Because Garden State Plaza Needs 1400 Housing Units

Posted on September 26, 2023 by grim

From Costar:

Unibail Seeks To Add Roughly 1,400 Housing Units to New Jersey Flagship Mall

Unibail-Rodamco-Westfield said it plans to build up to nearly 1,400 residential units as part of the major redevelopment and diversification of its large mall in North Jersey, one of the flagship U.S. properties that the global retail landlord decided to keep and is now looking to spruce up. 

Paris-based URW and its co-developer Mill Creek Residential, based in Boca Raton, Florida, have kicked off the process of seeking local approvals from the Paramus Planning Board for their reimagining of the Westfield Garden State Plaza, one of the largest malls in New Jersey and a top-performing mall in the United States. The next borough hearing on the development is slated for Oct. 5. 

URW, the owner and operator of shopping malls and other real estate in Europe and the United States, unveiled plans for the mall’s transformation into a mixed-use property in May 2019, with Mill Creek coming on board in August 2022. The vision is to create a town center, a community hub for a sprawling suburb, with new residences and green space complementing Garden State Plaza’s existing retail, dining and entertainment offerings. 

The first phase entails the construction of about 575 luxury apartments that “will be integrated with the shopping center via a one-acre town green for residents, visitors, and shoppers to enjoy, and will also introduce a main street outdoor district featuring restaurants and everyday conveniences and services,” according to URW. An additional 809 residential units are on the horizon, the company said.

URW is one of a number of large retail landlords — a group that includes Simon Property Group and Pennsylvania Real Estate Investment Trust — that are busy diversifying their malls by adding new uses such as multifamily housing, fitness centers, hospitality properties, office space and healthcare locations. The goal is to attract foot traffic for the site’s retailers and other tenants.

Posted in Economics, Housing Bubble, New Development, New Jersey Real Estate, Where's the Beef? | 150 Comments

Good or Bad?

Posted on September 25, 2023 by grim

From NJ Spotlight:

Reconciling rising unemployment and strong job growth: NJ’s uncertain fiscal outlook

New Jersey’s unemployment rate has steadily risen over the past year and now ranks among the highest in the nation. But while some economists and others suggest that’s a cause for concern, the topline numbers may not tell the full story.

The state unemployment rate has soared from 3% to 4.2% over the past year, according to the latest jobs report released by the state Department of Labor and Workforce Development.

That easily tops the national jobless rate of 3.8%. It also puts New Jersey among the states with the highest unemployment rates in the country, with Nevada topping out at over 5%.

Yet at the same time, New Jersey has also enjoyed healthy employment gains over the past year. Nearly 70,000 jobs have been added over the prior 12 months, according to the latest jobs report.

Also running slightly ahead of last year’s pace in August were monthly state income tax collections, reflecting what Department of Treasury officials called a “steady job market” in a recent news release.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 71 Comments

All your money are belong to us

Posted on September 24, 2023 by grim

From CNBC:

These are the U.S. states with the highest property taxes—New York and California aren’t in the top 10

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 46 Comments

Sales slump, prices still rising

Posted on September 22, 2023 by grim

From ABC News:

Home sales fell again in August as homebuyers grapple with rising mortgage rates

Sales of previously occupied U.S. homes fell for the third month in a row in August, as higher mortgage rates, rising prices and a dearth of properties on the market shut out many would-be homebuyers.

Existing home sales fell 0.7% last month from July to a seasonally adjusted annual rate of 4.04 million, the National Association of Realtors said Thursday. That’s below the 4.10 million pace that economists were expecting, according to FactSet.

Sales slumped 15.3% compared with the same month last year and are down 21% through the first eight months of the year versus the same stretch in 2022.

Meanwhile, prices rose again last month, propped up by buyers competing for a near-record low inventory of homes on the market.

The national median sales price rose 3.9% from August last year to $407,100, marking the third month in a row that the median price remained above $400,000. Last month’s median sale price is also the fourth-highest on records going back to 1999.

“Home prices continue to march higher despite lower home sales,” said Lawrence Yun, the NAR’s chief economist. “Supply needs to essentially double to moderate home price gains.”

