From HousingWire:
Home price growth slows but rent keeps rising at 2019 ends
Both home prices and rents continued to increase as the year reached an end, but one of those two is increasing faster than the other.
Home values in the U.S. grew to $243,225 in November, which was the smallest annual growth since January 2013, according to Zillow.
Annual home value growth has now slowed in each of the past 19 months, Zillow noted, but slowdown has been gradual.
According to Zillow, the drop in year-over-year growth has not exceeded 0.3 percentage points from one month to the next during this period.
“As we approach the winter holidays, housing, too, is taking a breather,” said Skylar Olsen, Zillow’s director of economic research. “Motivated sellers trying to close before the end of the year dropped their list prices in September and October, with November numbers showing the expected quiet in listing activity.”
Out of the 35 largest metro areas, San Antonio and Washington, D.C. are the only to be growing at a faster annual rate than they were this time last year.
Meanwhile, San Francisco, San Jose, Las Vegas and Seattle have slowed down the most, with San Jose and San Francisco seeing a decline in year over year home values.
On the other hand, rent growth accelerated for the fifth straight month, up 2.3% annually to $1,600.
But, for-sale inventory fell 6.4% from last year, and there are 102,463 fewer homes on the market than a year ago.
Inventory fell the most in Seattle, which is down 28.8%.
“That quiet is echoed by the slower annual appreciation and the lower-than-normal available inventory. But as we anticipate longer days to come, so too we anticipate some relief for housing,” Olsen continued. “Lifting housing starts and permit numbers, strong jobs reports and the steady progress towards more stable and sustainable home value appreciation all point to a healthier 2020 for housing.”
Good Morning New Jersey
A builder I know who has been actively building side by side duplexes in Eastern Bergen County for the last decade told me the market is falling faster than he can reduce prices. Last week he went under contract to sell half a duplex in Fort Lee. The other side of the duplex had closed 3 months ago for 9% more than the contract he signed last week. The units are identical.
Low interest rates. Low unemployment. Booming economy. Why are home prices in North Jersey continuing to fall?
Low interest rates. Low unemployment. Booming economy. Why are home prices in North Jersey continuing to fall?
I have no doubt that if I went to a few open houses after the super bowl, I would be subjected to the 650K gas mask specials that I’ve grown to love over the years. I have fond memories of fat Mary’s Chesterfield and Rheingold hovel. But don’t take my word for it, look in the article above at the quote from Zillow’s director of economic research.
30 year,
No offense, but I’m with fast. I don’t look at the market like you do, which is short term. I only look at the long term. I don’t flip for short term gains.
Is economy strong? Is labor market strong? Low rate capital available? Supply of housing is at all time lows. Stock market hitting all time highs. How can you lose long term under these conditions? It’s inevitable that the millennials will go to war for housing. They are banking up ammo and soon they will realize they can’t wait, housing is not going to go down.
You know how many millennials still think a recession is coming and “waiting” to buy cheap real estate? They are super cautious and at the same time, insane. They still think the economy is going to drop because that’s what they been told over and over the past 10 years by their scarred baby boomer families. Their mindset will change shortly. It’s becoming obvious boom years are coming.
If you think what I say is nonsense. At least look at the rising rents and what that tells you. They are driving up rents while they wait for housing…writing is on the wall. You will never ever see these current real estate prices in nyc metro market again. Next run will provide higher ceiling and floor like it always does.
30 year I suspect they are falling because even with low interest rates and a booming economy prices and property taxes are too high. Low rates have kept prices inflated. Throw in student loans and cost of day care plus modest wage increases and there is the answer in my opinion. Back in the 80s when we started out. Student loans were not an issue, and one salary was all you needed for a house in a nice Bergen Co town. And property taxes were not outrageous. This generation got screwed.
And 30year gets lectured again! It’s unbelievable!!
It’s like comparing nj’s economic growth Carolina. Of course Carolina is going to see higher growth. How small is their economy to ours? Same with real estate prices that went up the highest in the past 10 years (sf and nyc). They need to allow for spillover to grow. They completely destroyed the rest of the National market avg in the past 10 years. Let the spillover happen and then watch nyc and sf push to new levels in 10 years. Just let the market go to work on these strong fundamentals we are currently experiencing. It’s a golden age people; I don’t care how old you are, this will be the best boom of your life and it’s not even close.
“Meanwhile, San Francisco, San Jose, Las Vegas and Seattle have slowed down the most, with San Jose and San Francisco seeing a decline in year over year home values.”
