South Jersey seeing no foreclosure recovery

Posted on April 21, 2016 by grim

From the Press of Atlantic City:

South Jersey home sale prices hit by large distressed market

South Jersey real estate continues to be hit hard by distressed properties, Atlantic County most of all.

Lenders started foreclosure actions against 399 homeowners in the county in the first three months of this year. There were also 476 notices of sheriff’s sale and 328 bank repossessions, all as reported by RealtyTrac, a company that researches foreclosure data nationwide.

Combined, this meant there was some level of foreclosure activity on more than 1,200 homes, or one out of every 106 homes in the county in the first quarter. That kept Atlantic County in the top position on RealtyTrac’s list of more than 3,100 counties across the U.S. for foreclosure activity.
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Atlantic County Sheriff Frank Balles says that when he took office in 2009, “we were probably averaging about 200 to 250 (sales) a year. Last year, there were a little over 2,100.”
When he started, it was normal to see one or two people looking to bid. Now, he sees closer to 50, often more.
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“We’re seeing the biggest year-to-year increases in the number of distressed assets hitting the market that we’ve ever seen,” says D’Alicandro, a past president of the Atlantic City & County Board of Realtors.

“These are properties not cared for and maintained by homeowners. In a lot of cases, they were abandoned, in some cases years ago. They may be damaged, vandalized and sometimes stripped on the way out,” he says.

“When you go from 5 to 6 percent bank-foreclosed properties up to double digits … being distressed sales, and when they’re selling for 25 to 30 percent below what they would sell for in good condition, that has an impact on the median sales price,” D’Alicandro added.

March figures from the New Jersey Association of Realtors show part of that impact.

The median sale price for an Atlantic County home last month was $184,000, down from $211,500 in the same month last year. That’s a 13 percent drop, NJAR reported.

Median prices also dropped in Cape May County, from $305,000 last March to $260,000 last month for single-family sales, a 14.8 percent cut.
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NJAR also reported gains in Ocean County in both categories, with the total number of sales going up 18 percent and the median price hitting $261,000, a jump of 5.7 percent over a year earlier.

Still, foreclosures are a concern all around South Jersey, with the four local counties all showing up in the top 11 percent in nationwide foreclosure activity.

In Cumberland County, one home in every 159 had some foreclosure activity in the first quarter of this year. And in Ocean County, the rate was one out of every 221.

Posted in Foreclosures, Shore Real Estate, South Jersey Real Estate | 131 Comments

NJ’s shell game taxes

Posted on April 19, 2016 by grim

From the APP:

Prieto: No estate tax deal without gas tax increase

Assembly Speaker Vincent Prieto said he won’t move forward with any plans to eliminate New Jersey’s estate tax without a broader deal to increase the state’s gasoline tax.

Prieto, D-Hudson, stood along with a coalition of left-leaning groups Monday who lambasted plans by Gov. Chris Christie and some in the New Jersey Senate to eliminate the tax on estates worth more than $675,000.

Calling the move “unconscionable” and “another big giveaway for the wealthy,” leaders from the state’s education union and environmental, anti-poverty and other groups said the elimination of the estate tax would blast a $450 million hole in the state’s proposed $33.8 billion budget for next fiscal year. That, they said, would benefit only the wealthy while cutting programs that help the state’s poor and middle class.

“We would not be able to withstand a total repeal,” Prieto said. “It has to be a part of a bigger picture in my mind.”

Also, part of that picture would be a gas tax hike to fund the Transportation Trust Fund, which is projected to run out of money for new projects this summer. Meanwhile, Christie’s administration said last week that the governor is waiting for lawmakers to send him an outline of what that deal might look like.

Prieto’s announcement is a hurdle for a bill making its way through the state Senate that would phase out New Jersey’s estate tax entirely over five years. The state has the lowest thresholds for estate taxes at $675,000.

It also came on the same day state Sen. Jennifer Beck, R-Monmouth, proposed compromise legislation that would increase New Jersey’s estate tax threshold to $2.5 million, the average level for states that tax estates.

