Measuring the buyer/appraiser disconnect

Posted on June 15, 2015 by grim

From HousingWire:

Homeowner, appraiser home value opinion gap widens

The difference between appraiser and homeowner perceptions continued to increase for the fourth consecutive month in May, Quicken Loans reports.

Appraiser opinions of home values were 1.15% lower than homeowner estimates, according to Quicken Loans’ national Home Price Perception Index.

This is the first time in 22 months appraisal opinions were lower than homeowner estimates by at least 1%.

“The HPPI, more than anything, is a reminder that there is no such thing as a national housing market,” said Quicken Loans Chief Economist Bob Walters. “Every city, and every neighborhood, moves in different directions based on local factors. Consumers need to remember to watch their local area closely to understand the direction their market is heading.”

Home values continued to steadily climb nationally, and in many regions of the country. The national Home Value Index (HVI) increased 0.24% in May from its April level, and rose 4.64% since the previous May.
…
Quicken Loans’ exclusive look at the gap between the perceptions of appraisers and homeowners showed the difference of home value opinion continued to widen on a national level. Appraiser opinions of home values were 1.15% lower than homeowner estimates according to May’s national index.

This is a larger gap than in April, when the national index showed appraiser opinions 0.69% lower than homeowner estimates. Despite the widening perception gap at the national level, appraiser opinions remain higher in the majority of the metro areas examined.

Posted in Economics, Housing Bubble, Housing Recovery | 112 Comments

Bayonne the hot new market?

Posted on June 14, 2015 by grim

From the Hudson Reporter:

Going up, up, up

With dozens of rental developments in Hudson County going up and many recently being completed, why does a current report say that county rents are still on the rise, and may actually hit a $3,000 average as early as next year?

Pure economics, says Mark Quartello of Palisadium Real Estate on Boulevard East in West New York.

Even though there is a lot of apartment rental stock available, many of those seeking a place to live are very specific in what their needs are, and have the income to support them.

“Historically in North Hudson, the towns of Weehawken, West New York, Union City, and North Bergen, have been more stable than other areas in terms of high rents,” Quartello said. “But nothing is like it is today.”

Rents for Hudson County towns have grown every year since 2009, and may top a $3,000 average as early as next year, said Reis Inc., a New York-based research firm, in a report in March.

That should not be a surprise, Quartello said, because Hudson and adjacent Bergen County offer great proximity to New York, multiple mass transit options, and relatively low rents compared to Manhattan.

But many of those working in New York City want luxury accommodations, and even though many of those projects are in the pipeline, there are not enough.

“Even with the additional development, you just can’t meet the demand,” Quartello said.
…
A large number of those renters are transplanted Manhattanites, coming to New Jersey for a bit more bang for their buck.

“Consumers want to go to Manhattan without paying $5,000 a month for a studio,” Quartello said.
…
The luxury rental market in Bayonne is one of the fastest growing ones, because as in north Hudson, rents may be high, but they’re still not at New York levels.

“Brooklyn is overpriced and their residents are being driven here,” Piechocki said. “They get so much more for their money here. Brooklyn and Jersey City are creating a new market in Bayonne.”

Posted in Economics, Housing Recovery, New Development, New Jersey Real Estate | 30 Comments

Sitting on your ass not a viable economic strategy?

Posted on June 13, 2015 by grim

From Bloomberg:

New Jersey, You Should’ve Built That Tunnel

There are lots of reasons for bondholders to love Colorado and show no respect for New Jersey. Here’s a big one: infrastructure. Colorado made a huge investment in it and is getting rewarded by investors. New Jersey didn’t and is being punished.

More than 20 years ago, Colorado residents defied business leaders, airline executives and not a few politicians (led by consultant Roger Ailes, now president of Fox News). They voted to borrow a lot of money — a total of $4.4 billion by now — to build the Denver International Airport. At twice the size of Manhattan it’s the largest airport in the U.S., and it’s been pumping up the economy ever since.

Denver International makes more money for the state than any other enterprise, pumping $26.3 billion a year into the economy while supplying 225,000 jobs. It gave Denver, the 22nd-largest U.S. city, the nation’s third-largest domestic flight network, with a record 53.4 million passengers last year and revenue of $322.8 million.
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Now look at what happened in New Jersey, the third-richest state based on median income, after it rejected a chance to improve its transportation infrastructure. In 2010, the federal government offered New Jersey $3 billion to build a rail tunnel to double commuter capacity to New York City. It would have relieved pressure on the overburdened existing tunnel, built in 1910 and damaged in 2012 by Hurricane Sandy.

