BofA: Home Prices to increase 3.3% a year for the next 10 years

Posted on November 9, 2012 by grim

From HousingWire:

BofA Merrill Lynch analysts forecast 5% rise in home prices

Bank of America Merrill Lynch revised its housing forecast upward due to a better alignment of supply and demand, and now predicts the S&P/Case-Shiller Index will increase by 5% in the fourth quarter over 4Q 2011.

That translates into an average price gain of 2.1% this year compared to 2011.

In August, BofA analysts predicted prices would rise 2% in the fourth quarter over the year-ago quarter. That was also a revision upward. In March, BofA Merrill Lynch forecasted the bottom in national home prices. However, it underestimated the magnitude of the turn.

The analysts also expect average home price appreciation of 3.3% a year over the next 10 years, a cumulative gain of about 36%.

BofA still expects home prices to slow down into the end of the year.

“It is important to remember that the housing market is subject to volatility in the best of times; in this distorted market, we cannot expect a smooth pattern,” the research note said.

It predicts that national prices will increase 5.6% quarter-over-quarter in the third quarter of 2012, following a 9.3% gain in the second quarter. It predicts flat prices in the fourth quarter of this year as well as a decline of 1.6% in the first quarter of 2013 before prices begin to trend upward.

The main component driving the forecasted increase in home prices is a better alignment of housing supply and demand. Inventory of homes for sale continues to decline because of pickup in house demand, a slow clearing rate for distressed properties and a significantly below normal pace of new home construction.

Posted in Economics, Housing Recovery, National Real Estate | 238 Comments

Widespread recovery in home prices?

Posted on November 8, 2012 by grim

From Bloomberg:

Home Prices Rise in 81% of U.S. Cities as Markets Recover

Prices for single-family homes rose in 81 percent of U.S. cities as the property market extends a recovery from the worst crash since the 1930s.

The median sales price increased in the third quarter from a year earlier in 120 of 149 metropolitan areas measured, the National Association of Realtors said in a report today. In the second quarter, 110 areas had gains.
…
“The housing recovery still faces a number of potential headwinds,” Paul Diggle, property economist for Capital Economics Ltd. in London, said in a note to clients after CoreLogic’s report was released. “But our central case is that tight supply conditions will mean that house prices will continue to rise steadily next year.”

At the end of the third quarter, 2.32 million existing homes were available for sale, 20 percent fewer than a year earlier, according to the Chicago-based Realtors group.

From the WSJ:

Home Prices Up 7.6% From Year Ago .

Home prices appreciated in a growing number of cities during the third quarter, the latest evidence that the real estate recovery is gaining momentum and breadth.

The median price for an existing single-family home was $186,000 in the third quarter, up 7.6% from a year earlier and the largest year-over-year growth since 2006, according to a report Wednesday from the National Association of Realtors. More cities saw gains. Single-family home prices rose in 120 of 149 metropolitan areas tracked by the NAR, up from 110 in the second quarter and 39 in the year-ago period.

Many of the sharpest home-price rebounds have been in markets hard hit by the real estate bust. In the Phoenix metropolitan area, for instance, median prices were up 34.9% from a year ago, according to the NAR. Three cities pummeled by the bust—Las Vegas, Miami, and Riverside, Calif.—all were in the top 20 for price gains with year-over-year increases between 12.0% and 12.7%.
…
All told, low home prices, rising rents and a slowly improving economy have given more Americans the motivation and confidence to become home owners. About 72% of respondents said it was a good time to buy a home, according to a monthly survey Fannie Mae issued Wednesday. While many consumers expect home prices to rise only modestly over the next year, they believe rental rates will continue to climb, further motivating them to buy.

Posted in Economics, Housing Recovery, National Real Estate | 236 Comments

Corelogic HPI jumps in September

Posted on November 7, 2012 by grim

From the AP:

Sustainable housing recovery evident: Home prices in many states rose steadily through year

A measure of U.S. home prices jumped 5 percent in September compared to a year ago, the largest year-over-year increase since July 2006. The gain reported by CoreLogic offered more evidence of a sustainable housing recovery.

