Hello Spring Market! Best February since 2005.

Posted on April 1, 2016 by grim

From the Otteau Group:

Home purchase demand in New Jersey increased for the 18th consecutive month in February rising to more than 8,000 home-purchase contracts. This was the highest number of purchase contracts recorded in the month of February since 2005, reflecting an impressive 26% increase compared to the same month one year ago.

On a year-to-date basis (January-February) home purchase demand in New Jersey continues to expand, increasing by 22%. The majority of this year’s increase has been concentrated in homes priced below $600,000, as first-time ‘Millennial’ buyers begin to transition from rentership to homeownership.

While home purchase demand continues to rise, the inventory of available homes remains constrained in New Jersey. The number of homes being offered for sale in the month of February increased slightly by 1,400 homes (3%) compared to one year ago. Still, this is about 26,000 (-35%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.9 months of sales (non-seasonally adjusted), which is less than one year ago when it was 7.2 months.

Currently, more than three-fourths of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson is presently experiencing the strongest market conditions in the state with fewer than 4 months of supply, followed by Union, Essex, Somerset and Morris Counties, which all have fewer than 5 months of supply. All of the counties with an unsold inventory level equivalent to a supply of 12 months or greater are concentrated in the southern portion of the state including Atlantic (13.6) and Salem (14.3).

Posted in Economics, Housing Recovery, New Jersey Real Estate | 150 Comments

Jed Kolko drops the bomb on the urbanization myth

Posted on March 30, 2016 by grim

From jedkolko.com (former Trulia economist):

Urban Revival? Not For Most Americans

The U.S. population is now less urban than before the start of the housing bubble. While well-educated, higher-income young adults have become much more likely to live in dense urban neighborhoods, most demographic groups have been left out of the urban revival.

In recent years, numerous studies and media reports have documented that college-educated young adults have been drawn to urban centers. At times some have claimed a broader demographic reversal in which cities grow faster than suburbs, and even the end of the suburbs.

But, in fact, the U.S. continues to suburbanize. The share of Americans living in urban neighborhoods dropped by 7%, from 21.7% in 2000 to 20.1% in 2014. Even looking at only the densest urban neighborhoods where about one-third of the urban population lives, the share of Americans living in these neighborhoods fell by 5%, from 7.4% in 2000 to 7.0% in 2014. (See note at end of post for details on data, methodology, and definitions.) Headlines about educated young adults flocking to Brooklyn and San Francisco aren’t wrong – but they are far from the whole story and are unrepresentative of broader trends. Other demographic groups are suburbanizing faster than the young and rich are piling in to cities.

This post looks at the change in urban living for detailed demographic groups, using individual-level data from the Census. The findings are consistent with analyses of the most recent county data and of detailed neighborhood data, both of which confirm that the American population overall continues to suburbanize. What’s new is that individual-level data show us how skewed the urban revival is toward rich, young, educated Whites without school-age kids.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 121 Comments

National home prices up 5.4% in January

Posted on March 30, 2016 by grim

From Forbes:

Home Prices Rise A Steady 5.4% In January, S&P/Case-Shiller Says

Home sales prices rose 5.4% in January, continuing at a moderate and steady pace despite ongoing inventory shortages, a report released Tuesday said. Home prices are rising twice as fast as both inflation and wages.

January’s 5.4% year-over-year increase was slightly up from December 2015′s (downwardly revised) 5.3% pace of home price appreciation, according to the S&P/Case-Shiller U.S. National Home Price Index, which tracks repeat sales for homes in all nine Census divisions. Homes in America’s largest 20 metro areas appreciated at a slightly faster pace, welcoming 5.7% annual sales price growth in January, while prices in a select 10-city index rose an annual 5.1%. Again, both indices were slightly up from the annual gains in December.

“Home prices continue to climb at more than twice the rate of inflation,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.“The low inventory of homes for sale–currently about a five month supply–means that would-be sellers seeking to trade-up are having a hard time finding a new, larger home.”

Price appreciation, which reached breakneck double-digit increases during housing’s recovery, moderated to around an annual 4-5% nationally by late 2015. But across the country and in all the cities that Case-Schiller tracks–except for Chicago (2.1%) and Washington, D.C.(2.2%)–home prices are still rising far faster than the core 2.3% rate of inflation (all items less food and energy). They’re also growing at a faster rate than wages, which have been stuck at about 2.25% annual growth for the past two years.

