Brigadoon!

Posted on September 10, 2016 by grim

From the NY Times:

Westfield, N.J., Where Small Town Meets Urban

Marci Bandelli thought she would never leave Brooklyn. Her husband, Stanford, who was born there, felt the same way. By 2001, with the addition of two children, the couple were outgrowing their rent-stabilized apartment in Brooklyn Heights and began looking in Park Slope.

Then the terrorist attacks happened on Sept. 11. Ms. Bandelli’s brother, Alan Kleinberg, who worked at Cantor Fitzgerald, died at the World Trade Center. And everything changed.
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The appeal of Westfield for New York City transplants like the Bandellis is understandable, as this central Union County town offers characteristics typically associated with urban living — a bustling downtown, a vibrant cultural scene and good transportation options — along with many benefits of suburban living, like attractive homes, well-regarded schools and a sense of community.

“Westfield is big enough that there are a lot of ways to get connected, but small enough to feel like you can really get to know everyone in this town,” said Laura Brockway, 60, a Realtor with Keller Williams who has lived in Westfield for 32 years with her husband, Richard, raising their three sons there.

Lauren Mays, the mother of a 10-month-old daughter, has connected with many of her neighbors through the Westfield, N.J., Moms Facebook page. Though she and her husband, Tice Mays, who works in sales, had no children when they began looking to move to the suburbs from their Manhattan apartment in 2014, they sought a town with good schools.

The couple, both 35, visited towns in Westchester County and northern New Jersey, happening on an open house for a 1950s three-bedroom two-bath colonial in Westfield, which they wound up buying for $630,000.

“We love the downtown, we’re within walking distance of the elementary school, and the people are very friendly,” said Ms. Mays.
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The couple, both 35, visited towns in Westchester County and northern New Jersey, happening on an open house for a 1950s three-bedroom two-bath colonial in Westfield, which they wound up buying for $630,000.

“We love the downtown, we’re within walking distance of the elementary school, and the people are very friendly,” said Ms. Mays.

Posted in New Jersey Real Estate | 34 Comments

Rising? Stalling? Falling? Yeah, all three.

Posted on September 8, 2016 by grim

From HousingWire:

CoreLogic: Home prices still up, but leveling off

Home prices increased in July year-over-year and month-over-month, according to the Home Price Index and HPI Forecast released by CoreLogic, a property information, analytics and data-enabled solutions provider.

Home prices in the U.S., including distressed sales, increased by 6% from last year, and 1.1% from June, according to the HPI.
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“If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year,” CoreLogic Chief Economist Frank Nothaft said. “The increased sales will support further price appreciation, and according to the CoreLogic Home Price Index, home prices are projected to rise about 5% over the next year.”

The HPI Forecast shows that home prices will increase by 5.4% annually from July this year to July 2017. The Forecast also predicts that home prices will rise yet again in August by 0.4%, a slowdown from current annual and monthly growth.
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“The strongest home price gains continue to be in the western region,” CoreLogic President and CEO Anand Nallathambi said. “As evidence, the Denver, Portland and Seattle metropolitan areas all recorded double-digit appreciation over the past year.”

Posted in Economics, National Real Estate | 77 Comments

Purchase Mortgages highest since 2007, Credit still tight

Posted on September 7, 2016 by grim

From HousingWire:

Black Knight: Mortgage originations surge to highest level in three years

The purchase market is booming, fueling the overall mortgage market and helping set the highest first-lien mortgage originations volume in a single quarter since the second quarter of 2013, the latest Black Knight Financial Services Mortgage Monitor Report found, based on data as of the end of July 2016.

In the second quarter of 2016, purchase loan originations increased 52% ($102 billion) from the first quarter, reaching the highest level in terms of both volume and dollar amount since 2007.

This in turn helped bring in first-lien mortgage originations in the second quarter to $518 billion.

Black Knight Data and Analytics Executive Vice President Ben Graboske explained that a combination of continued purchase origination growth and refinance activity spurred by low interest rates drove the growth in first-lien mortgage originations in the quarter.
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According to the most recent Freddie Mac mortgage rate report, the 30-year fixed-rate mortgage sits at 3.46%.

