their market. Meanwhile, just 30% of resale agents in South Florida said buyers outnumber sellers in their market.

In most markets, homebuyers still outnumber home sellers.

Posted in Demographics, Economics, Housing Bubble, National Real Estate, New Jersey Real Estate | 73 Comments

Not quite the 70s…

Posted on May 7, 2024 by grim

From Yahoo Finance:

Return to the ’70s? Today’s housing market has echoes of dark era.

High inflation and a disappointing report on economic growth — followed by a sudden drop in stocks late last month — made for a familiar economic combination.

These conditions were hallmarks of the 1970s, when inflation ran high, leading the Federal Reserve to hike interest rates. The central bank’s measures to tame inflation drove up borrowing costs for real estate developers and ultimately shrunk homebuyers’ purchasing power.

As a result, the housing market stagnated, and the decade itself became synonymous with stagflation, an economic cycle characterized by high inflation, tepid growth, and weak employment, leading to a stagnant economy.

While those trends may sound familiar, the current housing market is resilient. Not to mention, job growth is solid.

The major problem today: a dearth of inventory.

“You could argue that there is weakness in the housing market at the moment, caused by a supply-side shock,” Mark Fleming, chief economist at First American, told Yahoo Finance. “In other words, restriction in the supply of a good, which is causing inflation. … But I wouldn’t say we are in stagflation,” noted Fleming. “The problem isn’t weak demand, it’s weak supply.”

Claudia Sahm, former Fed economist and chief economist at New Century Advisors, LLC, agreed with this sentiment.

“This is not stagflation,” said Sahm. “GDP numbers look soft, but consumer spending is just trucking along. … But we are in this ongoing struggle with inflation, and people call inflation all sorts of things.”

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

Hottest markets in NJ right now

Posted on May 6, 2024 by grim

From NJ1015:

21 of this spring’s hottest real estate markets are in NJ

Out of 10,770 towns nationwide realtor.com looked at the hottest real estate markets in the country. They calculated the rankings by looking at the number of days properties remained listed on its site before selling and how often people were viewing the homes in any given town.

The results bode well for the Garden State. At least, if you’re a homeowner. Buyers might see this differently.

Of the top 100 hottest markets in the country 21 New Jersey towns made the list. In other words over 20% of the nation’s hottest home selling markets are right here in New Jersey.

98 Clifton $522,500

97 Summit $1,695,000

92 Chatham $1,850,000

84 Voorhees $448,900

81 Pompton Plains $599,000

79 Somerville $505,000

69 Blackwood $355,000

65 Middlesex $520,000

55 Red Bank $599,000

51 Hillsborough $610,000

50 Mount Laurel $404,500

47 Westfield $1,299,500

43 Old Bridge $580,000

35 Marlton $477,450

28 Fair Lawn $687,000

27 Montclair $1,034,000

25 Cherry Hill $562,450

16 Cranford $749,999

15 Ramsey $699,000

11 Ridgewood $1,195,000

8 Fairfield $629,900

Posted in Housing Bubble, New Jersey Real Estate | 69 Comments

Uh oh.. NJ hits peak-warehouse

Posted on May 5, 2024 by grim

From NJ Spotlight News:

Warehouse industry reports point to possible slowdown

Recent data from state and industry sources shows a sharp slowing in the number of building permits issued for warehouse construction last year in New Jersey. Those sources also show a new rise in vacancies, and a lower rate of increase in rents for the giant buildings, which have been springing up throughout the state for several years.

Analysts and companies that collect data on the industry say the breakneck pace of growth over the last several years can’t be sustained because supply from developers has already exceeded demand from customers. High interest rates are deterring investors from adding more space and uncertainty over economic growth is sapping confidence in any further expansion, they say.

The data on rents, vacancies and building permits suggest that warehouse tenants are less willing to pay top dollar for space; that more of the vast structures are remaining empty after a frenzy of speculative construction, and that developers are scaling back plans to build more of them.

Industry sources also note that developers continue to feel headwinds from warehouse opponents fighting the buildings at the local level. In the Legislature, two dozen warehouse-related bills first introduced last year now await consideration by lawmakers in response to rising local concern that the buildings are snarling traffic, worsening air quality, and contributing to warehouse “sprawl.”

