NJ’s real estate market off to a good start in 2017

Posted on March 1, 2017 by grim

From the Otteau Group:

NJ Home Sales Remain Strong in 2017

In January, the number of contract purchases by home buyers exceeded the same month in the prior year for the 29th consecutive month, reflecting a 14% increase over January 2016. Considering the 15% increase (y-o-y) in January of 2016, home sales have increased by 31% over the past 2 years. This latest gain was the highest number of purchase contracts recorded in the month of January since 2005.

A closer look at the distribution of home sales in New Jersey shows continuing strength in those priced below $400,000, which recorded a 16% increase in January compared to one year ago. This price range is primarily represented by younger-age ‘Millennials’ who are beginning to transition from rentership to homeownership. Also noteworthy is a 19% increase in the number of home sales priced between $1.0-2.5-Million, which has been sluggish in recent years. While it’s still too early in the year to declare this a trend, one possible explanation is increased optimism among higher income households given the Trump administration’s plans for lowering taxes and deregulating businesses. This trend bears close watching in the months ahead.

Shifting to the supply side of the equation, the supply of homes being offered for sale remains constricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has declined by nearly 5,400 (-12%) compared to one year ago. This is also about 34,000 (-47%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.4 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 7.0 months.

Currently, the majority (81%) of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson County is presently experiencing the strongest market conditions in the state with just 2.9 months of supply, followed by Essex, Union, Morris, Middlesex, Bergen and Passaic Counties, which all have fewer than 5 months of supply. All of the counties with an unsold inventory level equivalent to a supply of 8 months or greater are concentrated in the southern portion of the state including Cumberland (8.4), Cape May (8.6), Atlantic (9.7) and Salem (14.0).

Posted in Economics, New Jersey Real Estate | 247 Comments

Pending home sales starting to show cracks?

Posted on February 28, 2017 by grim

From CNBC:

Pending home sales drop unexpectedly to lowest in a year, down 2.8% in January

Higher mortgage rates and near record low supply resulted in disappointing home sales to start the year.

House hunters signed 2.8 percent fewer contracts to buy existing homes in January compared with December, although December’s read was revised slightly higher, according to the National Association of Realtors. The group’s so-called pending home sales index is now just 0.4 percent higher than January 2016, and this is the lowest reading since then. Pending home sales are an indicator of closed sales in February and March.

“The significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay,” said Lawrence Yun, chief economist of the NAR. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it’s not uncommon to see a home come off the market within a month.”
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“January’s accelerated price appreciation is concerning because it’s over double the pace of income growth and mortgage rates are up considerably from six months ago,” said Yun. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location.”

Regionally, pending home sales in the Northeast rose 2.3 percent month to month and were 3.6 percent above a year ago. In the Midwest sales fell 5.0 percent for the month and were 3.8 percent lower than January 2016. Pending home sales in the South gained only barely, up 0.4 percent for the month and up 2 percent for the year. The biggest drop was in the West where sales plunged 9.8 percent for the month and were 0.4 percent lower compared with a year ago.

Posted in Demographics, Economics, Employment, National Real Estate | 87 Comments

Has the time come for Newark’s revival?

Posted on February 27, 2017 by grim

From Bloomberg:

In Shadow of Manhattan, a Long-Neglected City Is Having a Moment

For years, downtown Newark’s Military Park, barren and surrounded by vacant buildings, was a symbol of the despair that set in after the 1967 riots. Now it’s at the center of hope that a long-sought recovery for New Jersey’s biggest city may finally be taking hold.

Across from the park’s northern edge, the old Hahne & Co. department store debuted last month as a $174 million redevelopment with 160 apartments and a Rutgers University arts program and jazz museum currently displaying such artifacts as Miles Davis’s trumpet and a gown worn by Ella Fitzgerald. There will also be offices, a restaurant by celebrity chef Marcus Samuelsson and a Whole Foods supermarket that’s set to open March 1, bringing life to a building that had sat empty since 1987.

A reputation for crime and poverty has kept Newark, just 10 miles (16 kilometers) west of Manhattan, mostly on the sidelines of the urban revival that’s transformed swaths of blight into trendy neighborhoods across the U.S. A surge of construction, with the Hahne’s project at its heart, is a sign the city’s luck may be about to change. Developers and their backers — Prudential Financial Inc. and Goldman Sachs Group Inc. among them — are aiming to build the critical mass needed for Newark to improve its image and fill new towers with residents who prize affordability and easy access to mass transit.