A shortage of housing for sale continues to push up prices, particularly at the lower end of the market. Last week Trulia released a report showing that the inventory of starter and trade-up homes is down more than 40% since 2012, making it difficult for would-be buyers to get into the market. Starter home inventory is down most in the West and South, with affordability particularly bad in California, according Trulia.

Underscoring the points of Trulia’s report, Tuesday’s S&P/Case-Shiller data reports high year-over-year price gains in Portland (11.8%), Seattle (10.7%), San Francisco (10.5%), and Denver (10.2%). Eleven of the cities recorded greater annual price increases in January than December. After Denver, the next highest annual gain was in Dallas (9.2%), followed by Tampa (7.4%), and Los Angeles (6.9%). Phoenix’s annual gain dipped to 6.1%, ending a year-long streak of increasing annual gains each month. Price gains were weakest in the Northeast region of the country; Boston had an annual 3.6% gain, New York 2.8%.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 44 Comments

Pending home sales jump in February

Posted on March 29, 2016 by grim

From Reuters:

U.S. pending home sales hit seven-month high in February

Contracts to buy previously owned U.S. homes rose sharply in February, reversing the previous month’s deep decline, as the volatility of the data continues to make it difficult to parse the strength of the housing market.

The National Association of Realtors said its pending home sales index rose 3.5 percent to 109.1 last month, the highest level in seven months. January’s reading was revised to show a 3.0 percent decline, which was deeper than initially reported.

Economists polled by Reuters had forecast contracts rising 1.2 percent last month. Contracts were up 0.7 percent from a year ago.

Regionally, signed contracts climbed 11.4 percent in the Midwest, with more modest gains in the South and West., the Associated Press reported. In the Northeast, the number of contracts dipped 0.2 percent, according to the AP.

Posted in Economics, Housing Recovery, National Real Estate | 44 Comments

A long way to “recovery”

Posted on March 28, 2016 by grim

From the Star Ledger:

N.J. home prices slowly recover from housing bubble

Slowly but steadily, New Jersey’s housing market is recovering.

The average home sale price in New Jersey in 2015 was $397,279, according to the state Division of Taxation. But most towns throughout New Jersey are still showing average sales below the pre-housing bubble peaks.

“We’re not out of the woods yet,” said Tg Glazer, president of the New Jersey Realtors Association. “There’s still work to be done, but everything is looking very positive and I believe that things will continue to move forward throughout the year.”

Figures from the New Jersey Realtors Association for 2015 show home sales rose 12.3 percent to 93,635 and there were small upticks in the median and average sales prices, according to figures from the New Jersey Realtors Association — a hopeful sign as the spring selling season gets underway.

The 22.7 percent jump in pending sales in December over the year before pointed to 2016 getting off to a strong start. But even as job gains, low mortgage rates and consumer confidence help boost home sales, the number of homes for sale has fallen.

In December, for example, there were 10.6 percent fewer listings — 49,829 compared to 55,720 at the same time in 2014.

“Our economy and housing sector are both better than where they were in the recession, but both have a ways to go before anybody would want to cheer at the pace of activity,” said Patrick O’Keefe, director of economic research at CohnReznick, an accounting and consulting firm.

Even though home prices are showing signs of increasing, there is still a large number of homeowners who are underwater on their mortgages and are reluctant to sell at a loss, he said.

“If they bought from 2005 to 2007, they paid prices that were still well above where the market is today,” O’Keefe said. “As a consequence, if they list their homes for sale, they’re going to get offers well below what they paid and unless it’s a distressed situation where they have to move, it would be irrational to sell the house at the discounts.”
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New Jersey housing prices continue to lag behind the national average, he said, citing the housing price index calculated by the Federal Housing Finance Agency.

Nationally, prices in the last quarter of 2015 were 0.3 percent higher than in 2007, while New Jersey’s prices were 13.8 percent less. But compared with New Jersey’s own peak in the second quarter of 2006, prices are down 21.3 percent.

“Those price factors are a major reason why the state’s housing recovery has lagged the rest of the country,” O’Keefe said. “Our prices ran up more sharply prior to the housing meltdown and have recovered far more slowly in the aftermath of the meltdown.”

