Bubble buyers capitulating?

Posted on March 22, 2015 by grim

From the Record:

Homeowners who’ve decided it’s (finally) time to sell

Henry and Rachel Kirk bought their two-bedroom Mahwah town house in 2005, not long before the housing bubble began to deflate. As their family expanded to include three children, they thought of trading up but couldn’t face the loss as housing values plummeted.

“We could never have put the place on the market back then,” Henry Kirk says.

A lot of homeowners felt the same way, choking off much of the supply of houses on the market in recent years. But that’s starting to change as home values have begun to recover. Prices are now about 19 percent below their 2006 peaks in the New York metro area, an improvement over the 27 percent drop they hit in the depths of the housing bust. That’s led more homeowners, including the Kirks, to put their properties up for sale.

According to Fannie Mae’s Monthly National Housing Survey, 40 percent of those polled in February said it’s a good time to sell, up from 34 percent a year earlier. And the New Jersey Realtors recently reported that while inventories remain tight, new single-family listings in February jumped 16.4 percent in Bergen County and 17.9 percent in Passaic.

With these signs that homeowners are more willing to sell as the spring buying season gets under way, The Record talked to three sellers who recently listed their homes.
…
Sam Horowitz and Kelly McCormick bought their home, a Westwood colonial, in 2005. They loved the house and neighborhood, an easy walk to a playground, school and Westwood’s lively shopping district.

But they recently put it on the market so they could move to Morris County because both their jobs — he’s a commercial real estate broker, she’s a project manager for an engineering company — have relocated there.

Recognizing the reality of the market, they set a listing price of $389,000, even though they paid $455,000.

“Anytime you’re not getting out what you put in, you’re disappointed,” says Horowitz, who’s in his late thirties. “But we’ve lived in the house for almost a full decade, and the house was terrific for us that entire time. I also understand that every financial situation is not going to work out ideally.”
…
Nancy and Steven Brillo of Wayne sold their house gradually — then all at once.

They had bought the Cape Cod for $315,000 in 2002, after falling in love with the Packanack Lake neighborhood.

“I cannot tell you how much we love living here. Packanack is a great community,” says Nancy Brillo, who works in education, testing children with special needs.

But once the couple had two sons — now 8 and 10 — the house began feeling too small.

“There’s one bathroom for the four of us,” Brillo, 39, says. “We couldn’t take it anymore.”

They began looking for a bigger place about two years ago, but their choices were limited because they were determined to stay in Packanack Lake. They put their house on the market several times over the past two years, and got three offers. But those deals fell apart because the Brillos couldn’t find the right house nearby.

To flush out sellers, they put letters in mailboxes around the neighborhood — and hit pay dirt with a ranch house around the block. The owners weren’t ready to sell yet, but said they would be in a year or two.

“My husband and I knew this was the house,” Brillo says. “We were in love with this house.”

Posted in Economics, Housing Recovery, New Jersey Real Estate | 27 Comments

Wish we were over-heated, I’m done with the winter.

Posted on March 21, 2015 by grim

From the WSJ:

Report Says “False Equity is on the Rise” in Housing Market

Home prices in some U.S. markets are rising much faster than rental incomes or what it would cost to build new houses in those markets, according to a new study by a real estate valuation firm.

The growing gap between sales prices, on one hand, and rents and so-called “replacement cost” on the other is evidence of markets that are over-heating, said the report by Jacksonville, Fla.-based Smithfield & Wainwright. “The build-up of false equity is on the rise again,” the report states.

Using inflation-adjusted data, the firm concluded that recent sales prices of single-family homes in 13 states and the District of Columbia are 10% more on average than what the homes would have been appraised for using two other methods.

One of those appraisal methods is simply what it would cost to replace the homes. The other method values homes by applying a multiplier to what those houses would yield in rental income.

Since home prices bottomed out in the second quarter of 2011, the firm says, sales prices increased 13.2% on average through the third quarter of last year nationwide. Meanwhile, rent and reconstruction costs have increased by only 1.9% and 3.3% on average, respectively, the report said.

During the last housing boom, inflated appraisals helped contribute to the run-up in home prices. In December, The Wall Street Journal reported that appraisers are increasingly being pressured to inflate home valuations.

In the story, the Office of the Comptroller of the Currency expressed concern that some of the mortgages banks are giving out are based on inflated values. Freddie Mac said it had launched fraud investigations to determine whether lenders had approved mortgages backed by inflated home appraisals.

