Prediction Season!

Posted on December 16, 2023 by grim

From the APP:

Realtor.com released 2024 forecast for top housing markets

Coming in at No. 23 was the Allentown-Bethlehem-Easton, PA-NJ area, with forecasts of :

  • 2024 existing home sale counts year over year: 2.2 percent
  • 2024 existing home sale counts vs 2017-19 average: -13.2 percent
  • 2024 existing home median sale price year over year: 5 percent
  • 2024 existing home median sale price vs. 2017-19 average: 63.3 percent
  • Combined 2024 existing home sales and price growth: 7.3 percent

The next New Jersey market on the list was New York-Newark-Jersey City, NY-NJ-PA, coming in at No. 75.

  • 2024 existing home sale counts year over year: -10.8 percent
  • 2024 existing home sale counts vs 2017-19 average: -37.5 percent
  • 2024 existing home median sale price year over year: 3 percent
  • 2024 existing home median sale price vs. 2017-19 average: 47.7 percent
  • Combined 2024 existing home sales and price growth: -7.8 percent

The final New Jersey market in the Top 100 is Philadelphia-Camden-Wilmington, PA-NJ-DE-MD, at No. 80.

  • 2024 existing home sale counts year over year: -13.4 percent
  • 2024 existing home sale counts vs 2017-19 average: -36 percent
  • 2024 existing home median sale price year over year: 3.8 percent
  • 2024 existing home median sale price vs. 2017-19 average: 48.5 percent
  • Combined 2024 existing home sales and price growth: -9.6 percent
Posted in Demographics, Economics, Employment, Housing Bubble, New Jersey Real Estate | 47 Comments

Room to run

Posted on December 15, 2023 by grim

From Business Insider:

The Fed brought some relief to the housing market

The Federal Reserve’s forecast for easing monetary policy in 2024 fueled stocks to new highs, dragged bond yields lower, and sparked a fresh wave of exuberance across Wall Street. 

But the housing market is also getting some needed relief from the forecast of lower interest rates in 2024. 

While the Fed kept its benchmark rate unchanged on Wednesday, its Summary of Economic Projections nodded to the potential for as many as three rate cuts next year. Daily rates on the 30-year fixed mortgage dipped to 6.82% on Thursday, according to Mortgage News Daily, the lowest since May.
…
Yet it is still possible a sharp drop in mortgage rates throws the housing market further out of whack in the near term, with lower rates opening the gates to a flood of demand before more supply comes online. 

“If rates come down too much — and mortgage rates follow — we’ll see the current supply-demand imbalance exacerbated as pent-up demand gets released into an undersupplied market, putting upward pressure on home values – and inflation,” Jack Macdowell, chief investment officer at Palisades Group, wrote in a note Wednesday. 

“Until mortgage rates drop below 6%, it is unlikely that pent-up deferred sales will meaningfully contribute to supply,” Macdowell added.

Real estate group Redfin has forecasted mortgage rates to drop into the mid-6% range in 2024, and Wednesday’s Fed move reinforces that prediction.

Strategists at Goldman Sachs, meanwhile, wrote in a note prior to the Fed meeting Wednesday that housing starts and home prices will crawl higher in the coming years, while existing home sales will remain flat. The bank has a no-recession scenario as part of its base case, which should keep prices propped up. 

Posted in Housing Bubble, Mortgages, National Real Estate | 97 Comments

Party Time

Posted on December 14, 2023 by grim

From Barrons:

Dow Soars 500 Points to Record Closing High

The Dow Jones Industrial Average sprinted to a new record closing high after the Federal Reserve announced its latest monetary policy decision.

The Dow gained 512 points, or 1.4% to close at 37090. The S&P 500 rose 1.4%, while the Nasdaq Composite jumped 1.4%.

The Fed is holding rates steady since inflation is dropping and the central bank wants to avoid putting the economy into a recession.