Even as rising mortgage rates force many buyers to the sidelines, the shortage of homes for sale has kept the market competitive, driving bidding wars in many places, especially for the most affordable homes. 

Buyers snapped up homes last month typically within just 20 days after the properties hit the market, and about 31% of homes sold for more than their list price.

“Sales are down, people are struggling to buy a home, but prices are going up,” Yun said.

Posted in Demographics, Economics, Housing Bubble, Mortgages, National Real Estate | 115 Comments

Can’t afford to buy here, can’t afford to rent here

Posted on September 21, 2023 by grim

From Patch:

Most Expensive Places To Rent In NJ: Some Pay Over $3K Per Month

Here are the 20 most expensive places to rent in New Jersey: 

  1. Demarest Borough (Bergen County): $3,501 
  2. Shrewsbury Borough (Monmouth County): $3,403
  3. Short Hills (Essex County): $3,279
  4. Harrington Park (Bergen County): $3,188
  5. Liberty Corner (Somerset County): $3,075
  6. Oakhurst (Monmouth County): $3,068
  7. Packanack Lake (Passaic County): $3,059
  8. Finesville* (Warren County): $3,050
  9. Pompton Plains (Morris County): $2,987
  10. Tenafly Borough (Bergen County): $2,985
  11. Mountainside Borough (Union County) $2,926
  12. Franklin Lakes Borough (Bergen County): $2,866
  13. Troy Hills (Morris County): $2,820
  14. Cedar Knolls (Morris County): $2,790
  15. Ho-Ho-Kus Borough (Bergen County): $2,773
  16. Blackwells Mills (Somerset County): $2,697
  17. Cliffwood Beach (Monmouth County) $2,640
  18. Oceanport Borough (Monmouth County): $2,639
  19. Florham Park Borough (Morris County): $2,632
  20. Ten Mile Run (Somerset County): $2,605
Posted in Economics, New Jersey Real Estate | 140 Comments

Wages Up!

Posted on September 20, 2023 by grim

Seems like given the current inflation conditions, we’re in a politically advantageous time to push for minimum wage increases without much noise:

Florida’s minimum wage increases this month

Montgomery County Introduces Bill To Phase Out Tipped Minimum Wage

Connecticut’s minimum wage to increase on Jan. 1. What will the new wage be?

Industry and Labor Serve Up $20 Minimum Wage Deal For Fast Food Workers

Chicago’s tipped workers to get minimum wage

Galloway: Biden should raise minimum wage to $25

Minimum wage could raise to $25 for California health care workers

Ohio Democrats introduce bill that would raise the state’s minimum wage

Maine minimum wage to increase in 2024

Sen. Cassidy backs bill to raise federal minimum wage

In a Hot Job Market, the Minimum Wage Becomes an Afterthought

Posted in Economics, Employment, National Real Estate | 24 Comments

Hike or Stay?

Posted on September 19, 2023 by grim

From the NYT:

Fed Creeps Toward Next Phase in Its Fight Against Inflation

Federal Reserve officials are expected to leave interest rates unchanged at their meeting on Wednesday, buying themselves more time to assess whether borrowing costs are high enough to weigh down the economy and wrestle inflation under control.

But investors are likely to focus less on what policymakers do on Wednesday — and more on what they say about the future. Wall Street will closely watch whether Fed policymakers still expect to make another interest rate increase before the end of the year or whether they are edging closer to the next phase in their fight against rapid inflation.

Central bankers have already raised interest rates to a range of 5.25 to 5.5 percent, the highest level in 22 years. By making it more expensive to borrow to buy a house or expand a business, they are trying to slow demand across the economy, making it harder for companies to charge more without losing customers and slowing price increases.

Officials predicted in their last quarterly economic forecast — released in June — that they were likely to make one more rate increase before the end of 2023. They have kept that possibility alive throughout the summer even as inflation has begun to fade meaningfully. But key policymakers have sounded less intent on making another move in recent weeks.

