Low property taxes outside NJ? Think again

Posted on April 7, 2015 by grim

Watch the rest of the country catch up in real time, from Wallethub:


Real-Estate-Tax--2007-2013-animated

Source: WalletHub
Posted in New Jersey Real Estate, Property Taxes | 117 Comments

“I did not think it would be this hard. I truly didn’t. I had no idea.”

Posted on April 6, 2015 by grim

From the Star Ledger:

Federal jobs reports point to a rebounding labor market, though the unemployment rate remained at 5.5 percent in March. But the percentage of jobless residents out of work 27 weeks or more remains historically high.

Nationally, about 30 percent of jobless residents have been unemployed at least 27 weeks.

The situation is much worse in New Jersey.

Of 302,000 unemployed residents in New Jersey in 2014, roughly 41 percent, or 125,000 people, have been out of work at least 27 weeks, according to federal labor data. Though down from a peak of about 51 percent in 2010, the data still mean New Jersey’s long-term jobless rate is among the highest in the nation.

Only New Mexico and Washington, D.C., posted higher rates in 2014. North Dakota, Iowa and Alaska, on the other hand, had the lowest long-term unemployment rates in the country last year.
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Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University, said there are several reasons New Jersey’s long-term unemployment has remained higher than most states. He pointed to steep job losses in the financial and construction industries during the Great Recession, which hit New Jersey hard, and a slow recovery in those areas. He also noted some jobs, like many in the pharmaceutical industry, have left the state altogether.

“Those are what make New Jersey different but there are many things that make New Jersey the same,” Van Horn said, noting that the longer a person remains unemployed the more difficult it becomes to get a job.
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Kerri Gatling, a spokeswoman for the state Department of Labor and Workforce Development, noted gains in employment in the private sector since 2010 and upward revisions to job growth estimates for 2013 and 2014. Gatling said that indicates steady improvement in the state’s economy despite the effects of Hurricane Sandy and casinos shuttering in Atlantic City.

“We have a ways to go here, and we will not be satisfied until everyone who wants a job, gets a job. But the employment situation is improving in the state,” Gatling said.
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For 15 years, Kent said, he worked as director of information technology for a retail chain until he lost his job in June. His unemployment benefits, he said, ran out in December.

“I’ve been struggling since then,” the 42-year-old Hawthorne resident said. “I’ve had interviews. I’ve had a mix of either working via recruiters or directly with the company but the majority of them seem to have the same results: nobody even responds back to you.”

Kent said he and his wife think they soon will face foreclosure. He said he plans to continue working toward finding a job in New Jersey but if that doesn’t pan out he said they may move out of state to look for work.

“I’m never giving up. I have responsibilities,” Kent said, but, “I did not think it would be this hard. I truly didn’t. I had no idea.”

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 55 Comments

No Spring for Sussex

Posted on April 5, 2015 by grim

From the New Jersey Herald:

Foreclosures spur help for homeowners

Faced with a foreclosure rate among the highest in the country, Sussex County officials took the first steps in a program designed to bring help to homeowners before the bank calls about late payments.
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The freeholders asked department Administrator Stephen Gruchacz to look at ways his department can take a proactive approach to the problem and suggested the Housing Partnership as a starting point since former Freeholder Sue Zellman was executive director at the Dover-based organization before her retirement. The Housing Partnership is a HUD-certified counseling agency for mortgage delinquency and default resolution.

Gruchacz said the department has also begun talks with several mortgage companies and banks seeking a way to include information along with the monthly mortgage statements and is looking at ways to involve the Federal Housing Administration, which provides mortgage insurance on homes, among other services.

Sheriff Mike Strada, whose office handles auctions of foreclosed properties, the final step in a lengthy foreclosure proceeding, said currently 450 foreclosures are in the department’s system, meaning a court has issued a writ of foreclosure and the property can now be sold.

By the time his department gets a court writ to sell at auction, “it’s taken two to five years to get through the system,” and, he said, “something like 99 percent are going back to the bank (at auction) because there isn’t a bid.”

Most of the properties have a higher mortgage than the market value of property, making it unlikely to attract a buyer looking for a bargain.

