Alpine back on top

Posted on November 14, 2023 by grim

From NJ.com:

These 5 N.J. zip codes are among the priciest in the country

A record five New Jersey zip codes made the list of the top 100 priciest places to buy a home in the U.S., according to an annual study by Property Shark, a real estate data company.

They are: Alpine with a $2.9 million median sales price; Avalon at $2.29 million; Sea Girt at $2.24 million; Deal at $2.1 million; and Short Hills with a $1.92 million median sales price.

Alpine reclaimed its title as the most expensive zip code in New Jersey after being unseated by Deal last year. Alpine had a 35% increase in the median sales price, according to Property Shark, landing it as the 28th most expensive zip code nationwide.

That’s the highest Alpine has appeared on the list of 100 priciest zip codes. Its previous high was No. 33 in 2018.

Alpine, a 9-square mile town in Bergen County, can frequently be found on lists of expensive homes. It had the highest priced home sale in New Jersey last year, when a 12 bedroom, 19 bathroom, 30,000-square-foot home sold for $27.5 million. And it has the fifth most expensive home on the market in New Jersey right now.

Posted in Demographics, Economics, New Jersey Real Estate | 86 Comments

Least affordable … ever?

Posted on November 12, 2023 by grim

From Black Knight:

From the NAHB:

Rising Mortgage Rates Push Housing Affordability to Lowest Level in Index History

Rising mortgage rates, elevated construction costs and limited existing inventory helped push housing affordability in the third quarter of 2023 to its lowest level in more than a decade.

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), just 37.4% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $96,300. This is down from 40.5% posted in the second quarter of this year, and the lowest reading since NAHB began tracking affordability on a consistent basis in 2012.

“Steadily rising interest rates since the beginning of the year are taking a toll on housing affordability by raising housing costs for buyers and increasing the cost of development and construction loans for builders,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “And with mortgage rates currently near 8%, our builder surveys indicate that market conditions will remain challenging through the end of the year, even as the Federal Reserve appears to be done raising interest rates.”

“Rising mortgage rates have clearly been the key cause of declining housing affordability conditions and shelter costs have been the main driver of inflation,” said NAHB Chief Economist Robert Dietz. “And with shelter cost increases driven by a lack of affordable supply and increasing development costs, the best way to tackle America’s growing housing affordability challenges is to enact policies that will allow builders to increase the housing supply.”

The HOI shows that the national median home price held steady at $388,000 in the third quarter, unchanged from the previous quarter. Meanwhile, average mortgage rates jumped from 6.59% in the second quarter up to 7.13% in the third quarter—the highest rate in the HOI series history.

Posted in Crisis, Demographics, Economics, Housing Bubble, National Real Estate | 73 Comments

Are agents employees or contractors?

Posted on November 9, 2023 by grim

(Anyone have access to the full text?)

Ain’t just a problem for Lyft and Uber. From Bloomberg Law News:

Change in NJ Realty Agent Contractor Status Could Upend Industry

The structure of New Jersey’s roughly 60,000-person real estate industry hung in the balance Wednesday as the justices considered whether home selling and buying agents should be classified as employees instead of independent contractors under state law. 

The case’s oral argument, which dove into a messy web of statutes and legal tests, could have a huge impact on the industry. The plaintiff is arguing for the opportunity to bring a class action with fellow brokers, even though he signed a contract that classified him as an independent contractor.

Posted in New Jersey Real Estate | 91 Comments

Golden Handcuffs

Posted on November 8, 2023 by grim

From the Philly Inquirer:

How the ‘lock-in effect’ is helping shape today’s housing market

Why? the supply of homes, as measured by homes for sale, is way down. It looks like we will end 2023 with inventory shrinking between 10% and 15% over the year.

And that raises the question, why are people not putting their homes on the market when prices have risen so much over the past few years? It’s largely due to the surge in prices and mortgage rates, but not for the normal reasons.