Posted in Housing Recovery, New Jersey Real Estate | 33 Comments

Never going back again

Posted on March 26, 2016 by grim

New Jersey’s new state song:

From the Record:

55-year fight to name a New Jersey state song gains traction

Mascara, also known as Joseph Rocco Mascari of Phillipsburg, was a fixture at the State House for 55 years as he lobbied lawmakers to adopt his tune, “I’m from New Jersey” as the official state song. Mascara died last June at the age of 92 without realizing that dream.

“You would see him with a little can and in the can was some candy,” Assemblyman Ronald Dancer, R-Monmouth, recalled last week. “He would ask with a smile, ‘Have a piece of candy?’

And then he would add, “Remember, we need a state song.”

This month, the Assembly remembered when lawmakers in a 71-1 vote approved “The Red Mascara Act.”

The bill was a compromise that would designate five songs with various “official” labels.

As detailed in the bill approved this month, Mascara’s tune, composed in 1960, would be the “state song.” Another composition, “New Jersey, My Home” by Teaneck educator Patrick Finley, would be the “state anthem.” “In New Jersey,” with lyrics inspired by fourth-graders at a school in Bridgewater would become the state “children’s song.”

“New Jersey U.S.A.” by Nelson Trout, would be the “state ballad” and “Be Proud to Be in New Jersey” by Mark and Ellen Winter would be the “state popular song.”

But the compromise appears to have hit a snag in the Senate, where Senate President Stephen Sweeney has nixed the idea of having multiple state songs.

“The Senate president believes that the best way to celebrate New Jersey’s attributes in song is to designate one song rather than five,” said Richard McGrath, a spokes­man for the Senate Democrats. “A single song would be more distinctive and more memorable.”
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Mascara’s grandson Lee said he remains optimistic — like his grandfather — that something good ultimately will come of all this. His optimism is reflected in Mascara’s song, which includes these lyrics:

“I’m From New Jersey and I’m proud about it,
I love the Garden State;
I’m From New Jersey and I want to shout it,
I think it’s simply great.”

Posted in Humor, New Jersey Real Estate, Unrest | 34 Comments

Population patterns in NJ showing urbanization shift

Posted on March 25, 2016 by grim

From the Record:

Bergen County leads population growth trend, halts flow to other parts of N.J.

A decades-long population shift from northeastern New Jersey to other parts of the state has come to an abrupt halt, with Bergen and Hudson counties leading a new growth trend that has potentially broad financial, political and social implications.

New data released Thursday by the Census Bureau show that the number of people living in Bergen County rose almost 4 percent from 2010 to 2015, nearly double the overall rate in the state; Hudson County’s population led the state’s 21 counties, with an estimated growth of more than 6 percent.

Those figures follow decades in which Bergen and Hudson had relatively low increases compared with the rest of the state.

That growth, along with increases in Passaic County, helped nudge upward the proportion of state residents concentrated in the densely populated northeast region — the reverse of a pattern dating to the 1970s.

So far the shift is small: The percentage of New Jersey’s 8.96 million residents living in the five-county region of Bergen, Passaic, Hudson, Essex and Union ticked up from 38.2 percent in 2010 to 38.8 percent in 2015.

At the same time, other parts of New Jersey saw their portion of the population drop.

Overall, the state’s population has increased 1.9 percent since 2010.

That’s well behind the national growth rate of 4.1 percent.

But the New Jersey numbers reveal how a renewed interest in living and working in and around New York City is trumping a long period of ever-outward suburban sprawl, said Rutgers University demographer James Hughes.

“The defining element of New Jersey post-World War II was suburbanization, first with people and then jobs. That trend has stopped dead in its tracks,” said Hughes, noting that most of the Metropolitan area’s job growth since the late-2000s recession has been in New York City.

“It changes the entire logic of the state,” Hughes said.

So-called millennials, people who grew up around the turn of the century, increasingly prefer the “24/7, l-w-p — live-work-play — environments” of New York City and communities bordering the city, Hughes said.

“A common attitude is, ‘We don’t want to live in the sticks. We are out of here. We want to go to the Hudson River [communities] and Brooklyn,’” he added.

Counterbalancing Hudson, at the other end of the state spectrum, was Sussex County, where the population dropped 3.7 percent and a six-county southern region including Camden, Atlantic and Salem, where the number of residents dropped by about one-half of 1 percent.

