New Jersey Real Estate Report

From Housingwire:

Consumers ease off housing recovery gas pedal

Although consumers continue to remain relatively upbeat, their attitudes around housing may have hit a brick wall, decreasing over the past three months.

Americans tempered their optimism toward the housing market in September, indicating growing caution surrounding the fiscal policy debate, according to Fannie Mae’s recent housing results.
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For instance, 55% of Americans continue to believe the economy is on the wrong rack, narrowing 16 percentage points in September, according to Fannie Mae.

The gap could widen, depending on the outcome of the debt ceiling debate, with many experts believing the nation’s borrowing authority will be exhausted by Oct. 17.

The average 12-month home price change expectation came in at 3.1%, decreasing 0.3% month-over-month.

Meanwhile, the share of people who believe home prices will go up in the next 12 months fell to 52%, down three percentage points.

Additionally, 63% of Americans believe mortgage rates will go up in the next 12 months, increasing 3 percentage points from last month.

On an interesting note, the share of respondents who would buy if they were going to move increased to a survey high of 69%.
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“The only thing that would derail what is happening now is backslide in job numbers,” Walters concluded. “However, we are still seeing fairly steady gains and until we see that reverse, there’s going to be a demand for housing.”

From HousingWire:

Homeowners with more equity want to improve their homes

Homeowners are watching their home equity levels rise, but tapping into this pool of home equity to finance remodeling projects remains difficult in today’s lending environment.

While the hope was rising equity could support the issuance of home equity loans by banks and potentially increase the pool of borrowers eligibile for refinancing, many institutions are gun shy about investing in new products and providing home equity lines of credit. And this is unfortunate because more homeowners are now interested in restoring their properties, Fitch Ratings claims in a new report.

To put it into perspective, homeowners watched their equity increase $571 billion in the second quarter of 2013, and $2.2 trillion over the past year, according to research firm Compass Point Research & Trading.

Although this is an impressive trend for the home improvement sector, challenges still remain that could derail a sustained rebound in home remodeling spending.

Bank lending standards are easing a bit but remain relatively tight, making it difficult for homeowners to use credit finance remodeling projects, pointed out Fitch Ratings analysts Robert Rulla, Robert Curran and Philip Zahn.
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It’s important to note that other challenges remain for the home improvement sector, including elevated unemployment levels and weakening consumer confidence relative to historical patterns.

Regardless, Fitch expects remodeling spending to pick up for the remainder of the year and into 2014 as homeowners revisit restoration projects once deferred.

“Most investments in home improvements over the past few years were focused on necessities,” Fitch Ratings analysts said.

They concluded, “Now there are indications homeowners, although still cautious, are somewhat more willing to undertake discretionary projects and purchases.”

From MarketWatch:

Home-price growth fastest in more than seven years

Home-price growth accelerated to the fastest pace in more than seven years, showing gains across the country, according to a report released Tuesday.

Home prices, including distressed sales, rose about 0.9% in August and were up 12.4% from a year earlier, the highest annual rate since February 2006, according to CoreLogic, an Irvine, Calif.-based analysis firm. Excluding short sales and other distressed properties, prices rose 1% in August, and were up 11.2% from the year-earlier period, also hitting the fastest annual pace since February 2006.

The housing market in Nevada, where prices crashed during the housing crisis and remain far below peak levels, saw the largest year-over-year price growth in August. Including distressed properties, annual home-price growth in Nevada reached 26%.

Despite that growth, prices in Nevada in August were about 42% below peak. Meanwhile, the state with the lowest annual price growth, including distressed properties, was New Mexico, where prices were up 1.5%.

Including August’s increase and distressed sales, U.S. home prices were about 17% below a 2006 peak.

The report echoes other recently released housing data that show fast year-over-year gains. Still, there’s been concern about the toll that rising mortgage rates are taking on the housing market’s recovery. A recent reading on pending home sales — these are deals that typically close within two months — showed that they fell in August for a third month of declines.

There is some evidence that the growth in home prices is decelerating. But that’s not all bad. Sellers like hot markets and higher prices can help struggling owners. However, a slower pace also gives more first-time buyers and others a chance to participate in the market while affordability remains relatively high.