Falling in line with recent industry reports, the Black Knight report also hit on today’s tight credit environment.

According to the report, two-thirds of Q2 purchase lending went to 740+ credit score borrowers, which is on par with last year, and the largest growth (13% year-over-year) was seen in moderate credit borrowers (700-739).

“Although the purchase lending credit box remains tight, there is increasing participation among ‘moderate’ credit borrowers as well,” said Graboske. “This segment has seen the highest rate of growth over the last three quarters, and now makes up 19% of all purchase originations.”

“On the other end of the spectrum, sub-700 score borrowers now account for only 15% of originations, with less than 5% going to borrowers with scores of 660 or below,” he said. “Both of these mark the lowest share of low credit purchase lending seen dating back to at least 2000.”

Posted in National Real Estate, Risky Lending | 52 Comments

Why are prices going up?

Posted on September 6, 2016 by grim

From National Mortgage News:

Home Prices and Homeownership Rates Are Out of Whack

Before the financial crisis, home prices and homeownership rates moved roughly in tandem. Expanded access to credit and a booming real estate market made homeownership easier for more Americans. When existing median home prices reached their precrisis peak is roughly when homeownership rates for both those under the age of 35 and for those ages 35 and older began to slip.

And they haven’t recovered since. Today, the homeownership rate for both groups is lower than it was more than 20 year ago. But the picture now is looking bleaker than it did before and even during the crisis. Home prices have returned to their precrisis peaks, but homeownership rates, which were already depressed because of the crisis, keep on slipping. Affordable housing is becoming scarcer across the country, but especially in popular markets such as the Pacific Northwest and California. And homebuilders have stopped building starter homes at the same rates they did before the crisis, instead turning to the more lucrative luxury home end of the business. Single-family starts are running at recession levels, and home sales are short of normal, according to economists.
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“We do know that homeownership rates for young people are lower,” Danielle Hale, managing director of housing research at the National Association of Realtors, said. “They’re now lower than in the mid-1990s.”

But signs are cropping up that the tides may be finally shifting to get the home sales market back to where it once was. Citing mortgage application data, the Mortgage Bankers Association has noted that there’s greater demand year over year for loans under $150,000. Those loans are closely associated with first-time homebuyers, indicating that they are starting to return to the housing market.

But chances are that once they do return, they’ll be older thanks to the waiting game caused by the financial crisis. For the past two decades roughly, the median age of first-time homebuyers has hovered within a range from 30 to 32 years old. Looking ahead, first-time buyers may enter homeownership later in life.

Posted in Demographics, Economics, National Real Estate | 45 Comments

NJ/PA Tax Reciprocity Agreement Nearly Dead

Posted on September 3, 2016 by grim

From the Philly Inquirer:

Christie ends income tax pact with Pa.; commuters could pay more

Cross the Delaware River for work? Your taxes could go up in 2017.

Gov. Christie on Friday scrapped a decades-long agreement between New Jersey and Pennsylvania that has allowed taxpayers to pay income tax in the state where they live, not where they work.

The change is set to take effect Jan. 1, though Christie suggested he might reverse course if the Democratic-controlled Legislature fills a budget hole by acting swiftly to reduce public employees’ health-care costs.

Christie’s decision means high-income Pennsylvania residents in Bucks County and elsewhere who work in the Garden State would be subject to Trenton’s higher tax-rates. South Jersey residents who work in Philadelphia are also likely to pay higher income taxes – to Harrisburg.

About 125,000 Pennsylvania residents commute to New Jersey, and another 125,000 make the reverse trip, according to Census Bureau estimates.

Christie, a Republican, issued an executive order on June 30, the end of the last fiscal year, asking his administration to examine the issue. In the same order, he said the Legislature had failed to achieve $250 million in savings in public employees’ health-care costs, which he had called for in his February budget address.

Christie’s former treasurer, Andrew Sidamon-Eristoff, has estimated that ending the agreement could generate $180 million annually for New Jersey. To a lesser extent, it also would help Pennsylvania, according to Sidamon-Eristoff.
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A spokesman for Wolf, a Democrat, said in a statement that Christie had “erred significantly in his decision to unnecessarily punish 125,000 Pennsylvanians and cost the commonwealth $5 million annually.”