He said the latest numbers given to him during a staff meeting — pulled from realtytrac.com — indicate New Jersey has the sixth highest rate of foreclosures among states and Sussex County has the highest foreclosure rate among New Jersey 21 counties.
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Freeholder Rich Vohden, who has been following demographic trends in Sussex County since late 2013, uses the number of lis pendens, the formal notice from the lender that the borrower has fallen two payments behind, as his gauge.

Vohden said as of March 31, there were 9,131 lis pendens in Sussex County, an increase of 132 over the first of the month.

“I’m not being negative, I’m just reciting the facts,” he said. “I think it’s important we know where we are before we can decide how to go forward.”

He said the number of foreclosure proceedings “ties into all the other issues, such as the drop in home values, the drop in property valuation, even the loss of population.”

Posted in Demographics, Economics, Employment, Foreclosures, North Jersey Real Estate | 22 Comments

Fleeced: $350k Ranch Renovation

Posted on April 4, 2015 by grim

Where did the money go? I just don’t see it. Spent $350k and the showpiece was an Ikea kitchen? The money went into fancy light fixtures? I just don’t see it. Sorry, but sounds like you were fleeeeced – From the Star Ledger:

N.J. Home Makeover: Livingston ranch undergoes $350K gut renovation

Hayley and Scott Prochazka bought a ranch-style home in April of 2013 and started renovations in July of the same year — little remained untouched.

They had lived in a Short Hills cape for six years before deciding to move to Livingston, Hayley’s hometown. While the Prochazkas, both 35, waited for their new Essex County home to be renovated, they lived with Hayley’s parents in the same township. Post-renovation, they have a modern, airy abode for their family, which includes sons Braden, 6, and Cooper, 3, and Aubrey, their 10-month-old daughter.
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“We just wanted it to be really open and bright,” she says of her 5,000-square-foot home, which was built in 1966. Many of the rooms were dark, so while no part of the house was completely demolished, mostly every room got completely made over, which required the removal of a few walls. The ceilings were also raised by a foot.

“We didn’t think we were ripping it down to the studs,” Hayley says, but that’s pretty much what happened.
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The kitchen, already white, was whitened up some more, thanks to an Ikea cabinet installation. The eating space was also updated with an infusion of Bosch appliances, including two ovens and a refrigerator. Gray wall tile complements the fresh cabinets and kitchen island.
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The gut renovation of the property took 13 months — they moved into the home in January of 2014, before the makeover was complete.
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$350,000 to $400,000. The Prochazkas had planned to spend $150,000 but costs rose once they realized the extent of the renovation they desired.
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Some of the most obvious showpieces of the house are the lighting fixtures, designed by Artemide and Estiluz. Scott works in commercial lighting, so his expertise came in handy in this arena, while some other pointers came from Hayley’s sister, an interior designer. The Prochazkas also went all out on the windows, replacing each and every one in the house.

Posted in New Development, North Jersey Real Estate | 20 Comments

Montclair council votes to change government to fascist dictatorship

Posted on April 3, 2015 by grim

From the Patch:

Montclair Debates ‘Redevelopment’ at Lackawanna Plaza

he plan to redevelop Lackawanna Plaza marches ahead, but what the final vision will end up looking like is still up for debate.

During a public workshop held on Monday, representatives from the municipal planning board discussed the Township Council’s recent designation of nine properties around Lackawanna Plaza as an “area in need of redevelopment,” and what that could mean for residents and business owners in the neighborhood.

Designating a property as an area in need of redevelopment allows a municipal government to take certain legal actions that they wouldn’t normally be allowed, including seizing properties through the use of eminent domain, as per New Jersey law.

According to Hoboken-based planning consultant Paul Grygiel, the designated properties – which are currently owned by Hampshire Real Estate Companies and Pinnacle Companies – are currently zoned as C-1 commercial, which allows for building heights of up to eight stories if incentives are provided.
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One of the most vocal critics of the proposed redevelopment has been The Great Atlantic & Pacific Tea Company (A&P), which has over 30 years remaining on its lease.