In its report, Smithfield & Wainwright compared home sales data from the Federal Housing Finance Agency with how much income homes can produce if rented out (based on data from the Department of Housing and Urban Development) and how much it costs to rebuild homes if they are destroyed (based on data from building-cost data provider Marshall & Swift.)

The gap between prices and the other two variables increased greatly during the last boom. Nationwide, Smithfield & Wainwright’s data show that home prices on average increased 36% between the end of 2000 and the end of 2006 after adjusting for inflation while rent and reconstruction costs increased 5% and 16%, respectively.

The 13 states Smithfield & Wainwright identified as the most over-heated currently are Arizona, Colorado, Idaho, Louisiana, Massachusetts, Montana, New Jersey, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming as well as the District of Columbia.

Posted in Housing Bubble, New Development, New Jersey Real Estate | 17 Comments

You know it’s bad when Detroit replaces Atlantic City in Monopoly

Posted on March 20, 2015 by grim

Perhaps we should accept AC sliding further into the pit of irrelevance. Are those bulldozers I hear in the background? Sad reflection on the Atlantic City leadership and the State of NJ. Shame shame.

From the APP:

Atlantic City rejected by voters on new Monopoly games

Atlantic City is where the Monopoly board game began, but voters in a global contest to pick cities for new editions of the 80-year-old game have turned their attention elsewhere.

Hasbro Inc. let voters choose which cities would appear in the two new versions it is putting out, including one that will feature world cities. According to results released Thursday — the 80th birthday of Monopoly — Atlantic City, whose streets provided the names for the game’s squares when it was created in 1935, did not make the cut.

The winners in the Monopoly Here & Now U.S. edition are Pierre, South Dakota; Minneapolis; New York; Virginia Beach; Los Angeles; Chicago; Indianapolis; Charleston, South Carolina; Detroit; Boston; Milwaukee; Cleveland; Asheville, North Carolina; Denver; Atlanta; Little Rock, Arkansas; Seattle; Portsmouth, New Hampshire; Charlotte, North Carolina; Dallas; Waconia, Minnesota; and Chesapeake, Virginia.
…
The Press of Atlantic City, in an editorial published this month when preliminary results showed Atlantic City lagging far behind, had this to say:

“Atlantic City made Monopoly. Atlantic City catches people’s attention. People are interested in the city. It’s special. Trust us, a game based on the city of Toledo — or Pawtucket, Rhode Island, for that matter, Hasbro Inc.’s hometown — would not have lasted for 80 years.”

Posted in Shore Real Estate | 83 Comments

National foreclosures nearing 10 year low

Posted on March 19, 2015 by grim

From Marketwatch:

U.S. Foreclosure Activity Down 4 Percent in February to Lowest Level Since July 2006 Despite 9 Percent Rise in REOs

Realtytrac today released its U.S. Foreclosure Market Report(TM) for February 2015, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 101,938 U.S. properties in February, a decrease of 4 percent from revised January numbers and down 9 percent from a year ago to the lowest level since July 2006. The report also shows a U.S. foreclosure rate of one in every 1,295 housing units with a foreclosure filing in February.

“Given that August 2006 was the peak of the housing bubble, this eight-and-a-half year low in foreclosure activity is a significant milestone and a sign that nationwide foreclosure activity is on track to return to historic norms this year — and is possibly even headed below historic norms given the skinny-jeans-tight lending standards over the past five years,” said Daren Blomquist, vice president at RealtyTrac. “In markets where foreclosures were processed more efficiently we are seeing foreclosure numbers now below pre-crisis levels in some cases. Conversely, the cleanup of deferred distress is continuing in markets where a logjam of in-limbo foreclosures is still lingering from the housing crisis — as evidenced by rebounding foreclosure activity in those markets.”

Despite the national decrease from a year ago, 24 states posted a year-over-year increase in overall foreclosure activity, including Massachusetts (up 53 percent; fifth consecutive month with an increase) and New York (up 19 percent; sixth consecutive month with an increase).
…
Despite the national decrease in foreclosure starts, 23 states posted year-over-year increases in foreclosure starts, including Nevada (up 153 percent; fourth consecutive month with an increase), Massachusetts (up 116 percent; 11th consecutive month with an increase), and Texas (up 5 percent; five out of last six months with increase).

