Home price jackpot? Think again.

From the NYT:

How Much Higher Are Your Post-Pandemic Property Taxes?

The median price for a single-family home in the United States rose about 40 percent from 2019 to 2022, peaking at $480,000 before receding to about $417,000 at the close of 2023. The higher home prices have led to higher property taxes, adding even more to a monthly housing budget. A recent study by CoreLogic found that from 2019 through 2023, the median U.S. single-family property-tax bill rose by nearly 24 percent, to about $2,826.

Property taxes are determined on the county level, based on a home’s assessed value and the local tax rate. Reassessment timelines differ — taxable home values are determined either at the time of sale, annually, or on another schedule — so the pandemic price increases have affected rates differently depending on location. CoreLogic found that taxes rose 26.3 percent ($612) among homes that were reassessed since 2019, and 18.4 percent ($402) among those that were not. What’s a few hundred dollars over the course of 12 months? Maybe not a deal breaker in lower-cost counties where the tax rates are more manageable.

But don’t tell that to homeowners in Westchester, just north of New York City, the most expensive tax county of all. According to a separate CoreLogic study, the median tax bill there in 2023 was $15,373. Just across the Hudson River, Rockland County, N.Y., followed, with $14,879 a year in property taxes; and New York County, otherwise known as Manhattan, had the third-highest taxes, with a median of $14,073 a year.

Overall, the New York City area had the highest taxes in the country, with 13 of the 15 most expensive tax counties located in the city or its suburbs.

Posted in National Real Estate, New Jersey Real Estate, NYC, Property Taxes | 56 Comments

NJ Loses Jobs

From NJ Spotlight News:

NJ Recorded loss of 5,300 jobs in February

For the first time in seven months, nonfarm employment has decreased in New Jersey. The U.S. Bureau of Labor Statistics reported a decrease by 5,300 jobs in February to reach a seasonally adjusted level of 4,370,700. The unemployment rate stayed steady at 4.8% for the sixth straight month; the national unemployment rate is 3.9%.

In February, 5 of 9 major private-industry job sectors recorded growth: private education and health services (+2,400), leisure and hospitality (+1,000), information (+500), financial activities (+200) and manufacturing (+100). The public sector recorded a seasonally adjusted gain of 700 jobs.

From the Record:

NJ lost 34,000 jobs in the past year. Are there choppy waters ahead?

New Jersey’s economy posted a loss for the first time in six months, the state Department of Labor and Workforce Development said Thursday, after the labor market showed signs of slowing last year.

The New Jersey jobless rate in February hovered at 4.8%, where it’s been since September, the latest data shows. That makes it the fourth-highest unemployment rate in the nation, and above the national rate of 3.9%. 

All told, the state lost 34,000 jobs between February 2023 and 2024, state data shows. Higher-paying sectors such as finance, professional services (accounting, architecture, legal work, technology) and telecommunications slowed hiring in the past year. 

“Certainly, growth has slowed, really in the second half of the year,” said James Hughes, an economist at Rutgers University. 

Posted in Demographics, Economics, New Jersey Real Estate | 97 Comments

New Home Sales Tank

From Newsweek:

Home Sales Collapse in Several States

Sales of new homes in the Northeast and the Midwest plunged in February, helping to bring down the market overall across the country, as elevated mortgage rates dissuaded buyers from purchasing property.

The Northeast registered a 31.5 percent nosedive in single-family home sales, while the Midwest saw a decline of 2.4 percent, contributing to a 0.3 percent of drop at the national level of 662,000, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. Bloombergeconomists had forecast sales of 677,000. The South had more encouraging data, registering a 3.7 percent increase, while the West also saw positive numbers, up 2.3 percent for the month.

Analysts blamed high mortgage rates for the disappointing numbers.

“Rising mortgage rates subdued activity in February,” Yelena Maleyev, KPMG’s senior economist, said in a note shared with Newsweek.

The fall in new home sales is a reverse of a recent trend in the existing homes market. That segment saw sales jump 9.5 percent last month despite the rise in mortgage rates, which for a while had dissuaded sellers from putting their homes on the market, reluctant to give up the low loan rates they secured in the past.

Posted in Housing Bubble, National Real Estate, New Development | 78 Comments

Better move fast

From the Star Ledger:

N.J. ranks second in nation for fastest selling homes. See latest list.

Homes in New Jersey sold within a median of 39 days in February, the second fastest in the nation, the latest data from Realtor.com showed.

Only Rhode Island, where homes sold within 38 days, had a hotter housing market. New Jersey and Massachusetts tied for second for fastest selling homes in the nation.

Nationwide, homes sold within a median of 61 days in February, the data showed. Homes in Montana stayed on the market the longest. 

Posted in Economics, Housing Bubble, New Jersey Real Estate | 71 Comments

Bubble buyers first to bail

From Fortune:

Housing market data suggests the most optimistic buyers during the pandemic are more likely to stop paying their mortgages

Traditional methods for forecasting housing prices and broader economic indicators are proving insufficient. In our recent research, we explored an overlooked aspect of home buying: the significance of buyers’ expectations. We found that the anticipations of mortgage borrowers regarding future housing prices are crucial for understanding the health of the economy.

