From the NYT:
Why the Housing Market Is Slumping Despite a Booming Economy
These should be happy times for the housing sector. The economy is booming, with more people working at higher pay, and with the sizable millennial generation reaching prime home buying age.
Instead, the housing market has gone soft, acting as a drag on the overall economy rather than as a force propelling it forward.
Sales of new single-family homes were down 22 percent in September from their recent high in November 2017, and existing home sales in September were down 10 percent. This tepid residential investment subtracted from G.D.P. growth in each of the first three quarters of 2018.
Home prices have not declined nationally, at least according to the most widely followed indexes. But their rate of increase has declined, and more and more home sellers are finding they must reduce asking prices to find a buyer.
Given how central housing is to the broader economy — it is the biggest driver of both wealth and indebtedness for most families, and its fluctuations have frequently been major factors in past booms and busts — this slump isn’t something to be taken lightly for anyone hoping the good times will last.
So what’s going on?
What a generic, boring article by the NYT. A more interesting question is why are suburban home prices 2x in Bay Area compared to New York City suburbs? probably explained by tech companies located to locate in San Francisco suburbs but not New York suburbs.
Because even though the economy may be booming the prices are still too high.
I always left hours after the offices were officially closed…… I seldom if ever regretted it, and generally had the road to myself. The only drawback at times was trying to park in Hoboken on the street.
Mike S says:
November 16, 2018 at 10:23 pm
Was such a good call to leave work at 830 last night. Was home in mid-essex co. By 10 via rt 3.
Mortgage applications have been falling all through the fall, they are now down 22 percent from year-ago levels, with purchase applications down 3 percent. This matters because if people aren’t taking out mortgages they are not buying homes. Residential construction has been a drag on GDP in the last three quarters. Also, when people buy a new home they typically buy appliances and other items associated with moving. This means less consumption spending as well.
That’s a big number. Off the top of my head, I can’t think of any other important economic indicator that’s down 22 percent over just the past year. In fact, I can’t think of anything that’s close. So what’s the problem? Here’s Neil Irwin:
When you look closely at the data, it appears this paradox of a strong economy and a weak housing market is, at its core, an illustration of a fundamental rule in economics: If something can’t go on forever, it won’t.
Ex: the $10,000 limitation, interests rates, and -SURPRISE- prices are creating a chill. The official direction will be when people file their 2018 taxes a really see the actual impact. Most tax preparers are just now receiving updates on their software so some hardcore estimations can be calculated and the final five weeks of 2018 can be locked into place. My dry run gave me an extra $5,000-$10,000, but those people who are spending money based on their adjusted W-2 withholding tables may be in for a really bad shock.
Impacts unknown, but 2 months from now will begin the process.
BTW – Orange County is a sinkhole…… yikes….
Just faultline stuff….yeeeesh
Chi—96% of former AMT payers will not pay going forward. Those folks all lost access to the SALT deduction. Should be interesting to see impact.
“The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, substantially changed the AMT. About 5 million taxpayers were expected to pay the AMT under the old law, but only 200,000 are expected to pay the AMT this year. So few taxpayers will owe the AMT that the IRS says it will remove its online AMT Assistant tax too”
https://www.forbes.com/sites/bobcarlson/2018/09/29/what-you-need-to-know-about-the-new-alternative-minimum-tax/#43eef6224822
Chicagofinance what do you mean Orange County is a sinkhole? Orange County, California, or another Orange County?
You don’t actually own your home in nj. that’s the difference. Someone posted a house from Cupertino that was asking asking $2.2M. The taxes were $1800. 300k shltbox in NJ the taxes are 5x that.
Fake news becomes more delusional each day as they pander to a smaller more biased audience. According to nj.com now, the unprecedented traffic jams Thursday had nothing t do with Murphy’s inexperience and s lack of preparedness but was entirely the fault of People who went to work that day.
Meanwhile no mention of the accused rapist who he was sheltering in a patronage job. He and his wife and administration were aware of the accusations and did nothing.
Just in Anaheim for the week….. don’t worry, I didn’t say Hudson County….
Off to the St. Regis tonight for a wedding…. ugh… PIA….
Yo! says:
November 17, 2018 at 1:08 pm
Chicagofinance what do you mean Orange County is a sinkhole? Orange County, California, or another Orange County?
Chicagofinance, 20% of Orange County houses worth $1 million, highest in USA after Bay Area metros. Rising number of 7-figure homes in Orange County, while NJ 7-figure homes shrink in number.
Most people with common sense will soon realize this tax reform put more money in their pockets than this salt defection ever came close to provided. This housing market makes absolutely no sense from a long term value standpoint.
*Salt Deduction ever came close to providing
I’m pretty sure that it was Trump and/or racism that caused the poor response to snowfall in Democrat controlled states. After all, what color is snow?
Just picked up my free Lyric thermostats. Thanks whoever told me.
Rising interest rates will depress prices or at least tamp down increases.