The Fed’s chair, Jerome H. Powell, had suggested in June that further adjustment was “likely.” More recently, including during a closely watched speech in August, he said policymakers could nudge rates up “if appropriate.”

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 119 Comments

I prefer the term over-asset’ed

Posted on September 18, 2023 by grim

From Fortune:

House poor is back: ‘the new normal for the foreseeable future’

While many first-time home buyers struggle to afford a down payment on a house in today’s market, one of the long-term affordability issues centers on monthly payments resulting from escalating mortgage rates. The current 30-year fixed-rate mortgage is 7.18%, according to Freddie Mac, a stark difference from the sub-3% rates seen during the early days of the pandemic. 

The surging mortgage rate results in higher monthly payments for new buyers. Indeed, monthly payments are up 60% (or $871) year-over-year, according to real estate data and analytics firm Black Knight. The average monthly principal and interest payment for borrowers on a 30-year fixed rate loan in July 2023 was more than $2,300, which is the highest average principal and interest payment on record, according to Black Knight.

Now, more than half of homebuyers face a monthly mortgage payment of at least $2,000, while one-fourth are paying $3,000 or more, Black Knight data shows. Meanwhile, average U.S. monthly earnings in July 2023 were just $4,600, according to economic data firm CEIC. That means some home owners could be spending more than 60% of their paychecks on their mortgage.

Keep in mind that principal and interest figure is before factoring in expenses like property taxes and insurance.

“When did the $2,000 monthly mortgage payment become the norm?” questions Andy Walden, Black Knight vice president of enterprise research in the report. “Nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief.”

Based on current mortgage rates, average income levels, and home prices, most first-time home buyers using a “minimal” down payment could be paying more than 40% of their monthly income toward housing, says Buck Horne, director of equity research, homebuilding and residential REITS at Fortune 500 investment banking firm Raymond James.

“All else equal, that number certainly looks unsustainable relative to long-term averages closer to 30%,” Horne tells Fortune. 

Posted in Crisis, Demographics, Economics, Housing Bubble, Mortgages | 60 Comments

Tick Tick Tick

Posted on September 17, 2023 by grim

From NJ1015:

NJ ADDS JOBS, UNEMPLOYMENT RATE EDGES UP

New Jersey’s unemployment rate ticked up in August.

The New Jersey Department of Labor and Workforce Development announced on Thursday that the number of jobs in the state grew by 12,300 in August, including a seasonally adjusted gain of 5,6000 public-sector jobs, mostly at the local level.

Meanwhile, the state’s unemployment rate increased to 4.2%, from 3.9% in July, due to more residents joining the labor force and fewer residents being employed, NJDOL said.

The state’s unemployment rate was 3% in August 2022.

In the private sector, job gains were recorded in seven out of nine major sectors: leisure and hospitality; professional and business services; education and health services; other services; manufacturing; information; and financial activities.

Over the past year, New Jersey added 67,300 “nonfarm jobs” — the distinction excludes certain groups such as farm workers and private household employees, but still accounts for 80% of workers who contribute to the economy.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 33 Comments

Blame the boomers!

Posted on September 15, 2023 by grim

From Fox:

Why are home prices so expensive? Blame the boomers, Barclays says

U.S. home prices across the country are surging even with the astronomical rise in mortgage rates, putting ownership out of reach for millions of Americans. 

The spike in interest rates – which topped 7% last year for the first time in two decades – has created a “golden handcuff” effect in the housing market: Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell and take on a more expensive option, leaving few options for eager would-be buyers.

The number of available homes on the market at the end of August was down by more than 9% from the same time last year and down a stunning 45% from the typical amount before the pandemic began in early 2020, according to a recent report from Realtor.com.

But there’s another factor driving home prices higher, according to Barclays economists; baby boomers. In a recent analyst note, titled “Blame the Boomers,” the strategists argued the aging of America is spurring more household formation.