Governor Chris Christie, predicting cost overruns in a rare period of disinflation and exceptionally low borrowing costs, canceled the project. The new tunnel would have created at least 200,000 jobs, and would have generated $9 billion in business revenue and $1.5 billion in federal, state and local tax revenue during nine years of construction, according to a March 2012 report by the U.S. Government Accountability Office.

Since cancellation, New Jersey’s economic performance has lagged. Adjusted for inflation, its median household income declined 12.2 percent, compared with an average drop of 3.9 percent for the U.S. New Jersey is among only 12 states with deteriorating economic health defined by jobs, mortgage delinquency, personal income, home prices, tax income and stock performance, according to data compiled by Bloomberg. The same data shows Michigan and California, where infrastructure has been a priority, as leaders in job growth. By the same measures, New Jersey is No. 6 from the bottom.

There are always many reasons for weak economic performance. In New Jersey, transportation is vital. The state sends almost half a million people out of state for jobs, the most in the nation. The majority go to New York.

It should come as no surprise, then, that the state has lost the confidence of investors. While Colorado provided an 8.9 percent return since 2010, beating the national average of 4.95 percent, New Jersey’s equivalent bonds gained 1.01 percent, the worst performance after Puerto Rico and Arkansas, according to the BofA Merrill Lynch U.S. Transportation Municipal Securities Index.

Posted in Economics, New Jersey Real Estate, Politics | 28 Comments

Uh Oh – Now they did it…

Posted on June 12, 2015 by grim

Famous last words, from Gothamist:

The Brooklyn Real Estate Bubble Will Never Pop

The housing crash of the late 2000s was supposed to have decimated property values across the nation. But in Brooklyn, the housing market barely broke its stride. Supply and demand is supposed to be an immutable truth, yet a well-documented boom in development has done little to stop spiraling prices. Every few weeks, a different neighborhood in New York City’s most populous borough seems to break its own record for most expensive sale. Intuitively, it feels like the borough is at a breaking point. If something goes up, must it come down?

“There’s no end in sight,” says Jesse Keenan, the research director at Columbia University’s Center for Urban Real Estate, referring to Brooklyn’s obscene housing market.

Currently, the monthly payments on a median-priced home in Brooklyn eat up 98 percent of the borough’s median income of $46,000. The median sales price in the nation’s “most unaffordable city,” just passed $600,000 for the first time. The 70 percent of Brooklyn residents who rent aren’t faring any better—average rent in the borough rose by 77 percent between 2000 and 2012. According to a March report by StreetEasy, “the typical new renter will spend 60 percent of their income on rent in 2015,” the highest rent-to-income ratio in all of New York.

And the Times is running trend pieces about how Brooklynites are moving to Manhattan because it’s cheaper, which means the trend started at least five years ago.

In order to bring housing prices down in any significant way, Keenan told me, the city would need to massively expand its housing stock. That’s especially true of Brooklyn, whose historic neighborhoods are largely made up of townhouses and not apartment buildings.

A 2013 report Keenan co-authored estimates that 300,000 to 350,000 new units must be built to house the next generation of New Yorkers, nearly double the 200,000 affordable units that Mayor Bill de Blasio has pledged to build or preserve.

“I know that sounds crazy and there are significant sensitivities there, but we’re so far in the hole that it’s a long-term challenge to our labor economies,” Keenan said.
…
A housing expert who works for a prominent real estate investment company who asked to remain anonymous because he was speaking so candidly, agreed that New York has a chronic supply shortage that will take decades to fix. Even if the housing market cools off, he said, “when the bottom falls out … you will only see massive rent decreases in marginal neighborhoods.”

Even if Brooklyn’s housing sales end up being a bubble, the expert says, it’s unlikely that renters will reap the benefit of it bursting, as “rents are not speculative, whereas housing prices are.”