Prieto said he could support increasing New Jersey’s estate tax threshold to the federal level of $5.4 million or possibly a phase-out, but only after the state started reaping the benefits from replenishing the transportation fund.

Posted in New Jersey Real Estate, Politics | 128 Comments

Affordability again pushing buyers to the burbs?

Posted on April 18, 2016 by grim

From LoHud:

Housing market strong in Lower Hudson Valley

The Lower Hudson Valley housing market continued to show its strength, as the total number of first-quarter home sales in Westchester, Rockland and Putnam counties went up by 14.5 percent over the same period last year, according to the real estate sales report released Monday by the Hudson Gateway Association of Realtors (HGAR).

Market conditions in Westchester and Putnam were also rated strong and stable in another quarterly report recently issued by Douglas Elliman.
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The HGAR report shows that 1,847 homes sold in Westchester County in the first quarter, up 14 percent from the prior year quarter.

Sales activity in Westchester — along with Long Island and Fairfield County in Connecticut — since last year has remained strong because more consumers are seeking affordable homes in surrounding suburbs, said Jonathan Miller, CEO and president of Miller Samuel Inc., a real estate appraisal and consulting firm, which monitors 18 real estate markets in the region.

“Affordability is dropping in New York City, and we’re seeing the pressure of pushing out to the suburbs in terms of property demand,” said Miller, who is the author of the Elliman report.

According to Miller’s report, Westchester’s overall sales volume stabilized in the first quarter: The number of closed sales was 1,640 while the figure was 1,647 in the prior year quarter. But the number of total sales under contract surged 16.3 percent to 2,338 over the same period. During the first quarter, 1,928 contracts were signed, up by 19.2 percent over the same quarter last year.

The luxury market in Westchester — defined by the Elliman report as the upper 10 percent of all single-family sales — continues to show weakness, with median sales price falling 16.8 percent to $1,985,000 over the same period.
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The number of the first quarter sales in Rockland went up 9.4 percent to 467 over the same period last year; the median sale price of single family homes remained almost the same at $399,000.

“Over the past year, we have seen a very balanced market,” said Rosemarie Pelatti, a real estate broker and owner at Keller Williams Realty Hudson Valley in New City, noting that the trend continues in 2016.
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The number of sales in Putnam has continued to rise over the prior year level, mirroring the growth in Westchester.

A total of 227 homes were sold in the first quarter, up by 26.8 percent from the prior year quarter. Of those sales, 87.2 percent were single-family homes and 12.8 percent were condominiums, according to the Elliman report.

The median sale price was $290,000, up by 3.6 percent from a year before.

Miller said Putnam’s market growth is also “connected to what’s happening in New York.”

Posted in Employment, Housing Recovery, NYC | 60 Comments

The key to growth

Posted on April 16, 2016 by grim

From the Record:

Population rebounds around train stations in N.J.

When Kevin Eleby started commuting by train to New York City in 2001, the station in downtown Paterson was nearly empty. Every morning he climbed the stairs to the platform to wait alongside three other riders.

Nearly a decade passed. A few new people started showing up. Then a few more. A few weeks ago, when his train rushed into the station at 7:39 a.m., Eleby was surrounded by a crowd of 45 |people.

“This place was deserted. Now you come up here and it’s full. Look at all these people!” said Eleby, 48, a Paterson resident who works in information technology for Memorial Sloan Kettering Cancer Center in Manhattan. “It’s a big change.”

It’s a change that’s taking place across New Jersey and in some of the nation’s largest metropolitan regions. During the housing boom of the early 2000s, New Jersey’s population grew by 2.8 percent. But car-dependent suburbs saw their populations grow by 4.1 percent, according to a study by Tim Evans, research director at New Jersey Future, which advocates for transit-oriented development. Meanwhile, neighborhoods within a half-mile of a transit station barely grew at all.

Then came the 2008 recession — and a major shift in population and commuting patterns.

Statewide, population growth slowed, dropping to 1.5 percent from 2008 through 2014, the latest year for which data is available. Car-oriented suburbs grew at roughly the same rate.