25 states post annual increase in scheduled foreclosure auctions

Nationwide, 45,880 properties were scheduled for a future foreclosure auction in February, down 13 percent from revised January numbers and down 4 percent from a year ago to the lowest level since July 2006.

Despite the national decrease in scheduled foreclosure auctions — which can act as the foreclosure start in some states — 25 states posted a year-over-year increase in scheduled foreclosure auctions, including New York (up 146 percent; ninth consecutive month with an increase), Massachusetts (up 88 percent; third consecutive month with an increase), New Jersey (up 38 percent; 15th consecutive month with an increase), and Washington (up 17 percent; five out of last seven months with an increase).
…
Maryland, Nevada, Florida post highest state foreclosure rates
…
Other states with foreclosure rates among the top 10 highest nationwide in February were Indiana (one in every 871 housing units with a foreclosure filing), Idaho (one in every 877 housing units), New Jersey (one in every 895 housing units), Illinois (one in every 906 housing units), Delaware (one in every 957 housing units), Ohio (one in every 1,000 housing units), and North Carolina (one in every 1,088 housing units).

Posted in Foreclosures, Housing Recovery, National Real Estate | 73 Comments

Jersey gains jobs

Posted on March 18, 2015 by grim

From the Record:

NJ added 12,400 jobs in January; unemployment rate at 6.3%

New Jersey got a double portion of positive employment news Tuesday: Not only did the state add 12,400 jobs in January, but it turns out that it added more jobs than first estimated in both 2013 and 2014.

Even so, the state has lagged the nationwide pace of job creation, and still has replaced only about 65 percent of the jobs that vanished during and after the recession.

The U.S. Bureau of Labor Statistics, which annually revises state jobs data, reported that New Jersey added 35,500 jobs last year, up from earlier estimates of 29,000. The revision for 2013 was more dramatic: Instead of the 18,800 added jobs originally reported, the BLS said the state actually added more than twice that many – 39,300.

The revised numbers indicate “a much more robust job performance in the state” than earlier numbers suggested, said Joseph Seneca, a Rutgers economist.

In January, the addition of 12,400 jobs left the unemployment rate at 6.3 percent, unchanged from December but down from 7.1 percent in January 2014.
…
But even with the more positive job-creation numbers, the state’s unemployment rate in January was higher than the 5.7 percent national rate; the state rate has been consistently higher than the national level since 2011. Thirty-five states had lower unemployment rates than New Jersey in January.

And while the U.S. has more than recovered all the jobs lost during and after the 2007-2009 recession, the Garden State has now recovered just about 60 percent to 65 percent of its vanished jobs, according to James Hughes, a Rutgers economist.

“We’re moving forward, but we’re a long way behind the national growth rate,” Hughes said.

Patrick O’Keefe, an economist with CohnReznick, an accounting firm in New York and Roseland, said with the revised numbers, the state’s job market has gone “from a snail’s pace to a tortoise’s pace.”

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 109 Comments

Back in the New York groove

Posted on March 16, 2015 by grim

From the WSJ:

U.S. Regained Top Spot for Real Estate Investment in 2014

We’re number one – again!

For the first time since 2009, the U.S. was the top destination for capital going into real estate markets, according to Cushman & Wakefield’s annual report, leapfrogging over China. But it came as the global market actually got smaller, not bigger.

The market-share gains in the U.S. came more because of a drop in investment in land in China, the firm said, which led to a 6.4% drop in global real-estate investments to $1.21 trillion. “This decline in activity can be solely attributed to a drop in Chinese land purchasing,” the firm wrote. The report was released at the annual real-estate conference sponsored by MIPIM.
…
New York City was the top destination, followed by L.A., San Francisco, Washington, D.C., Chicago, and Boston. Globally, New York was still number one, followed by London, Tokyo, L.A., and San Francisco. In a nod to the youngsters, the survey found that the top markets offering “the right live/work/play environment” for millennials were Nashville, Brooklyn, Portland, and Memphis.

For 2015, the firm projects the global real-estate market will rise 11%, to $1.34 trillion, with the largest gains coming in central and eastern Europe (30%), followed by western Europe (19%), and North America (15%). But the report was cautious about the current year. “While growth may be better, it will be volatile and divergent market by market.”

Posted in Demographics, Employment, National Real Estate, NYC | 143 Comments

Maybe millennials will save the market?