Over the past 10 years, home prices have basically doubled. During that time, interest rates were at historic lows. If you bought a home or refinanced, your mortgage was likely 4.5% or less. Unfortunately, those low-rate mortgages have created a major quandary for homeowners.

If the homeowners sell their house, they can realize the price gains and put the funds toward a new home. But then they have to give up their low mortgage rate and take out a new loan at a significantly higher rate. Going from a 4% mortgage to an 8% one, for a different home whose price has also doubled, creates more financial strain than many people would likely want.

The unwillingness to trade in a low-rate mortgage for a high-rate one, a threat that economists warned about years ago, has been nicknamed the “lock-in effect.” Goldman-Sachs estimated that “nearly all mortgage borrowers have interest rates below current market rates, and that almost 90% have rates more than 2pp below and over 60% have rates more than 4pp below.”

In other words, if you own a home and are thinking of selling and moving to another house, you are almost certainly facing mortgage rates a lot higher than you currently have. That is making most homeowners think twice about entering the market. The soaring mortgage rates have created a financial barrier to selling and moving. Think of it as “Golden Handcuffs.”

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 77 Comments

End of the Realtors?

Posted on November 6, 2023 by grim

From CNN:

After a $1.8 billion verdict, the clock is ticking on the 6% real estate commission

Using a travel agent to buy a plane ticket or a stockbroker to trade equities seem like relics of the past. And yet, every day, people across America hire a real estate agent to help them sell a home. It’s one of the few industries that has been able to largely avoid the disruption that has helped consumers cut costs in the Internet age.

And that is largely because of the power of the National Association of Realtors, the largest professional organization in America and a significant lobbying group for the real estate industry.

But the verdict handed down in a Missouri court on Tuesday that found NAR and two brokerage firms, Homeservices of America and Keller Williams Realty, were liable for $1.8 billion in damages for conspiring to keep commissions artificially high, may mark the beginning of the end of how homes are bought and sold.

Two other firms initially named in the suits brought by home sellers – Re/Max and Anywhere Real estate, formerly known as Realogy, which is the parent company of Coldwell Banker, Century 21, Sotheby’s International Realty and Corcoran — settled out of court for a combined $140 million. As a term of the settlement, they each announced a commitment to make changes in their business practices — including not requiring agents to be members of NAR.
…
NAR and the brokerages have vowed to appeal the verdict, which means real estate commissions aren’t going anywhere immediately.

NAR has been fighting off US antitrust officials and litigation for years regarding anti-competitive practices and this verdict is the association’s biggest setback yet.

This verdict is just from one of several lawsuits currently filed against NAR, which is also facing scrutiny from the US Department of Justice.

NAR has already faced a difficult year, setting aside the verdict and the troubled housing market.

In August, the NAR president, a member agent named Kenny Parcell, resigned amid sexual harassment allegations. Last month Redfin, an internet real estate company, left the association.

Posted in National Real Estate, Unrest | 93 Comments

No end to price increases?

Posted on November 4, 2023 by grim

From Zillow:

Home prices could spike nearly 5% in 2024: Zillow

Anticipating mortgage rates to remain elevated and new home listings to slightly rise in the coming months, some experts predict home prices would increase 4.9% from August 2023 through August 2024, according to the latest Zillow Home Value Index. 

However, this marks a downward revision from last month’s projection of a 6.5% increase from July 2023 to July 2024.

“August brought an unexpected late-summer uptick in the number of new for-sale listings entering the market,” Zillow said in its data report. 

New listings increased by 4% from July to August, according to Zillow’s home value index. That signaled the first time that new listings increased over those two months, according to Zillow’s records. 

“To be clear, August’s new listings total – as well as total for-sale inventory – remains well below typical levels seen prior to the pandemic, and inventory conditions remain very tight,” Zilow said. “This unusual late-summer supply uptick helped to ease market conditions some, causing our outlook for home values to cool.”