Posted in Economics, Housing Bubble, NYC | 118 Comments

9 years of foreclosure inventory in NJ

Posted on June 11, 2015 by grim

From Black Knight Mortgage Monitor

Black Knight’s April Mortgage Monitor: 62 Percent of Seriously Delinquent Loans Have Undergone Home Retention Actions; Florida Sees Greatest Backlog Improvement

This month, Black Knight examined the most recent data on home retention actions — i.e., loan modifications and repayment plans — and found that of the approximately 952,000 borrowers who are 90 or more days past due but not yet in foreclosure, 62 percent have been through some form of home retention program. As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, while overall retention actions have decreased over the past two years, they are making up a greater share of that seriously delinquent inventory.

“In analyzing the data around home retention initiatives, we found that nearly one in five seriously delinquent borrowers are currently taking part in an active trial modification or payment plan,” said Graboske. “With 62 percent of loans 90 or more days delinquent but not yet in foreclosure having been through some form of home retention action, we’re currently seeing the highest level of saturation yet, but that’s only marginally up from last year – in other words, that saturation level is beginning to flatten. Overall, home retention actions have declined 42 percent over the past two years, but at the same time have increased nine percent as a share of that seriously delinquent inventory. We’re also starting to see some redundancy in this activity – 70 percent of all new trial modifications and repayment plans have already been through one or more home retention actions previously.”
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As Graboske went on to explain further, though there has been great improvement in both seriously delinquent and active foreclosure inventories, they still remain two and three times their pre-crisis norms, respectively, with 28 percent of the remaining inventory located in just three states: Florida, New York and New Jersey.

“Of these three states, Florida has seen the most improvement, with a 37 percent decline in inventory over the last year, and a 63 percent drop over the last two years,” Graboske said. “On the other hand, low foreclosure completion rates in New York and New Jersey have contributed to lingering inventory in those states. Looking at pipeline ratios — the length of time it would take to work through the backlog at the current rate of foreclosure completions — we see New York and New Jersey with nearly 13 and nine years of inventory, respectively. Even though Florida peaked with 20 percent of the entire state being 90 or more days past due, its pipeline ratio was never longer than 10 years and is currently the lowest among all the judicial foreclosure states at just under three years. Compare that to Washington, D.C., which uses a non-judicial foreclosure process and a comparatively very small backlog inventory, yet still has a pipeline of over 43 years, primarily due to extremely low foreclosure sales volume there.”

Posted in Foreclosures, Housing Recovery, New Jersey Real Estate, Risky Lending | 126 Comments

Clinton did it…

Posted on June 10, 2015 by grim

From the WSJ (Hat tip Moose):

They Put a Face on the ’90s Homeownership Push. Then They Lost Their Home

This month marks 20 years since President Bill Clinton unveiled his “National Homeownership Strategy,” a 100-point action plan that put as its overarching goal achieving an “all-time high level of homeownership in America within the next six years.”

That set in motion an effort by both parties in Washington to work with the private sector to loosen lending standards and make it easier for middle-class Americans with less savings or inherited wealth to purchase homes.

Jean and Jim Mikitz of Allentown, Pa., had just bought a home using a loan backed by the Federal Housing Administration when the Clinton administration was rolling out its homeownership campaign. Their mortgage broker connected them with administration housing officials, which is how Ms. Mikitz ended up introducing Mr. Clinton at his June 1995 speech, a few weeks after they closed on the purchase.

The homeownership rate, then at around 64%, steadily climbed to 69% in 2004, after President George W. Bush similarly embraced a goal of increasing homeownership. Today, the homeownership rate has fallen back to below where it was 20 years ago following the bursting of the housing bubble, which led to millions of foreclosures.

Mr. and Ms. Mikitz’s story, it turns out, also ended in foreclosure. Mr. Mikitz, a 41-year-old mechanic, lost the house in 2004, according to public records. Mr. Mikitz said they stopped making payments on the home when he and his wife divorced. “It pretty much forced me into bankruptcy,” he said. His former wife couldn’t be reached for this article.
…
There’s considerable evidence that the worst excesses of the housing bust stemmed less from homeownership and more from speculative purchases that drove home prices higher—as opposed to owner-occupied purchases. Home prices peaked in 2006, two years after the homeownership rate stopped rising.

Moreover, the downturn was exacerbated by the hundreds of billions of dollars that homeowners pulled out of their homes in the form of home-equity loans and cash-out refinancing, which left millions of households at risk of foreclosure even if they bought their homes well before the bubble inflated.
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The problem: Many households can’t afford to buy homes because they don’t have the income or savings to qualify for a loan, and lenders have tightened standards. At the same time, rental growth is soaring, pushing up rents, and leaving families in a spot where they can’t qualify for a loan and where they can’t afford the rent.