An attorney for A&P attended the Township Council’s March 10 meeting in protestation of the designation.

“We are particularly stressed over the use of crime statistics as the basis for the designation,” the attorney told council members. “We are further distressed when we read the public notice that reserves the right to use eminent domain. We think that we can work with you, but with the specter of eminent domain hanging over us as a tenant, it becomes very difficult.”

Posted in New Development, New Jersey Real Estate, Politics | 83 Comments

Low inventory due to underwater owners? Not quite.

Posted on April 2, 2015 by grim

One of the best pieces I’ve seen yet on the inventory issue. Brings up a host of topics that haven never really been brought to light. Too much to paste in so click the link for the details:

Why is housing inventory so low?

There has been a great deal of discussion regarding the consistently low housing inventory levels throughout the nation. Very little, however, has been written about the reasons why inventory levels are so low, especially following the economic disruption of 2008-2011.

Understanding the why can be helpful in predicting how these factors might influence longer-term supply levels and future appreciation potential. This knowledge might also shed light on why inventory might remain constrained over the long run.
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Capital gains exclusion on primary residence
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Step up in basis
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Sustained low rate environment
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Value disruption/reset in 08/09
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Values not at peak levels across the country
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Sense that values will continue to climb
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Where would I go? Move up
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Stunted new development

Posted in Economics, Housing Recovery, National Real Estate | 136 Comments

January Case Shiller

Posted on April 1, 2015 by grim

From the Record:

North Jersey home prices rise, still less than national average

Home prices in the region ticked up 2.1 percent in the New York metropolitan area, including North Jersey, in the 12 months ended in January, the S&P/Case-Shiller home price index reported Tuesday. That was less than half the national increase of 4.5 percent.

The numbers point to a housing market that is still slowly recovering from the worst downturn since World War II. Home values are no higher than they were in 2004, both nationally and in the region. Single-family prices in the area are almost 19 percent below their peaks in mid-2006, while national values are about 17 percent below their peaks.

“Despite price gains, the housing market faces some difficulties,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Home prices [nationwide] are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback. Moreover, the new home sector is weak; residential construction is still below its pre-crisis peak.”

In Bergen County, the median price of a single-family home dropped 8.6 percent in January from a year earlier, to $425,000. In Passaic County, the median dropped 1.8 percent, to $275,000. Those numbers are from the New Jersey Realtors and reflect the mix of properties sold in the month; Case-Shiller does not track prices on a county-by-county basis.

New Jersey’s housing market faces several challenges, including the state’s employment market, which has not been creating jobs as fast as the nation as a whole. In addition, the state has one of the nation’s highest rates of properties in the foreclosure pipeline, because it slowed the eviction process after questions arose about mortgage industry abuses.

Posted in Housing Recovery, National Real Estate | 148 Comments

February Pending Home Sales Beat

Posted on March 31, 2015 by grim

From CNBC:

Pending home sales rose 3.1% in February

Colder than average temperatures and heavy snow in much of the U.S. failed to keep February home buyers away. Signed contracts to buy existing homes rose 3.1 percent from January, according to the National Association of Realtors (NAR).

The Realtors’ so-called “Pending Home Sales Index” is 12 percent higher than one year ago, and is at its highest level since June, 2013.

The gains were primarily driven by sales in the West and Midwest. Pending sales jumped 11.6 percent month-to-month in the Midwest and are now 13.8 percent higher than a year ago. Sales in the Northeast fell 2.3 percent but are 4.1 percent above a year ago. Sales in the South decreased 1.4 percent sequentially, but are 10.8 percent above last February. Sales in the West climbed 6.6 percent and are now 18.3 percent above a year ago.

“Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents,” said Lawrence Yun, chief economist for the NAR. “These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle—especially for first-time buyers—continues to be the depressed level of homes available for sale.”

Posted in Economics, Employment, Housing Recovery, National Real Estate | 84 Comments

Why NYC remains at the top

Posted on March 30, 2015 by grim

From the Atlantic:

The Feedback Loop That Will Make America’s Richest Cities Even Richer

This week, the Brookings Institution came out with a report on “job proximity”—that is, which cities have the largest and fastest-growing concentrations of jobs in their city centers. This is an important statistic, because people who live closer to work are more likely to be employed. It’s particularly important for poorer workers who cannot afford longer commutes.