The real-estate data provider also said Tuesday that prices declined 0.3 percent in September from August, the first drop after six straight increases. The monthly figures are not seasonally adjusted. CoreLogic said the monthly decline reflects the end of the summer homebuying season and not a softening in the housing recovery.

Steady price increases should give the housing market more momentum when home sales pick up during the spring. Rising prices encourage more homeowners to sell their homes and entice would-be buyers to purchase homes before prices rise further.

Other measures have also shown healthy gains in home prices in the past year. The Standard & Poor’s/Case Shiller 20-city index rose 2 percent in August compared to a year ago, a faster pace than the previous month.

The price gains in the past year reported by CoreLogic were widespread. Prices have risen in all but seven states. And they declined in only 18 out of 100 large cities that are tracked by the index.

Posted in Economics, Housing Recovery, National Real Estate | 216 Comments

Ask … and ye shall receive?

Posted on November 6, 2012 by grim

From HousingWire:

October home prices rise 2.9% as rents soar above 5%

Home prices rose 2.9% over last year in October, but had nothing on the rental market which saw rates rise 5.1% from 2011 levels, Trulia said Monday.

The numbers show a national real estate market that is experiencing gradual price appreciation. Yet, the impact of potential buyers unable to obtain mortgages is exemplified by climbing rental rents, especially in markets like Houston and Miami, where rents rose 16.5% and 10%, respectively.

The online real estate site released this data from its Trulia Price Monitor and Trulia Rent Monitor for the month of October.

Prices from September to October edged up 0.7%, according to real estate listing data within Trulia’s website.

When removing distressed assets from the equation, home listing prices grew 3.6% from October 2011 to last month.

Posted in Economics, Housing Recovery, National Real Estate | 239 Comments

Living at the shore to get even more expensive

Posted on November 5, 2012 by grim

From the APP:

Costly aftermath? Another battering for homeowners

New Jersey is not Florida North quite yet.

But the widespread wreckage left by Sandy, the nor’easter-tropical storm hybrid that mercilessly barreled into the East Coast last week, brings to mind the unexpected devastation Hurricane Andrew wrought in South Florida 20 years ago, causing $26 billion in damage.

The second costliest in U.S. history behind Hurricane Katrina in 2005, Andrew reshaped Florida’s insurance industry. Today, Floridians pay astronomical rates for property protection from available insurers or obtain coverage from a government-run corporation, the largest insurer in the state.

In the days following Sandy’s unprecedented tear through New Jersey, experts offered mixed forecasts for the insurance industry here. Could Sandy spook insurance companies from the coast? As sea levels rise and climate change fuels larger, more frequent storms, will insurance costs dig too deeply into the pockets of Shore residents?

In the short term, experts can agree on one thing: premiums will go up — way up.
…
“In a shock loss, the market’s first reaction is to push up prices,” said Randy Dumm, professor of risk management and insurance at Florida State University.

Posted in Economics, New Jersey Real Estate, Shore Real Estate | 161 Comments

What does Sandy mean for NJ real estate?

Posted on November 3, 2012 by grim

From Bloomberg:

Sandy Batters New Jersey’s Struggling Housing Market

Cody Buck rebuilt his home in Sayreville, New Jersey, after Hurricane Irene knocked it down last year. Yesterday, Buck showed New Jersey Governor Chris Christie how superstorm Sandy destroyed the house again.

“I think, governor, we need to level the whole neighborhood, give everybody a check and get out of here,” Buck said, according to a pool report by journalists covering Christie’s tour of the hurricane-racked state.

Sandy’s brutal arrival Oct. 29 was the latest blow to homeowners in New Jersey, where foreclosures continued to rise and real estate prices to fall after most of the U.S. housing market began to recover last year. The Atlantic storm claimed eight lives in New Jersey and drove 6,329 people to shelters. About 2.05 million residences and businesses, more than half of those in the state, were still without power at 2 p.m., according to the U.S. Energy Department.