Posted in Demographics, Economics, Housing Recovery, North Jersey Real Estate, NYC | 33 Comments

Otteau: NJ home prices to rise 4% in 2016

Posted on March 24, 2016 by grim

From the Record:

N.J. housing expert sees 4 percent rise in prices this year

New Jersey home prices are likely to rise about 4 percent this year, as a thriving job market boosts a housing sector that’s still recovering from the worst downturn in decades, a housing analyst said Wednesday.

“Job creation fuels home purchases,” appraiser Jeffrey Otteau of East Brunswick, who researches the real estate market statewide, told an audience of real estate agents in Hasbrouck Heights.

Employers created more than 81,500 jobs in New Jersey last year, the best performance since 1999. Those new jobs, in turn, helped push the number of home sales in the state up 17 percent last year, to the highest level since 2005, Otteau said.

But New Jersey home values are still more than 15 percent below the peaks they reached during the housing bubble, and they will not reach those levels again till 2023, Otteau predicted. That was a less optimistic prediction than he has given in the past; at various points during the housing bust, he forecast that prices would return to their peaks in 2018, 2019 or 2020. His new forecast apparently reflects a slower pace of price increases than he earlier forecast. Average values rose about 1.5-percent annually in the last two years, Otteau said Wednesday.

Areas closer to New York City’s powerful economic engine have fared best, he said. In affluent towns with rail lines to New York, such as Ridgewood and Glen Rock, prices have recovered to their peaks, he said.

“The lowest unemployment rates and the best housing markets, for the most part, are in the places closest to New York City,” Otteau said. Bergen and Passaic counties both have less than a six-month supply of homes for sale at the current sales pace — an inventory level that points to rising prices as buyers bid on a small number of choices.

But sales along the shore are less robust, partly because of changes in flood insurance rules after Superstorm Sandy and partly because baby boomers are at an age where they’re less interested in buying beach homes, Otteau said. And demand for houses in Sussex and Warren counties is also sluggish, because those counties are beyond easy commuting distance to New York City, he said.

Most of the new construction in the state has been in multi-family rentals, Otteau noted. Millennials are renting longer than their parents did, in part because incomes have been flat and in part because young people have seen firsthand that home values can plummet.

“Young people don’t have the confidence in the investment value of homeownership that prior generations had,” Otteau said.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 71 Comments

Note to NJ – Stop making promises you can’t afford

Posted on March 23, 2016 by grim

From the Record:

Standard & Poor’s revises N.J.’s credit outlook to ‘negative’

New Jersey’s finances are still a mess, Standard & Poor’s said Tuesday, and the state’s weak credit outlook will not improve until officials make lasting reforms.

The Wall Street agency did not downgrade New Jersey’s “A” bond rating – already one of the lowest in the country. But Standard & Poor’s did revise New Jersey’s outlook from “stable” to “negative,” usually the first step before a downgrade.

Analysts pointed to a familiar problem, years in the making: a mountain of debt in the area of pensions and health-care packages for retirees.

John Sugden, an S&P analyst who studies New Jersey, said those costs continue to bring “significant long-term pressures” that could “worsen over the next year or two.”

Governor Christie has proposed a $34.8 billion state budget for the fiscal year that begins July. His plan would send $1.86 billion to the strained pension funds, or 40 percent of what actuaries say is needed to fully fund the retirement benefits public workers have earned. Next year, for his last budget, Christie plans to pay 50 percent of the total cost.

Those reduced payments mean that “the state’s underfunding of its pension is contributing to rapidly growing unfunded liabilities and reduced sustainability for its systems,” S&P said.

Fitch Ratings, Moody’s Investors Service and S&P have issued nine downgrades of New Jersey’s bond rating since Governor Christie took office in 2010, often citing the pension-funding predicament. But they all affirmed the state’s lower-than-average bond rating this year.

A spokesman for the state Treasury Department said S&P was the only major ratings agency to change its outlook to “negative” in recent days.

“This outlook change should serve as a wake-up call to Democrat legislators in Trenton: if they do not join the governor’s efforts to make public employee entitlements affordable for taxpayers, and if they continue to fight to enshrine these costs in the state constitution, it will be devastating to the budget and to the economy,” said Christie spokesman Brian Murray.