Posted in Foreclosures, Housing Bubble, National Real Estate, Politics, Risky Lending | 104 Comments

Homeownership rate to fall even lower

Posted on June 9, 2015 by grim

From the WSJ:

New Housing Headwind Looms as Fewer Renters Can Afford to Own

Last decade’s housing crisis could give way to a new one in which many families lack the incomes or savings needed to buy homes, creating a surge of renters and a shortage of affordable housing.

The latest problem looks very different from the subprime mania of the early 2000s, but it shares one trait: Policy makers in Washington appear either unaware or unwilling to do much about it.

The U.S. homeownership rate is below where it stood 20 years ago when President Bill Clinton launched a national campaign to encourage Americans to buy homes. Conventional wisdom says the rate, at 63.7%, is leveling off to where it was for decades before the housing-market peak.

But this is probably wrong, according to research from the Urban Institute, which predicts homeownership will continue to slip for at least 15 years.

Demographics tell the story.

Urban Institute researchers predict that more than 3 in 4 new households this decade, and 7 of 8 in the next, will be formed by minorities. These new households—nearly half of which will be Hispanic—have lower incomes, less wealth and lower homeownership rates than the U.S. average.

The upshot is that fewer than half of new households formed this decade and the next will own homes. By contrast, almost three-quarters of new households in the 1990s became homeowners.

The downtrend would push homeownership below 62% in 2020, and it would hold the rate near 61% in 2030, below the lowest level since records began in 1965.

The declines reflect a surge of new renter households, which is boosting rents. Together with tougher mortgage-qualification rules, this will leave households stuck between homes they can’t qualify to purchase and rentals they can’t afford, says Ron Terwilliger, who spent two decades running Trammell Crow Residential, one of the nation’s largest apartment developers.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 161 Comments

Maybe it’s not so bad after all?

Posted on June 6, 2015 by grim

From the Record:

Economy gaining steam; U.S. job figures best in five months and N.J. is catching up

The better-than-expected U.S. job numbers released Friday echoed positive trends in New Jersey and boosted confidence that the economy in the state, and the nation, is on track, economists said.

U.S. employers added 280,000 jobs in May, according to Labor Department figures, the highest in five months, after a first-quarter slump many economists blamed on the harsh winter. Hourly wages, which have barely budged even as jobs grew, rose 0.3 percent from the previous month, the biggest increase since August 2014. Unemployment edged up to 5.5 percent from 5.4 percent in April, as more people entered the workforce.
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New Jersey, which has trailed the U.S. in the speed of job creation, posted its 10th straight month of job growth in April and is on pace to gain an estimated 60,000 jobs this year.

The state still is not adding jobs at the same pace as the nation as a whole, but the gap has narrowed in the past six months, according to Rutgers University economist Joseph Seneca, who called the trend “encouraging.”
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By a number of measures, New Jersey’s economy is improving, said Patrick O’Keefe, an economist with CohnReznick, a New York accounting firm with offices in Roseland. For example, unemployment claims in New Jersey have dropped to lows last seen about 15 years ago; home building is 12 percent above last year’s level; and non-residential construction is up. Tax revenue in the state also has risen, O’Keefe said.

However, “the national economy has a degree of momentum that we have yet to see at the state level,” he said. “The state just hasn’t gained the traction that we see nationally.”

New Jersey is scheduled to report its May jobs figures on June 18. In April, the state added 4,300 jobs, and the state’s jobless rate remained at 6.5 percent.
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Friday’s strong national employment numbers are likely to be good news for New Jersey, especially for the state’s $42.1 billion tourism industry, said Michael Wolf, a regional economist who follows New Jersey for Wells Fargo.

“Presumably with a stronger labor market and higher incomes, more people will say, ‘Why don’t we take a long weekend or a full week and head to the Shore?’Ÿ” Wolf said.

Over the longer term, Wolf expects “modest to moderate” economic growth for the state.

“I don’t expect New Jersey to be a leader of growth in the U.S., but I don’t think it’s slated to devolve into perpetual recession,” he said.
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ohn Fugazzie, founder of the North Jersey-based Neighbors Helping Neighbors support group for job seekers, and program coordinator of the state’s Ready to Work job training and placement grant, cautioned that the gains still haven’t eased the unemployment and underemployment problems of many New Jerseyans and Americans.

