New Jersey Real Estate Report

From the Record:

Some optimism about the state economy, for a change

New Jersey’s economy has rarely failed to disappoint in recent years, but economist Joel Naroff thinks that may change in 2016.

He foresees a solid national performance, with economic growth of around 3 percent. And while New Jersey won’t match the nation, the state will enjoy a similar performance – unlike past years, when the state has clearly lagged, Naroff said.

“We are beginning to follow national trends again,” said Naroff, who is economic adviser to the Trenton-based New Jersey Business and Industry Association, adding that his comments reflect only his own views. “That’s good news.”

“I am positive about the direction the state’s economy is going in,” he said. “I am not saying it’s going to be strong. We are not going to have a great economy. But we had improvement in the second half of 2015, and that will carry through to 2016.”

The upbeat forecast from the economist, who heads his own consulting company, contrasts with his past laments about the state’s lackluster economic recovery.

He has worried that no industry appears to be strong enough, or with enough potential, to lift the state out of the doldrums created by the decline of such past powerhouse sectors as manufacturing and telecommunications, the downsized casino industry, the weakened financial sector and the diminished pharmaceutical industry.

Yet the state is coming into its own as a distribution, logistics and warehouse hub, and that will help, Naroff said. The rise of online shopping requires logistical excellence to get goods purchased online quickly to consumers, and the state’s ports, infrastructure and proximity to the vast metropolitan market make it well placed to benefit from the shift, he said.

Outside of that, Naroff said the economy will be helped by a rise in incomes, which will have an “outsized” impact on New Jersey, because of its dense population.

“I think the state economy accelerates in 2016, in no small part because we will finally start seeing better income gains,” he said. “And that feeds back. Income gains means greater demand. Greater demand means more hiring. More hiring means more income. And you set off this positive impact.”

From the Record:

2015 was the year of the long good-bye, but jobs rebounded

New Jersey’s job market swung from optimism to despair and back in 2015, ending the year on a high note, with the largest annual employment increase in 15 years.

Yet the encouraging performance will have to show continued strength if it is going to dispel the notion that the state’s economy lags the national expansion.

New Jersey added 37,800 jobs in the first five months of the year, only to lose 60 percent of them in June and July. Since then, state employment has grown by about 12,000 jobs a month, bringing the figure to 55,000 through November, the most since the 78,400 jobs created in 2000.

The state’s employment increase, by 1.38 percent, is smaller than the national employment increase of 1.64 percent so far this year. New Jersey’s jobless rate of 5.3 percent remains above the national level of 5 percent. And the state has recovered only about 78 percent of the jobs lost in the recession; the U.S. regained them more than a year ago.

Construction provided the state’s largest proportional employment increase, adding 9,800 jobs for a 7 percent increase in 2015 that reflected the strength in the housing market. The next biggest gains were in education and health services — a reliable growth sector that saw employment rise 2.4 percent — and leisure and hospitality, which expanded by 2.2 percent, shrugging off the weakness of 2014 from the casino meltdown in Atlantic City.

The most striking improvement was in the manufacturing sector, long a declining area, which increased by 1.57 percent, or 3,800 jobs, this year, prompting economists to wonder whether the drop had bottomed out.

That did little to diminish concern at the weakness in the professional and business services group, home to many of the state’s high-paying occupations. The sector shed 900 jobs in 2015.
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North Jersey’s housing market continued to recover in 2015 from a deep downturn, with multifamily construction and the number of home sales up significantly.

But the pain is not over. Price increases were muted, and the state led the nation in foreclosures.

Home construction in the state has rebounded strongly from the depths of the housing crash, when only about 13,000 housing units were started each year from 2009 to 2011 — the lowest numbers since World War II. In 2015, the state’s builders are on track to start more than 30,000 units — the highest number since 2006, and close to the longtime averages in the 37,000 range.

The growth this year was entirely in multifamily construction, especially along the Hudson River waterfront in Hudson and Bergen counties. Single-family building permits were actually down by 8.2 percent through November, reflecting the high price of land and the fact many households are renting, either by choice or because they can’t qualify for a mortgage.

Still, the number of single-family home sales through November was up 11 percent in Bergen and 14 percent in Passaic County over the same period last year, according to the New Jersey Realtors. Despite the increased demand for homes, prices didn’t budge much, up 2.2 percent in Bergen and 3.5 percent in Passaic.

During the year, New Jersey led the nation in foreclosure activity. Lenders continued to clear up a backlog of distressed properties that built up after the mortgage industry was forced to slow down foreclosures after being accused of abusing the rights of homeowners in trouble.