In a note to investors Tuesday, S&P called for “credible pension reform” and said New Jersey’s outlook would not improve to “stable” until it sees “a demonstrated significant and sustainable funding commitment to the state’s pensions that, at a minimum, reverses the trend of growing liabilities.”
…
The state pension funds face $40 billion in unfunded liabilities according to the terms of state law, but using newly adopted federal accounting standards, the tab grows to $80 billion. Pension plans managed by local governments are in better shape.
…
According to Fitch Ratings, the state faces more than $65 billion in unfunded liabilities for retiree health benefits.

Posted in Economics, New Jersey Real Estate, Politics | 80 Comments

Blame the blizzard … and the stock market

Posted on March 22, 2016 by grim

From the WSJ:

U.S. Existing Home Sales Tumbled 7.1% in February

Sales of previously owned homes sank in February, a sign that demand for housing could be cooling amid rising prices and low inventory.

Sales fell 7.1% in February from the prior month to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said Monday. Economists surveyed by The Wall Street Journal had expected sales would fall 2.6% to a rate of 5.33 million in February.

While inventory ticked up slightly in February to 4.4 months’ supply from January’s 4.0, economist Joel Naroff of Naroff Economic Advisors, Inc., noted a more “normal, vibrant market” would have roughly six months’ supply.

“Without the product to sell, it is hard to sell homes and that is a factor to consider when determining the meaning of this report,” Mr. Naroff said in a note to clients.

Economists cited other factors that may have given buyers pause, such as January’s blizzard on the East Coast and a slump in the stock market.

“The biggest drop in single-family home sales was the 17% plunge in the northeast, the region most sensitive to the stock market,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “If we’re right, the rebound in the market over the past month ought to mean home sales rebound in the spring, but momentum has stalled for now.”

Real-estate brokerage Redfin noted that the number of listings surged 12% in its major metro areas in February, signaling a stronger spring selling season on the horizon.

Lawrence Yun, the association’s chief economist, called February’s numbers a “meaningful slowdown,” but said the 5.25 million average for January and February was comparable to the same period a year ago.

Despite the fall, February’s sales are still 2.2% higher than February a year ago.

Posted in Economics, Housing Recovery, National Real Estate, North Jersey Real Estate | 108 Comments

Just how low can inventory go?

Posted on March 21, 2016 by grim

From the WSJ:

This Problem Is Shutting the Door on Many Would-Be Home Buyers

The U.S. housing market has a supply issue.

Between low interest rates, a steady job market and rising rents, economic fundamentals suggest lots of houses should be selling. Simultaneously, though, tight inventory levels are playing a role in driving prices higher, making the market less appealing for buyers and potentially making it tougher for sales to keep growing at a rapid clip.

As the all-important spring selling season ramps into high gear, Monday’s report on existing-home sales should offer clues of whether higher prices are keeping potential buyers on the sidelines.

Economists polled by The Wall Street Journal estimate February sales of previously owned homes fell 2.6% from a month earlier. On a year-over-year basis, sales are expected to have risen by about 7%. Existing homes account for about 90% of the housing market.

In 2015, existing-home sales had their best year since 2006. But falling inventory could make it difficult for last year’s strength to continue.

For instance, there were about 1.8 million existing homes available for sale at the end of January, according to the National Association of Realtors. That was down 2.2% from a year earlier. It also represented about a four-month level of supply at the current sales pace, near the lowest levels since 2005. A level of six months is considered typical.
…
Of course, the existing-home market isn’t completely dried up. As the Journal reported earlier this month, housing has become a tale of two markets, as lower-priced homes have been selling rapidly while inventory of more expensive ones is piling up. In other words, the cheaper the price, the smaller the growth in the number of homes available on the market.

Posted in Economics, Housing Recovery, National Real Estate | 52 Comments

Oh boy…

Posted on March 19, 2016 by grim

From News 12:

Toms River ordinance bans aggressive real estate solicitation

Door-to-door real estate solicitation is now forbidden in areas of Toms River. The “cease and desist” ordinance went into effect Friday.

The ordinance comes after many complaints by Toms River residents of real estate agents “aggressively” inquiring about the sale of homes that have not been put on the market. The residents say that typically these agents represent members of the Orthodox Jewish community from neighboring towns like Lakewood.

Toms River has previously had a “no knock” registry to keep away unwanted solicitation, and residents were able to put green stickers on their door to mark their homes as such. However, township officials have expanded the law after more complaints came in from residents.

Toms River police will now enforce the law, although there won’t be any special task force assigned to the task.