But during the same period, transit-oriented neighborhoods saw their population surge. Since the recession, they have accounted for 38.3 percent of the population growth in New Jersey, Evans found.

“It’s really dramatic, actually, how little these transit places were growing before 2008 and now they’re growing really quickly,” Evans said. “And the outlying counties that were the locus of sprawl are now losing population.

In Bergen and Passaic counties, many older suburbs grew up along train lines, and many newer ones are dependent on cars. That means the change in population patterns is not as stark here as elsewhere around the state, Evans said.

Yet the pattern holds. Most car-based municipalities in North Jersey continued to grow after 2008, but at a slower pace than before the recession, Evans said. Places like Montvale, Cresskill, Upper Saddle River in Bergen County; Wanaque in Passaic County; and Pompton Plains in Morris County all saw their growth rates stagnate.

But many transit-oriented neighborhoods grew. In Bergen County, Fair Lawn, Lyndhurst, Garfield, Ridgewood and Glen Rock all went from losing population before the recession to gaining population since 2008.

“It’s definitely true that places near transit have been growing faster than they had for many decades before the recession,” Evans said.
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In North Jersey, the epicenter of this transit turnaround is Paterson. The neighborhood within a half-mile of the city’s downtown train station lost 473 people every year on average between 2000 and 2008, according to census figures. In the years since, it has gained an average of 220 people annually.

One of those newbies is Antonia Felix, 25, who moved to an apartment near the station in December so she could catch a train into Manhattan, where she works as a nanny. Standing beside her on the platform one recent weekday morning was Natalie Petrardo, who rented an apartment nearby in November.

“I moved here so that I could catch the train to Secaucus,” where she works in a warehouse, said Petrardo, 26. “I don’t have a car, and the train service here in the morning is really good.”

Longtime commuters notice the difference. Marilyn Romero rides the train every weekday from Paterson to Ramsey, where she works at a dry cleaner’s shop.

“I was afraid when I started. There was nobody up here,” said Romero, 30, who started riding the train 15 years ago. “Now it feels safer with all these people here.”

That switch is even more impressive than it seems, Evans said. That’s because like most neighborhoods near train stations, downtown Paterson already was built-out in 2008, with little vacant land. Growth there meant developers had to renovate, expand or bulldoze existing buildings to make room for new housing units, often at more expense than building a house with a two-car garage on formerly rural land.

“The growth there is remarkable because it isn’t as easy to do in a place that already has used up all of its developable land,” Evans said. “You have to do more steps to make that happen.”

Posted in Economics, Housing Recovery, New Development, New Jersey Real Estate | 22 Comments

Freddie and Fannie to reduce principal

Posted on April 15, 2016 by grim

From HousingWire:

FHFA makes it official: Principal reduction is coming

A day that many in the housing industry thought would never come is finally and actually here, as the Federal Housing Finance Agency is making official what was first reported several weeks ago – widespread principal reduction is coming.

In what it is calling a “final crisis-era modification program,” the FHFA announced Thursday that it will be launching a principal reduction program for some borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac.

But the program is not quite as widespread as was first reported.

Initial reports in the Wall Street Journal suggested that the FHFA’s principal reduction program may make fewer than 50,000 “underwater” borrowers eligible for principal reduction, but what wasn’t known until Thursday was the exact number of borrowers the FHFA’s program could affect.

The FHFA said Thursday that it expects approximately 33,000 borrowers to eligible to participate in the principal reduction program due to very specific eligibility requirements.

According to the FHFA, principal reductions will be available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, meaning that borrowers will not able to “strategically default” in able to receive principal reduction.

Additionally, the program will only apply to borrowers whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value ratios are more than 115%.

For years, the leadership of the FHFA, Fannie, and Freddie claimed this day would never happen. They all said the GSEs were in conservatorship, not receivership, and so a reduction in asset values would be counterintuitive to that status.
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According to the FHFA, this program will give seriously delinquent, underwater borrowers “last chance” to avoid foreclosure by providing principal reduction in a straightforward and timely manner.