The Fed also said it will depend on economic data to make further interest rate decisions, acknowledging the economic damage from high rates likely hasn’t fully played out yet.

When it comes to rates, markets are “fading the previously dominant “higher for longer narrative,” wrote Ali Hassan, Portfolio Manager at Thornburg Investment Management.

Posted in Economics, National Real Estate | 95 Comments

No unintended consequences here…

Posted on December 13, 2023 by grim

From the NJ Monitor:

N.J. Senate approves penalties for discriminatory real estate appraisals

Senate lawmakers approved a bill Monday that would create steep penalties for real estate appraisers who undervalue homes because of the owner or buyer’s protected characteristics, with Republican critics saying they worry the bill’s disregard of appraisers’ motives would lead to unintended consequences.

The bill, which cleared the Senate in a narrow 22-11 vote, would fine appraisers who discriminate on the basis of protected characteristics like race, sex, or gender. Bills need 21 yes votes to clear the Senate.

“As recent research has borne out, appraisals are systematically lower for Black and Latino families than for white families across the country,” said Sen. Nellie Pou (D-Passaic). “This law will help us further protect families from this discrimination and also contribute to lowering the racial wealth gap in our state.”

Violators would pay $10,000 on a first offense, $25,000 on a second, and $50,000 on a third.

The bill would also require violators to make restitution equal to the cost of the discriminatory appraisal and attend an anti-bias seminar. Those who violate the bill’s provisions a second time would have their appraisal licenses, certificates, or registrations suspended for 30 days. That penalty rises to full revocation for appraisers who commit a third offense.

Two Republican lawmakers cautioned against the legislation, warning it would push appraisers out of the same neighborhoods the bill seeks to aid.

“A $10,000 fine — I don’t know any appraiser that’s going to take this on, which means that banks are going to have to say, ‘I don’t know what to do,’” said Sen. Bob Singer (R-Ocean). “Though the intent is wonderful, the implementation just doesn’t work.”

Sen. Holly Schepisi (R-Bergen) said she worries the bill would levy steep penalties on well-meaning appraisers who unintentionally or unknowingly issue a discriminatory appraisal. The risk created by that state of uncertainty would keep appraisers out of communities that have historically faced discrimination, she said.

“The cost of doing business and providing appraisals in certain communities is going to be deemed to be impossible without potentially being hit with an unknowing bias,” Schepisi said.

Posted in Demographics, Economics, Politics | 97 Comments

Pretty sure this won’t end well, whichever way it goes

Posted on December 12, 2023 by grim

From Yahoo Finance:

‘Stay Out Of The Markets’ — Kevin O’Leary Urges Government To Not Get Involved In Housing — Says New Bill That Would Ban Hedge Funds From Buying Homes ‘Is Very, Very Bad And Destructive’

Real estate investors still account for a significant number of single-family home purchases, buying 26% of all homes sold in June 2023, according to a recent report. These numbers have remained fairly unchanged over the past two years, and are causing some lawmakers to call for banning large investors from purchasing homes that could otherwise be a homeowner’s primary residence.

Earlier this month, Arrived, a Jeff Bezos-backed real estate company, announced a new fund aimed at acquiring single-family homes. U.S. Rep. Ro Khanna (D-California) responded to this news in a post on X saying, “The last thing Americans need is a Bezos-backed investment company further consolidating single-family homes and putting homeownership out of reach for more and more people. Housing should be a right, not a speculative commodity. Congress must pass my Stop Wall Street Landlords Act.”

Since the congressman’s post, the issue has garnered more attention from lawmakers, and a new bill was introduced on Dec 4 — the End Hedge Fund Control of American Homes Act of 2023. Khanna’s Stop Wall Street Landlords Act calls for additional taxes to be placed on institutional investors that buy single-family homes, while the new bill calls for a complete ban on hedge funds from buying homes and forcing them to sell off their current holdings over a 10-year period.