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

S&P Case Shiller: Prices up 2.6% YOY in August

Posted on November 3, 2023 by grim

From CNN:

US home prices rose in August for the seventh straight month

US home prices continued to rise in August, hitting a new record high and marking the seventh consecutive month of increases. Even as mortgage rates topped 7% in August, historically low inventory continued to push up the price of a home.

Prices rose 0.9% in August from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index released Tuesday.

Compared to a year ago, the national composite index also rose, with prices up 2.6% from August 2022, according to Case-Shiller data.

“One measure of the strength of the housing market is the relationship of current prices to their historical levels,” said Craig Lazzara, managing director at S&P Dow Jones Indices.

August saw record-high price levels, he said. The National Composite, the 10-City Composite, and seven individual cities (Atlanta; Boston; Charlotte, North Carolina; Chicago; Detroit; Miami and New York) were at all-time highs in August.

“Observing the breadth of price changes provides insight into another dimension of market health,” Lazzara said.

On a seasonally adjusted basis, prices increased in 19 of 20 cities in August — and Cleveland only missed by a hair.
…
While 12 of the 20 cities reported higher prices in the year ending August 2023 versus the year ending July 2023, seven of 20 cities reported lower prices.

Chicago led the way for the fourth consecutive month, with prices up 5% from a year ago; followed by New York, with prices up 4.98% from a year ago; and Detroit, with prices up 4.8%.

Prices fell most in the West: Home prices in Las Vegas were down by 4.9% and Phoenix were down by 3.9%.

The Midwest, where prices are up 3.9% from a year ago, continues to be the nation’s strongest region. It is followed by the Northeast, where prices are up 3.8%.

In the West and Southwest prices were down 0.9% and 0.8% respectively.


Posted in Economics, Housing Bubble, National Real Estate | 61 Comments

Done?

Posted on November 2, 2023 by grim

From CNN:

Markets rise after Federal Reserve hits pause again on rate hikes

US markets soared higher Wednesday, rebounding after a dismal October and three straight months of losses.

The Dow rose by 221 points, or 0.7%, in Wednesday trading. The S&P 500 hit a session high, and was up 1.1%. The tech-heavy Nasdaq Composite was 1.6% higher. 

The Federal Reserve said it would keep interest rates between 5.25% and 5.5%, and amended language in its post-meeting statement to say that “economic activity expanded at a strong pace in the third quarter.” Previously, Fed officials wrote that the economy had grown at a “solid pace.”

Fed Chair Jerome Powell said that he would not rule out another rate hike at the Fed’s next meeting in December, but Wall Street seemed to brush off the fear of more economically painful hikes. 

In a note to investors, Whitney Watson global co-head and co-chief investment officer of fixed income at Goldman Sachs Asset Management wrote that “the economy’s resilience has not stalled labor market rebalancing or revived wage and price pressures, suggesting disinflation will progress and indicating that the Fed will likely keep its policy unchanged into 2024.”

Treasury yields, meanwhile, slumped to 4.76% on the Fed news.

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

You pay extra for the ghosts in NJ

Posted on October 31, 2023 by grim

From WBGO:

Selling a house in New Jersey? If it’s haunted, you better say so

Haunted houses — they’re real — in real estate, that is. New York and New Jersey are two of only four states in the country, along with Massachusetts and Minnesota, that address the issue of paranormal activity when a house is being sold.

Deanne Rymarowicz, a lawyer with the National Association of Realtors, said on this side of the Hudson, when it comes to ghosts, there’s no hiding under a white sheet.

“If a buyer asks specifically, ‘Is this house haunted?’ then the real estate agent and the seller need to answer that question truthfully,” she said.

A haunted house, said Rymarowicz, is serious business in New Jersey.

“This is really interesting that New Jersey specifically calls out ‘A property purportedly being haunted,’ an exact quote from the statute, is a ‘psychological impairment’ to the property,” she said.

New York law, she said, is not as clear. It’s more like Let The Buyer Beware. But even so, she added, Ghostbusters have been called, specifically to the town of Nyack.