“FHFA believes that this final crisis-era modification program will provide seriously delinquent borrowers a last opportunity to address negative equity and to avoid foreclosure and will also help to improve the stability of neighborhoods that have not yet recovered from the foreclosure crisis,” the FHFA said in prepared materials.

According to the FHFA, the eligible loans are heavily concentrated in Florida, New Jersey, New York, Illinois, Ohio, Pennsylvania, Nevada and in” hardest hit communities.”

Posted in Foreclosures, Mortgages, Politics, Risky Lending | 116 Comments

Atlantic City and Trenton lead the nation in foreclosure filings

Posted on April 14, 2016 by grim

From NBC News:

Atlantic City Area Tops List of Foreclosures

Atlantic County, home to New Jersey’s fiscally distressed gambling hub Atlantic City, had the highest foreclosure rate of any major U.S. metropolitan area in the first quarter of 2016, according to RealtyTrac data released on Thursday.

One in every 106 housing units in Atlantic County had a foreclosure filing in the first quarter, compared to a nationwide rate of one filing per 459 homes.

The area has been hit hard by the closure of four Atlantic City casinos in 2014, which remain shuttered. It also had the highest metro foreclosure rate for all of 2015.

Trenton, New Jersey’s capital city, had the second-highest metro foreclosure rate in the nation in the first quarter and Baltimore, Maryland, came in third.

As a state, New Jersey had one foreclosure filing for every 216 housing units, the second-worst rate of all U.S. states, behind only Maryland, where one in every 194 units had a filing, the RealtyTrac data showed.

Nationally, foreclosure activity bumped higher seasonally in March, but most markets continue to improve to more stable levels, said RealtyTrac senior vice president Daren Blomquist in a statement.

More than a third of the 216 local markets examined were below their pre-recession foreclosure averages in the first quarter.

“We would expect a growing number of markets to move below that milestone the rest of this year, while the number of markets with a lingering low-grade fever of foreclosure activity continues to shrink,” he said.

Posted in Foreclosures, New Jersey Real Estate | 24 Comments

Foreclosures continue improvement trend

Posted on April 13, 2016 by grim

From HousingWire:

Foreclosure inventory declined nearly 25% in February

National foreclosure inventory, or any house within the foreclosure process, in February decreased by 23.9% annually, according to CoreLogic’s February 2016 National Foreclosure Report.

Completed foreclosures, total homes lost to foreclosures, was down by 10% annually in February, according to the report. Nationwide, the number of completed foreclosures reduced by 4,000 from 38,000 in February 2015 to 34,000. This is down 71.3% from its peak in 2010.

“Job creation averaged 207,000 during the first two months of 2016, and incomes grew over the past year,” CoreLogic chief economist Frank Nothaft said. “More income and improved household finances have helped bring serious delinquency rates down in nearly every state.”

“However, serious delinquency rates increased in North Dakota and West Virginia, two states affected by price declines for the energy fuel each produces,” Nothaft said.

Since September 2008, there have been about 6.2 million completed foreclosures, and since 2004 there have been 8.2 million.

Total foreclosure inventory in February, about 434,000, was about 1.1% of all homes with mortgages. This was down from 1.5% last year. The foreclosure inventory rate in February was the lowest it has been since November 2007.

The total mortgages in serious delinquency also declined by 19.9% in February, according to the report. About 3.2% of mortgages fall under this category, also the lowest rate since November 2007.

Posted in Foreclosures, Housing Recovery, National Real Estate | 87 Comments

More settlements … no guilt … no prosecution

Posted on April 12, 2016 by grim

From the Star Ledger:

Goldman Sachs to pay $5 billion for its role in housing bubble

Goldman Sachs has agreed to pay more than $5 billion to settle charges it sold mortgages it knew were likely to fail during the housing bubble heydays of 2005-2007, the U.S. Justice Department announced today.

Of that settlement, $1.8 billion has been set aside to help consumers harmed by the practice – with most of it going toward loan modifications, loan forgiveness and forbearance, or to “distressed and underwater homeowners throughout the country,” according to the settlement.