During a recent appearance on Fox Business’s “The Big Money Show,” Kevin O’Leary shared his stance on the proposed legislation.

“Very bad idea. Very bad policy when you try to manipulate markets or sources of capital,” O’Leary said. “I don’t care if they’re Democrats or Republicans, whoever they are, stay out of the markets. Let the markets be the markets.”

O’Leary argues that Wall Street provides a needed funding source for the housing market and offers the lowest cost of capital.

The author of the new bill, U.S. Sen. Jeff Merkley (D-Oregon), argues that institutional investors are driving up home prices and rents.

“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” said Merkley in a press release. “It’s time for Congress to put in place common-sense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford.”

Posted in Demographics, Economics, Housing Bubble, National Real Estate, Politics | 9 Comments

Making Money

Posted on December 9, 2023 by grim

From CBS News:

The U.S. states where homeowners gained — and lost — equity in 2023

For the millions of Americans who own their homes, their properties are typically their biggest source of wealth. The good news? Those assets have grown in value over the past year thanks to rising home prices. 

The typical American homeowner saw their home equity rise by $20,000, or 6.8%, through the end of the third quarter compared with a year earlier, according to a new analysis from real estate data firm CoreLogic. 

Despite a fierce headwind in the form of the highest mortgage rates in two decades, average home prices have jumped about 9% this year, according to the National Association of Realtors. That has boosted the value of homeowners’ equity, or the difference between how much a home is worth and the remaining amount due on a mortgage. 

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate | 121 Comments

Don’t let the money leave

Posted on December 8, 2023 by grim

From ROINJ:

Murphy appoints new task force designed to cut property bills in half for New Jersey seniors

A new task force charged with cutting property tax bills in half for New Jersey seniors has been created, according to a Monday announcement from the Governor’s Office.

Designed to offer recommendations to implement the new StayNJ property tax relief program, six of New Jersey’s highly regarded public servants have been assigned to review all of the state’s existing property tax relief programs and present a report to Gov. Phil Murphy and the Legislature no later than May 30, 2024.
…
“StayNJ will be transformative for all families planning for the future, with historic property tax relief for seniors,” Coughlin said. “We need to ensure this program launches smoothly, with a seamless application process and system for benefit distribution. That’s why I am pleased to appoint Mayor McCormac to the StayNJ Task Force. His depth of experience will be invaluable. His service as state treasurer and his 17 years as mayor — particularly his innovative initiatives for Woodbridge seniors — make him uniquely qualified for this role. Mayor Mapp, the joint legislative appointment, brings even more expertise to the table with his decades of experience in local government, public finance and his training as a Certified Public Accountant.”

Under StayNJ, eligible seniors with a gross income under $500,000 will receive a credit of 50% on the annual property tax bill for their principal residence, up to $6,500.

Posted in New Jersey Real Estate, Politics, Property Taxes | 146 Comments

Riskiest Markets

Posted on December 7, 2023 by grim

From Atom:

Housing Markets Facing Greater Risk Of Downturns Clustered In California, New Jersey And Illinois

ATTOM, a leading curator of land, property, and real estate data, today released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, foreclosures, underwater mortgages and other measures in the third quarter of 2023. The report shows that California, 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 and Chicago areas, as well as central California. Less-vulnerable markets are spread mainly throughout the South, Midwest and Northeast.

The third-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 33 of the 50 counties considered most vulnerable to potential drop-offs. Those concentrations dwarfed other parts of the country at a time of mixed market trends when home prices and homeowner equity improved but home affordability and foreclosure activity worsened.
…
The metropolitan areas around Chicago, IL, and New York, NY, as well as central California, had 21 of the 50 U.S. counties considered most vulnerable in the third quarter of 2023 to housing market troubles (from among 578 counties with enough data to analyze).