The key finding of the study was that people and jobs moved to the suburbs in the 2000s, and the number of jobs near the typical resident fell by 7 percent. This is in keeping with Trulia data that has found that most moves—both within counties (two-thirds of all moves) and between counties—are toward lower density and cheaper housing.

Even in a decade when retail gasoline prices tripled, people and work didn’t move closer together. Americans are spacing out.

But another story emerges when you look at the cities with the highest job density and who is moving there. When Elizabeth Kneebone and Natalie Holmes used Census tracts to determine the places with the greatest job proximity, these cities topped the list:

(see link)

Anybody who spends their free time looking at ordinal lists of American cities will notice that this is a pretty familiar set. It’s almost exactly the list of the most populous U.S. metro areas (for methodological reasons, the Brookings study could not include Boston or any other cities in Massachusetts). It’s almost exactly the list of the large U.S. cities with the highest median incomes. And the highest density of college grads. And the highest share of foreign-born residents among young people.

And, perhaps most importantly for the immediate future, it’s almost exactly the list of cities where college grads have been moving since the recession began.
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This is a tight feedback loop. The densest cities tend to be the most educated cities, which are also the richest cities, and often the biggest cities. They’re gobbling up a disproportionate share of college grads. And, as a result, they are becoming richer, denser, and more educated.

This feedback loop goes by many impressively multisyllabic names—geographic sorting, economic agglomeration, cumulative advantage. But they’re all fancy ways to describe something simple. Even as older and less educated Americans are moving to the suburbs, young people with college degrees are moving toward density, and their migratory patterns are encouraging future young people to follow in their steps.
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But many cities that don’t already appear at the top of these degrees-and-density lists are fighting migratory currents that are pulling more of the most talented young people to the same small set of cities. “At the same time that American communities are desegregating, racially, they are becoming more segregated in terms of schooling and earnings,” Enrico Moretti wrote in his book The Geography of Jobs. In other words, today’s richest cities might not mimic the collapses suffered by the richest U.S. cities from the 1970s. “The knowledge economy has an inherent tendency toward geographical agglomeration,” he wrote. “Initial advantages matter, and the future depends heavily on the past.”

Posted in Demographics, Economics, Employment, NYC | 84 Comments

“Newark needs love, Paris doesn’t”

Posted on March 29, 2015 by grim

From Politico:

Is Newark the Next Brooklyn?

NNewark is building again. Yes, that Newark—the city in Jersey that burned after the ’67 riots, the one that helped to define “white flight,” that struggles still with almost impenetrable unemployment and homelessness and crime. That city is building.
And here it all is—its past and present and future—pouring through Irene Hall’s floor-to-ceiling windows downtown: the whites and browns of the Old First Presbyterian Church, founded in 1666; haggard red brick facades with windows sealed off by cinderblock; the neon blue lights of Hotel Indigo, which opened last year in a long-vacant, century-old building near the busiest intersection in Brick City.

“The colors are amazing,” Hall declares on this late February morning.

Though the five-year-old Courtyard Marriott, just up the block, doesn’t take Hall’s breath away, it is the first new hotel built in Newark’s downtown in 40 years.

If the story of Newark’s revitalization is all about buildings, Hall, a 60-year-old principal at a charter school here, is living inside one of its newest characters. Her eclectic, fifth-floor apartment is one of the residential units in Teachers Village, a $150 million, mixed-use project financed through a consortium of private and public investments and blessed with mammoth government tax credits. The development lives along five blocks of Halsey Street, just off of the city’s main thoroughfare and was designed to convert into residents some of the 6,000 teachers and administrators who commute to this city of 280,000 each workday.