Some of that money will also be used to finance affordable rental housing throughout the country as well – “a crucial need following the turmoil of the financial crisis.”

Settlement money also is designated to settle claims by the Federal Home Loan Bankis in Des Moines, Seattle, Chicago, the State of New York, and the State of California.

The practice of selling high-interest loans to consumers who were unlikely to be able to afford mortgage payments for long resulted in an unprecedented number of foreclosures throughout the country. Goldman Sachs has admitted with this settlement that it resold pools of this high-risk loans without due diligence, according to the Justice Department.

The settlement “expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability,” according to the Justice Department.

Posted in Mortgages, Politics, Risky Lending, Unrest | 69 Comments

Positive sign for jobs? Or just more of the same?

Posted on April 11, 2016 by grim

From the Record:

North Jersey employers put out the ‘Help Wanted’ sign

Ikea is hiring — and so are Hackensack University Medical Center, Public Service Electric and Gas Co., Eisai and Toys “R” Us, among other North Jersey employers. With New Jersey’s unemployment rate at its lowest point since 2007 — dropping to 4.3 percent in February — North Jersey employers and hiring counselors say the outlook for jobseekers is the brightest it’s been in years.

“There’s more out there; there’s more opportunity,” said Sandra Leshaw, director of Re-Launch Career Services at Jewish Family Services in Teaneck.

The highest demand is for workers with skills in health care and technology. Construction workers also are likely to find more opportunities now and in the coming months, thanks to a revival in home building, along with large-scale projects like Fort Lee’s downtown redevelopment, the American Dream project in East Rutherford, and plans for several new hotels in the region. Retail, manufacturing and warehousing also are hiring.

Still, challenges remain for jobseekers in North Jersey. The state added 81,500 jobs last year — the highest total since 1999. But this year’s jobs numbers have been less promising. In January and February, New Jersey lost a total of 24,300 jobs, many of them in the well-paid professional and business services sector, as well as in education and health. New Jersey’s job numbers for March are to be released Thursday.

The state still hasn’t made up all the jobs lost in the 2007-09 recession. By contrast, the nation has almost 6 million more jobs than it did before the recession.

Although the labor market has tightened, wages haven’t moved much, when adjusted for inflation. Under the laws of supply and demand, wages would be expected to rise as employers compete for scarcer workers.

But so far, that hasn’t happened. According to the U.S. Department of Labor, wages nationwide rose about 2.3 percent in the 12 months ending in March — a bit higher than 2 percent range of recent years. Even Janet Yellen, the chairwoman of the Federal Reserve, said there’s still enough slack in the workforce to keep wages from heating up.
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Eisai Inc., a pharmaceutical company in Woodcliff Lake, is one employer that has seen wages pushed up by competition for experienced employees in its highly specialized industry.

“Top candidates have their choice of jobs,” said Lucille Naclerio, director of human resources. “Companies now need to position themselves to stand out.”

Eisai has 48 open positions in New Jersey, up 35 percent from a year ago.

Ryan Sanzari, director of operations for the real estate developer Alfred Sanzari Enterprises in Hackensack, said that paychecks in the building trades might soon reflect the rising demand for construction skills.

“If a carpenter has seven jobs going on at once, he’s going to throw higher numbers at you,” Sanzari said.
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Even with the increased hiring, not all the news is positive. Many of New Jersey’s new jobs are in lower-paid industries such as restaurants and retail, where a paycheck often cannot support a household. And many workers who lost their jobs in the 2007-09 recession have struggled to get back into the workforce — especially if they’re older.

“There’s discrimination against older workers,” said Tammy Molinelli, head of the Bergen County Workforce Development Board. “That’s frustrating for us. We see so many talented people walking through the door.”

Many of those returning to the workforce after long periods of unemployment have had to take pay cuts, said Christopher Irving, head of the Passaic County Workforce Development Board.