From HousingWire:

Housing recovery rides through peaks, valleys

The housing market is now two-thirds of the way back to normal, according to Trulia’s (TRLA) latest Housing Barometer report. While existing-home sales have finally found their way back to normal levels, construction activity continues to lag.

“The recovery is not a straight line: it moves through different phases,” said Jed Kolko, Trulia’s chief economist.

The current phase for pending home sales shows a drop in August sales as the market remains impacted by tight inventory, rising interest rates, escalating prices and tighter mortgage lending guidelines.

The National Association of Realtors’ pending home sales index took a slight dip in August, falling 1.6% from an index score of 109.4 in July to 107.7 in August. Nonetheless, August’s numbers were still 5.8% above August 2012 levels, when the index score hovered at 101.8.
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The national median existing-home price is expected to rise 11% to 12% in 2013, easing to an increase of 5% to 6% next year, with general improvement expected in inventory supplies.

“Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead,” said Yun.

If it’s any indicator as to how far the housing market has come, it’s now 67% back to normal, Trulia claimed.

“When we created the Housing Barometer eighteen months ago, all measures of the housing recovery were far from normal,” said Kolko “Since then, the recovery has surged ahead in many ways but languished in others. Existing home sales are 99% back to normal, while construction is just 40% back to normal. Tracking the recovery’s progress as a single number is not the best approach anymore.”

From NYU:

Manhattan Sales Prices Surpass Pre-Recession Peak

NYU’s Furman Center for Real Estate and Urban Policy finds foreclosures continue to rise citywide; New housing development signals a recovery in the market New York, NY— Manhattan sales prices have reached a new peak, surpassing the prior prerecession peak achieved in the fourth quarter of 2007, according to the 2013 Quarterly Housing Update: 2nd Quarter PDF released today by NYU’s Furman Center for Real Estate and Urban Policy. Citywide, sales prices have increased 10 percent since the second quarter of 2012.

Residential sales volume across the city also grew over the previous quarter and the same quarter of last year. Year-to-year sales volume grew most significantly in Staten Island, though each borough saw a modest increase.

Indicators of new housing development continue to suggest growth. In the second quarter of 2013, developers secured permits to build more than 4,000 new units—an increase of over 1,000 new units over the same period in 2012. Brooklyn and the Bronx led the city in authorized permits, with over 1,000 new units secured for each borough.

Despite all those signs that the market is recovering, foreclosure filings across New York City have not slowed down. Since the second quarter of 2012, foreclosure filings across New York City have increased 37 percent. Roughly half of the affected one- to four-family and condominium properties had already received a filing since 2005, indicating continued distress among those homeowners, rather than properties entering foreclosure for the first time. While each borough saw at least a 20 percent rise in foreclosure filings, Brooklyn and Staten Island saw the largest growth over the previous year.

From MarketWatch:

Spotlight on the economy: Can the good times in housing continue?

The Federal Reserve was so spooked by the backup in mortgage rates that it postponed tapering its bond-buying program. But what about prospective home buyers?

Data released Tuesday will shed more light on that topic, with home price gauges from S&P/Case-Shiller and the Federal Housing Finance Agency both due at 9 a.m. Eastern and both covering July. The two series have slightly different methodologies — in June, prices were up 12.1% on the Case-Shiller gauge and up 7.7% on the FHFA gauge from the same period of 2012. But prices should, at least for now, remain resilient, economists say.

From Bloomberg:

Existing-Home Sales Probably Declined

Purchases of previously-owned homes probably fell in August as mortgage rates at a two-year high began to slow the progress in U.S. residential real estate, economists said before a report this week.

Contract closings fell 2.6 percent to a 5.25 million annualized rate from the highest level since November 2009, according to the median forecast of 62 economists in a Bloomberg survey ahead of National Association of Realtors data due on Sept. 19. Another report is projected to show home construction starts rose in August, reflecting orders in the months preceding the run-up in interest rates.

Rising borrowing costs may temper the pace of the housing rebound that’s been a mainstay of the economy. Federal Reserve policy makers meeting this week will decide whether the expansion and labor market have improved enough to warrant scaling back purchases of government and mortgage securities.

“The recent jump in mortgage costs will moderate the pace of the housing recovery but not derail it,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “The Fed is likely to go ahead with tapering. Borrowing costs could ease a bit between now and year-end as the market digests the idea that the Fed’s decision is not a tremendously negative event.”