“Gov. Wolf continues to hope that Gov. Christie will change his mind and reverse his decision today,” the statement said. “Unfortunately, it seems that Gov. Christie is committed to making Pennsylvania and our residents working in New Jersey suffer the consequences of his failure to enact a responsible budget in a bipartisan way.”

Either state can withdraw from the Reciprocal Personal Income Tax Agreement, reached in 1977, by simply providing 120 days’ written notice. Christie’s decision did not require approval of the Legislature.

The Christie administration on Friday notified officials in Harrisburg that the governor was nixing the agreement.

Posted in New Jersey Real Estate, Politics | 52 Comments

Worst Real Estate Markets

Posted on September 2, 2016 by grim

Way to go NJ! Taking 3 out of the bottom 5 spots! Special Kudos to Newark and Paterson – worse than Detroit.

From WalletHub:

2016’s Best Real-Estate Markets

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Posted in New Jersey Real Estate | 48 Comments

Otteau: NJ Pending Sales at 2005 Levels

Posted on September 1, 2016 by grim

From Otteau Group:

NJ Purchase Contracts On Par With 2005

The number of home sales this year in New Jersey has been about the same as 2005, which was the peak year heading into the Great Recession. In July, the number of contract purchases by homebuyers exceeded the same month in the prior year for the 23rd consecutive month, reflecting a 2% increase over July 2015. Considering the 21% increase (y-o-y) in July of 2015, home sales have increased by 23% over the past 2 years.

On a year-to-date basis (January-July) home purchase demand in New Jersey has increased by 13%. This increase has been largely concentrated in homes priced below $400,000, as first-time ‘Millennial’ buyers begin to transition from rentership to homeownership. By comparison, the number of luxury home sales priced at $2,500,000 and above, declined by 3% this year. Reasons for this trend include a greater number of younger-age first home buyers, trade-down purchases by older-age empty-nesters, and relaxed mortgage lending standards which have reduced minimum down-payment amounts.

Shifting to the supply side of the equation, the supply of homes being offered for sale remains tight, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has declined by nearly 6,000 (-10%) compared to one year ago. This is also about 22,000 (-30%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.3 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 5.9 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 3.3 months of supply, followed by Union, Essex and Somerset Counties, which all have fewer than 4 months of supply. None of the counties have an unsold inventory level equivalent to a supply of 12 months or greater, however those with the largest amount of unsold inventory are concentrated in the southern portion of the state including Cumberland (9.4), Cape May (9.9), Atlantic (10.3) and Salem (10.8).

Posted in Demographics, Economics, New Jersey Real Estate | 40 Comments

National Home Prices up 5.1% YOY

Posted on August 31, 2016 by grim

From Bloomberg:

US home price gains ease in June: S&P/Case-Shiller

The pace of U.S. home price gains slowed in June from the previous month, but strong appreciation in the West and South kept growth above the two-year average, according to a monthly report.

The S&P CoreLogic Case-Shiller 20-City Composite index rose 5.1 percent year over year, versus expectations for an increase of 5.2 percent. That marked a sequential slowdown from May’s revised 5.3 percent increase.

The June gains were slightly above the 4.8 percent annual pace over the last two years.

“Overall, residential real estate and housing is in good shape. Sales of existing homes are at running at about 5.5 million units annually with inventory levels under five months, indicating a fairly tight market,” David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.

Portland, Oregon, led the gainers with price appreciation of 12.6 percent. Seattle followed with an 11 percent increase, and Denver came in third with a 9.2 percent gain.

“In the strongest region, the Pacific Northwest, prices are rising at more than 10 percent; in the slower Northeast, prices are climbing a bit faster than inflation,” Blitzer said.

Posted in Economics, National Real Estate | 70 Comments

West Coast the New East Coast?

Posted on August 30, 2016 by grim

From HousingWire:

Here are the 10 hottest housing markets that fueled a record-breaking August

The hottest housing market in America right now might still be Vallejo-Fairfield, California [San Fran area] but this doesn’t mean the rest of the list stood still. Interestingly, one new market not only joined the list, but also jumped up to the eight spot. And to the city that was sitting comfortably as the eighth hottest market, well, it fell completely out of the top ten, barely even making the top twenty.