“The seller had basically broadcast this home as the site of paranormal activity, they had said in the press, in Reader’s Digest magazine, that they lived in a haunted house. It was included in local tours, touted to be a haunted house,” said Rymarowicz.

But when it came time to sell, the owners didn’t tell about the ghosts they had advertised as being in residence, and claimed they didn’t have to. So who ya gonna call? Your lawyer. A court upheld the right of the buyer to know everyone who lives there.

Posted in Humor, New Jersey Real Estate | 139 Comments

The best doesn’t come cheap

Posted on October 30, 2023 by grim

From Travel+Leisure:

10 Best Places to Live in New Jersey, According to Local Real Estate Experts

Recreational and economic opportunities play a major role in choosing where to settle down. As one of the most business-friendly states in the nation, New Jersey’s economy is booming while also offering residents direct and quick access to New York City and Philadelphia. But the state also has a spectacular variety of natural sights—more than 900 lakes and rivers, 127 miles of picture-perfect Atlantic coastline dotted with quaint resort towns and beaches, over two dozen state parks, and even more natural areas. Add to that its exceptional public school system that often ranks in the top three in the country, and you get an idea why people are drawn to the Garden State. Unsurprisingly, all of this makes for some pretty happy residents—New Jersey took the fifth spot in WalletHub’s recent survey of the happiest states, ranking high in emotional and physical well-being, work environment, community and environment, and low in suicide rates, depression, and separation and divorce.

  1. Jersey City – New Jersey’s second-largest city sits along the Hudson River, rewarding its residents with postcard-perfect views of the Manhattan skyline. The city has grown incredibly in the past 15 years, from sleek high-rises along the waterfront to the trendy bars and restaurants that have popped up along its historic, tree-lined streets.
  2. Hoboken – “Geographically, Hoboken is only about one square mile in total,” Peter Cossio, a sales agent at Brown Harris Stevens, said, adding that its nickname is Mile Square City. “On the west side of this mile, you’ll find one of the fastest-growing areas with new sustainable parks and services to be found on nearly every corner, including the Monroe Center, a factory [that was converted] to a multiuse space where you can find boutique fitness and health studios, kids’ programs, office lofts, retail spaces, dining establishments, and artist studios.
  3. Princeton – Princeton may be a small town, famous for its Ivy League university, but it also draws new residents with its robust jobs market and proximity to Philadelphia and New York City. From locally owned shops to world-class brands like Hermes and trendy farm-to-table restaurants to classic diners, Princeton has it all.
  4. Montclair – Known for its blend of urban and suburban conveniences, Montclair is the perfect choice for New York City commuters (it’s only 15 miles away from the city) seeking top-notch schools, a vibrant year-round cultural program, excellent restaurants, and an abundance of parks and green spaces.
  5. Ridgewood – Ridgewood, together with neighboring Ho-Ho-Kus, are often stated as two of the best places to live in the country for their excellent public schools, family-friendly amenities, and safety. Realtor.com also recently named Ridgewood as the third most popular zip code in the U.S. for its idyllic setting, proximity to Manhattan, and many parks. Both towns are located in Bergen County, about 18 miles from New York City, and are two of the most affluent communities in the Garden State.
  6. Milburn-Short Hills – “People are often initially drawn to Millburn for its reputation as one of the top public school systems in New Jersey. But in addition to an outstanding education, Millburn offers extensive recreational activities (a public pool, golf, and tennis), lovely outdoor spaces, and the locally renowned theater, the Paper Mill Playhouse — all with two train stations and Midtown Direct service to Penn Station in New York,” said Sue Lemkau of Harrison-Lemkau Real Estate Partners, Lois Schneider Realtor.
  7. Wayne – This town in Passaic County has a high-ranking school system — both public and private — which is a draw for many families seeking excellent education and suburban amenities close to Manhattan. Wayne is also home to three lake communities — Lionshead, Packanack, and Pines Lake — with beaches, playgrounds, and picnic tables, according to Joseph Simone, a realtor with Howard Hanna Rand Realty.
  8. Avalon/Stone Harbor – “Avalon and Stone Harbor offer the perfect combination of a vibrant, luxury summer resort atmosphere and the peacefulness of serene beach living during the off-season,” said Jennifer Gensemer, a sales agent at Long & Foster. 
  9. Middletown – “Middletown dates back to pre-Revolutionary War times, and there’s a distinct sense of history in many areas. Housing styles vary considerably, from French chateau and Tuscan [designs] to grand center hall colonial to modern,” Thomas McCormack, senior partner and broker at Resources Real Estate, said, noting the town is also home to New Jersey Governor Phil Murphy and musician Jon Bon Jovi. Regular commuter train and ferry services guarantee a fast and convenient commute to New York City. 
  10. Fair Haven – “Fair Haven has long been one of the most popular towns in Monmouth County. It has a wonderful small-town yet sophisticated feel. With restaurants, a library, and retail like the corner hardware store and River Road Books right in the heart of town, it’s easy to see why it’s a favorite place to live,” Katherine Raftery, a sales agent at Resources Real Estate, said, adding that in recent years, the town has been popular with families moving from Hoboken and Jersey City. The town has a diverse mix of homes that run the gamut from Victorian to sleek new constructions.

