Here it is! The first look at pending home sales (contracts) for Northern NJ.
(Source GSMLS, except Bergen- NJMLS) – Updated with 2011 Data
February Pending Home Sales (Contracts)
——————————-
Bergen County
February 2011 – 490
February 2012 – 564
February 2013 – 682 (Up 20.9% YOY, Up 39.2% Two Year)
Essex County
February 2011 – 221
February 2012 – 313
February 2013 – 364 (Up 16.3% YOY, Up 64.7% Two Year)
Hunterdon County
February 2011 – 90
February 2012 – 92
February 2013 – 126 (Up 40.0% YOY, Up 40.0% Two Year)
Morris County
February 2011 – 264
February 2012 – 320
February 2013 – 403 (Up 25.9% YOY, Up 52.7% Two Year)
Passaic County
February 2011 – 138
February 2012 – 153
February 2013 – 215 (Up 40.5% YOY, Up 55.8% Two Year)
Somerset County
February 2011 – 176
February 2012 – 201
February 2013 – 270 (Up 34.3% YOY, Up 53.4% Two Year)
Sussex County
February 2011 – 68
February 2012 – 106
February 2013 – 125 (Up 18.0% YOY, Up 83.8% Two Year)
Union County
February 2011 – 204
February 2012 – 273
February 2013 – 292 (Up 7.0% YOY, Up 43.1% Two Year)
Warren County
February 2011 – 59
February 2012 – 69
February 2013 – 92 (Up 33.3% YOY, Up 55.9% Two Year)
Good Morning New Jersey
Ahhhh to be young, rich, and living in Downton Abby, NJ.
One of these Essex Co contracts is mine. Wish me luck.
3. Oh lord!! ;-) Hey, It’s OK baby. That’s what I keep telling myself.
I made a similar comment 7 years ago. It is not the particular details or facts of the article that are important, but rather the overall ideas behind the article that are rising to a point of critical mass to be noticed by the media. One article is not that important, but to the extent that we begin to see more articles of this type, it represents a meaningful information stream that should be monitored. Too bad it was buried on a Saturday.
WSJ
HEARD ON THE STREET
Cash Course in Housing Economics
By JUSTIN LAHART
It is true that the Federal Reserve’s efforts to get the economy going have helped spark a recovery in housing. Just not in quite the way it intended. Both home sales and prices have been on the rise over the past year, offering relief at a time when the U.S. has been fighting through a sluggish recovery at home and financial uncertainty overseas. Housing’s gains have also provided evidence that the Fed’s extraordinary efforts to put the economy back on its feet are having an impact.
But a cursory look at the data shows that there is something unusual going on.
Even though overall home sales are now back to 2007 levels, mortgage activity isn’t. In the fourth quarter, mortgage originations aimed at purchasing a home came to $123 billion, according to the Mortgage Bankers Association, compared with $226 billion five years earlier. Rates are extremely low, and the Fed is buying oodles of mortgage-backed securities, but banks are still reticent about lending money to home buyers.
The explanation for why home sales have recovered despite lackluster mortgage origination is that a lot of homes are getting bought in all-cash deals these days. Across 55 large metropolitan areas that it follows, DataQuick found that 36% of homes sold last year were purchased without mortgage financing, compared with 15% in 2007. In some of the old hotbeds of speculation, the number of homes getting purchased for cash is eye-catchingly high: In the Miami area, for example, there were 72,459 cash sales last year, against 19,625 five years earlier.
Some of those cash sales come from people who aim to live in what they bought, of course, but a great many of them were to investors looking for homes to rent out. Indeed, what was essentially a mom-and-pop activity a few years ago—buying distressed-price homes, fixing them up and renting them out—has turned into a big business, with investment firms like Blackstone Group and, more recently, foreign-led groups jumping into the fray.
A big reason why: The extremely low long-term interest rates that the Fed has helped engineer through its bond and mortgage purchases have made many investors desperate for yield. That has made the stream of income they can generate through rental homes enticing. So while the Fed’s intent was to get housing going by making mortgages more easily available to would-be buyers, much of its actual success has come as a result of the yield-seeking behavior—or reach for yield—it has inculcated among investors.
Given the role that investors’ house-flipping played in the inflation of the housing bubble, there is something disconcerting about investor involvement having such a pronounced effect on the market now. An important difference is that today’s activity isn’t being driven by investors buying homes with subprime mortgages in hopes of selling to a greater fool, but by investors who are looking to generate better returns on their cash than they can get elsewhere.
But though it is cheering that today’s activity doesn’t have the speculative characteristics of a bubble, there is still a question of how long the economics of what housing investors are doing is going to make sense.
Home prices are now on the rise, and with so many houses getting converted to rentals, rent increases aren’t keeping up. That has begun to make rent-to-price ratios—housing yields—a little less attractive. If the trend continues, and if an improving economy prompts the Fed to let long-term interest-rates rise, the reason for the reach for yield goes away.
Christopher Mayer, a Columbia Business School economist, further worries that some housing investors have underestimated the cost of maintaining stand-alone homes, and may soon find that they aren’t generating as much income from their rentals as they had anticipated.