“The salary levels of the jobs being added are much lower than the jobs that are being lost,” he said.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 85 Comments

Newark Gentrification?

Posted on June 5, 2015 by grim

From the Star Ledger:

‘Renaissance’ or ‘gentrification’?: Panel to take on narratives surrounding Newark redevelopment

Is Newark on its way to becoming the new Brooklyn? Or will it be, as city officials are fond of saying, “Newark 3.0”?
…
Entitled “Renaissance or Gentrification?: How do we discuss redevelopment in Newark?”, the event will include a panel discussion featuring a variety of voices from government, real estate and media, including Newark Deputy Mayor and Director of Economic & Housing Development Baye Adolfo-Wilson, former Washington Post reporter Dale Russakoff and local planning and development leader Francis J. Giantomasi.

The speakers will discuss how high-profile changes in the city, including the additions of luxury apartments and plans for a mixed-use development that will include a Whole Foods supermarket, are portrayed.

Those developments and other plans for downtown Newark have attracted national media attention, including a Politico article published in March that asked whether the city would be the next metropolis to be termed the “new Brooklyn.”

The meeting is part of “Engage Local”, a two-day hosted by Montclair State University’s Center for Cooperative Media focused on the interaction between community and media. A series of workshops and presentations on the topic will be held on the second day of the event, June 16.

In a statement, Newark Mayor Ras Baraka said recent changes in the way news is delivered and digested has had far-reaching implications for cities like Newark, and hoped the meeting would “assist in facilitating more effective communications with the citizens that we serve.”

Posted in Demographics, Economics, Housing Recovery, New Development | 117 Comments

Down payments fall, more buying with less

Posted on June 4, 2015 by grim

From HousingWire:

RealtyTrac: Average down payment falls to three-year low

The average down payment for single-family homes, condos and townhomes purchased in the first quarter fell to 14.8% of the purchase price, a slight dip from 15.2% the previous quarter and 15.5% a year ago, RealtyTrac’s first quarter 2015 Home Purchase Down Payment Report said.

This is the lowest level since the first quarter of 2012.

Translated into dollars, the average down payment was $57,710 in the first quarter, up marginally from $57,618 the previous quarter and down from $57,992 the first quarter of 2014.

“Down payment trends in the first quarter indicate that first time homebuyers are finally starting to come out of the woodwork, albeit it gradually,” said Daren Blomquist, vice president at RealtyTrac.

“New low down payment loan programs recently introduced by Fannie Mae and Freddie Mac, along with the lower insurance premiums for FHA loans that took effect at the end of January are helping, given that first time homebuyers typically aren’t able to pony up large down payments,” he continued.

At the end of last year, both government-sponsored enterprises announced their individual 97% loan-to-value products, in the government’s latest attempt to expand the credit box for first-time homeowners.
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Additionally, the share of low down payment loans — defined in the report as purchase loans with a loan-to-value ratio of 97% or higher, which would mean a down payment of 3% or lower — was 27% of all purchase loans in the first quarter, up from 26% in the fourth quarter and 26% a year ago. This marks the highest share since second quarter 2013.

Posted in Economics, Housing Recovery, National Real Estate | 138 Comments

April Home Prices Heat Up

Posted on June 3, 2015 by grim

From MarketWatch:

U.S. house prices accelerate in April, CoreLogic says

U.S. house prices accelerated further in April, as low inventories and growing sales push costs higher, a leading data provider said Tuesday.

CoreLogic reported a 2.7% monthly advance to take the year-on-year gain to 6.8%.

The spring is traditionally the strongest portion of the year for housing, and data from CoreLogic and other providers suggest an upturn.

“Old-fashion supply and demand, fueled by historically low mortgage rates and improving consumer finances and confidence, continue to push home prices up,” said Anand Nallathambi, president and CEO of CoreLogic.

Dallas and Houston prices are showing few signs of let-up despite the collapse in energy prices. Dallas prices were up 10.3% in the 12 months to April, and Houston prices were up 9.5%. The Washington, D.C., area brought up the rear with just a 1.6% advance.

South Carolina was the strongest state, with an 11.4% advance, while Massachusetts saw a 1.7% drop, one of only four states to register a decline.