“When we started thinking about middle income housing,” says Ron Beit, the project’s lead developer, “we thought, ‘Whoa, wait a minute. We have this crop of teachers coming into Newark every day and the energy they bring would be a great catalyst for our plan.’”
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Thirty-three transactions and $130 million later, Beit and partners had amassed 79 properties, eight of those destined to become Teachers Village. The rest lie in wait for the next phases of the plan: a hotel; more residential, retail and office space; even an aeroponic farm smack in the middle of the city.
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Beit, who was once described by Booker as the “James Brown of development,” uses words like “metaphysical” and “ecosystem” when discussing his vision for Teachers Village. Berggruen is even more elegiac. “Newark basically got abandoned, it was like a blank canvas,” he says by phone from Paris in early March.

“My feeling is every neighborhood deserves beauty and quality, not because it’s challenged. Newark needs love. Paris doesn’t.”
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But Beit and his partners sensed an opportunity. Newark’s relatively cheap land prices and its proximity to New York City—20 minutes or so by train—had attracted new investors and development to the city for the past decade. But there was still a “doughnut hole” in the center of Newark’s downtown, a circle of blight ringed by the city’s more established businesses and government institutions. What this urban abyss needed most, Beit thought, was middle-income earners willing to live and spend money there.

Posted in Housing Recovery, New Development, New Jersey Real Estate | 40 Comments

Ball and chain holds back housing

Posted on March 28, 2015 by grim

From the NYT:

Negative Equity a Drag on Home Sales

While existing home sales are up nearly 5 percent from last year, economists say activity would likely be more brisk if it weren’t for the negative equity overhang that has lately worsened in many markets.

Completed sales on existing homes rose 4.7 percent in February compared with a year ago, reaching an annual rate of 4.88 million, according to the National Association of Realtors, a 1.2 percent increase over January. But Mark Fleming, the chief economist at First American Financial Corporation, a national provider of title insurance and settlement services, says his research tells him that home sales ought to be even higher. The labor market has improved considerably. And home prices are higher, which, though it may sound counterintuitive, have historically correlated with rising home sales, he said.

“Rising prices only crimp affordability for the first-time buyer who doesn’t yet own the asset,” Mr. Fleming said. “But the vast majority of home sales are to existing homeowners. And for existing homeowners, what changes affordability is their own income and the price of money.”

Both of these factors are running in homeowners’ favor. The problem, though, is that many are still unable to participate in the housing market because of insufficient equity.
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The share of homeowners underwater has, in fact, declined dramatically from the 2011 peak of 31 percent. As of the fourth quarter of 2014, the national rate was closer to 17 percent, according to Mr. Humphries.

“A big part of that is because of robust home value appreciation in the last three-plus years,” Mr. Humphries said. But he emphasized that the decline in underwater homeowners is “now slowing as the housing cycle matures. As price gains moderate, the pace at which we work out negative equity slows down.” By the end of 2015, the share of homes with negative equity will likely still be above 15 percent, he said.

Zillow’s 2014 fourth-quarter negative equity report even shows rising negative equity levels in 21 of the top 50 housing markets, compared with the third quarter. The reason is that the bottom 10 percent of homes in these markets, where negative equity is highly concentrated, are declining in value, Mr. Humphries said.

Homeowners in the bottom one-third of housing stock by price are three times as likely to be underwater than homeowners in the top third, Mr. Humphries said. What’s more, the Zillow report found, they are also far more likely to be deeply underwater, or owing at least twice what their home is worth.
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In the New York area, 13 percent of owner-occupied homes had a mortgage in negative equity. These homeowners were underwater by an average of $125,550, compared with $67,797 nationally.

Posted in Economics, Housing Recovery, Mortgages, National Real Estate | 32 Comments

All about the wages (but did they get it right?)

Posted on March 27, 2015 by grim

From Bloomberg:

U.S. Home Prices Are Surging 13 Times Faster Than Wages

For most people, buying a home is no cheap venture. That’s especially the case when the growth in U.S. home prices is beating wage increases 13 to 1.

Wages climbed by 1.3 percent from the second quarter of 2012 to the second quarter of 2014, compared to a 17 percent increase in home prices around that time, according to a new report from RealtyTrac. The real-estate data provider used the Labor Department’s weekly earnings data to measure wage growth, while home prices were derived from sales-deed data in December 2014 and compared to December 2012 on the hypothesis that a change in average wages would take at least six months to affect home prices.