“The US housing sector is on the upswing again, even with mortgage rates at multi-decade highs,” the strategists, led by Jonathan Millar, wrote. “Although much has been attributed to shortages of existing properties and mortgage lock-in effects, we think strong demand is a symptom of the aging population.” 
…
It may seem “paradoxical,” because an aging population tends to require fewer homes. But that’s not the case with the baby boomers, who are currently between the ages of 57 and 75. Boomers are reaching retirement age and forming new households, either due to divorce or death, but they aren’t freeing up existing supply.
…
“While it is likely true that older people tend to prefer smaller housing units, it is not true that an older population requires fewer housing units,” Millar said. 

Although there have been “notable” increases in demand from the younger population, nearly all additional demand is explained by the aging population and significant increases in households, according to the analysis. 

Barclays anticipates the imbalance between excessive demand among boomers and limited supply to last for several years. 

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 68 Comments

Lonely at the top

Posted on September 14, 2023 by grim

From ATTOM:

New Jersey And Illinois Have Highest Concentrations Of Housing Markets At Risk Of Declines

ATTOM, a leading curator of land, property, and real estate data, today released a Special Housing Impact Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, foreclosures and other measures in the second quarter of 2023. The report shows that New Jersey and Illinois have the highest concentrations of the most-at-risk markets in the country, with the biggest clusters in the New York City, Chicago and Philadelphia areas. The South, along with other parts of the Northeast, are generally less exposed to market woes.

The second-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that New Jersey and Illinois had 23 of the 50 counties most vulnerable to potential drop-offs. Those concentrations dwarfed other parts of the country amid a time of significant uncertainty when the U.S. housing market was rebounding from a period of flat or falling values.

The 50 counties at the top of the most vulnerable list included eight in and around New York City, six in the Chicago metropolitan area and three in or near Philadelphia. Another six were scattered through northern, central and southern California. A majority of the rest were in Indiana and along the East Coast.
…
Seventeen of the 50 U.S. counties considered most vulnerable in the second quarter of 2023 to housing market troubles (from among 574 counties with enough data to analyze) were in the metropolitan areas around Chicago, IL; New York, NY, and Philadelphia, PA.

The 50 most at-risk counties included two in New York City (Kings and Richmond counties, which cover Brooklyn and Staten Island), six in the New York City suburbs (Bergen, Essex, Ocean, Passaic, Sussex and Union counties, all in New Jersey) and six in the Chicago metropolitan area (Cook, De Kalb, Kane, Kendall, and Will counties in Illinois, and Porter County in Indiana). The three in the Philadelphia, PA, metro area that were among the top 50 in the second quarter were Philadelphia County, PA, Gloucester County, NJ, and Camden County, NJ.

Posted in Economics, Housing Bubble, National Real Estate, New Jersey Real Estate, NYC, Philly | 74 Comments

Sorry about your paycheck

Posted on September 13, 2023 by grim

From the WSJ:

U.S. Incomes Fall for Third Straight Year

Surging inflation gobbled up household income gains last year, making 2022 the third straight year in which Americans saw their living standards eroded by rising prices and pandemic disruptions.

Americans’ inflation-adjusted median household income fell to $74,580 in 2022, declining 2.3% from the 2021 estimate of $76,330, the Census Bureau said Tuesday. The amount has dropped 4.7% since its peak in 2019.

The figures add to the picture of the economic challenges facing households since Covid-19 hit in early 2020. Inflation hit a four decade high last summer as the pandemic upended supply chains and the Ukraine war drove up energy prices. 

This year could be different. Earnings and inflation trends have improvedas a strong labor market and cooling price increases boosted household purchasing power, said Bill Adams, chief economist at Comerica Bank.

“Shifting into the present and into the future, the prospects are better for wages to make up for some of the ground lost during the last couple of years,” Adams said. 

Wage growth for the typical worker outstripped inflation starting in December 2022, with inflation-adjusted wages rising about 3% in July, according to data from the Atlanta Fed Wage Tracker and the Labor Department. 
….
The Census Bureau, in its annual report card on the financial well-being of U.S. households, said median household incomes in 2022 dropped by 3% to 5% in the West, Northeast and Midwest, while the South was unchanged.
…
A broader unofficial measure of poverty that accounts for taxes and noncash government aid rose sharply last year to 12.4% for the overall population and children. The increase was linked to the expiration of several pandemic-related tax credits, especially one for children, according to Liana Fox, an assistant division chief at the bureau.