“The police department will enforce whatever the state, federal or local government puts on the books and we’re going to enforce it. But we’re not aggressively seeking to catch anybody doing this. It’s going to be as a result of citizen complaints as it always has been,” says Toms River police spokesman Ralph Stocco.

The ordinance will ban the solicitation for the next five years. Nonprofit organizations such as the Boy Scouts or Girl Scouts are exempt.

The new ordinance comes after Lakewood’s mayor criticized Toms River Mayor Tom Kelaher for calling the aggressive real estate inquiries “an invasion” or Orthodox Jews. Kehaher later apologized for the comments.

Posted in New Jersey Real Estate, Politics, Unrest | 59 Comments

Living near crime doesn’t pay

Posted on March 18, 2016 by grim

From RealtyTrac:

RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its first-ever Registered Criminal Offender Risk Index, which shows that average home values and home equity were lower — while average foreclosure rates were higher — in zip codes with a higher offender index than in zip codes with a lower offender index.

The report also shows that average home price appreciation has been slightly stronger over the past year and five years in zip codes with a higher offender index than in zip codes with a lower offender index, but only zip codes with an offender index in the bottom 20th percentile have seen home prices rebound above levels from 10 years ago.

“This new index provides concrete evidence that registered criminal offenders pose not only a potential safety risk for homeowners and their families, but also a potential financial risk for what is likely a homeowner’s biggest asset,” said Daren Blomquist, senior vice president at RealtyTrac. “This is clearly evident in the significantly lower home values and significantly higher foreclosure rates in zip codes with a higher offender index, but it may not be as evident in the home price appreciation numbers, which are actually slightly stronger over the past year and five years in zip codes with a higher offender index. However, the 10-year appreciation numbers demonstrate home values in the lowest-risk zip codes for offenders were not hit as hard during the housing downturn and have rebounded more quickly back to their previous highs – even exceeding those previous highs.”

The index is based on the number of registered criminal offenders (including sex offenders, child predators, kidnappers and violent offenders) as a percentage of total population in 10,358 U.S. zip codes. The offender data is collected from each state’s criminal offender registry online and is available on RealtyTrac subsidiary www.homedisclosure.com, where offenders living within a half-mile radius of a home can be identified.
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The higher the offender index, the lower the home value and home equity

Average home values as of the first quarter of 2016 in zip codes with a Very Low offender index ($512,841) were more than three times higher than home values in zip codes with a Very High offender index ($157,844).

Furthermore, the average 2015 median sales price for homes in zip codes with a Very Low offender index ($450,925) was more than three times higher than the average 2015 median sales price in zip codes with a Very High offender index ($126,205). The median price per square foot on average for homes in zip codes with a Very Low offender index was $243, three times higher than in zip codes with a Very High offender index ($81).

Homeowners living in zip codes with a Very Low offender index on average had 29 percent equity (71 Combined Loan-to-Value) as of the first quarter of 2016, nearly three times the average 10 percent equity (90 CLTV) for homeowners living in zip codes with a Very High offender index.
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Home prices rebound above 10-year-ago levels only in zips with Very Low offender index

Among homes that sold in 2015, the average one-year home price appreciation in zip codes with a Very High offender index (up 7 percent) was slightly higher than the average one-year HPA in zip codes with a Very Low offender index (up 5 percent).

Home prices also rose slightly faster over the past five years in zip codes with a Very High offender index (up 24 percent on average) than in zip codes with a Very Low offender index (up 20 percent on average).

Median home sales prices in zip codes with a Very Low offender index in 2015 were 7 percent higher than median sales prices 10 years ago, in 2005, but home prices in all other offender index categories were flat or lower than 10 years.

Posted in Demographics, Economics, Housing Recovery | 55 Comments

NJ’s Wealthiest Resident Leaves for Florida

Posted on March 17, 2016 by grim

From Bloomberg:

Tepper’s Most Profitable 2015 Trade May Be Moving to Miami

New Jersey lost its richest resident late last year when billionaire David Tepper decamped to the tax friendly climes of Florida.

Tepper registered to vote in Florida last October, listing his residence as a Miami Beach condominium, and followed up in December by filing a court document declaring that he is now a resident of the state. He also carried out a business reorganization on Jan. 1 that relocated his Appaloosa Management from New Jersey to Florida, which is free of personal income and estate taxes.