Posted in Demographics, New Jersey Real Estate | 38 Comments

Sorry kids, the boomers aren’t leaving what you thought they were.

Posted on October 29, 2023 by grim

Great piece from Insider:

The myth of the Great Boomer Wealth Transfer

When my husband’s grandmother turned 87, our family realized it was time for us to take over her affairs. Grandma Sue was ailing and recently widowed, so we decided that it was best for her to turn over her finances. Between retirement savings and the proceeds from the sale of her house, she had about $250,000 in assets at the time. She told my husband that he would inherit all of it. On the face of it, Grandma Sue’s generosity seemed like it would be a huge financial help for our family since the money was just about enough to pay off our mortgage. But my husband wasn’t banking on a windfall.  

Grandma Sue was able to cover the cost of assisted living with the income she was receiving from Social Security and the income on her savings. But after six years, she needed round-the-clock care and eventually was moved into a nursing home. The transition was tough and the nursing home wasn’t cheap, but it was necessary to keep her comfortable. Eventually, Grandma Sue dipped into her principal to keep up with the bills, and after eight years, she had gone through the majority of her assets. At that point, she qualified for Medicaid, which covered the cost of her care. But that left my husband’s inheritance at about $2,000, the maximum amount of assets you could have at the time to go on Medicaid. 
…
We were happy that Grandma Sue had enough money to afford a good quality of life — she was able to get the kind of care she needed during her last years. That said, $2,000 is peanuts compared to the roughly $250,000 she had expected to pass on. Instead of paying off our mortgage, we used the money to replace our dining-room windows. 

As the boomer generation hits their twilight years, the question of what will happen to their money has become a source of fascination and consternation for economists, estate planners, and families across the country. Boomers hold a massive amount of wealth: The 55.8 million Americans over 65, about 17% of the population, hold half of America’s wealth — $96.4 trillion, according to the Federal Reserve. The general assumption is that as this older generation dies, that money will trickle down to younger generations and give cash-strapped families a leg up. Consider it the Great Boomer Wealth Transfer — when their parents or grandparents die, millions of Gen Xers, millennials, and Gen Zers could receive a financial windfall that will help them catch up financially. But it isn’t that simple. 

Death, they say, is the great equalizer. But even death can’t offset wealth inequality. Most of the money held by America’s older generations will get eaten up by long-term care and end-of-life costs, and what remains will mostly end up in the hands of other already-wealthy people. Instead of an inheritance boom, the reality is that most Americans will not receive a vast fortune to ameliorate their grief. 