Posted on March 14, 2015 by grim

From HousingWire:

Is household formation set for a rebound

Despite ongoing concerns about the delay in household formation by younger buyers, demographically speaking things may be about to turn a corner.

The decline in the share of young adults living with their parents should provide a boost to household formation over the next few years, according to a client note from Capital Economics.

This is an upside risk to their forecasts for sales and housing demand and, perhaps, homebuilding, but it is unlikely to trigger a sharp rise in prices, the note says.

The subdued rate of household formation has been a drag on the housing recovery in recent years.

Most measures suggest that, since 2008, the number of new households forming each year has been unusually low – little more than half a million.

But in the latest Homeownership & Vacancy Survey, the Census Bureau estimated that household formation surged to 1.7 million in 2014, from 400,000 the previous year.

“Admittedly, the annual measures of household formation have always been volatile and it’s difficult to know how much weight to place on the latest reading,” says Ed Stansfield, chief property economist for Capital Economics. “But such a strong rebound could be a sign that housing demand is set to receive a significant boost in the coming years.”

Posted in Demographics, Economics, Housing Recovery | 21 Comments

Strong shore season in store for 2015

Posted on March 13, 2015 by grim

From the Press of Atlantic City:

Beach rentals enjoying stronger season than 2014

It may seem a bit too early to worry about your plans for July and August, but it may be too late already to rent some local beach houses in the prime weeks of those prime summer months.

Real estate agents from Cape May to Long Beach Island report that their weekly rental homes are moving faster than last year — considerably faster, in some places.

“Interest is strong,” said Frank Shoemaker, of Ocean City’s Berger Realty. “We’re running about 35 percent ahead of where we were last year. We’ve already booked 7,000 rentals for 2015. Last year, we booked over 12,000” for the whole summer, he added.

Two counties to the north, Prudential Zack Shore Properties — which has three Long Beach Island offices — is ahead of even that impressive pace. On a mid-week in late winter, AnneMarie Aresco of the Beach Haven branch ran the numbers and found that “so far, as of this moment, we’re up 37 percent from last year.”

And while no agents expect potential renters to have any trouble finding a place to enjoy a week at the shore, they say customers may have to adjust either their desired locations or desired vacation schedules —or both. Because while there are plenty of homes on the weekly market, some of those prime July and August weeks are booking up, particularly in the most desirable spots.
…
Still, for all the demand they’re seeing, agents say most renters don’t have to worry about paying a lot more than they’re used to.

“We haven’t seen too much change,” says Allan Dechert, the broker and co-owner of Ferguson Dechert Real Estate, which is based in Avalon but also covers Stone Harbor. “We advise owners that unless they made substantial changes to their property, they should maintain their pricing. We’re competing against a lot of different markets, so you need to stay in line.”

Farther south, Justin Aftanis of Cape May Realty agreed with that assessment.

“We’ve seen some small increases, but not anything we’d put a percentage on. Call them cost-of-living increases,” Aftanis said.

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

Unicorns on Myspace will save the NJ housing market

Posted on March 12, 2015 by grim

From HousingWire:

4 reasons New Jersey housing is set to boom

It is obvious that the Great Recovery has impacted regions in the U.S. unevenly. One local market has had more to deal with than others: the state of New Jersey. The Great Recovery has been anything but Great or Recovery for the Garden State. With slow job growth, high taxes, and the collapse of the real estate market, New Jersey had enough to deal with without having two catastrophic storms hit consecutively: Irene (2011) and Sandy (2012).

Back in 2011, Irene came with the price tag of $1 billion in damage to 200,000 homes and buildings, making it the costliest disaster in the state’s history.

Then came Sandy the following year, which brought estimated losses to businesses of up to $30 billion in New Jersey alone.

But this spring, 2015, could present itself as a big pivot for New Jersey’s real estate market
…
1. Pent-up demand turns into a buying surge?

Over the past few months, there have been a number of very credible articles citing negative metrics, including mortgage apps dropping 3.5% and extensive number of days listings remain on the market.

What the warm weather appears to be carrying with it: some unexpected, pent-up demand and some badly needed inventory, according to a few New Jersey brokers.

