New Jersey Real Estate Report

From Bloomberg:

Sales of Previously Owned U.S. Homes Probably Climbed in June

Sales of previously owned U.S. homes probably rose in June, a report may show today, a sign the recent pickup in demand will be sustained.

Purchases climbed 1.5 percent last month to a 4.62 million annual rate, matching April as the fastest since January, according to the median forecast of 76 economists surveyed by Bloomberg News. Jobless claims increased last week, another report may show.

Mortgage rates at all-time lows and a drop in prices have made properties more affordable for Americans with access to credit. At the same time, the recovery in the housing market will take time as the economy is slow to create jobs and lingering foreclosures put more homes on the market.

“We’re past the bottom and slowly recovering,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We might have one more bout of price weakness ahead when the foreclosure pipeline empties later in the year, but investor demand is strong and we’ll absorb that.”

The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.46 million to 4.75 million.

Federal Reserve Chairman Ben S. Bernanke is among those who say the housing market is improving.

Growth in construction and “historically low mortgage rates” are among “modest signs” of a housing recovery, even as some buyers show concern about personal finances and the broader economy and have difficulty meeting lending standards, Bernanke told the Senate Banking Committee this week.

From the WSJ:

Yea! Home Prices Hitting Bottom. Now, the Bad News.

This is a great time to buy a home in many parts of the country. There are signs that the downward price spiral is bottoming out. Mortgage rates are at historic lows.

The next few years could well be remembered as the best opportunity for Americans to buy homes since the postwar baby boom.

But one group’s opportunity is another group’s problem. Tens of millions of baby boomers and other home owners have seen their equity shrunken or wiped out completely. Many were counting on their homes to help finance their retirements. Often they have been waiting for years for the market to turn. Now they find themselves on the short end of the deal, sellers into the buyer’s market of the century.

“It’s a really challenging environment to be a seller,” says Lawrence Glazer, wealth adviser at Mayflower Advisors in Boston. “Unfortunately, many people planning to retire may have no choice.”
…
The last crash took more than a decade to work through—and this market could take an especially long time because the huge accumulation of empty, foreclosed houses will hold down prices for all properties.

When adjusted for inflation, the Case-Shiller index didn’t return to its 1989 peak until 2000. Some markets, such as New York and Los Angeles, didn’t hit new highs until 2002. This time may be even worse because the bubble was much, much bigger. Some locations may not recover their inflation-adjusted peak in our lifetimes.
…
The bottom line? The national housing market may take many years to recover. It’s a buyer’s market, but home owners hoping to sell need to do their math first.

From the WSJ:

Housing Passes a Milestone

The housing market has turned—at last.

The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing.

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. “We finally saw some rising home prices,” S&P’s David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.

Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.

The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won’t happen again this year, he says.

Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.

“Even with the overall economy slowing,” Wells Fargo Securities economists said, cautiously, in a note to clients, “the budding recovery in the housing market appears to be gradually gaining momentum.”

Economists aren’t always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don’t.

From Reuters:

US apartment rents rise at highest rate since ’07 -Reis

Renting an apartment in the U.S. became even more expensive during the second quarter, as vacancies set a new 10-year low and rents rose at a pace not seen since before the financial crisis, according to real estate research firm Reis Inc.

The average U.S. vacancy rate of 4.7 percent was the lowest since the fourth quarter of 2001, down 0.2 percentage points from the prior quarter, according to preliminary data Reis released on Thursday.

Asking rents jumped to $1,091 per month, 1 percent higher than the first quarter and the biggest increase since the third quarter of 2007. Excluding special perks designed to lure tenants, like months of free rent, the average effective rent rose 1.3 percent to $1,041.

“The improvement in rents is pretty pervasive,” said Ryan Severino, Senior Economist at Reis. “Even in places like Providence and Knoxville, which you don’t think of as hotbeds for apartment activity, landlords felt the market was strong enough to raise rents on their tenants.”
…
Severino characterized the broad increase in rental prices last quarter as “pretty amazing.”

Apartment dwellers have been facing higher rents since late 2009 but the pace of increase has been picking up steam over the past three quarters.

The surge in rental prices stems from a growing number of people who are looking for places to live, but are not willing or able to buy a home because of the ongoing slump in the housing market and tight lending conditions.

A dearth of new construction has also led more and more people to squeeze into tight urban areas at higher prices.

Generation Y has also been a driving force for higher rental prices in urban areas, particularly in cities like New York and San Francisco, where job markets are relatively strong. Even though home ownership costs less than renting, young professionals prefer to rent apartments in tightly packed cities than move out to the spacious suburbs, Severino said.

“This generation doesn’t hold home ownership on a pedestal the way prior generations did,” he said.
…
The particularly dense and expensive rental market of New York City loosened up slightly in the second quarter, with vacancies inching up 0.2 percentage points. Yet with a vacancy rate of 2.2 percent, New York remains the tightest market in the country and is by far the most expensive.

New York’s effective rents rose at a rapid 1.7 percent clip from the previous quarter and 3.9 percent from a year earlier. The average renter’s effective monthly tab of $2,935 beats the second-most expensive city, San Francisco, by over $1,000.

From CNN/Money:

Rents keep rising, while home prices inch higher

As if record low mortgage rates and beaten down home prices weren’t enough to get prospective home buyers off the fence, there’s another factor that has made the case for buying even stronger: rising rents.

U.S. rents rose an average of 5.4% over the 12 months ended June 30, according to real estate website Trulia. Demand from former homeowners displaced by foreclosure and potential homebuyers who failed to qualify for mortgages have helped to send rents skyward.

“With rents rising faster than prices in most markets, buying is getting even more affordable relative to renting,” said Jed Kolko, Trulia’s chief economist.

Meanwhile, asking prices on homes listed for sale inched up a mere 0.3% over the same period, according to Trulia’s data. And while that’s the fourth increase in home prices in five months — an indication that prices may be starting to recover — the gains are modest compared to the increases in rental rates over the past 12 months.

From Forbes:

Rising Home Prices Can’t Keep Up with Rent Increases

The Trulia Price Monitor and Trulia Rent Monitor are the earliest leading indicators of how asking prices and rents are trending nationally and locally. They adjust for the changing mix of listed homes and therefore show what’s really happening to asking prices and rents. Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed.
…
Asking prices were up once again month over month in June, by 0.3%. Aside from May, when asking prices increased by so little that they were essentially unchanged, asking prices have moved up every month since February. Now, even the year-over-year price change is positive. Foreclosures hold back price gains; when we exclude foreclosed homes, prices are up 1.7% year-over-year. At the local level, prices have risen quarter-over-quarter in 84 of the 100 largest metros, seasonally adjusted – these widespread gains are in addition to the typical springtime boost. Now that’s real progress.
…
Although prices have increased, rents have risen faster, at 5.4% year over year. In 22 of the 25 largest rental markets, rents are outpacing prices. This means that buying a home is becoming an even better deal relative to renting – that is, for those who can qualify for a mortgage and put up the down payment.

Are there any signs of rents slowing down? Not really. In most markets, the year-over-year increase in June was higher than in March. In San Francisco, for instance, rents were up 14.7% year over year in June compared with 10.9% in March. Oakland, Portland, Philadelphia and Houston have also seen rent increases accelerate since March.