Posted in Economics, Housing Recovery, National Real Estate | 224 Comments

3 New North Jersey Casinos to Save AC

Posted on June 2, 2015 by grim

From the Star Ledger:

Lawmakers now want 3 casinos in northern N.J.

Several state lawmakers who want to allow casino gambling outside of Atlantic City are now seeking as many as three casinos in northern New Jersey — up from two.

The trio of state Assembly members from Essex, Bergen and Hudson Counties on Monday announced that they’ve introduced a proposed constitutional amendment — which, if passed by the Legislature, would have to be approved by voters — to allow the casinos in their three counties.

Revenue from the casinos would in part go to redeveloping Atlantic City, which has been devastated by the downturn of its gambling industry largely due to competition from neighboring states.

“We can’t sit by any longer. The history of Atlantic City is one I was part of,” Assemblyman Ralph Caputo (D-Essex), a former casino executive who is sponsoring the resolution with Assembly members Valerie Vainieri Huttle (D-Bergen) and Raj Mukherji (D-Hudson), said during a Statehouse press conference. “The business has changed. We’ve had tremendous competition from our neighboring states… If you don’t adapt, you become extinct and you become a dinosaur.”
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The number has increased to three in the newest proposal as support for expanding gaming has increased, with formerly staunch opponents like Senate President Stephen Sweeney (D-Gloucester) and Gov. Chris Christie now being open to it.

“I’ve been fighting for this for six or seven years. When I started this effort, people thought it was folly. This has become a reality,” Caputo said.
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Already, potential operators and investors are pitching casino plans for The Meadowlands and Jersey City. Essex County Executive Joseph DiVincenzo thinks Newark would be an ideal location for one.

Posted in Demographics, Economics, New Development, Politics, Property Taxes | 181 Comments

Rich not spending

Posted on June 1, 2015 by grim

From Bloomberg:

Frugality of High Earners in U.S. Shows Long Shadow of Recession

The nearly rich aren’t spending nearly enough, a trend that’s weighing on U.S. growth.

Six years after the worst recession since the 1930s, Americans who earn $100,000 to $249,999 a year still are “making very careful decisions” when it comes to discretionary purchases, said Pam Danziger, president of Unity Marketing Inc., a luxury research company based in Stevens, Pennsylvania. “That’s smart for them, but it’s certainly not good for the economy.”

These consumers — Danziger calls them HENRYs, or high earners not rich yet — are “feeling squeezed” primarily because their spending power is curbed by sluggish income gains, she said. They spent 10 percent less on luxury goods and services in the fourth quarter compared with the same period in 2013, according to figures from Unity Marketing.
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Americans who earn $250,000 or more a year also are cutting back. Their luxury spending fell 17 percent in the fourth quarter from a year earlier — though these consumers make up 2 percent of households, compared with 18 percent for HENRYs, Danziger said.
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“The caution of high-income consumers is key to the lackluster retailing environment” because the top 20 percent of households make up more than half of total spending, said Mark Zandi, chief economist of Moody’s Analytics Inc. in New York. Retail sales are flat year-to-date, following average monthly gains of 0.6 percent in the first four months of 2014, Commerce Department figures show.
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Sentiment among Americans earning more than $100,000 has fallen 15.1 points from a nearly eight-year high in mid-April, which is more than double the 7-point drop for all income groups, according to the Bloomberg Consumer Comfort Index.
Many HENRYs have a middle-class mindset, particularly if they live in urban areas, said Ron Kurtz, president of the American
…
Americans who earn about $100,000-$250,000 a year saved 8.5 percent of their disposable personal income in the fourth quarter, according to Zandi’s calculations based on Fed financial accounts figures. That’s higher than the 7 percent average for all consumers, though it’s consistent with broader trends, he said.

Even so, there are signs spending may pick up. Average daily expenditures among Americans with household incomes of $90,000 or more rose 3.9 percent in April to $160 from a year earlier, according to Gallup Inc. in Washington. May figures are scheduled for release Monday.
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As people feel comfortable flaunting big-ticket purchases again, this could spur spending among their neighbors, Zandi said. There’s been a “general cultural shift” away from displays of conspicuous consumption, but some Americans will revert to old habits of “trying to keep up with the Joneses.”