“From the beginning of March, our office has seen a significant jump in business and activity for our office in Toms River,” said Robert Cecchini, operating principal at Keller Williams RCI Group in Toms River, New Jersey.
…
2. Technology to make New Jersey brokers better prepared

Expertise and engagement

Facebook advertisements: Facebook advertisements are clearly the new ‘must-have tool’ on the block, but social media isn’t replacing the foundational personal referral, it is simply enhancing it.

Wait, hold it, right there. I let it slip when you blamed the housing market problems on Irene and Sandy. But Facebook?

Are you kidding me?

Facebook is the fix NJ’s housing market problems? What kind of crap is this?

3. Emerging demographics: The single millennial as the new buyers

There is a new market segment of homebuyer: the pre-married millennial.

Oh for f*ck’s sake, this just gets better. The pent up demand from unwed millennials on Facebook will save the housing market (Pretty sure that unwed Millennials aren’t using Facebook anymore.)

Certainly the business calls for more intentionality in establishing one’s expertise and professionalism.

Holy Christ – WHAT DOES THIS EVEN MEAN!?!?!

4. Real-time broker/buyer instant access

A broker is no longer held to physical face-to-face meetings, but can now give access to view the home virtually via technology to the home, paving the way for the actual inspection. These virtual open house platforms include:

Myspace and AOL Instant Messenger? Who the hell wrote this? Myspace and unwed millennials on Facebook are going to save the NJ housing market… “I would have bought that house, but the broker didn’t hit me on myspace with a link to a video chat” – Said no one ever.

Posted in Humor | 82 Comments

COAH dead – but is there any alternative?

Posted on March 11, 2015 by grim

From NJ Spotlight:

COAH IS HISTORY: STATE’S TOP COURT DECLARES TROUBLED AGENCY ‘MORIBUND’

Declaring New Jersey’s affordable housing process “nonfunctioning,” the state Supreme Court on Tuesday removed from the executive branch jurisdiction over low- and moderate-income housing and sent it back to the courts, giving a clear victory to housing advocates.

This significant order comes 40 years after the court’s first decision establishing the so-called Mount Laurel doctrine, which holds that municipalities must provide their “fair share” of affordable housing, and in some ways turns back the clock to that time period, when individuals, developers, and advocates had to sue to prevent municipalities from blocking this type of housing through zoning laws.

Unless, that is, either the Council on Affordable Housing, which by law is supposed to set housing obligations and approve municipal plans for meeting those obligations, takes action or Gov. Chris Christie and the Legislature can agree to new rules. Several sources said yesterday that neither of those is likely, at least for a while.

“I wouldn’t expect the governor to act in any way that is productive,” said Sen. Raymond Lesniak (D-Union) and sponsor of a COAH reform bill that Christie vetoed in January 2011. He said he will begin working with other lawmakers on a new housing bill, using the one Christie vetoed as a template.

Christie spokesman Kevin Roberts, in a statement, said the governor wants to fix the process: “Today’s decision is a call to action to finally finish the job of reforming our affordable housing system so that it is no longer a costly burden to the people of New Jersey and actually encourages sound development.”

The “Supreme Court ruling stripping COAH of its power in the affordable-housing process and transferring it back to the courts is a sad, but necessary, day for New Jersey,” said Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University and a 1993-2004 COAH member. “Since 2004, the process for providing affordable-housing opportunities has been mired in the failure of COAH to abide by the constitutional requirements and the delays caused by litigation in attempting to force COAH to act properly. Today’s decision will result in more litigation, but this time the judicial decisions on a town-by-town basis will result in enforceable plans to create affordable housing.”

And if municipalities do not comply, they could be forced to allow more housing units at greater density under the “builder’s remedy“ the Supreme Court allowed under its second Mount Laurel ruling.

Posted in New Development, New Jersey Real Estate, Politics | 56 Comments

Investors have all gone

Posted on March 10, 2015 by grim

From HousingWire:

CoreLogic: Cash sales drop to 35.5% of home sales

Cash sales made up 35.5% of total home sales in December 2014, down from 38.5% in December 2013, marking the 24th consecutive month of declines, the latest report from CoreLogic (CLGX) said.

On a monthly basis, the cash sales share fell by half of a percentage point.

CoreLogic cautioned that due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis.

At its peak in January 2011, cash transactions made up 46.5% of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%. Should the cash sales share continue to fall at the same rate that it did in December 2014, the share should reach 25% in mid-2017.

Looking at cash sales share by sale type, real estate owned sales had the largest cash sales share in December 2014 at 58.4%, followed by re-sales (35.4%), short sales (32.7%) and newly constructed homes (15.6%).