“New Jersey was a laggard before the storm even came along and the storm won’t help,” Sam Khater, deputy chief economist for CoreLogic Inc., a real-estate information service, said from his office in Tysons Corner, Virginia.
…
An estimated 75,300 homes valued at $22.6 billion along the New Jersey coast were in Sandy’s path, according to an Oct. 29 CoreLogic report. That included more than 20,000 properties worth $4.8 billion in the Atlantic City area, where Sandy destroyed part of the boardwalk and amusement rides.
…
Infrastructure projects can give a shot in the arm to disaster zones, such as New Orleans, where the Army Corps of Engineers spent $14.5 billion on new levees after Hurricane Katrina overwhelmed the area’s storm defenses in 2005.

Storms also force stricter building codes, which raise property values, said Don Epley, director of the Center for Real Estate Studies at the University of South Alabama in Mobile.

“Some of the locals here joke that we need a good hurricane every few years,” Epley said in a telephone interview. “It cleans out the old stuff.”
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Eqecat Inc., a provider of catastrophic risk models, doubled its previous damage estimate to as much as $50 billion in total property losses, with $10 billion to $20 billion of that covered by insurance, the company said today.

Reis Inc. (REIS), a real estate research firm, gave a preliminary estimate of $30 billion to $40 billion in total damage from Sandy. The New York-based company valued reconstruction efforts at $25 billion to $30 billion in its Oct. 30 calculation. That would result in a $10 billion to $15 billion economic loss, Reis said.

Storms with the force of Sandy have the power to reshape real estate for years, Eqecat President Bill Keogh said yesterday in a telephone interview from his vacation home in Litchfield, Connecticut, where he sought refuge after the power went out in his Hackensack, New Jersey, office. Damaged homes owned by delinquent borrowers may cause lingering blight if neither the owner nor the lender has resources for repairs, he said.

“It could also improve the value of some homes,” Keogh said. “The house that used to be two blocks from the water is now on the beach.”

Posted in Economics, New Development, New Jersey Real Estate | 212 Comments

Case Shiller posts a strong print in August

Posted on October 31, 2012 by grim

From Bloomberg:

Home Prices in 20 U.S. Cities Rise by Most in Two Years: Economy

Residential real-estate prices increased in the year ended August by the most in two years, a sign housing will continue to boost U.S. economic growth.

The S&P/Case-Shiller index of property values in 20 cities rose 2 percent from August 2011, the biggest year-to-year gain since July 2010, after climbing 1.2 percent the prior month, the group said today in New York. The median forecast of 25 economists in a Bloomberg survey projected a 1.9 percent gain.
…
“The housing recovery has had modest momentum,” said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “We still are looking for housing improvement and think that trend will continue.”

Estimates in the Bloomberg survey ranged from gains of 1.5 percent to 3.1 percent. The Case-Shiller index is based on a three-month average, which means the August data were influenced by transactions in June and July.

Posted in Economics, Housing Recovery, National Real Estate | 320 Comments

Ultramegasuperstorm of the Century Open Discussion

Posted on October 27, 2012 by grim

Armageddon Approacheth – Discuss

Posted in General | 376 Comments

Otteau: Prices to rise by 3% in 2013

Posted on October 26, 2012 by grim

From the Record:

Appraiser sees NJ home prices rising in 2013, after long slide

After a long, steep slide, New Jersey home prices are poised to begin rising again — slowly — in 2013, appraiser Jeffrey Otteau said Thursday. But it will take until 2020 for values to return to their 2005 levels, and real estate still faces many challenges, he said.

“The recovery in the housing market is only just starting,” said Otteau, of East Brunswick, whose housing forecasts are followed by the real estate industry. He said demand is stronger in Bergen County than in Passaic, which has been hit hard by foreclosures and other economic distress in the cities.

According to Otteau’s calculations, New Jersey home prices have been basically flat this year. By contrast, the S&P/Case-Shiller index, which uses different ways to track prices, found New York metropolitan-area values dropped 2.6 percent from July 2011 to July 2012, its most recent figures.

The number of sales in New Jersey has rebounded to the fastest pace since 2007, though it remains below the boom levels of 2005, Otteau said. Lower home prices, rock-bottom mortgage rates and a growing confidence in the economic recovery have lured buyers back, Otteau told real estate agents at his semiannual seminar in East Hanover.