Using localized earnings data, RealtyTrac also found that 76 percent of housing markets posted increases in home prices that exceeded the wage growth there during that time frame, led by the regions of Merced, California; Memphis, Tennessee; Santa Cruz, California; and Augusta, Georgia. Others include the Detroit, Houston and Miami regions. (To be fair, some of these areas are still considered affordable and experienced massive price drops during the housing bust and recession.)
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For demand from traditional buyers to improve, “either wages are going to need to go up or prices are going to need to at least flatten out and wait for wages to catch up,” he said. “You might say the third alternative is interest rates go down so you give people more buying power with their wages, but interest rates are about as low as they can go.”

The trend illustrates the limited impact of the Federal Reserve’s decision to include mortgage-backed securities in its unprecedented asset-buying program. The Fed bought more than $1 trillion of those securities to prop up the housing market after it collapsed and helped trigger the worst recession in the post-World War II era.

With the economy improving and home prices climbing, central bankers seem to have achieved at least part of their goal. However, investors have reaped much of the benefits of rising prices, while meaningful wage growth — and with it the ability of many Americans to buy homes — has yet to materialize. That’s been one reason housing has posted such inconsistent progress over the past two years, even with mortgage rates near historical lows.

The 24 percent of markets where wage growth outpaced home price appreciation from 2012 to 2014 include Tulsa, Oklahoma; Raleigh, North Carolina; Virginia Beach, Virginia; and New York, according to the RealtyTrac data. However in some places, such as the Baltimore region, it’s only because home prices fell during that time period.
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In such regions, there may be “a lot of distress those places are working through,” Blomquist said. Though for someone who’s looking for a more “emerging market” where prices have more room to run, “maybe that’s a good opportunity,” he said.

Posted in Demographics, Economics, Employment, Housing Recovery | 61 Comments

Otteau’s forecast for 2015

Posted on March 25, 2015 by grim

From the Record:

After tepid 2014, home prices forecast to rise 3.5% this year

After treading water in 2014, New Jersey home prices will get a boost from low mortgage rates and an improving job market this year, appraiser Jeffrey Otteau predicted Tuesday.

Otteau, an East Brunswick appraiser whose forecasts are widely followed in the real estate industry, expects home values to rise about 3.5 percent this year, compared with an anemic 1.4 percent in 2014. He also expects this year’s spring market – traditionally the busiest time to buy and sell – to be active.

“If we continue to see strong job creation in the state, it will translate into home purchase demand,” Otteau told more than 130 real estate agents at a seminar in East Hanover.

In January, New Jersey employers added 12,400 jobs – a bright start to the year, although Otteau and other analysts have cautioned that the state’s employers may not be able to keep up that pace. New Jersey added a total of 35,500 jobs for all of 2014 and, unlike the nation as a whole, still has not recovered all the jobs lost as a result of the 2007-2009 recession.

The housing market has been slowly recovering since prices and sales volume cratered several years ago. But New Jersey values are still well below the peaks reached in the housing bubble, and won’t return to 2005 levels until about 2025, Otteau said.

“Prices went up too fast, and we’re still paying the price,” he said. In addition, incomes have been flat.

“More people are working, but they’re not earning enough to be able to afford homeownership,” Otteau said. “We are not able to generate the same level of economic opportunity we once could in the U.S. and New Jersey.”

The best-performing housing markets in the state are those closest to New York City jobs, and other employment opportunities, Otteau said. “Where there are jobs, everything is better,” he said. And towns along commuter rail lines, including Glen Rock and Ridgewood, have experienced strong demand, he said.
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Although foreclosures remain an issue in the state, Otteau said that the problem is mostly confined to urban and rural areas, as well as some shore towns hurt by superstorm Sandy.

“Suburban towns have very little foreclosure inventory, and will not be affected,” he said.