Posted in Demographics, Economics, National Real Estate, Where's the Beef? | 17 Comments

Home offices spur office homes

Posted on October 27, 2023 by grim

Fun collection of stories this morning:

Why turning offices into homes is a terrible idea

City of Ottawa looking at ways to make office-to-residential conversions easier

Conversion of vacant London offices could deliver 28,000 homes to the UK capital

These Ten U.S. Cities Are Converting the Most Offices to Residential

Commercial-to-residential Conversion: Addressing Office Vacancies

A New White House Plan to Create Affordable Housing: Convert Empty Office Buildings

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate, New Development | 112 Comments

Who the heck is refinancing right now?

Posted on October 26, 2023 by grim

From CNBC:

Adjustable-rate mortgage demand hits highest level in nearly a year as interest rates continue to climb

Mortgage demand has essentially stalled at the slowest pace since 1995 as mortgage interest rates continue to rise.

Total application volume dropped 1% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

One type of mortgage, however, is seeing new life. The adjustable-rate mortgage share of total demand hit 9.5%, the highest level in nearly a year. ARMs offer slightly lower rates.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.90% from 7.70%, with points increasing to 0.77 from 0.71 — including the origination fee — for loans with a 20% down payment.

The average contract interest rate for 5/1 ARMs increased to 6.99% from 6.52%.

“Ten-year Treasury yields climbed higher last week, as global investors remained concerned about the prospect for higher-for-longer rates and burgeoning fiscal deficits,” said Joel Kan, an MBA economist, in a release. “Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points.”

Applications to refinance a home loan increased 2% from the previous week and were 8% lower than the same week one year ago. That annual comparison is shrinking because refinancing crashed just over a year ago, when mortgage rates first started to rise sharply.

Refinances now make up less than a third of total application activity. Just two years ago, when rates were hovering around record lows, they made up two thirds of mortgage demand.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 110 Comments

Buyer must feed the …

Posted on October 25, 2023 by grim

From NorthJersey.com:

Once a New Jersey church, this $650K Zillow Gone Wild home for sale comes with a graveyard

When browsing homes for sale, you stumble upon a swimming pool or a newly built deck. But, have you ever seen a home that comes with a cemetery? Just in time for Halloween, we’ve found one for you: The property at 198 Locktown Flemington Road in Delware Township.

A former church that was recently converted into a single-family home, this property is listed for sale for $650,000. Its current owner, local architect Ralph L. Finelli, renovated the church to include modern living features. Now, a three-bedroom, three-bathroom home, the 1.1 acre property is ready for its next owner — as long as you don’t mind sharing the property with a few former congregants.

The former Locktown Christian Church first opened its doors in 1828, and later became a Presbyterian church in the 1980s. The 19th-century church was sold to its current owner in 2014 for $74,538 after the church’s congregation decided to merge with another nearby Presbyterian church.

This listing, outside of Flemington in Hunterdon County, was featured on Zillow Gone Wild — an Instagram page dedicated to highlighting unique (and sometimes crazy) home listings across the county — for the ancient cemetery that comes with the property. There are as many as 150 people buried in the cemetery, with the earliest gravestone being for Charity Allen, who died in 1843.

If you’re not looking to take on the pressure of maintaining these historic graves, don’t worry. An organization known as the Mount Amwell Project entered an agreement with the seller to maintain the cemetery, said Kevin McPheeters, a realtor with Callaway Henderson Sotheby’s International Realty who is managing the listing. The organization will tend to the monuments and stones within the cemetery, while the new owner will be responsible for mowing the lawn.

Posted in Crisis, Housing Bubble, Humor, New Jersey Real Estate | 145 Comments

Congratulations, you are rich.

Posted on October 24, 2023 by grim

From the Manhattan Institute:

Economics Newsletter: Fed Survey Shows Widened Inequality as Stock and Home Prices Rise

Last week, The Fed released its tri-annual Survey of Consumer Finances, a survey that offers a detailed look into American household finances. It shows that contrary to many reports, many households are struggling especially with inflation. This figure is the value of financial assets by income group. Despite stimulus checks and being stuck at home, low-income households did not save much money. They still have less than they did in 2007. Meanwhile, higher stock and home prices means inequality has widened. 

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 67 Comments