“Fewer and fewer people are losing their jobs,” Otteau said. “That’s part of the housing recovery.”

After dropping about 27 percent since the peak of the housing boom, median prices — the point at which half of homes sold for a higher price and half lower — will rise about 3 percent in 2013 as a result of the increased demand, Otteau predicted. As prices begin to tick up, he predicted, buyers will become less cautious and jump into the market.

“Home buyers don’t want to buy if there’s a chance that they could get it for a better price” by waiting, Otteau said.

He predicted that the real estate market next spring will be the most active in at least five years. Spring is traditionally the busiest time in the housing market, as families look to move before the next school year starts.
…
Not all regions and price categories have experienced higher sales this year. Rural areas continue to trail, in part because fewer people are willing to commute long distances when gasoline costs around $3.50 a gallon. And job cuts on Wall Street have meant lower sales of homes costing over $2.5 million, Otteau said.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 151 Comments

Will the lazy scapegoats save the country?

Posted on October 25, 2012 by grim

From the Atlantic:

Could Twentysomethings Become the Heroes of the Recovery?

Young people are the lazy, smelly scapegoat of the recession. They’re not working, they’re living at home, they’re constantly complaining about their debt, they’re not buying cars or houses, and they’re not even having babies.

But there is an outside chance that The Twentysomething, the media’s favorite economic whipping boy, is poised to become the hero of the recovery, and it all comes down to two words. Household formation.

In the last four years, millions of young people who otherwise would be starting families and independent lives have waited out the recession in the cozy bunker of their parents’ basement. One in three twentysomethings reported moving back in with their parents for an extended period of time, according to a 2011 Pew report. Some went back to school. Some worked. Some did nothing.

Whatever they were doing, they weren’t moving out or starting new “households.” Technically speaking, a “household” is any group of people living together: six roommates, a young couple, a family with kids, anything. By delaying their adulthood, these basement-dwellers were, through no fault of their own, holding back the economy by holding back household formation. But economists are increasingly confident that this generation is ready to migrate into the real economy.

Wherever they move, they’ll make an impact. If they move into apartments, they’ll bid up rent prices (making owning a home relatively more attractive) and encourage the construction of more apartment buildings. If they buy homes, all the better: the entire real estate super-industry will get a boost. New households are more likely to buy cars and appliances. They’re more likely to buy cable TV packages. And they’re more likely to have kids.

Maybe this all sounds a bit like I’m rehearsing the game of “Life” for you, but in fact these details are crucial to economic growth. Independent adults make the economy grow. The longer Millennials delayed independent adulthood, the further we’d be from a full recovery. Just look at the correlation between household formation and housing starts (via Business Insider). If you want a housing recovery, folks, you need households.

Posted in Economics, Housing Recovery | 102 Comments

Booyah, ’nuff said.

Posted on October 23, 2012 by grim

Booyah Bob – Circa 2006:

Anonymous says:
August 18, 2006 at 12:31 pm

Spin this one.

“I believe area home sellers are just going to have to get used to these new market conditions because it’s not likely to change for a long time. Speaking very generally, buyer’s and seller’s markets in our area seem to last about five to eight years. It’s a cycle that has repeated since the early 1980s. If it holds true, it is possible we won’t see another seller’s market until at least 2011.”

How about 2020!

Jeff Otteau – Circa 2012 (from NJBIZ):

Economist says N.J. housing recovery will drag through 2020

Though the pace of sales activity in New Jersey’s residential real estate market has picked up dramatically over the past year, home prices across the state have barely nudged toward their prerecession levels, leading one local industry watcher to forecast their recovery will drag through 2020.
…
Analyzing that data, Otteau said median home prices in every county fell year-over-year through the second quarter of 2012, which caused the statewide median home price to drop from $339,000 in 2005 to $251,000 in 2011 — indicating homes throughout New Jersey were sold last year at prices nearly 75 percent of their 2005 levels.

But Otteau said the state’s median home price ticked up by one-third of 1 percent in the third quarter of 2012, which he said finally signals the start of a long road of recovery.