The city is “probably the beneficiary of an overheated New York market, where there’s money looking to land,” said Jeff Kolodkin, a New Jersey-based managing director at brokerage Newmark Grubb Knight Frank. With a multitude of companies investing in Newark, “even if a project or two doesn’t go as well as everyone would hope, all of them are not going to go bad.”

About 2,000 residential units were approved for construction last year, adding to the 2,000 that have been built since 2014, according to the city Department of Economic and Housing Development. In that period, about $1.7 billion has been invested in residential, commercial and industrial projects.

Newark’s comeback has been predicted before — in the late 1990s with the opening of the New Jersey Performing Arts Center and a minor-league baseball stadium, and again almost a decade later with the Prudential Center hockey arena — but the hoped-for revival never fully blossomed.

“Folks have been probably overlooking Newark for a long period of time,” Mayor Ras Baraka said in a phone interview. “It just needed us to be really focused on it, market it, to push hard around development.”

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 67 Comments

Who to blame?

Posted on February 25, 2017 by grim

From National Mortgage News:

Thank Landlords for the Home Price Recovery: Attom

Small investors, not first-time homebuyers, are driving home prices to unaffordable highs, according to a new report from Attom Data Solutions and Clear Capital.

Real estate investors drove the home price recovery, but a different segment of this market is poised to continue to shape the housing markets.

At first, it was the institutional investors that took advantage of the housing downturn, buying properties as home prices hit their bottom. But as prices rose, these investors cashed out and were replaced by smaller investors.

Rather than flip these properties, many of these investors turned to the rental market for money making opportunities.

The report shows though that over time the smaller investors became the main driving force behind home price appreciation, particularly as the homeownership rate remained low and the buyer share comprising Federal Housing Administration borrowers flattened out.

“Because the driving force behind this housing recovery has been real estate investors, home prices have risen higher and more quickly than if the recovery had been driven more heavily by first time homebuyers,” Attom and Clear Capital wrote in the report.

Posted in Demographics, Economics, National Real Estate | 31 Comments

How high do rates need to be to slow home sales?

Posted on February 24, 2017 by grim

From HousingWire:

FHFA: Rising interest rates not slowing down home prices…yet

Home prices increased during the fourth quarter and, despite rising interest rates, showed no sign of a slowdown, according to the Federal Housing Finance Agency’s House Price Index.

Home prices increased 1.5% from the third quarter and 6.2% from the fourth quarter of 2015, the report showed. FHFA’s seasonally adjusted monthly index increased 0.4% from November to December.

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

“Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown,” FHFA Deputy Chief Economist Andrew Leventis said.

“Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains,” Leventis said.

Posted in Economics, Mortgages, National Real Estate | 92 Comments

Should I stay or should I go?

Posted on February 23, 2017 by grim

From HousingWire:

Here’s the inventory crisis smothering Millennial homebuying

Posted in Demographics, Economics, National Real Estate | 79 Comments

Somebody believes in AC

Posted on February 22, 2017 by grim

From the AP:

Showboat Owner Blatstein Buys Land Nearby in Atlantic City

Bart Blatstein, the Philadelphia developer who’s been buying up distressed Atlantic City properties and re-opening them, has added three more Boardwalk parcels for about $6 million.

Blatstein, who last year reopened the former Showboat casino as a non-gambling hotel, has added land nearby as part of the future development of the site.

He bought the Garden Pier across from the shuttered Revel casino, which is also near the Showboat, along with a volleyball court between Revel and the Showboat. Blatstein also bought land in the Inlet district next to a new $40 million Boardwalk repair project.

“It shows my continuing confidence in the renaissance of Atlantic City,” he said. “It’s a great opportunity to expand the holding.”

Blatstein said the parcels near the Showboat will increase outdoor uses for the site. He said the Inlet land is prime property in a redeveloping area.

“It affords even more of an outdoor element for the Showboat, and the land near the Inlet is wonderful land abutting a new $40 million Boardwalk,” he said. “It’s beautiful real estate.”

The deals closed Friday.

Blatstein has taken a contrarian stance regarding Atlantic City, rushing in while many are running out. He bought the former Pier Shops at Caesars and reopened it in 2015 as The Playground. Last year, he reopened the former Showboat as a non-gambling hotel two years after Caesars Entertainment shut down the still-profitable casino.

Blatstein said he’s still working on an overall concept for the Showboat, adding he’s not close to being ready to reveal it.