It’s one example. No way in hell does this apply to the entire north jersey market. 9% drop across the board? You wish.
3b says:
December 30, 2019 at 9:17 am
30 year I suspect they are falling because even with low interest rates and a booming economy prices and property taxes are too high
3b,
Put your money where your mouth is. Let’s bet on the market. 1,000 that it goes up in the next 2 years.
30 year, willing to take the bet?
This is the impact of duel income households. Drove up the price of everything. North jersey has lots of duel income “professional” households. You live under a one income household, so I understand how you look at north jersey and can’t figure how people afford it. I promise you they are getting rich off it, not becoming poor.
Know quite a few dual doctor households. They are fine..
“Back in the 80s when we started out. Student loans were not an issue, and one salary was all you needed for a house in a nice Bergen Co town. And property taxes were not outrageous. This generation got screwed.”
To set the record straight my spouse went back to work when my children were older. When they were young she was able to stay home and take care of them. The same house today requires two incomes. So much for improved quality of life. Now back to ignoring you.
Pumpkin, How about all those people that bought back in 2004 to 2007? How has their long term real estate appreciation worked out for them in most of North Jersey?
The post WW II era of North Jersey real estate ended with the great recession. Changes are happening regarding what people value and where they want to live. If you continue to look through the old lens, your vision of the future of real estate in our area will be distorted.
What do you know 30 year??!!
Follow the money in the economy. Nyc is expanding through spillover at a rapid pace. In all directions, but especially now with jersey. It’s just so damn close to nyc and was ignored for as long as could be. Now, that time of cracking jersey jokes is over. Newark is going to be as important to nyc as Brooklyn. North jersey has become the biggest location for nyc expansion. That’s why Murphy gets it and is pouring all this money into nj transit while that clown Christie almost bankrupt the agency. He knows we live or die with nj transit. This is becoming nyc. If you don’t see this, you are blind. We are dense and will become even more densely populated. Hence, long term real estate is impossible to lose on in north jersey over the next 20 years. Simply impossible, no matter where you buy (inside rt 287 barrier).
The only segment of the North Jersey market that is currently strong is the 2 to 4 family market. Prices have inflated to bubble level for small multi family homes. I believe this is investor driven and that these buyers will be very unhappy with their low return or negative cash flow investments when the bubble bursts.
I did not say or intend to give the impression that North Jersey real estate fell 9% across the board in a 3 month period. The point of the example is that prices are in decline as evidenced by the sale of virtually identical properties a few months apart. The strongest likelihood is that prices in that area are falling and the desirability of that specific new construction product is falling out of favor. None the less it is a troubling example.
The market is divided in ways that I have never experienced in my decades in North Jersey real estate. Another market that is losing value faster than the market in general is condos in full service/ white glove buildings. This is partly due to very high HOA fees.
The Great Pumpkin says:
December 30, 2019 at 9:25 am
It’s one example. No way in hell does this apply to the entire north jersey market. 9% drop across the board? You wish.
A couple of weeks ago it’s AI and no one will have jobs and now it’s Newark will be Brooklyn and you can’t lose in real estate.
I think it speaks volumes that I have no idea to what you are referring, but it isn’t too hard to guess. Come over to the dark side….. it is much easier….
3b says:
December 30, 2019 at 10:42 am
A couple of weeks ago it’s AI and no one will have jobs and now it’s Newark will be Brooklyn and you can’t lose in real estate.
Put the pieces together. Nj economy up north is on fire. It’s slowly becoming what it never was…a piece of nyc. The nyc economy wants to grow. It never stops. It can’t anymore at ground zero. For now, it has peaked. Now it has begun spilling over ever since. It’s remarkable to watch happen. Nj is so close. It’s only natural for the nyc market to eventually absorb the north jersey area as it continues to grow.
So laugh at Newark now, but in 20 years it might be stronger than Brooklyn if they improve the connection between nyc and Newark. Northeast nj is ripe with potential.
Chgo I have been on the dark side these last few months took a quick trip to the other side specifically because I respect 30 years opinion on the north Jersey market since he has been involved in it for so long and it’s his livelihood. Immediately his post was hijacked and I now have scurried back over to the dark side.
3B: Obi Wan has taught you well……
I notice something interesting here. Which I know is ‘not’ Jersey,
But the high end market seems dead. Nice $2m properties sit for a year or more.
Laugh at me 3b. In the end I will be correct.
Couple more pieces of the puzzle for you.