“Looking at the projections of continued job recovery in the private sector and rising personal income in New Jersey, coupled with buyers’ confidence that home prices won’t go any lower, I think we’re going to see much of the pent-up demand come out and purchase homes,” Otteau said. “If home prices continue to rise in small measures, I think by 2020, we can expect to get back to 2005 price levels.”

Posted in Economics, Housing Bubble, Housing Recovery, New Jersey Real Estate | 97 Comments

It’s just not fair!

Posted on October 23, 2012 by grim

From the Star Ledger:

Wealthy N.J. counties’ taxes go to poor areas, analysis finds

Wealthier counties sent a higher percentage in income and sales taxes to Trenton than they got back in key types of state aid, while poorer counties paid less and got more, according to an economic analysis released today by Rutgers University.

In answer to the question, “Where do the revenues come from and where does the aid go by county and region?” the report found “a significant redistribution of resources” from high income areas to those of low and moderate income.

The new Rutgers Regional Report looked at the state county-by-county as of the fiscal year that ended in mid-2010, showing how much was paid in income and sales taxes, and how much counties got back in school, municipal and county aid from the state.

“It’s not winners and losers, there are differences,” said Joseph Seneca of the Edward J. Bloustein School of Planning and Public Policy at Rutgers, lead author of the report. “It’s not a surprising result… This is (the result of) state policy over the years.”

A similar study conducted eight years ago found the same result, he said. “This is not a report on what should be, it is just a report on what is,” Seneca said.
…
The highest state school aid per pupil was in Cumberland County, at $14,681; followed by Hudson County, at $13,114; and Essex, at $12,160, according to the study. Bergen County got the lowest school aid per pupil, $2,297.
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In affluent Somerset County — one of six largely-suburban counties identified by Rutgers as the state’s “Wealth Belt” — residents paid 7.1 percent of the taxes but received 1.9 percent of the state aid.

Freeholder Director Pat Walsh said the result “isn’t fair.”

“There’s no doubt in Somerset County there are wealthy people, some very wealthy people. But the majority of Somerset County residents are middle class residents,” she said. “Once again when you do the right thing, you end up at the bottom of the barrel.”

Hudson County, in contrast, paid 3.7 percent of the tax revenue, but received 10.8 percent of aid.

Posted in Economics, New Jersey Real Estate | 115 Comments

Inquirer takes a slam at South Jersey (for good reason)

Posted on October 22, 2012 by grim

From the Philly Inquirer:

N.J.’s local tax bills keep spiraling upward

Ted Marvel pays $4,900 in annual property taxes on his 1,000-square-foot home in the heart of Collingswood.

In fact, his monthly tax bill – $407 – is starting to rival what he pays in principal and interest on his mortgage. Said Marvel: “They’re going to meet soon.”

In the new millennium, New Jersey’s property taxes, the highest in the nation, are exploring new heights.

“It’s astronomical,” said Marvel. “It’s crazy.” That, too, his Garden State neighbors affirm.

Even as incomes have dropped (4.4 percent), and overall taxable value has fallen in a third of the towns, an Inquirer analysis showed that from 2000 to 2011, average tax bills in Burlington, Camden, and Gloucester Counties rose 44 percent. And that’s adjusted for inflation. The average bill jumped from $3,964, to $5,691.
…
“They’re astounding,” said Janice Potts, former resident of a place she still loves, Haddonfield, which had South Jersey’s highest annual average tax bill, $12,282 in 2011. She sliced her bill by more than $10,000 by buying a home of similar value in a place not commonly viewed as a tax refuge: Philadelphia.

“They’re terrible,” agreed Edward Borden, a Haddonfield commissioner who pays almost $16,000 in annual taxes on a $595,000 home on Overhill Road. That’s a steep price, even for a tony community with an elite public school system.

On average, New Jersey property taxes consumed 7.8 percent of median income in the 2008-10 period, according to the Tax Foundation. That was double the Pennsylvania figure.

Why are Jersey’s real estate levies in the stratosphere?
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The answer is complicated, but one reason is that much of the cost of school, town, and county governments in New Jersey is bundled into the real estate levy.