Prospects are most difficult for job hunters without basic skills — such as proficiency in English, writing and simple math. These days, even entry-level office jobs require familiarity with Microsoft Word and Excel, said Molinelli.

“In the 21st century, technology is the way we communicate,” she said. The state’s One-Stop Career Centers offer training in basic technology skills, she said.

Both Molinelli and Irving said employers are looking for “soft skills,” such as being able to arrive at work on time, meet deadlines and get along with colleagues and clients.

“You’re not going to function in a work environment if you can’t work on a team, solve problems and communicate,” Molinelli said.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 80 Comments

HAT TIP CHICAGO FINANCE

Posted on April 9, 2016 by grim

From the WSJ:

Housing Bust Lingers for Generation X

The group of Americans known as Generation X has suffered more than any other age cohort from the housing bust, according to an analysis of federal data, suggesting homeownership rates for that group could remain depressed for years to come.

The data show an enormous swing in the fortunes of people born between 1965 and 1984, the group defined by the Harvard Joint Center for Housing Studies as Generation X.

Compared with previous generations, Generation X went from the most successful in terms of homeownership rates in 2004 to the least successful by 2015, according to the data, which date to the early 1980s.

The culprit: a historic bull market for housing, fueled in part by easy-to-get mortgages, that encouraged record levels of home buying until the financial system cracked and the housing market collapsed. Earlier generations such as baby boomers, who entered the market before the frenzy of the early 2000s, have fared better.

Generation X “came into the market at precisely the wrong time,” said Rick Sharga, executive vice president at Ten-X.com, an online real-estate brokerage. “We’ve effectively wiped out a group of homeowners who historically would have been on their second or third properties by now.”

In 2004, people then-aged 25 to 34, the core of Generation X, had a homeownership rate of 49.5%, the highest for that age group since the U.S. Census Bureau started regularly collecting such data in the early 1980s.

Last year, by contrast, the homeownership rate for 35-to-44-year-olds was at a more than three-decade low of 58.5%, down from an average of 65.8% for that age group. The upshot: Generation X experienced a much smaller increase in homeownership rates than previous generations as they hit middle age.

Much of the discussion of the future of the housing market centers on millennials, the group born between 1985 and 2004, according to the Harvard Center. Their tendency to live at home with parents and delay getting married has raised concerns about long-term homeownership trends.

But Generation X’s travails promise to disrupt traditional real-estate patterns as well. The housing market can be viewed as a progression through time: younger people start out renting, save enough to buy houses, build equity and then trade up to more desirable homes.

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

America hates New York City

Posted on April 8, 2016 by grim

Don’t read New Republic but this popped up on my feed this morning and I thought it was especially interesting in the wake of Cruz getting booted from NYC. From New Republic:

New York Campaign Ads Are a Tale of Two Cities

Muslim women in American flag headscarves. A shopkeeper speaking Spanish to his customers. Orthodox Jewish men walking down a city street. This is the New York depicted in a recent Hillary Clinton ad: a cultural melting pot that showcases America’s openness and tolerance.

Both Clinton and Bernie Sanders have released uplifting ads about the Empire State in recent days. But these are not indicative of how New York is generally portrayed on the campaign trail. Not since the early 2000s, when politicians were tripping over themselves to praise New Yorkers after September 11, have campaign ads shown the state in such a positive light.

More often, New York is used as a symbol of greed, excess, and general depravity. It represents the source of the country’s problems, not its best aspects. It shows the fundamental clash between wealthy, powerful elites and down-to-earth people in real America.

In his 2014 memoir God, Guns, Grits, and Gravy, Mike Huckabee described a great culture war gripping America that pitted New York against rest of the country. Fancy Manhattan restaurants, he wrote, never served grits. Guns were all but outlawed, and people stared at his cowboy boots on the subway. This is the New York most commonly depicted in campaign commercials, a city cordoned off from the American heartland and its wholesome values.
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Political ads are often about identifying a villain: someone or something that makes voters either angry or afraid. Commercials about Wall Street, featuring sleek office buildings with tinted windows, do both. Look at these bankers who threw the country into a recession! You should be angry! What’s going on behind those ominous dark windows? You should be afraid! That is what makes these ads so effective—and Wall Street such an obvious target.