“The age of winner-take-all cities”
“The bottom line: Economic opportunity for most Americans increasingly hinges on one factor: where you live.”
https://www.axios.com/era-of-winner-take-all-cities-16495b38-3df4-45fe-825e-5913482a0250.html
SHHHHHHH….. nothing to see here….. move along…
WSJ
Americans Are Taking Cash Out of Their Homes—And It Is Costing Them
Many homeowners pay higher rates after refinancing their homes to tap home equity, but the trade-off often makes sense
By Ben Eisen
Many U.S. homeowners who need cash are taking it out of their properties. The trade-off: higher interest rates.
Over the past two years, a big chunk of homeowners took on higher interest rates when they refinanced to tap their home equity. These cash-out refinancings, as they are known, free up money homeowners can use to pay down credit-card debt, renovate or invest in a new property.
Nearly 60% of cash-out refinancings in 2018 came with higher interest rates, the biggest share since before the financial crisis, according to Black Knight Inc., a mortgage-data and technology firm. This year, that number fell to around 44% of cash-out deals, but it remains at more than three times its average between 2009 and 2017.
This corner of the mortgage market illuminates the crosscurrents in the U.S. economy: After roughly a decade of rising home prices, homeowners are flush with record amounts of home equity they can tap. But many Americans remain short on cash and are increasingly relying on debt to fund their lives.
“There’s something in their life that is causing them to need money,” said Sam Polland, a mortgage-loan officer at Sandy Spring Bank in Rockville, Md. “They are willing to go up in rate to get the equity out of their house.”
For some homeowners, the trade-off is worth it. While mortgage rates have crept up, they are still lower than what borrowers would pay if they tapped a credit-card or home-equity line of credit.
Cash-out refis made up a significant share of refinancings in the third quarter, helping fuel a rebound in the mortgage market after a dismal 2018. Led by refis, lenders originated $700 billion in mortgages in the third quarter, the most since before the financial crisis, according to industry research group Inside Mortgage Finance.
The average 30-year fixed mortgage rate has been under 4% for much of the year. That is low by historical standards, but higher than periods in 2012, 2013, 2015 and 2016 when borrowers last flooded the market. Black Knight found that 39% of the people who did cash-out refis in the third quarter had obtained their mortgages during those four low-rate years.
Paul Thompson, who works in product development, got a mortgage at 4% when he bought his Dallas house in 2015. This month, he refinanced at 4.625% and took out about $30,000.
The higher rate was worth it, he said, because it gave him the cash to renovate an investment property next door that he bought this fall. His parents are planning to move in once it is finished.
“It just gives me some cushion should I have to go back to being self-employed,” said Mr. Thompson.
Summer Garrett, Mr. Thompson’s loan officer at Caliber Home Loans Inc., said cash-out deals made up about 30% of her business over the past few months. Many clients use them to pay off credit-card debt, she said.
The use of cash-out refinancings worries some economists because it echoes the precrisis era, when homeowners used their homes like ATMs. Consumers who struggle to pay mortgages that have swelled due to a cash-out refinancing risk losing their homes. Credit-card debt, by contrast, is unsecured.
But the volume of cash-out refinancings remains well below precrisis levels. And many lenders say this type of activity isn’t uncommon deep in an economic expansion marked by rapid home-price growth in much of the country.
Cash-out refinancings also look increasingly attractive next to home-equity lines of credit. The 30-year fixed mortgage rate has fallen at a much faster pace than Heloc rates this year because they are based on different benchmark rates that haven’t moved in tandem.
In September, the average 30-year mortgage rate was almost 3 percentage points lower than the average Heloc rate, the biggest gap on record going back to 1992, according to personal-finance website Bankrate.com.
Homeowners sometimes lower their rates through cash-out deals.
Matthew Miller traded in an adjustable-rate mortgage at 4.75% for a 30-year fixed-rate loan at 3.5% this fall.
The New York-based architect took out the ARM last year to finance the purchase of a home in Sagaponack, N.Y. Because the house wasn’t up to code, he had trouble finding a lender and accepted a rate higher than the market rate as a result.
He renovated the property to bring it up to code, allowing him to refinance into a fixed-rate mortgage. The renovation also increased his equity; he pulled out $350,000 through a cash-out refinancing to cover the construction costs.
“It was a stressful process, definitely,” he said. “But now that it’s done it feels really good.”
And this –
For the fourth straight year, New York lost population, according to the Census Bureau. It was one of 10 states to go through a decline during the past year, a group that included New Jersey and Connecticut. The top-five states in percentage population gain were Idaho, Nevada, Arizona, Utah and Texas.
Merry New Year!