Still, the longer a trend persists, the more likely such behavior becomes habituated, Danziger said. Consumer spending makes up about 70 percent of U.S. gross domestic product, so continued prudence among HENRYs is problematic, she said.

“We’re at a real tipping point,” Danziger said. “The affluent who have spending power are really not spending.”

Posted in Demographics, Economics, National Real Estate | 139 Comments

“The concentration in the northeast quadrant of the state is striking”

Posted on May 30, 2015 by grim

From the Record:

Homebuilding revs up in NJ, led by multifamily construction

Home construction continues to heat up in New Jersey, especially in the multifamily sector, as builders obtained the largest number of monthly permits in April since the housing-boom days of 2005.

More than 3,700 building permits were issued last month. So far this year, 9,118 permits have been issued, up 12.3 percent from the first four months of 2014, according to the U.S. census.

This year’s increase in activity has been powered by the multifamily sector, as New Jersey’s long-term patterns of suburban, single-family development shift to a denser, more urban style. So far this year, multifamily permits have accounted for almost two-thirds of building permits issued in the state, as builders respond to a higher demand for rentals.

Patrick O’Keefe, an economist with the accounting firm CohnReznick, which has offices in New York and Roseland, expects single-family starts to remain flat, in part because young adults — the so-called millennial generation — often can’t qualify for mortgages because of tight lending standards and high levels of student-loan debt. In addition, he said, millennials “have experienced a housing market where prices went down, and have a more realistic assessment of housing as an asset.”

Hudson County has led the way in home-building starts through March, followed by Ocean County, where many homes destroyed by Superstorm Sandy are being replaced, according to an analysis by the New Jersey Department of Labor and Workforce Development. Bergen County ranked third in the state. Taken together, Hudson, Bergen and Union counties accounted for 37 percent of the home-building permits issued through March.

“The concentration in the northeast quadrant of the state is striking,” O’Keefe said.

Jersey City continues to lead the state’s municipalities in homebuilding activity, as it did last year when it had 2,180 permits — more than the totals in most New Jersey counties. The city, along with the rest of Hudson County, is benefiting from spillover from New York City’s hot housing market.

Posted in Housing Recovery, New Development, New Jersey Real Estate | 44 Comments

Smooth sailing for NJ real estate?

Posted on May 29, 2015 by grim

From the Star Ledger:

N.J. home sale prices tick up as Realtors report strong housing market

New Jersey homes are selling for more than they were a year ago, new data shows, as real estate professionals in the state report a strong housing market that isn’t expected to ebb soon.

Tg Glazer, the president-elect of New Jersey Realtors and an agent at the Coldwell Banker Westfield East office, said listings are up and sales are up. That’s pushing up prices, Glazer said, but “at a reasonable rate.”

“We’re in the heart of the spring market right now,” Glazer said. “We have a few months left in that busy part of our season and we’re expecting that the trends are going to continue.”

Data released earlier this month by New Jersey Realtors put the median sales price for single-family properties, townhouses, condominiums and properties in adult communities in the state at $270,000 in April, a jump of 4.2 percent from the same time a year ago. The report also showed an increase in new listings, pending sales and closed sales.

A report released Thursday morning by the Irvine, Calif.-based real estate data firm RealtyTrac also shows a year-over-year increase in median sales prices in New Jersey though it’s not as large.

The median sales price for single-family homes and condos in New Jersey clocked in at $248,000 in April, the RealtyTrac report found, which represents an increase of 1 percent over the same time last year.

The median sales prices nationwide inched up 2 percent to $171,700 over that time frame, according to the RealtyTrac report.
…
While prices are ticking up overall, the market varies from place to place in New Jersey.

County-level data from New Jersey Realtors shows the median sales price of just single-family homes in Cape May County dropped by 10 percent in April compared to April 2014, while Essex County saw a 10 percent bump. The RealtyTrac data also shows swings from county to county.

As Glazer put it: “All real estate is very local.”

Richard Leonard, the broker/owner of Arcadia Realtors in Roseland, said the market is active, with some homes in towns like Glen Ridge, Caldwell and Montclair garnering multiple bids.

When asked how this spring stacks up with recent years, Leonard said, “No comparison, in my opinion. I haven’t seen this kind of situation until prior to 2008.”

Posted in Demographics, Economics, Housing Recovery, New Jersey Real Estate | 94 Comments