But expanding the reach of the Showboat would go a long way toward revitalizing the northernmost part of Atlantic City’s Boardwalk, which has drawn little foot traffic since the 2014 closure of the Showboat and Revel, two of the four casinos that went belly-up that year.

Posted in New Development, New Jersey Real Estate, Shore Real Estate | 117 Comments

The other South Jersey market

Posted on February 21, 2017 by grim

From the Press of Atlantic City:

South Jersey beach construction booming

John Van Duyne heads into a house he recently finished building, a few doors off the beach in Ventnor.

He points out the quartz shower seats and countertops in the downstairs bathrooms. In the living room, a giant TV is recessed into the wall, and rows of speakers are built into the ceiling.

The master bedroom includes a bar and refrigerator hidden under a sink. And when Van Duyne approaches a separate room that houses the toilet, the lid lifts automatically as soon as he reaches the door.

This could be a dream beach house to almost anyone. Van Duyne figures that on the grand scale of today’s luxury homes, this one is maybe a 4 out of 10.

Construction is still busy on the islands that stretch along the South Jersey coastline. And builders say much of their market now is for high-end homes with elevators and pools and luxury gadgetry built right in, from automatic vacuum systems to automatic irrigation systems for the plants that decorate the decks.

News about South Jersey real estate often includes fair amounts of gloom and doom. Atlantic County is still the national leader in mortgage foreclosures. And sales figures from New Jersey Realtors, the trade group, show the median value of a single-family home in Cape May County dropping last year by 5.8 percent to $290,000.

For those reasons and more, a local home-building industry that boomed for decades along with Atlantic City’s casino business has slowed almost to a halt in much of the region. But building hasn’t stopped entirely. It just moved to the beach.

“The focus is always on the water, whether it’s beachfront or bayfront,” says Van Duyne, a Ventnor native who builds on Absecon Island.
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“They’re basically two separate markets now, with outsiders buying up the islands,” says Richard Perniciaro, a veteran Atlantic Cape Community College economist. “The two housing markets — mainland and island — are very separate and influenced by different housing trends.”

“The investors, or second-home owners or retirees from outside the area, are making housing decisions based on the value of their homes in (Philadelphia), North Jersey or Cherry Hill,” he says.

Those markets have largely recovered from the housing debacle that fed the national recession, he said.

With home values growing in those areas, Perniciaro said, “The shore is a bargain to them.”

Posted in New Development, Shore Real Estate | 52 Comments

Montclair pretty much the most unequal place in NJ

Posted on February 19, 2017 by grim

Haven’t gotten a chance to post this one, but it needs to be posted. From the Star Ledger:

How every town in N.J. rates on income inequality

Despite what Montclair wants you to believe, outside of the typical wealth enclaves like Saddle River, Far Hills, Deal and the like, Montclair ranks as pretty much the most unequal large town in New Jersey. There are few towns in NJ that show such a blatantly obvious amount of geographic segregation as Montclair, less than 1 mile separates some of the wealthiest residents of NJ from some of it’s poorest.

So what’s more important, creating an image of being inclusive and equal, or actually being it? Turns out, there are large swaths of Essex, Passaic, Bergen, and Hudson counties that are more diverse, and more equal, than Montclair.

So what gives? How did Montclair manage to create an image of itself that is almost entirely undeserving? The inclusive educational system? The town’s wealthiest residents have no problem packing Montclair Kimberly full, despite the fact that the yearly tuition is $30,000, making it one of the most expensive private schools in NJ. Sending 3 kids to MKA will cost you north of a million dollars, by the way. Good number of 4th Ward residents probably don’t even make $30,000 a year, let alone pay that for school.

Seems like a load of bullshit to me, especially when neighboring Clifton is more diverse and integrated. Are there towns that are less diverse and wealthier than Montclair? Absolutely, but they aren’t hell bent on creating an image that really appears to be completely manufactured marketing, and not reality. Having just come back from Brazil, I’ve got to say, the wealth gaps are pretty similar.

Seems like a great place to live if you are rich and want to feel good about yourself.

Posted in New Jersey Real Estate | 69 Comments

So Close!

Posted on February 17, 2017 by grim

NY State on the verge of taking the #1 foreclosure spot:

Posted in Foreclosures, New Jersey Real Estate | 177 Comments

Christie kicks the can

Posted on February 14, 2017 by grim

From the Star Ledger:

Christie signs bill to give Sandy victims some protection against foreclosure

New Jersey homeowners facing foreclosure while they’re still trying to rebuild from Hurricane Sandy now can be protected from losing their homes.