The natural response would be to sell, which would probably be a pretty nice trade for investors who bought at the bottom. For the more recent comers, some of which would have hundreds of homes to unload, it could be a bit more trying.
Write to Justin Lahart at justin.lahart@wsj.com
A version of this article appeared March 2, 2013, on page B14 in the U.S. edition of The Wall Street Journal, with the headline: A Cash Course in U.S. Housing Economics.
4. Cautiously happy and occasionally terrified. Moving in less than a month. From debt free and footloose to owing the bank a small fortune, but owning a slice of Haughtyville.
chi[5]
Is there any data available on what %% of SFH (as opposed to legal or illegal multi or townhouses) are actually investor-owned rentals? My guess is very few, at least around here… sure there is a large increase in the number of houses rented out by the owners having to relocate and unable to sell at a price they like, but investors?
cobs: first article of hopefully future articles; also maybe we can begin to find primary sources versus secondary sources…..let’s see how it unfolds…
Don’t be hesitant to e-mail the journalist…..ask him the question….
cobbler says:
March 2, 2013 at 12:04 pm
chi[5]
Is there any data available on what %% of SFH (as opposed to legal or illegal multi or townhouses) are actually investor-owned rentals? My guess is very few, at least around here… sure there is a large increase in the number of houses rented out by the owners having to relocate and unable to sell at a price they like, but investors?
http://blogs.wsj.com/developments/2012/09/25/five-questions-why-home-prices-are-rising/
At the moment it’s a seller’s market again,” said David Fogg, a real estate agent in Burbank, CA. “Very low inventory, very low interest rates, almost no bank inventory of homes, it’s crazy out there. Every good property I’ve listed this year has brought 10-50 offers and sales prices 10-20 percent over comps. Cash is King.”Nearly one third of all existing home sales in January were paid for in cash, and not just by investors, who are making up a shrinking share of the market. Fierce competition is forcing buyers to use every advantage, given that so many are going after so little.In California’s San Fernando Valley there are usually over 9,000 homes for sale this time of year, according to real estate agent Billy Wynn. Today there are just over 1,400.”Realtors are getting so many offers they are taking the homes off the market and not accepting additional offers before any offer is even accepted,” said Wynn. “This is real estate bubble 2.0 on steroids.”It is a puzzling situation, given all the warnings of a tsunami of so-called “shadow inventory” that was supposed to be flooding the market right now. As it stands, fewer distressed properties are coming to the market.
http://m.cnbc.com/us_news/100512238/2
Re: [10]
Nearly one third of all existing home sales in January were paid for in cash
I wonder if that is really true, or overstated. (A Realtor said it… DUH!) Seriously though, like Grim says “It’s ALL cash on the closing table.” Does that mean that the market is really dominated by buyers (even first-time buyers) with sufficient liquid assets to buy in a pricey market like coastal California? Or maybe ‘cash buyer’ is just a proxy for no mortgage contingency? That would simply shift the burden onto the buyer to get a serious pre-qual. Might this be what a realtor considers a ‘cash buyer’? And if the inspection and appraisal contingencies remain (and I don’t think we’re quite back to that point yet), then I don’t see much functional difference.
Even bill mcbride founder of calculated risk see positive
http://www.businessinsider.com/bill-mcbride-of-calculated-risk-2012-11
chi (5)-
Any questions?
Outside of the cash buyers, we also still have the FHA set rolling into properties with virtually no skin in the game. That should end really well.
(12)
auto-disqualification?
“I read a lot of different economists to try to understand theory, because I’m not an economist – I have an MBA – I kind of understand business, I’ve always been good with numbers, but I read economic theory and I’m glad to read…when we were going into this crisis, I was reading Krugman all the time because it was clear to me that he had a handle on what was going on.”
Krugman is sort of the Three Stooges of necronomics.
Do you have any video of that? I’d love to find out some additional information.
the only thing Krugman understands is that people have short memories and are too stupid to know how clueless he is.
Scrapple,
My contacts list got hosed by an OS update. So I can’t find your email. Shoot me an email so I can ask you some inventory questions. Nomdeplumenj@gmail.com
After the pitiful Gooner performance today, gluteus may have to lay low until June.
I especially enjoyed Piers Morgan throwing Wanker and the whole team under the bus before, during and after the game. Typical Gooner fan.
I’d like to throw Piers under a bus. And not a metaphorical one either.
[14] Joyce,
Krugs might have had a handle on the crises but no clue about how to solve them.
There are actually undoubtedly numerous details like that to take into consideration. That is an excellent point to bring up. I offer the thoughts above as general inspiration but clearly you’ll find questions like the one you bring up exactly where the most fundamental thing might be working in honest fine faith. I don?t know if very best practices have emerged around points like that, but I am positive that your job is clearly identified as a fair game. Both boys and girls feel the impact of just a moment’s pleasure, for the rest of their lives.
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Incredible points. Sound arguments. Keep up the great work.
The next time I read a blog, I hope that it doesnt disappoint me as a lot as this 1. I mean, I know it was my option to read, but I actually thought youd have some thing interesting to say. All I hear is often a bunch of whining about something that you simply could fix if you werent too busy searching for attention.
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