The 50 most at-risk counties included three in New York City (Kings and Richmond counties, which cover Brooklyn and Staten Island, and Bronx County), six in the New York City suburbs (Bergen, Essex, Ocean, Passaic, Sussex and Union counties, all in New Jersey) and seven in the Chicago metropolitan area (Cook, De Kalb, Kane, Lake, McHenry and Will counties in Illinois, and Lake County in Indiana).

The five in central California were Fresno County, Madera County (outside Fresno), Merced County (outside Fresno); San Joaquin County (Stockton) and Stanislas County (Modesto).

Elsewhere, the top-50 list included three each in northern California, southern California and the Philadelphia, PA, metro area. They were Butte County (outside Sacramento), El Dorado County (outside Sacramento) and Humboldt County (Eureka) in northern California and Kern County (Bakersfield), Riverside County and San Bernardino County in southern California. Those in the Philadelphia area were Philadelphia County, Gloucester County, NJ, and Camden County, NJ.

Posted in Demographics, Economics, Housing Bubble, New Jersey Real Estate | 80 Comments

Ringwood is prime

Posted on December 6, 2023 by grim

From the NYT:

Ringwood, N.J.: A Rural Lifestyle 40 Miles From New York City

154 CUPSAW DRIVE | A four-bedroom, one-bath house, built in 1939 on 0.31 acres, listed for $640,000. Credit Laura Moss for The New York Times

With its wooded hills, winding roads and shimmering lakes and reservoirs, Ringwood, N.J., feels more like the Catskills than like a New Jersey suburb. That rural charm was what attracted Linda and James Pentifallo when they decided to leave their longtime home in River Edge, in Bergen County.

“My wife really wanted to be on a lake, but I thought, ‘We’re not going to be able to afford that,’” said Mr. Pentifallo, 64, the owner of the Ridgefield Hobby store in Ridgefield, N.J.

Earlier this year, however, they bought a three-bedroom log cabin on Cupsaw Lake — one of several lakes in Ringwood — for $599,000. Their new home reminds Ms. Pentifallo, 65, a retired office manager, of the lakefront cabin her family owned in the Adirondacks.

“We go out on the deck and have a cocktail and enjoy the view,” Mr. Pentifallo said. “What’s great about Ringwood is its location: You’re in the country, and yet you’re not far from the city.”

Orly Steinberg, an agent with Keller Williams Village Square Realty in Ridgewood, said that many buyers start out searching in pricier northern New Jersey towns, only to realize that “they can afford a nice house and get more bang for their buck” in Ringwood. Others, she said, discover the borough during weekend outdoor adventures.

“During the pandemic, 30 percent of our clients came out of the city,” said Ms. Steinberg, a longtime Ringwood resident. “Everybody was hiking the trails. That brought people up, and a lot of them bought permanent homes, and some weekend homes.”

Posted in General | 62 Comments

Inventory falls in Bergen, Morris, and Passaic

Posted on December 5, 2023 by grim

From NorthJersey.com:

Market update: Three North Jersey counties saw an increase in home listings in November

North Jersey’s real estate market saw a decrease in both new home listings and median listing prices during the month of November.

Similarly, national mortgage rates have experienced a decrease over the past month or so, but still remain high. Nationally, the average mortgage rate for a 30-year fixed mortgage is 7.48%, according to Bankrate, down from the more than 8% interest rates we saw in September.

According to housing data from Realtor.com for November, some of New Jersey’s 21 counties experienced a decrease in new home listings compared with November 2022, while others actually saw an increase.

The North Jersey counties of Bergen, Passaic and Morris continue to see a decline in new home listings. In November, Bergen and Morris saw a decline of 7.08% and 7.56%, respectively, while Passaic saw a decline of 3.54%.

While these areas continue to see fewer new listings than in the year prior, it is not by as significant of a margin than in previous months. In September, Bergen, Passaic and Morris had declines of 25.82%, 24.18% and 11.46%, respectively.