The move could save Tepper hundreds of millions of dollars in state taxes several years from now. Florida has been pitching itself as a warm-weather tax haven to hedge fund managers in the Northeast, some of whom face a 2017 deadline to pay taxes on billions of dollars in performance fees that they had kept offshore for years. A Florida residence could offer partial relief to New York and New Jersey money managers who face the prospect of surrendering at least half of the deferred money to federal, state and local taxes.

“Anyone who has a large deferral coming due in 2017” is thinking about ways of reducing the tax hit, said Anthony Tuths, a tax attorney in the New York office of Withum who advises alternative investment funds. “What is easier than packing up your house in New York City and moving down to Miami?”
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Tepper, 58, lived in New Jersey for more than two decades, initially as an executive at Goldman Sachs Group Inc., where he helped run junk-bond trading during the late 1980s and early 1990s. He founded Appaloosa in 1993 and now has an estimated fortune of $10.6 billion, according to the Bloomberg Billionaires Index. That ranks him as the wealthiest person in New Jersey.
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When Tepper personally relocated to Florida, part of his firm came along. Under a Jan. 1 reorganization, the firm moved what was formerly its main investment advisory unit to Miami from Short Hills, according to a filing with the SEC. Because the previously deferred offshore fees would normally be paid out to this unit, the move could be key to saving money on state taxes in 2017.
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As a New Jersey resident, Tepper would have to pay the 9 percent state tax upon reporting his deferred compensation in 2017 on top of a federal tax rate of 39.6 percent. Moving to Florida could at least eliminate the 9 percent tax.

Because Appaloosa Management is now in Miami, the deferred fees that it receives in 2017 from the offshore funds will qualify as Florida-sourced income for tax purposes, Tuths said. So will the future performance fees that Appaloosa Management receives as the general partner for Tepper’s primary onshore vehicle, Thoroughbred Fund LP. As a Florida resident, Tepper won’t have to pay any state income taxes on such fees when they’re passed along by Appaloosa Management.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 96 Comments

Swallowed by the sea

Posted on March 16, 2016 by grim

From the Star Ledger:

Rising seas could drive 837K N.J. residents from their homes, study says

Rising seas could force hundreds of thousands of New Jersey residents from their homes by the end of the century, a new report found.

The report, published in Nature Climate Change, analyzed the impact that sea-level rise will have on 22 states and Washington D.C. by 2100.

It paints a grim picture, projecting incessant flooding in coastal counties affecting up to 13.1 million people in the United States.

According to the study, up to 827,449 people in the Garden State would have to relocate due to sea-level rise, most notably on barrier islands, but also in low-lying urban areas, such as Hoboken and Newark.
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While New Jersey’s counties appear to fare significantly better against rising seas than some of the other 319 coastal counties in the study — 94 percent of residents in Tyrell County, North Carolina, would be affected for example — even under the low projections, more than 300,000 people could be forced from their homes.

Three counties in the Tampa and Miami area would account for a quarter of the projected 13.1 million affected by sea-level across the country, according the report.

In Cape May County, 38.9 percent of projected residents in 2100, or 79,345 people, would experience the result of climate change. The highest concentration of residents with homes inundated by rising seas would be in Ocean County, with 176,360 people affected.
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William Sweet, a NOAA oceanographer with the Center for Oceanographic Products and Services, told NJ Advance Media “it was important to note” that this report only focuses on high tide levels and does not take into account the impact on these areas from “recurrent tidal flooding or larger storm surges.”

“Such tipping points will occur much before high tide itself becomes problematic and much before the year 2100 as presented in this paper,” Sweet said.

In a 2014 report, NOAA said it expects most of the U.S. coastal areas to see 30 days of flooding or more each year by 2050.
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Under the three-foot sea-level rise scenario, a projected population of 308,662 people in New Jersey may have to relocate by 2100.

“If the sea level is three feet higher, Atlantic City is basically not viable,” said Strauss, who is also the vice president for sea level and climate impacts at the research group Climate Central. “And the same is probably true for Cape May.

“All of the barrier islands are too low and too developed to handle three-foot sea-level rise.”

Hauer noted that the study doesn’t take into account for any future strategies to manage rising seas, such as barriers, levees, seawalls, elevated developments or coastal wetland restoration.
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According to the report, the infrastructure need to protect the coastal areas from rising seas would cost roughly $421 billion by 2100.

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