The SALT deduction limit, while it may or may not be a real pain that is felt, the balloon now has a hole poked in it. That was one of those “they won’t do it” moves that they went through with, perhaps stupidly. Now listen to the demand hiss out…gee how did that happen? What else could they do that was seen as a sacred cow prior?
And how did the voters respond? By voting in the Leftists who can’t wait to drive up taxes on “the rich”, which always seems to be anyone who owns property. That’s not good for housing demand either.
SALT deduction distorts the true value of real estate. Also used as a rationalization to increase property taxes because you can write the taxes off.
It’s changing the rules mid game and that’s wrong. It didn’t distort pricing, this is what pricing was based on for how long? Taking away the salt is the definition of distorting the market.
It’s like all of sudden outlawing mortgages(extreme, i know, but making a point). It totally changes the rules of the market.
3b says:
November 18, 2018 at 11:27 am
SALT deduction distorts the true value of real estate. Also used as a rationalization to increase property taxes because you can write the taxes off.
The long arm of the IRS…
https://www.dailymail.co.uk/news/article-6402761/Meghan-Harry-face-tax-nightmare-hands-officials.html
So what? We are saying different things….. it is an unpleasant place to be….
Yo! says:
November 17, 2018 at 7:19 pm
Chicagofinance, 20% of Orange County houses worth $1 million, highest in USA after Bay Area metros. Rising number of 7-figure homes in Orange County, while NJ 7-figure homes shrink in number.
Fear of the new tax law is a major drag on the high end market. Of course high end is relative to location but generally homes with taxes approaching 20,000 anywhere are impacted. Recently several agents have indicated that the slow down has broadened in price range and location. Add to this the impending seasonal slowdown and it will not be an active late fall into early winter. If the Spring market is weak expect a slow 2019 in our area. My feeling is that this does not translate to a significant price adjustment this time around.
It’s changing the rules mid game and that’s wrong. It didn’t distort pricing, this is what pricing was based on for how long? Taking away the salt is the definition of distorting the market.
It’s like all of sudden outlawing mortgages(extreme, i know, but making a point). It totally changes the rules of the market.
Adding interest deduction in the first place was also changing the rules. Best way to incorporate changes to the market is to phase them in. This isn’t the end of the world, and if it is, we can challenge NJ to figure a way to stop siphoning money off of it’s residents in the form of property taxes. Ain’t gonna happen with Murphy in office.
Fake news becomes more delusional each day as they pander to a smaller more biased audience. According to nj.com now, the unprecedented traffic jams Thursday had nothing t do with Murphy’s inexperience and s lack of preparedness but was entirely the fault of People who went to work that day.
School districts all held work that day. They were under pressure to not kill everyone’s Spring Break like last year.
Don’t b!tch about high taxes now. People that expect perfect roads during storms should pay for this crap. Now they are going to be over prepared for every storm because of all the complaints. Hope people are happy.
https://www.nj.com/weather/index.ssf/2018/11/after_commuting_nightmare_murphy_state_get_aggress.html
Don’t b!tch about high taxes now. People that expect perfect roads during storms should pay for this crap. Now they are going to be over prepared for every storm because of all the complaints. Hope people are happy.
How do you manage to come up on the wrong side of every argument? How dare we demand accountability for over the 500 reported accidents. Someone even died in New Providence at a rail road cross that I pass several times a week. We already pay for this. Murphy kinda reminds me of Mayor Nagin not using the buses to evacuate New Orleans.
Accountability for something that could not be controlled? People that are crying about this, are the same people that cry about schools closing for snow storms. Now you know why it’s a benefit to all that schools close. There is a lot less cars on the road. There is absolutely nothing that could have prevented this traffic nightmare. You had everyone leaving work at the same time, including schools. Even if it rained, it would have been a nightmare. Never mind idiots crashing in the snow adding to the traffic nightmare. Keep blaming the govt and Murphy, like they are Gods that can save you from every situation life throws at you.
Blue Ribbon Teacher says:
November 18, 2018 at 10:21 pm
Don’t b!tch about high taxes now. People that expect perfect roads during storms should pay for this crap. Now they are going to be over prepared for every storm because of all the complaints. Hope people are happy.
How do you manage to come up on the wrong side of every argument? How dare we demand accountability for over the 500 reported accidents. Someone even died in New Providence at a rail road cross that I pass several times a week. We already pay for this. Murphy kinda reminds me of Mayor Nagin not using the buses to evacuate New Orleans.
Oh I get it, because you pay taxes, the govt must provide miracles. You are paying for it, right?
Hi, I’m from the govt, what can I do to help you next time there is a snow storm? Can I wipe your a$$ too?
I recommend that people leave work early, or don’t go in, if there is snow in the forecast and don’t want to get stuck in traffic. Don’t make me pay huge amounts of money so you can have perfect roads in a snow storm and still sit in traffic. Morons!