A bill signed Friday by Gov. Chris Christie gives certain homeowners affected by Sandy the potential to ward off foreclosures for up to three years while they try to recover financially from the storm.

In his signing statement, Christie indicated he wasn’t completely happy with the bill (S-2300, A-333), which he said was too broadly written to include foreclosures not precipitated by Sandy.

But the signing was welcome news to members of the New Jersey Organizing Project, a grass-roots group of Sandy victims and other housing advocates who have been waiting two years for the governor to take action.
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Last fall, Christie incurred the wrath of Sandy victims at an appearance in Seaside Heights where they complained many were still not home and faced financial ruin because of the state’s slow process in disbursing federal Sandy aid to rebuild.

At that time, Christie said he would take another look at the foreclosure bill, but many, including Mangino, said they were skeptical Christie would sign it.

“For all the families struggling to keep their heads above water, there’s hope,” said Staci Berger, president and chief executive officer of the Housing and Community Development Network of New Jersey. “Our families, friends, and neighbors deserve better than what they’ve been forced to endure over the last four years. Because of the hard work and dedication of our legislative leaders, Sandy survivors, and advocates, there will finally be some relief and the chance to rebuild.”

The law creates a forbearance period for up to three years for Sandy victims who have either been approved for help through the Reconstruction, Rehabilitation, Elevation and Mitigation Program or the Low-to-Moderate Income Program or those who have received rental assistance through the Federal Emergency Management Agency for damage to their primary residence.

Those approved would receive a certificate of eligibility for mortgage forbearance from the state Department of Community Affairs, allowing them to tack onto the end of their mortgage the months they missed paying during their Sandy recovery.

They would still be responsible for paying their taxes and insurance.
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Thousands of homeowners would be eligible for help under this law, Mangino said.

That includes Sandy victims who were facing foreclosure before the storm hit or whose mortgage default problems were unrelated to storm damage. Christie said he didn’t want it as part of the law because he said it would cause “mountains of damage” to “our federal funding flow and our state housing market.”

“I am very concerned these new requirements may adversely impact the state’s recovery efforts, jeopardize federal Sandy funding, increase borrowing costs and ultimately delay Sandy-impacted residents’ return to their homes,” he wrote.

Calling the bill “sloppily written” and “ill conceived,” Christie accused its Democratic sponsors of “politically pandering” to Sandy victims during to get re-elected.

Posted in Foreclosures, New Jersey Real Estate | 413 Comments

Think warm thoughts – shore rentals already up 33% YOY.

Posted on February 12, 2017 by grim

From the Philly Inquirer:

The rush is already on for rentals at the Jersey Shore

From the second-story deck of his aunt’s rental property near 20th and Central, real estate agent Bill Godfrey points out the ocean view a block away and the surrounding Gold Coast neighborhood as just two of the unit’s special amenities.

But what potential summer renters really want to know about the place is how the flatware looks and what kind of wine glasses are in the cupboard, Godfrey said.

“Oh, and how new the mattresses are,” Godfrey notes as among the nitty-gritty details that customers want to know before they are willing to plunk down as much as $4,000 for a week’s stay in this unit during the summer’s “high season.”

And getting precisely what they want when they walk through the door may be what is driving those renters to sign on the dotted line seemingly earlier and earlier each year. Rentals in Ocean City’s prime “high season” — from mid-July to mid-August — start at around $1,500 a week for a one-bedroom condo and go as high as $18,000 a week for a seven-bedroom house on the beach.

Marr Agency, where Godfrey works, and other real estate agencies in this Cape May County barrier island resort — and in towns from Long Beach Island south to Cape May — report that the number of signed contracts and deposits on summer rentals by the beginning of February were up by as much as 33 percent over the same time last year.

And while the bottom line on rental profits may ultimately stay mostly stagnant year to year because there are only so many units and so many weeks in the summer, an early rush on rentals may signal a strong 2017 Shore summer season with regard to tourism spending in other sectors, like restaurants, amusements, retail, and activities, according to experts.

Tourism is big business in New Jersey. The state’s second-largest industry attracted 95 million people to the Garden State, raked in a whopping $43.4 billion, and accounted for 318,000 jobs in 2015. And those numbers have been on a steady increase over the last decade.

Posted in Economics, New Jersey Real Estate, Shore Real Estate | 55 Comments

How low can inventory go?