In contrast, Essex, Sussex and Hudson counties all saw an increase in new home listings compared to 2022. Hudson County saw the highest increase at 9.6%, while Essex and Sussex saw increases of 7.98% and 6.74%, respectively.

Posted in New Jersey Real Estate | 80 Comments

Maybe in 2025?

Posted on December 4, 2023 by grim

From Fast Company:

U.S. home prices to hold firm in 2024 even if a mild recession hits, Fannie Mae says

Fannie Mae economists expect U.S. economic growth to decelerate, leading to a mild recession in 2024, according to the latest forecast released this week by Fannie Mae.

“The economy is now slowing from the otherwise robust first estimate of third quarter growth,” wrote Doug Duncan, Fannie Mae’s chief economist. “The slowdown in employment gains has continued, and stress is growing on consumers’ ability to sustain their high levels of spending—unsurprising results that we attribute to the often-lagged economic effect of monetary policy tightening.”

But here’s the thing: While Fannie Mae expects the U.S. economy is likely to slip into a mild recession next year, it doesn’t project that national home prices will fall in 2024.

Fannie Mae’s forecast model expects U.S. home prices to finish 2023 up 6.7% followed by a 2.8% gain in 2024. Then in 2025, Fannie Mae expects a slight 0.4% dip.

Earlier this year, when Fannie Mae revised its 2023 home price forecast from negative to positive appreciation, it pointed to a lack of supply that has shielded national home prices from declining. That suggests a belief that a mild recession wouldn’t materially change that dynamic.

While Fannie Mae doesn’t expect a significant mortgage rate drop next year, it anticipates that rates will continue to drift down, reaching 7.1% by the end of 2024 and 6.8% by the end of 2025.

“Housing has been and continues to be under serious affordability pressure, resulting in recessionary-level home sales activity. While many current owners with low mortgage rates will likely continue to be discouraged from listing their homes, we expect mortgage rates to trend modestly downward in 2024, which should help kickstart a gradual recovery in home sales into 2025,” wrote Duncan.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 95 Comments

Uh Oh

Posted on December 1, 2023 by grim

From CNBC:

Pending home sales drop to a record low, even worse than during the financial crisis

Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in October from September.

They hit the lowest level since the National Association of Realtors began tracking this metric in 2001, meaning it’s even worse than readings during the financial crisis more than a decade ago. Sales were down 8.5% from October of last year.

Because the index measures signed contracts, it is the most recent indicator of housing demand. It reflects the buyers who were out shopping in October, which was when the popular 30-year fixed mortgage rate briefly shot higher than 8%.

Rates have since pulled back to around 7.3%, according to Mortgage News Daily. The realtors continue to say it’s not just high rates but still very low supply of homes for sale that is deflating activity.

“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, chief economist for the NAR, said in a release. “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”

Pending sales fell in all regions month to month except in the Northeast. They fell most steeply in the West, which is where homes are most expensive. Sales were down everywhere compared with a year ago.

Tight supply and still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.

The Realtors noted that sales of homes priced above $750,000 have been increasing simply because there is more supply on the high end of the market.

Posted in Crisis, Economics, Housing Bubble, Mortgages, National Real Estate | 111 Comments

NYC Metro sees strong price increase in September

Posted on November 30, 2023 by grim

From MarketWatch:

Home prices continued ascent in September despite soaring mortgage rates: Case-Shiller

Home prices showed no signs of slowing in September despite the record-high mortgage rates that rendered housing unaffordable for many Americans, according to the latest S&P CoreLogic Case-Shiller Indices report.

Nationwide, home prices rose by 0.3% in September and now stand 3.9% above its year-ago level. The 10-city composite gained 4.8% and the 20-city composite increased 3.9% – the indices measure home prices in major metros across the country. Both indices posted a 0.7% month-over-month increase in September.