And just about everything in Jersey, it seems, is more expensive.

About half of all New Jersey’s state and local tax revenue is generated by the property tax, compared with less than 30 percent in Pennsylvania, which has a more varied tax menu.

Property owners complain that the high taxes are hurting their real estate values. They may have a point: In the most recent Inquirer survey, home prices fell 29 percent in South Jersey from 2007 to 2011, compared with a 18 percent decline in the Pennsylvania suburbs.
…
Another reason for the staggering property taxes in the Garden State: New Jersey is a high cost-of-living state. That translates to higher salaries for public employees. The average pay for 575,000 state and local government employees is the second-highest in the nation, about $65,000 a year – 25 percent higher than Pennsylvania’s – according to census data. That’s similar to the differences in median incomes between the two states.

Public education is more expensive in New Jersey. In the Census Bureau’s 2009-10 survey, per-pupil spending was $16,841, No. 2 in the nation. Pennsylvania’s was a middle-of-the-pack $12,995. The local share of the Garden State’s education bill, 55.6 percent, also was No. 2 in the country.

Posted in Comp Killer, Politics, Property Taxes, South Jersey Real Estate | 91 Comments

September Existing Home Sales

Posted on October 19, 2012 by grim

From Bloomberg:

Treasuries Rise on Speculation Existing Home Sales Fell

Treasuries rose for the first time in five days before an industry report that economists said will show sales of existing homes fell in September, highlighting an uneven rebound in the U.S. housing market.
…
U.S. existing home sales dropped 1.7 percent in September from the previous month, according to the median forecast of 78 economists surveyed by Bloomberg News before the National Association of Realtors reports the figure at 10 a.m. in New York. They rose 7.8 percent in August. Housing starts climbed 15 percent in September from August to a four-year high, government data showed Oct. 17.

From CNBC:

Ahead of the Bell: September US Home Sales

Sales of previously occupied U.S. homes likely slipped last month from a two-year high reached in August, the latest sign that the recovery in housing is slow and uneven.

Economists forecast that sales dropped 1.7 percent in September to a seasonally adjusted annual rate of 4.74 million units, according to a survey by FactSet. The National Association of Realtors will release the report at 10 a.m. Eastern time Friday.

In August, sales of previously occupied homes jumped 7.8 percent to 4.82 million, the highest since May 2010, when sales were aided by a federal home-buying tax credit.

But the number of contracts signed to buy homes fell that month, the Realtors’ group said. Decreases in signed contracts are usually followed by lower sales one or two months later.

Existing home sales have also been held back by a low supply of homes available for sale. There were 2.47 million homes available in August. It would take just over six months to exhaust that supply at the current sales pace. That’s the typical pace in a healthy market.

Posted in Economics, National Real Estate | 99 Comments

NJ unemployment ticks down to 9.8

Posted on October 18, 2012 by grim

From the Star Ledger:

N.J. unemployment rate falls to 9.8 percent

New Jersey’s unemployment dropped a tick in September, going from 9.9 percent to 9.8 percent, according to figures released this morning by the state Labor Department.

The slight drop comes as the state also shed 1,200 jobs, marking the the third time in the past 13 months the state has lost jobs, figures show. Last month, the private sector added 1,100 jobs but that was offset 2,300 losses in public sector, figures show. The U.S. unemployment rate saw a larger decrease last month, going from 8.1 percent to 7.8 percent.

“While New Jersey’s job market in September still showed the effect of the summer doldrums apparent in the national figures these last few months, there are positive signs,” said Charles Steindel, Chief Economist for the New Jersey Department of Treasury. “Our long-term uptrend in private sector employment continues and September’s dip in unemployment might be a sign that the situation will be getting better.”

The new figures also mark the 39th consecutive month the state has had an unemployment rate above 9 percent and does little to beat back a string of disappointing economic news for Gov. Chris Christie. The economic slide began in January, when the unemployment rate bottomed out at 9 percent and Christie declared a “Jersey Comeback.”

Posted in Economics, New Jersey Real Estate, Politics | 88 Comments