Posted on February 10, 2017 by grim

From HousingWire:

Realtors: Majority of metros hit peak levels in 2016

The fourth quarter of 2016 saw the best quarterly sales pace of the year, but also pushed housing inventory to record lows, and many markets to home prices with record highs, according to the latest quarterly report from the National Association of Realtors.

Actually, home prices in over half of measured markets either hit or surpassed their previous peak level, according to the report. The median existing single-family home price increased in 89% of measured markets. While 158 of metro areas saw gains from the fourth quarter of 2015, the remaining 20 metros recorded lower home prices than the year before.
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“Buyer interest stayed elevated in most areas thanks to mortgage rates under 4% for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” NAR Chief Economist Lawrence Yun said. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

This is more than the third quarter, when 87% of metros reported annual price increases. Also, of the metros that saw price gains, 17% of them were in the double digits, compared to 14% in the third quarter.

“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets,” Yun said. “The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

The national median existing single-family home price in the fourth quarter was $235,000, which is up 5.7% from the fourth quarter of 2015’s $222,300.

While home prices were reaching new highs, housing inventory was reaching new lows. At the end of the fourth quarter there were 1.65 million existing homes available for sale, a decrease of 6.3% from the 1.76 million homes a year before to the lowest level since NAR began tracking home supply in 1999. The average supply during the fourth quarter was 3.9 months, down from 4.6 months the year before.

Posted in Demographics, Economics, National Real Estate | 105 Comments

Annual home prices accelerating … with rates higher?

Posted on February 8, 2017 by grim

From MarketWatch:

Home prices accelerating in the face of rising mortgage rates

U.S. house prices rose at an accelerated pace in December, a sign that higher mortgage rates aren’t yet diminishing outsize demand for properties.

Data provider CoreLogic said its home price index was up 0.8% during the month, and 7.2% compared to a year ago. That’s the fifth straight month in which the yearly price increase was higher, including during months that saw mortgage rates jump nearly a full percentage point.

Low supply is boosting prices higher and higher, and CoreLogic expects that prices will rise 4.7% during 2017. That would take its national index – now 3.9% below the high last set in 2006 – to a fresh high sometime this year.

But CoreLogic’s forecasts have fallen short over the past few months as price gains defy gravity.

There are some familiar faces among the states with the strongest price appreciation: prices rose 10.8% in Washington and 10.3% in Oregon. But they were stronger in Idaho, at 9.0%, than in Colorado, which saw a gain of 8.9%.

Only one state, Wyoming, had a yearly decline in December. Prices were down 0.3% there.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 146 Comments

Up or Down or Up or Down or Up or Down

Posted on February 7, 2017 by grim

From Marketwatch:

Housing demand may keep market afloat, even if rates rise

How will the housing market handle rising rates?

Ever since the November election, when the unexpected Trump victory sent bond yields flying and mortgage rates following closely behind, analysts have been preoccupied with that question. From overly cautious lending standards to extremely tight inventory, the housing market has plenty of challenges, and any additional constraint won’t help.

But new data from Black Knight Financial Services suggests that demand might be resilient enough to withstand higher borrowing costs in 2017.

The last time mortgage rates spiked was in mid-2013, when then-Fed Chairman Ben Bernanke warned markets that the central bank would shortly begin to unwind its extraordinary stimulus programs. Rates jumped a full percentage point between April and September, and mortgage applications plunged.

So did home price appreciation.

In an illiquid market like housing, it takes time for prices to respond – in this case, until August, when they were rising at an annual rate of 9%. Then appreciation fell every month for over a year until hitting bottom.

When price gains finally starting rising, in early 2015, they kept going. Lower rates helped boost demand, and that was reflected in stronger pricing, said Ben Graboske, Black Knight’s vice president of data and analytics.

It’s worth noting that there’s another factor driving prices up: extremely tight supply. Inventory of previously-owned homes fell to a 17-year low last month, and choices of both existing and new homes have been so scarce that analysts have assumed it will quench demand at some point.

But prices even spiked a bit in the last months of 2016 – even after rates surged post-election. Black Knight doesn’t have December home price data yet, and Graboske cautioned that it’s hard to predict the path of mortgage rates from here on, with so much uncertainty around policy and markets.

If rates go up enough, price appreciation could slow – and possibly even reverse, he told MarketWatch.

But there’s another big question mark hanging over the housing market: the path of regulatory reform. If there are big changes to the 2010 Dodd-Frank law, Graboske said, it could open up lending to far more Americans.

Posted in Demographics, Economics, National Real Estate, Politics, Risky Lending | 65 Comments