Needless to say, the summer housing season was on fire, recording the hottest August housing market in a decade, as Jonathan Smoke, chief economist for realtor.com, the creator of the hottest medium-sized to largest market list, explained.

“Summer 2017 was one of most competitive buying seasons that we have ever witnessed, fueled by historically low mortgage rates and inventory shortages that resulted in record-high prices,” said Smoke.

“With the school year starting now in most of the country, we’re seeing some drop-off in demand, which may provide some relief for buyers weary from battling it out against other buyers all summer,” he noted.

So what exactly is hot?

According to realtor.com, the hottest markets received from 1.4 to 4.5 times the number of views per listing compared to the national average, and in terms of supply, these markets saw inventory move from 21 to 39 days more quickly than the rest of the U.S.

On the positive side for home shoppers, the report stated that the hottest markets saw inventory movement slow down slightly, with the median age increased by two days on average from July.

top20

Posted in Economics, National Real Estate | 65 Comments

Affordable Suburbia

Posted on August 29, 2016 by grim

From the Record:

Garden apartments help shape the N.J. landscape

In North Jersey, garden apartment buildings are a little like pizzerias — there’s at least one in every town.

These two-story rectangles, usually faced with brick and set on grassy lawns, date to a post-World War II suburban building boom that also gave rise to strip malls and modest single-family subdivisions across the region.

And like other suburban building types, garden apartments aren’t on anybody’s list of design stars.

“They’re nondescript architecturally,” said architect Barry Poskanzer of Poskanzer Skott in Ridgewood. “I’ve never driven by one and thought, ‘That’s an interesting design.’ ”

“Monotonous,” said James Hughes, a Rutgers economist who has studied the history of New Jersey’s apartment markets.

Still, garden apartments have their place in the housing ecosystem. They’re a relatively affordable choice for many people just starting out, or those who can’t or don’t want to buy a home. And then there’s the green space that puts the “garden” in their name.
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William Martin, a Westwood architect, said that the green space is one of the best features that garden apartments bring to the North Jersey landscape.

“If you look at complexes constructed in the ’50s and ’60s, they have mature trees, nice pathways, sometimes open space,” said Martin, co-chairman of the public awareness committee of the New Jersey chapter of the American Institute of Architects. “I think they’re a tremendous asset. They provide an alternative way to live in suburban New Jersey that isn’t a single-family home.”

Garden apartments, he said, help diversify a town’s demographics, allowing people to stay in the same town over their life cycles because they offer shelter for young people just starting out, as well as for older people looking to downsize. A garden apartment is often the first “adult” home for people in their twenties.
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Over the years they’ve often been marketed as “luxury,” but compared to newer rentals, they’re fairly modest in terms of both size and amenities.

“You have a kind of community, you have a front door, you can drive up to your apartment. It doesn’t feel as urbanized,” said Ryan Sanzari, chief operating officer of Hackensack-based Alfred Sanzari Enterprises, which owns about 500 units in half a dozen garden complexes. Most were built by his grandfather, Alfred Sanzari, half a century ago.

Investors like them, too. Tom McConnell of Redwood Realty Advisors in Hasbrouck Heights has sold a number of North Jersey garden complexes. Investors who buy these buildings, he said, will pay roughly $125,000 to $225,000 per apartment in suburban towns, depending on the town.

“There’s a lot more demand than there is supply,” McConnell said. Investors like the steady income they can get out of the buildings, which have monthly rents that typically range from around $1,200 to $1,700 for a one-bedroom in North Jersey.
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The heyday of garden apartment construction came in the 1950s and 1960s, part of the suburban building boom that followed World War II. Between the Depression and the war, there was a 15-year home-building drought, leaving an acute demand for housing that working people could afford.

“How do you economically meet that demand?” Martin asked.

Garden apartments were one answer, because they were relatively fast and easy to build, with wood frames and no need for concrete, steel or elevators. So a single-family builder without the expertise to construct a high-rise could easily diversify into garden apartments.