Less effective are the ads that attack the city as a whole. In January, Ted Cruz released a commercial in Iowa that featured an old newsreel of Trump saying, “I mean, hey, I lived in New York City or Manhattan all my life, so you know my views are little bit different than if I lived in Iowa.” The announcer concludes: “Donald Trump, New York values, not ours.” The idea was that there was something rotten about New York itself—and the people it produces.

This is a difficult idea to sell because it requires viewers accept the premise that all of New York’s eight million people are fundamentally corrupt. “It’s harder for citizens to draw the link,” Fowler said. “It’s easier to vilify the big banks than the city itself.” It’s particularly tricky territory for Republicans, who like to assail coastal elites for their moral apathy but often invoke the heroism of New Yorkers on 9/11 when discussing their counter-terrorism policies. When Cruz released the “New York Values” ad, “it didn’t end up playing very well,” Fowler said. Trump could simply write off the critique with a testament to the bravery he witnessed in New York immediately after the Twin Towers fell.

Posted in Humor, Unrest | 88 Comments

Millennials want a big house in the ‘burbs

Posted on April 7, 2016 by grim

From MarketWatch:

First-time buyers are skipping the starter home and saving for the big house in the suburbs

Forget the starter home. Today’s first-time buyers want a place they’ll live in for a long time — possibly even into retirement. And this ideal home is most likely in the suburbs.

That’s according to a new Bank of America poll of more than 1,000 adults 18 and older who would like to buy a home in the future. “Folks are waiting to buy their first home until later in life,” said Kathy Cummings, consumer education and consulting executive for Bank of America. And by that point, they’re probably better able to anticipate their future needs, which may be a home in which they can raise their families — places with ample square footage, backyards and sought-after school districts.
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The report found 75% of first-time buyers would rather bypass a starter home, even if they’d have to save more to do it. And 35% said they’d want to retire in this home.

Also, despite many reports about the lure of city life over recent years, especially among millennials, the report found that 52% of first-time home buyers want a home in the suburbs. Only 26% said they wanted to live in the city and 22% said they wanted to live in a rural area. A full 75% of first-time home buyers want a single-family home.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 112 Comments

Slowly heading back to normal, whatever normal is now.

Posted on April 6, 2016 by grim

From HousingWire:

Mortgage lending boom? Equifax reports massive increase in home credit

Contrary to some fears that the Consumer Financial Protection Bureau’s new disclosure rules would severely dampen mortgage lending in 2015, a new report from Equifax shows that exactly the opposite took place, as mortgage lending grew by a drastic margin in 2015.

According to the Equifax National Consumer Credit Trends Report for March 2016, the total balance of new first mortgages originated in 2015 was $1.82 trillion, which represents a 42.9% increase over 2014’s total of $1.27 trillion.

In other words, 2015 saw more than $546 billion in new first mortgages originated in 2015 than in 2014.

In terms of the total number of new first mortgages originated, 2015 also saw a sharp increase from 2014, albeit not quite as much as the total dollar amount.

According to Equifax’s report, there were 7.71 million new first mortgages originated in 2015, an increase of 31.6% over 2014’s total of 5.86 million first mortgages originated.

Additionally, based on Equifax’s totals, the average dollar amount of new first mortgages also rose in 2015, from $217,390 in 2014 to $236,057 in 2015, which is an increase of 8.59%.

And it wasn’t just overall new first mortgage lending that was up in 2015.

According to Equifax’s report, subprime lending also saw a large increase in 2015.

Equifax’s report categorizes subprime borrowers as those with an Equifax Risk Score of 620 or below, and the report shows that lending to those borrowers rose significantly in 2015.

According to Equifax’s report, the total balance of new first mortgages originated to subprime borrowers was $59.7 billion in 2015, an increase of 41.3% over 2014.