According to data from New Jersey’s Department of Community Affairs, the area covered by building permits for “storage” buildings — mostly warehouses — in 2023 dropped sharply to 16.2 million square feet, a decline of about half compared with the previous two years, and the lowest level since 2018.

Posted in Economics, Employment, New Development, New Jersey Real Estate | 22 Comments

Inventory shifts positive?

Posted on May 3, 2024 by grim

From the Star Ledger:

Real estate update: These NJ counties saw home inventory increase in April

Across New Jersey, 13 counties saw an increase in new home listings compared with April 2023. And, the number of new listings also increased in 18 New Jersey counties compared with March.

In North Jersey, the counties of Passaic, Essex and Hudson all saw inventory increases from last year. Passaic County saw 302 new listings in April — a 14.39% increase from 2023 and a 19.84% increase from last month — while Hudson County saw a 11.21% increase from 2023 and a 37.23% increase from last month with 516 new listings. And, Essex County had 490 new listings in April, a 4.7% increase from 2023 and a 7.46% increase from last month.

While Bergen and Morris counties saw 900 and 542 new listings in April — a 19.05% and 15.81% increase from last month, respectively — both counties had fewer homes for sale than this time last year.

With 214 new listings in April, Sussex County was the only county to see inventory decrease from both last year (2.73%) and last month (.93%).
…
In April, a majority of New Jersey counties saw active listings stay on the market for a shorter period of time.

Homes in Morris and Bergen counties are staying on the market for the shortest period of time in North Jersey, at 21 and 24 days, respectively. Listings are staying on the market for 26 days in both Passaic and Essex counties, while homes stayed on the market for about 35 and 38 days, respectively, in Sussex and Hudson counties.
…
Overall, median home prices continued to increase in just about every New Jersey county compared to April 2023. And, 15 New Jersey counties saw median home prices increase from last month.

With a median home price of $582,250, Essex County saw the great increase in median home prices from last year at 16.47%. In Bergen and Passaic counties, home prices increased by 8.02% and 8.35%, with median listing prices of $787,495 and $487,500.

The median home prices in Sussex and Hudson counties are $399,900 and $656,750 — 6.64% and 6.36% increases from last year — while Morris County had a price increase of 1.18% and a median home price of $698,750.

Posted in General, Housing Bubble, New Jersey Real Estate | 75 Comments

Back Again

Posted on May 1, 2024 by grim

From CNBC:

Demand for riskier adjustable-rate mortgages hits highest level of the year, due to rising rates

When mortgage rates rise, consumers look for any way to lower their monthly payments, and that often leads them to adjustable-rate mortgages. These loans offer lower interest rates than their fixed-rate counterparts but are considered riskier. While they can be fixed for up to 10 years, they eventually adjust to an unknown future market rate.

The share of ARM applications rose to 7.8% of mortgage demand last week, according to the Mortgage Bankers Association. That is the highest level of the year. When mortgage rates hit record lows in 2021, the ARM share of applications was in the 3% range.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.29% last week from 7.24% the previous week, with points decreasing to 0.65 from 0.66 (including the origination fee) for loans with a 20% down payment. Meanwhile, the average contract interest rate for 5/1 ARMs fell to 6.60% from 6.64%.

“Inflation remains stubbornly high, and this trend is convincing markets that rates, including mortgage rates, are going to stay higher for longer. No doubt, this is a headwind for the housing and mortgage markets, with the 30-year fixed mortgage rate increasing to 7.29 percent last week, the highest level since November 2023,” said Mike Fratantoni, senior vice president and chief economist at the MBA.

Posted in Economics, Housing Bubble, Risky Lending | 105 Comments

This pattern seems familiar..

Posted on April 29, 2024 by grim

From NJ.com:

Regulators close Republic First Bank, regional lender with 15 N.J. locations

Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.

The Federal Deposit Insurance Corp. said Friday it had seized the Philadelphia-based bank, which did business as Republic Bank and had roughly $6 billion in assets and $4 billion in deposits as of Jan. 31.

Fulton Bank, which is based in Lancaster, Pennsylvania, agreed to assume substantially all of the failed bank’s deposits and buy essentially all of its assets, the agency said.

Republic Bank’s 32 branches will reopen as branches of Fulton Bank as early as Saturday. Republic First Bank depositors can access their funds via checks or ATMs as early as Friday night, the FDIC said.

The lender has 15 branches in New Jersey in Burlington and Camden counties, according to its website. 