And they were a way to “create increased density in the suburbs,” according to Poskanzer, since more density generally means more profits for a builder.

Garden apartments make up a major part of the apartment market in New Jersey. About half the apartment units in the state were built from 1940 to 1979 — a period that includes the garden-apartment boom, according to a Rutgers report written by Hughes and a former colleague, Joseph Seneca.

Posted in Demographics, Economics, New Jersey Real Estate | 33 Comments

Good thing millennials don’t want houses, because they can’t afford them.

Posted on August 28, 2016 by grim

From Forbes:

Millennials Pessimism Could Spell Trouble For The U.S. Housing Market

Home prices in many places have been steadily rising, buoyed by a growing economy, low interest rates and a chronic lack of inventory in some markets.

While that spells good news for homeowners – and home sellers – it is creating worry for many first-time buyers who are watching prices steadily get out of reach. That is particularly true for millennials, a sector critical to the future of the housing market.

A study out this week from national realtor Redfin shows worry about affordability is growing more predominant among home buyers, but the fear is more acute among young people.

Just over 28% of buyers said they were most worried that “prices are rising or are too high,” the largest percentage to cite this concern in more than a year, according to the Redfin survey, which was conducted in August and includes more than 1,800 home buyers. Among millennials — buyers 35 and younger — 32.5% said affordability is a big concern.

Millennials are struggling to save enough money for a home since prices are rising faster than their pay, says Selma Hepp, chief economist at Pacific Union, the largest real estate firm in the San Francisco Bay Area. Today, the typical first-time home buyer purchases a home that costs 2.6 times his or her annual income, Hepp says.

The gap between affordability and other concerns is also widening, the study finds. The second-most cited top concern was “too much competition from other buyers,” at only 13%. In previous surveys, the second- and third-most cited concerns made up a far higher percentage of total responses. Last year it was 31.4 percent, while in May it was 33.5 percent.

Posted in Demographics, Economics, National Real Estate | 75 Comments

I love the smell of bulldozers in the morning

Posted on August 26, 2016 by grim

From Philadelphia Business Journal:

Final phase of mass demolition to get underway in Camden

Camden officials are moving forward with the final phase of an ambitious plan to tear down a total of 591 derelict structures in the South Jersey community.

In what is considered the largest demolition project in New Jersey history, the six-phase, $13.6 million program to raze nearly 600 buildings started in January 2015. A total of 531 properties have been torn down so far with the 60 that are remaining to be demolished by mid-September, said Dan Keashen, spokesman for Camden County.

Camden Mayor Dana L. Redd and other public officials gathered Thursday morning at the intersection of Louis Street and Kaign Avenue to mark this last part of the demolition program, which Keasen said was a tad ahead of schedule. The properties that will come down are in the following East Camden neighborhoods: Rosedale, Cramer Hill, Dudley, Stockton, Marlton and Beideman.

Once completed, the county and city will explore pursuing some infill development in areas and will consider parks, affordable housing and other projects. There may be cases where no new development is needed, said Robert Corrales, business administrator for the city of Camden.

“We have some really dense neighborhoods and maybe we leave it as green space,” he said.

The city is still figuring out what its approach will be on possible reuse of the properties, Corrales said. It may use an RFP process to see what interest there may be for some of the parcels. Regardless, he said, just getting rid of some of these eyesores improves the quality of life of people who live near them.

Posted in Economics, New Jersey Real Estate | 105 Comments

Ritholtz: “Many people should buy a home”

Posted on August 25, 2016 by grim

From Ritholtz over at Bloomberg View:

Still a Lot of Negativity on Housing

There has been a steady drumbeat of negativity about housing ever since the residential real-estate market crashed. While there are some signs of recovery, psychological damage persists.

It has been a few years since we last looked at this issue, so we’re overdue for a revisit.

Everyone has to live somewhere, and where and in what kind of housing you choose is crucial to your quality of life, your kids’ education and your ability to save for retirement. And because so many resources are devoted to sheltering the 320 million-plus Americans, the industry makes up a significant part of the economy.