While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 8.8% of all sales in December and, therefore, had a small influence on the overall cash sales share.

In January 2011, when the cash sales share was at its peak, REO sales made up 23.9% of total sales.

Posted in Economics, Housing Recovery, National Real Estate | 111 Comments

South Jersey Foreclosures

Posted on March 9, 2015 by grim

From the Press of Atlantic City:

Sheriff’s sales struggle to unload foreclosed properties

The amount of distressed real estate is expected to increase as unemployed workers who lost jobs in 2014 fall behind on mortgage payments — and as the state’s six months of unemployment benefits run out.

Employment in Atlantic County dropped 8,400 from December 2013 to 126,100 in December 2014, according to seasonally adjusted figures from the Federal Reserve Bank of Philadelphia.

Area economies in South Jersey had lost thousands of jobs before 2014.

Daren Blomquist, vice president of market research firm RealtyTrac, said what’s happening in South Jersey is happening in New Jersey as a whole, only more so.

In one year, 2014, foreclosure filings in Atlantic, Cape May, Cumberland and Ocean counties rose 94 percent, 85 percent, 97 percent and 79 percent, respectively, California-based RealtyTrac says.

This includes initial filings, notices of sale and bank repossession.

The state average increased 70 percent. Nationally it dropped 18 percent.

But Blomquist expects foreclosure activity in the area to rise from job losses last year.

“We haven’t seen the full impact of those on the foreclosure numbers yet, and, yes, unfortunately that means it’s probably going to get worse before it gets better,” he said.

Foreclosures take a long time in New Jersey, a judicial foreclosure state, where it takes more than 1,000 days, second only to Hawaii, Blomquist said.

Short sales in Atlantic County represented 11 percent of all sales from January to October 2014, Blomquist said, an increase of 2 percentage points from that period a year ago. In a short sale, the lender agrees to retire the mortgage for an amount less than the principal still owed.

Blomquist said such data may indicate banks are more willing to work with short sales in harder-hit real estate markets.

Posted in Foreclosures, Shore Real Estate, South Jersey Real Estate | 89 Comments

Maybe millennials will buy after all?

Posted on March 8, 2015 by grim

From the NYT:

Millennials on the Homeownership Path

Besieged by the recession and buried in student loan debt, the so-called millennials, born from the early ’80s through the late ’90s, have largely lacked the financial wherewithal to buy their own homes. Even 30-year-olds were as likely to be stuck in their childhood bedrooms as they were to own their own place as of 2013, according to a recent report from the Federal Reserve Bank of New York.

But there are reasons to be optimistic. While college debt continues to dog this generation, several indicators suggest a widening path to homeownership in the next few years.
…
A BRIGHTER EMPLOYMENT OUTLOOK. The job market was particularly unkind to young adults during the recession. Between 2007 and 2010, the unemployment rate within this group soared to 14 percent from 7.8 percent, compared with 9.6 percent for the population as a whole, according to Alan MacEachin, the corporate economist for the Navy Federal Credit Union, in Vienna, Va., who used Labor Department data. But at a Feb. 25 financial forum on millennials and money in Washington, he noted that the outlook was improving. As of January, he said, the millennial unemployment rate was down to 9.3 percent. Mr. MacEachin predicted that young adults would enjoy rising wages over the next couple of years, especially given that, according to the Census Bureau, about a quarter of them have at least a bachelor’s degree.

MORE ARE MOVING OUT. Researchers at the University of Southern California Lusk Center for Real Estate in Los Angeles say that even though job levels haven’t fully recovered, new household formation — which cratered during the recession — is back up to pre-recession levels. Gary Painter, the center’s director of research, and Jung Hyun Choi, a doctoral candidate, looked at data from 1975 to 2011 and found that household formation rates typically take three years to recover after a major drop in employment. The Commerce Department put year-over-year growth in household formation at more than 1.6 million in the fourth quarter of 2014; during the recession, the annual average was closer to 500,000.
…
HOMEOWNERSHIP IS ON THE RADAR. One looming question is whether the housing market crash will cause young adults to shy away from homeownership and stick with renting. While it’s too early to say, a good share of young adults are at least thinking about owning. In a Bank of America/USA Today survey of millennials released in November, 32 percent said they were saving for a house. (On the down side, 22 percent said they were not saving at all.)