The bank’s failure is expected to cost the deposit insurance fund $667 million.

Posted in General | 74 Comments

Oh, hey Austin, you too?

Posted on April 26, 2024 by grim

From Bloomberg:

Plunging Home Prices, Fleeing Companies: Austin’s Glow Is Fading

Oracle Corp. is moving its headquarters out of the city. Tesla Inc. is pulling back after a rapid expansion. Almost a quarter of commercial office space is vacant, and nowhere in the country have residential real estate prices fallen further from their pandemic peak.

Austin, the cosmic cowboy paradise that became a Covid-era economic superstar as it lured Elon Musk and a host of California refugees with its low taxes and sunny weather, had become accustomed to a steady drumbeat of good news. But lately that’s changed. And on Tuesday, Larry Ellison announced that his software company will shift its headquarters from the Texas capital to Nashville, Tennessee. It was a brief marriage — Oracle only arrived in Austin in 2020 — but getting jilted is never easy.

“City Hall was as surprised as everyone else,” Mayor Kirk Watsonsaid in a statement. 

But maybe he shouldn’t have been so shocked. Austin has been going so strong for so long that the tide was bound to turn. 

After a 12-year streak as the fastest growing large metro area in the US, Austin lost that slot in 2023. An office glut has pushed the vacancy rate 5 percentage points higher than the US average, according to data from Colliers. Home prices have dropped 18% from the pandemic highs seen in May 2022, the most among the 50 largest US metro areas, Redfin data show. Even so, the city ranks as one of the least affordable housing markets.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 80 Comments

The first to fall

Posted on April 25, 2024 by grim

From the NY Post:

Once the West Coast’s crown jewel, San Francisco’s real estate market is crashing

San Francisco, once the crown jewel of the West Coast, is now teetering on the brink of collapse — and it seems like nobody is sounding the alarm. 

The city’s housing market, in particular, has been hit hard over the past year, with prices plummeting and homeowners fleeing in droves.

JPMorgan Chase CEO Jamie Dimon didn’t mince words when he compared San Francisco’s woes to those of New York City, calling the Bay Area “in far worse shape.”

“I think every city, like every country, should be thinking about what makes an attractive city,” Dimon told Maria Bartiromo in an interview on Fox Business. 

“It’s parks, it’s art, but it’s definitely safety, it’s jobs and job creation, it’s the ability to have affordable housing. Any city that doesn’t do a good job will lose its population.”

San Francisco is failing on all fronts and in turn, its housing market is quietly crashing. 

Once-luxurious properties are now listing and selling for massive discounts just to attract buyers.

Consider the penthouse at the San Francisco Four Seasons Residential, initially listed in November 2020 for $9.9 million, now begging for buyers at $3.75 million — a jaw-dropping 62% markdown. 

It remains on the market today. 

Homeowners desperate to escape the sinking ship are offloading their properties at losses, with many seeing their investments dwindle by hundreds of thousands of dollars in just months.

A five-bedroom home at 478-480 Fourth Ave. sold for $1.1 million earlier this month, after selling less than a year prior for $1.6 million. 

At 88 King St., a two-bedroom condo overlooking a ball park that sold for $1.12 million more than a decade ago in 2014, recently sold last month for $1.08 million. 

Another two-bedroom condo at 1075 Market St., which sold in 2019 for $1.25 million just traded hands earlier this month for $675,000 — and after a price cut, to boot.

Posted in Crisis, Demographics, Economics, Housing Bubble, National Real Estate | 74 Comments

Zillow Home Price Forecast

Posted on April 24, 2024 by grim

From Zillow:

Zillow Home Value and Home Sales Forecast (March 2024)

Zillow’s home value forecast calls for 1.9% growth over 2024 – slower than long-term norms but a welcome slowdown for first-time buyers compared to the rapid appreciation seen over the pandemic. This is an upward revision from last month’s outlook, which projected growth of 0.9%. With interest rates still elevated, the modest upward revision is mostly the result of a slowdown in the growth of new for-sale listings. After rising at an annual pace of 21% in February, the year-over-year increase in new listings eased in March to just 4%, indicating that the market remains quite tight for would-be homebuyers. It remains to be seen how new listings will fare in April – the Easter holiday falling in March and the fact that February was a leap year are likely clouding the broader picture.