Equifax’s report also showed that there were more than 366,900 loans originated to subprime borrowers, which represents an increase 25.2%.
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“We saw a nice jump in mortgage lending in 2015 that was driven by both rising home-purchase activity and solid refinancing volumes,” said Amy Crews Cutts, senior vice president and chief economist at Equifax.

“While low interest rates are helping, continued gains in employment and consumer confidence are key,” Cutts continued. “What we are not seeing is any meaningful loosening of underwriting, at least with respect to credit scores.”

According to Cutts, the median credit score on new first mortgages in the fourth quarter of 2015 was 750 and 90% of first mortgage borrowers had a score in excess of 646, values that are “essentially unchanged” for the last three years.

Posted in Economics, Housing Recovery, National Real Estate | 114 Comments

Negative equity improves … except for the low-end

Posted on April 5, 2016 by grim

From CNBC:

How are millions still underwater as home prices rise?

Fast-rising home prices brought 1.5 million borrowers up from underwater on their mortgages in 2015, but there are still twice as many drowning. In total, 3.2 million homeowners nationally still owe more on their mortgages than their homes are currently worth, according to a new count by Black Knight Financial Services.

That brings the average negative equity rate to 6.5 percent, a vast improvement from the worst of the housing crash, but still well above historical norms. More concerning is that negative equity is now concentrated at the bottom price tier of the market. More than 16 percent of borrowers in these homes are underwater, which means they are frozen in place, unable to sell without losing money; these are the homes the market needs most, in order for young renters to become homeowners.

“Even after four years of improvement, the recovery has not reached all corners,” said Ben Graboske, senior vice president of Black Knight Data & Analytics. “When we looked at the population by home price levels, we found that over half of the nation’s underwater properties are in the lowest 20 percent of their respective markets. That’s the highest share on record.”
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Looking beyond states, at the lowest end of local markets, the bottom 20 percent in terms of price, Memphis, Tennessee, Cleveland, Detroit and St. Louis show negative equity rates at more than 40 percent. Again, these borrowers cannot move without paying into their homes and are 10 times more likely to default on their home loans than those who have even a small amount of equity.

Ironically, the negative equity on the low end of the market is fueling overheated price growth across even the midtiers of the housing market. That is because it plays heavily into the severe lack of supply of homes for sale this spring. Underwater borrowers are less likely to move. On top of that, homebuilders are not focused on the low end, because they can’t make enough money on cheaper homes to offset their rising costs for land and labor. The resulting short supply pushes prices higher for what is available on the low end.

Posted in Housing Recovery, Mortgages, National Real Estate | 60 Comments

Early indicators of the next building boom?

Posted on April 4, 2016 by grim

From HousingWire:

March job creation bodes well for housing inventory crisis

March job numbers brought welcome news as more jobs were added to the construction market, which bodes well for the current lack of inventory in the market.

Job creation increased by 215,000 in March, while the unemployment rate remained stagnant at 5%, the U.S. Bureau of Labor Statistics reported Friday.
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“The mix illustrated the crosscurrents affecting economic growth in the past two quarters, with some improvement in construction showing up in 37,000 added jobs as a response to the short supply of homes for sale, and the recession-like weakness in manufacturing revealed in a decline of 29,000 jobs,” continued Duncan.

The job report posted that construction employment rose by 37,000 in March, with job gains occurring among residential specialty trade contractors (+12,000) and in heavy and civil engineering construction (+11,000). Over the year, construction has added 301,000 jobs.

“New construction jobs provided a double boost to the economy in March. These jobs not only helped feed strong employment growth but also provided a lift to the housing market, where the dearth of homes for sale has stymied homebuyers for the past year. Much of the decline in new housing starts is attributable the lack of skilled construction workers, so the 12,000-worker increase in residential specialty trade contractors is welcome news in today’s report, especially when paired with the pickup in new single-family construction we saw in February,” said Redfin chief economist Nela Richardson.

In February’s homebuilder confidence report, National Association of Home Builders Chairman Ed Brady, said, “Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market. Of note, they expressed optimism that sales will pick up in the coming months.”

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate, New Development | 85 Comments