Posted in Demographics, Economics, Employment, Foreclosures, Housing Recovery | 161 Comments

NAR calls rent and price growth “unhealthy”

Posted on March 24, 2015 by grim

From the WSJ:

Home Sales Edge Up, but Rising Prices and Tight Supply Loom as Headwind

Sales of previously owned homes ticked up last month, but buyers are facing a dynamic of rising home prices and shrinking inventory that make homes less affordable.

Existing-home sales increased 1.2% last month from January to a seasonally adjusted annual rate of 4.88 million, the National Association of Realtors said Monday. Sales in February were up 4.7% from the same month a year earlier.

The median sale price for a previously owned home was up 7.5% from a year earlier to $202,600 in February.

Existing-home sales remain lackluster more than five years after the recession, and the latest price growth is at an “unhealthy” pace at this stage of the recovery, NAR chief economist Lawrence Yun said.

The price increase “is certainly good news for homeowners but it is negatively impacting affordability for people who want to buy a home,” Mr. Yun said Monday.

Existing home sales fell slightly in 2014, despite a modest uptick in the second half of the year as the labor market strengthened and mortgage rates remained at historic lows. Still, sales of existing homes, which account for roughly 90% of all purchases in the U.S., have yet to approach prerecession levels.

Meanwhile, fewer homes were available for sale in February compared with a year earlier, a factor Mr. Yun said may be driving up prices.

At the current sales pace, it would take 4.6 months to exhaust the supply of homes on the market. Total housing inventory at the end of February increased 1.6% from a month earlier, to 1.89 million existing homes available for sale. But the increase was small compared with the typical rise in inventory from January to February, which has averaged about 5.6% since 2000, Mr. Yun said.

“It’s all about inventory,” Mr. Yun said. “The only way to truly get that inventory is for the home builders to bring those new homes onto the market. “When that happens some of the existing homeowners buy those new homes and thereby release their existing homes on the market.”

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 58 Comments

Housing recovery for the high end?

Posted on March 23, 2015 by grim

From the NY Times:

Mortgage Amounts Rising More Quickly Than Home Prices

Mortgage amounts are rising more quickly than home prices, an unusual phenomenon that seems to confirm continued weakness at the lower end of the housing market, according to the Mortgage Bankers Association.

The trade association reports that the average size of purchase loans began to outpace the recovery in home prices in September 2011. By December 2014, according to the group’s weekly mortgage application survey, the average purchase loan amount had risen by nearly 32 percent. The average for the week ending March 6 was $294,900, a record high. In other words, the average purchase loan now exceeds levels reached before the recession when home prices soared to unsustainable heights.

By comparison, the association noted, a Federal Housing Finance Agency index that measures home purchase prices shows a considerably more gradual rise of 18.5 percent since 2011. Why this unusual parting of the two trend lines? Lynn M. Fisher, the association’s vice president for research and economics, said one possible explanation is that home prices are rising more quickly for larger homes, skewing the loan average upward. But more likely, she said, is that the bulk of the properties being sold are at the high end of the price range. “The mix of people buying is changing,” Dr. Fisher said. “More of the bigger stuff is transacting.”

That opinion jibes with the business trend at Mortgage Master of Walpole, Mass., which merged with loanDepot in January to become one of the country’s largest nonbank lenders, funding $2.1 billion in February.

“What our mortgage applications reflect is that we see a lot more activity at the higher end in general,” said Paul Anastos, the president of Mortgage Master. He noted that jumbo loans (which exceed conventional conforming loan limits) account for about 25 percent of the combined companies’ business. The brisker activity among jumbo borrowers — those who take out loans greater than $417,000 — is partly because, while there has lately been some loosening of credit for borrowers at the lower end, “for the most part, the easing of guidelines has been a bit more on the jumbo end,” Mr. Anastos said.

Buyers on the lower end — looking for homes priced at $250,000 and below — “are generally of moderate credit and are having trouble or being intimidated from applying for mortgages,” said Lawrence Yun, the chief economist and senior vice president for research at the National Association of Realtors. “While on the upper end,” he continued, “given the stock market bull run of the past six years, they have done very well financially. The stock market expansion has given a comfort level at the top tier of families to go ahead and apply.”

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 46 Comments