And last month, Redfin, a real estate brokerage, reported that 38 percent of millennials said they either would or have put off a wedding or honeymoon in order to save for a down payment on a home.

Posted in Demographics, Economics, Employment, Housing Recovery | 3 Comments

It ain’t fair

Posted on March 6, 2015 by grim

I don’t know who Lawrence Uniglicht is, but he nailed it this morning. Posted in full, from the Daily Record’s Letters section:

Feds owe New Jersey more than they’re paying

Why is New Jersey jumping through hoops to balance its budget as required by law? Why is our governor attempting to break a contractual obligation to contribute sufficient funds to public employee pensions, an unconstitutional act per a state judge? Why do New Jersey homeowners pay much higher real estate taxes than homeowners in most other states?

We should note New Jersey sends way more tax payments to Washington than it receives in reciprocal government spending from our nation’s capital. Our taxpayers in effect subsidize a host of other states, many in the South, that receive more from Washington than they pay out.

For example, New Jersey receives 61 cents per dollar sent, while Mississippi receives $2.02, Louisiana receives $1.78, Alabama receives $1.66, Arkansas receives $1.41, and South Carolina receives $1.35.

Indeed, many states subsidized by short changed states like New Jersey attract residents by offering real estate at relatively low prices taxed at a much lower rate than our fair state. Could it be New Jersey residents are getting the shaft while those other states are getting the gold mine?

Maybe that is why we have difficulty balancing our state budget, can’t meet our pension obligations. Maybe Washington ought to throw us a well-deserved bone, send back enough money to pay our current obligations. Through the years, we have been fleeced by much of the rest of the country for literally hundreds of billions of dollars in lost revenue.

Frankly, I’m tired of subsidizing all those anti-Washington southern Republican-leaning states, continually biting the hand that feeds them with harsh rhetoric, still fighting “The War of Northern Aggression” while indirectly taking New Jersey’s money.

Our two Democratic senators ought to sponsor federal legislation to grant proportional rebates to highly taxed states suffering a net loss in revenue to our nation’s capital. New Jersey, for one, getting an anemic bang for its buck, losing almost 40 cents per federal tax dollar, would likely secure enough revenue to balance its budget, pay its public pension obligations, and send enough money to municipalities to substantially reduce real estate taxes.

New Jersey taxpayers paid about $90 billion in federal taxes last year. Our net loss to Washington was therefore about $36 billion. A 50 percent rebate of $18 billion would cover a $2.25 billion pension payment that is due; help balance the state’s budget, leaving $15.75 billion to be disbursed among the state’s municipalities earmarked to reduce real estate taxes.

It’s only fair.

Lawrence Uniglicht

Posted in Economics, Politics, Property Taxes, Unrest | 98 Comments

Housing recovery for the top?

Posted on March 5, 2015 by grim

From Bloomberg View:

Income Inequality Hits the Housing Market

There’s been plenty of talk recently about signs of recovery in the housing market. Rather than think about housing as a single market, it might be helpful to look at housing as many markets based on everything from geography to price to new versus existing.

What I find intriguing is how things are shaping up based on price. It’s pretty clear that the fastest growth in new housing is at the high end, where sales are increasing the most. This might be a sign of economic recovery, but more likely it suggests that those in higher income brackets are doing better than average.

One of the features of today’s mortgage market is that, in spite of low rates, credit can be hard to obtain because of tough underwriting standards. That doesn’t affect high-end buyers as much as others because they tend to rely less on financing and have more cash as a result of gains from their financial-market investments.

According to the U.S. Census, the biggest gain in sales of new homes last year was for properties costing $500,000 and up, with a 17.3 percent increase, while sales of the least expensive houses tumbled 11.4 percent.
…
Perhaps this is like some law of physics in which what goes down a lot must have an opposite reaction. True, back in the dark days of the financial crisis in 2008, sales of houses in all price categories plunged. The high end was hurt much harder, though, perhaps because the crash in financial markets inflicted so much pain on the investments of the well-off.
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What remains to be seen is whether sales of more expensive houses will continue outpacing the broader market. It seems as though all builders are trying to cash in on the same part of the market at the same time. This is keeping new lower-priced housing in short supply. We can only hope that better economic conditions will boost employment, raise incomes and ease credit conditions so that more moderate-priced housing is built and bought.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 88 Comments