Zillow’s expectation for home sales was revised slightly downward this month as elevated mortgage rates continue to limit housing demand and sales volume. Zillow’s forecast now calls for 4.06 million existing home sales in 2024, slightly below both 2023’s level of 4.09 million and the previous forecast of 4.1 million existing home sales this year. Even after a better-than-expected sales count reading in February, leading indicators of home sales in the coming months suggest continued softness.

(For the NY Metro Market specifically)

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

Sorry about the affording thing

Posted on April 23, 2024 by grim

From CNBC:

Luxury real estate prices just hit an all-time record 

Real estate is increasingly a tale of two markets — a luxury sector that is booming, and the rest of the market that continues to struggle with higher ratesand low inventory.

Overall real estate sales fell 4% nationwide in the first quarter, according to Redfin. Yet, luxury real estate sales increased more than 2%, posting their best year-over-year gains in three years, according to Redfin.

Real estate experts and brokers chalk up the divergence to interest rates and supply. With mortgage rates now above 7% for a 30-year fixed loan, most homebuyers are finding prices out of reach. Affluent and wealthy buyers, however, are snapping up homes with cash, making them less vulnerable to high rates.

Nearly half of all luxury homes, defined by Redfin as homes in the top 5% of their metro area by value, were bought with all cash in the quarter, according to Redfin. That is the highest share in at least a decade. In Manhattan, all-cash deals hit a record 68% of all sales, according to Miller Samuel.

The flood of cash is also driving up prices at the top. Median luxury-home prices soared nearly 9% in the quarter, roughly twice the increase seen in the broader market, according to Redfin. The median price of luxury homes hit an all-time record of $1,225,000 during the period.

“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” said David Palmer, a Redfin agent in Seattle, where the median-priced luxury home sells for $2.7 million. “They’re ready to buy with more optimism and less apprehension.”

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 100 Comments

Second fastest in the nation

Posted on April 22, 2024 by grim

From the Star Ledger:

Homes in New Jersey sold the fastest in the nation.

As the weather heats up so is New Jersey housing market, according to the latest data.

Homes in New Jersey sold within a median of 36 days in March – three days faster than they sold in February. New Jersey tied with Maryland for second fastest selling homes in the nation, and Massachusetts was the only state that had homes that sold faster than in the Garden State.

Homes selling faster could be because of two things: the season and low inventory, according to real estate experts.

“It shows that properties are moving faster in the winter months than in past years, but overall keeps to similar trends of a longer time on the market in late fall and winter, with a ramp up beginning in spring,” Gloria Monks, president of New Jersey Realtors, said in an email to NJ Advance Media. “Inventory, of course, also affects this number — the lower the supply, the higher the demand,”

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

Has the slowdown begun?

Posted on April 19, 2024 by grim

From CNBC:

March homes sales dropped despite a surge in supply. Here’s why.

Sales of previously owned homes dropped 4.3% in March compared with February, to a seasonally adjusted annualized rate of 4.19 million units, according to the National Association of Realtors. Sales were 3.7% lower than in March 2023. This came after a big jump in sales in February.

Rising mortgage rates are likely the cause of the slowdown.

This sales count is based on closings from contracts likely signed in January and February. Mortgage rates stayed lower in January, in the mid 6% range on the popular 30-year fixed loan. They then shot higher in February.

Regionally, sales fell everywhere except in the Northeast, where they rose 4.2% month to month. Sales dropped hardest in the West, down 8.2%. Prices are highest in the West.

“Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said Lawrence Yun, NAR’s chief economist, in a release. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.”

Inventory did improve slightly, rising 4.7% month to month to 1.11 million homes for sale at the end of March. That’s a 3.2-month supply at the current sales pace. Inventory is now 14.4% higher than March of last year.

More supply did not cool home prices, however. The median price of an existing home sold in March was $393,500, up 4.8% from the year before. It’s also the highest price ever for the month of March. The annual comparison was, however, slightly lower than the month before.

The spring housing market is getting more competitive, and moving faster. The typical home sat on the market for just 33 days compared with 38 days in February.

Investors pulled back a bit, making up 15% of sales, compared with 21% in February and 17% in March of last year. First-time buyers did make a comeback though, accounting for 32% of sales, up from 26% in February and 28% the year before.

All-cash purchases accounted for 28% of sales, down from 33% in February but up from 27% one year ago. Pre-pandemic, that share was generally around 20%.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 97 Comments