Both poverty measures stand slightly above lows reached in 2019 ahead of the pandemic.

Posted in Crisis, Demographics, Economics, Employment, National Real Estate | 57 Comments

NJ DOM on track to break new lows

Posted on September 12, 2023 by grim

From Redfin:

New-Jersey Housing Market Overview

Posted in Demographics, Economics, Housing Bubble, New Jersey Real Estate | 78 Comments

New home prices might not be what they seem

Posted on September 11, 2023 by grim

From Wolf Street:

Mortgage-Rate Buydowns by Homebuilders Are Now All the Rage to Prop Up Sales, Lowering Effective House Prices in a Big Way, but Don’t Get Picked Up by House Price Data

Homebuilders don’t have the luxury of outwaiting the market, or waiting for the Fed to slash rates, or whatever, they must build and sell homes, that’s their business, no matter what the conditions in the market.

And the market is struggling with 7%-plus 30-year fixed mortgage rates and sky-high prices, after a ridiculous free-money spike during the pandemic. Sales of existing homes have plunged by about 25% from the same period in 2018 and 2019, and by about 32% from the same period in 2021, because buyers have pulled back, and the people with 3% mortgages have left the housing market altogether, not putting their homes on the market and not buying homes either, not even looking at homes.

That plunge in sales might be OK with potential home sellers, thinking that this too shall pass, but it’s not OK with homebuilders, and they’ve been adjusting to this market by cutting prices, building at lower price points, buying down mortgage rates, and offering incentives, such as free upgrades.

The latter two – buying down mortgage rates and piling on incentives – don’t show up in the prices of the homes they sell. So the pricing data that we have from the Census Bureau about sales of new single-family houses do not include the costs of mortgage-rate buydowns and incentives.

With mortgage rate buydowns, the homebuilder subsidizes the mortgage payment.

The duration of the buydown can be for a few years, which effectively turns it into a teaser rate that can cause problems when the rate jumps to normal.

Or the rate-buydown can be for the entire term of the mortgage (“permanent”).

The big homebuilders have mortgage-lender subsidiaries that originate the mortgage for their customers and then sell the mortgage to Government Sponsored Enterprises, such as Fannie Mae, which will securitize the mortgages into MBS. For example, the mortgage-lender subsidiary of D.R. Horton is DHI Mortgage Company.

Having their own mortgage lender makes rate buydowns a lot simpler for homebuilders. This is similar to the “captive” auto lenders, such as Ford Credit offering 0% 36-month financing for F-150 XLTs at the moment.

The costs of the mortgage-rate buy-downs can be big, because the home prices are big, and buydowns effectively lower the sales price of the home.

Posted in Economics, Mortgages, National Real Estate, New Development, Risky Lending | 35 Comments

Affordable? Not today.

Posted on September 9, 2023 by grim

From Yahoo Finance:

US Housing Affordability Remains at a Record Low, NAR Says

The National Association of Realtors housing affordability index was unchanged at 87.8 in July, matching the lowest level in data back to 1989. A level of 100 means a family with the median income has enough income to qualify for a mortgage at the median home price.

The typical family spent 28.5% of their income on the principal and interest of their mortgage payment each month, also matching an all-time high, according to the report released Friday. Qualifying income for a mortgage, based on a 20% down payment, was a record $104,496 in July.

“Higher mortgage rates continued to harm affordability despite modestly lower median home prices,” Lawrence Yun, NAR’s chief economist, said in an email. “Consequently, the Federal Reserve is unintentionally widening the social divide by preventing middle-income renters from ownership opportunities.”

Buying conditions have deteriorated swiftly over the last year as borrowing costs climbed and a shortage of available homes kept asking prices elevated. Mortgage rates are now near their highest level since 2000 and many homeowners who locked in at much cheaper rates are reluctant to sell.

The lack of inventory has, in turn, driven up home prices, and allowed the housing market to recoup the nearly $3 trillion in value wiped out last year.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 86 Comments