Before we go further, I am not advocating an expansion of home ownership as a government policy. But I will say this: given the state of the economy, housing prices and historically low interest rates, many people should buy a home.
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However, at some point in life, you probably no longer want to have a landlord telling you what color your walls can be or become tired of having strangers share a wall with you. I am not a zealous believer that everyone should go out and buy a home. However, for many people, buying makes sense — especially with mortgage rates as low as they are (the current rate of about 3.45 percent for a 30-year fixed-rate mortgage is just 0.10 percent higher than the record low).

There are lots of other reasons to buy, based on whether someone plans to live in the same area for five years or more, wants or needs a tax deduction, is concerned about the quality of local schools or simply wants the greater social stability that ownership tends to confer.

Obviously, not everyone or every time is suitable for buying.

However, home ownership still seems to be out of favor. I have blamed the recency effect for this in the past, but as home ownership rates continue falling, it make me wonder if what was once the American Dream has given way to a cultural shift in attitudes toward housing.

Whether that is on the verge of changing anytime soon will likely be determined by how soon the millennials move out of their parents’ basements, form households and start having kids. If that happens, that should bode well for the housing market.

Posted in Housing Recovery, National Real Estate | 69 Comments

New Home Sales at 9 Year High

Posted on August 24, 2016 by grim

From the WSJ:

U.S. New Home Sales Rise to Highest Level Since 2007

Sales of newly built homes rose in July to the highest level in nearly a decade, a sign of solid momentum in the U.S. housing market.

Purchases of new single-family homes rose 12.4% in July from a month earlier to a seasonally adjusted annual rate of 654,000, the Commerce Department said Tuesday. That was the highest level since October 2007.

“New home sales soared again,” said Ralph McLaughlin, economist at real estate website Trulia. “This is a continued sign that demand for new homes remains solid in a low interest rate, low unemployment environment.”

Economists surveyed by The Wall Street Journal had expected home sales in July to slow to a pace of 580,000. Sales in June were revised down to a pace of 582,000 from an initially estimated 592,000.

Through the first seven months of the year, new home sales also rose 12.4%, compared with the same period in 2015.

The housing market has been a bright spot in the economy this year. Historically low mortgage interest rates, improving income growth and steady job creation have supported buying of both new and existing homes.

The average rate for a 30-year fixed rate mortgage was 3.48% at the end of July, down a half-percentage point from a year earlier, according to Freddie Mac.

Posted in Economics, Employment, Housing Recovery, National Real Estate | 196 Comments

As go jobs, so goes housing?

Posted on August 23, 2016 by grim

From DS News:

Are Low Foreclosure Rates Due to the Job Market?

With foreclosure starts being at their lowest level since 2000, Fannie Mae reports that the major drop in foreclosures can be tied to a number of economic factors, but the major reason is the jobs market.

Fannie Mae economist, Orawin Velz says one of the most common reasons people fall behind on mortgage payments is unemployment. During the last recession, there was an increase in the unemployment rate, which contributed to rising foreclosure rates, she says.

“If you lose your job, it doesn’t take much to stop paying your mortgage,” she says.
Recent data from the Labor Department shows the national unemployment rate was 4.9 percent in July, compared to its peak during the recession of 10 percent in October 2009.

“Now, we’re in the opposite stage,” she says. “The labor market has been healing, and the unemployment rate has been declining.”

Fannie Mae shares that while nationally, the foreclosure spectrum is improving, there are still some states that are seeing an increase in foreclosure rates in the past six months, such as Alaska, Wyoming, and North Dakota.

The report notes that despite the states, nationally, the percentage of loans in any part of the foreclosure process at the end of the first quarter was 1.74 percent. This data is a reported 48 basis points lower from a year ago as well as the lowest since the third quarter of 2007.

Fannie Mae reports that while first-time foreclosures are the lowest since 2000, Ben Graboske, data and analytics executive vice president at Black Knight says over half of all foreclosure starts are coming from mortgages that have already been in active foreclosure at least once before, and nearly 60 percent of new serious delinquencies are from pre-2008 vintage loans.

“What we’re seeing with regard to new foreclosure starts — and the bulk of all new troubled loans, in fact — is that they’re largely still a remnant of the crisis,” Graboske says.

Posted in Economics, Employment, National Real Estate | 82 Comments