There’s a consensus that the expectations about future increases in housing prices and interest rates significantly influence housing market dynamics. The logic is straightforward: If individuals believe the value of homes will rise, they are more inclined to take on more debt. This effect is amplified in the housing market because you cannot bet against market downturns, making the positive outlooks of buyers more influential. Previous studies have indicated that this optimism can drive rapid increases in housing prices, creating “bubbles.” These bubbles often lead to inflated house prices, fueled by speculation.

What occurs, however, when housing prices remain elevated but expectations begin to decline?

Our findings indicate that expectations are critical in the decision-making processes of mortgage borrowers. During the COVID-19 pandemic, there was a period when confidence in future housing price increases waned, despite actual prices still rising.

We observed that borrowers who were initially the most optimistic about price increases were significantly more likely to request mortgage forbearance–a pause or reduction in payments–by about 50% more than the broader mortgage-borrowing population (6% versus 4% in our study) during this episode. This underscores the significant impact of borrower expectations on the housing market and economic stability.

Posted in General | 36 Comments

Welcome to Spring – Best February Prices Ever

From CNN:

US home sales surged last month, despite highest February prices on record

Sales of previously owned homes in the US unexpectedly soared in February to the highest level in a year, in a sign that buyers are returning to the market.

Meanwhile, mortgage rates edged higher this week, according to a separate report released Thursday from Freddie Mac.

Existing home sales — which make up most of the housing market and include single-family homes, townhomes, condominiums and co-ops — rose 9.5% in February from the prior month to a seasonally adjusted annualized rate of 4.38 million units, the National Association of Realtors reported Thursday. That was the second straight month of rising sales and the largest monthly increase since February 2023, according to a release.

Home sales have rebounded since dropping to the lowest levels in decades last fall as mortgage rates shot up.

Meanwhile, the median national price of an existing home rose 5.7% in February from a year earlier, to $384,500, a bigger annual rise than in the prior month. It was the highest median home price for any February on record.

Posted in Comp Killer, Housing Bubble, National Real Estate | 149 Comments

Six figures ain’t what it used to be

From CNBC:

The salary a single person needs to live comfortably in 25 major U.S. cities

Here’s the income a single person needs to live comfortably in the 25 U.S. cities with the highest cost of living:

  1. New York City: $138,570
  2. San Jose, California: $136,739
  3. Irvine, California: $126,797
  4. Santa Ana, California: $126,797
  5. Boston: $124,966
  6. San Diego: $122,803
  7. Chula Vista, California: $122,803
  8. San Francisco: $119,558
  9. Seattle: $119,392
  10. Oakland, California: $118,768
  11. Arlington, Virginia: $117,686
  12. Newark, New Jersey: $116,646
  13. Jersey City, New Jersey: $116,646
  14. Long Beach, California: $114,691
  15. Anaheim, California: $114,691
  16. Honolulu: $111,904
  17. Los Angeles: $110,781
  18. Aurora, Colorado: $110,115
  19. Portland, Oregon: $110,032
  20. Riverside, California: $109,408
Posted in Crisis, Demographics, Economics, Employment, National Real Estate, NYC | 101 Comments

Back to normal or just gridlocked?

From Mansion Global:

U.S. Home Price Growth Is Back to Where It Was Pre-Pandemic

After three years of drastic price fluctuations—with values surging and then cooling down—home price growth in the U.S. is back to where it was before the pandemic, according to a report by Redfin on Tuesday. 

During the Covid pandemic, home prices increased as low mortgage rates created home-buying madness, leading the Federal Reserve to increase rates in an attempt to cool down inflation. That in turn led to a swiftly cooling real estate market, as would-be buyers eschewed those higher rates. 

Home prices increased 0.6% in February from the prior month, which was the average monthly gain recorded in the eight years before the pandemic. During the height of the pandemic, prices rose as much as 2% month over month in January 2022 and fell by as much as 0.2% in August 2022.

“There’s a mismatch between the attitudes of buyers and sellers,” said Meme Loggins, a Redfin agent in Portland, Oregon, where prices fell 0.1% in February. “I have a lot of buyers coming in expecting a huge discount. Meanwhile, I have sellers who are standing firm on how much their house is worth after seeing their friends’ homes sell for way over the asking price during the pandemic. In reality, it’s neither a buyer’s or seller’s market.”

When looking at year-over-year changes annually, home prices increased by 6.7%, comparable to the 6.9% average annual gain in the years before the pandemic hit. 

Additionally, though listings have rebounded to their highest level in 18 months, there are still not enough homes on the market to meet demand. 

“Inventory has picked up dramatically in the past two weeks, but it’s getting snatched up quickly,” Loggins said. In Nassau County, New York, home prices rose 2% on a monthly basis in February, the biggest increase among the 50 metropolitan areas analyzed in the report. Montgomery County, Pennsylvania (2%); Warren, Michigan (1.9%); Chicago (1.8%) and Indianapolis (1.6%) rounded out the top five for monthly price increases. 

The biggest month-to-month price drops were in Tampa, Florida, where they fell 0.5%, and San Antonio, Texas, which recorded a 0.4% decline.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 138 Comments

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 | 92 Comments

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