Home prices now stand 6.6% above where they started the year despite rising mortgage rates. The September Case-Shiller tracks July, August and September when mortgage rates climbed steadily from 6.8% at the beginning of July to 7.3% by the end of September. At the same time, housing inventory has remained low. Existing home sales dropped 2% in September to a 13-year low, according to research from Realtor.com.

“Speeding up of annual home price growth reflects much of the pent-up demand that exists in the housing market amid very low inventories,” CoreLogic Chief Economist Dr. Selma Hepp said in a statement. “Nevertheless, home prices are feeling the weight of high mortgage rates, which will slow the rate of price growth in the coming months. Still, despite the dramatic increase in the cost of homeownership, home prices have risen 6.4% this year – meaningfully beyond expectations given the rise in borrowing costs.”
…
Detroit, San Diego and New York led the way for the fastest-growing cities in the U.S. Detroit reported the highest year-over-year growth, with an annual increase of 6.7%. San Diego and New York followed with gains of 6.5% and 6.3%, respectively.

September’s worst-performing cities were Las Vegas, Phoenix and Portland. Las Vegas saw the most significant year-over-year decline, with prices dipping 1.9%. Phoenix and Portland followed with a decrease in growth of 1.2% and 0.7%, respectively. 

Posted in Economics, Housing Bubble, National Real Estate | 37 Comments

$75k or $525k?

Posted on November 28, 2023 by grim

Ohhhhh, Millennials… From the Messenger:

Millennials Say Over $500K Would Buy Them Happiness: Report

Each generation has a different idea of the cost of happiness. For millennials, more than $500,000 annually would be the key.

In a survey conducted by The Harris Poll, 2,034 Americans ages 18 and older were asked about the secrets to financial happiness. Financial services company Empower released the results Monday, which determined the average person believes having $1.2 million is needed to attain financial happiness.

The average person would need a salary of about $284,164 every year to be happy, according to the survey, but the results did vary by generation.

Boomers said they needed the least amount of money, asking for an annual salary of $124,000 and a net worth of $999,945. They were followed by Gen Z, who sought a $128,000 salary and a net worth of $487,711.

Gen X respondents said they wanted a $130,000 salary and a net worth of $1,213,759, per the survey. Millennials said they needed the most, asking for $525,000 annually and a net worth of $1,699,571.

Women reported needing less than half of what men said they would need, asking for an annual salary of $183,000 compared to $381,000 for men.

Some researchers say millennials are not wrong. Nobel Prize recipient Daniel Kahneman co-authored a 2023 study that found that earning up to $500,000 a year can improve a person’s happiness.

But others disagree. Nobel Prize recipient Angus Deaton found in a 2010 studythat happiness can only be improved by money up to a $75,000 salary. After that point, he said that money had little impact on happiness.

Posted in Crisis, Demographics, Economics, Humor | 138 Comments

Three’s Company is cool again

Posted on November 27, 2023 by grim

From CNBC:

Gen Z, millennials are ‘house hacking’ to become homeowners in a tough market. How the strategy can help

Gen Z and millennials are “hacking” the housing market as high prices and interest rates make affordability difficult.

The term “house hacking” refers to the practice of renting out a portion of your home or an entire property for an additional stream of income.

Almost 4 in 10, 39%, of recent homebuyers say the practice represents a “very” or “extremely” important opportunity, according to a new report by housing market site Zillow. That share is up eight percentage points in the past two years.

Younger generations are especially keen on the idea. In Zillow’s survey, more than half of millennial, 55%, and Gen Z home buyers, 51%, expressed positive views on house hacking.

Zillow polled more than 6,500 recent homebuyers between April 2023 and July 2023. Respondents were adults who moved to a new primary residence they purchased in the past two years.

The additional income from house hacking can “help make those dreams of homeownership penciled into reality, given that there’s so many affordability constraints on the current market,” said Manny Garcia, senior population scientist at Zillow. 

Posted in Crisis, Demographics, Housing Bubble, National Real Estate | 30 Comments