Mortgage see-saw takes it’s toll

From CNBC:

Mortgage rates surge higher again, causing homebuyers to pull back

After a brief reprieve in December and January, mortgage rates are moving higher again, and that is taking its toll on mortgage demand.

Total mortgage application volume fell 2.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.87% last week from 6.80% the week before, with points rising to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That is the highest rate since early December 2023.

Applications to refinance a home loan, which are most sensitive to weekly rate changes, fell 2% for the week but were 12% higher than the same week one year ago. Rates are still about one-half a percentage point higher now than they were a year ago, but the recent drop in rates from a 20-year high last fall has brought more borrowers out looking for any savings they can get. The vast majority of current borrowers, however, have loans with rates far lower than those available today.

Applications for a mortgage to purchase a home dropped 3% for the week and were 12% lower than the same week a year ago.

“Purchase applications remained subdued as elevated rates continue to add to affordability challenges along with still-low existing housing inventory,” said Joel Kan, an MBA economist, in a release.

A recent report from Redfin showed an 8% drop in pending home sales over the last four weeks compared with the same period a year ago. These measure signed contracts on existing homes.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 52 Comments

37 NJ towns you can’t afford

From the Star Ledger:

These 37 N.J. towns have home values of at least $1M. See latest statewide ranking.

New Jersey’s home prices continued to steadily increase through the end of last year with typical home values of at least $1 million in 37 towns across the state, according to the latest Zillow data.

The top five home values were once again reported two pairs of neighboring Jersey Shore towns – Deal and Allenhurst in Monmouth County and Avalon and Stone Harbor in Cape May County – along with Alpine in Bergen County.

Nearly every ZIP code included in Zillow’s data for December posted increases in home values, topped by a more than 20% surge in the Three Bridges section of Readington Township. Just seven towns reported declines and five of those were less than 1% drops in Jersey Shore towns, which can be swayed by seasonality.

Statewide, the typical home value was $495,287 as of December, placing the Garden State eighth in the nation for most expensive homes. Nationwide, the typical home value was $342,685 in December, according to the data.

Posted in Demographics, Economics, New Jersey Real Estate | 100 Comments

Flooding kicks off new wave of Blue Acres buyouts

From ABC News:

Flood-stricken New Jersey residents look into government-funded home buyout program

The flooding in parts of New Jersey over the past few months left mounts of headaches for residents.

Countless residents from those affected areas came out to meet with New Jersey State Department of Environmental Protection officials in Pompton Lakes Thursday night to learn about the Blue Acres Program.

The program is voluntary and it relocates flood-stricken residents who are considering government-funded buyouts of their homes.

It eligible, homeowners would be offered fair market value for their homes, using state and federal funds.

“I’ve been in this town 60 years,” said David Woll of Pompton Lakes. “So, I’ve been through enough floods.”

For 10-year-old Melina, who says she was trapped inside her Wayne home during the recent storms, it’s a tough decision.

“I like my school and I wanna stay in my school, but I don’t like the flooding,” she said.

Her family bought their Wayne home six years ago.

But the flooding problems have been worse than expected.

From CBS News:

Some New Jersey flood victims looking to be bought out by government

Flooding across New Jersey in recent months has many residents in those areas saying they’ve had enough.

Thursday afternoon, some flood victims met with New Jersey’s Blue Acres, a government buy-out program.

This is the second Blue Acres meeting this month at the library in Lodi, a borough that’s seen its share of flooding. The one-on-one meetings are closed to the media and flood victims from across the state can attend.

Some tell us while the program is voluntary, the buy-out offers are low and confusing.

“We had the sewage coming up through this pipe, which was insane,” Manville homeowner Brianna Lohr said.

Lohr has begun the buy-out process and says even though she’s being offered what she and her boyfriend paid at the time of flood, she doesn’t care.

“Sign me up. I will sign the line. If we could get out today, we absolutely would,” she said.

Other residents in flood-ravaged neighborhoods say they want the full market value of their homes.

“They are saying that it is market value at the time of the incident, which is not fair,” Milford resident Leeana Jones said.

Jones’ life was turned upside down after Hurricane Ida damaged her Milford home and sent water into the basement.

She says she can’t get more funding to raise her home like others and her credit’s shot after making repairs.

Shawn M. Latourette, the commissioner of the Department of Environmental Protection, oversees the federally funded Blue Acres program. He says the rules are mandated by Congress.

“That is tied to fair market value at the time of the event, and it is one of those issues of bureaucracy that is a bit ignorant of or not attuned to the realities, the facts on the ground,” he said.

Posted in Crisis, New Jersey Real Estate, Politics, Unrest | 77 Comments

Priced out of Monmouth

From the APP:

Monmouth County median home prices start the new year by rising over the $800K mark

The median home in Monmouth County listed for $808,750 in January, up 2.5% from the previous month’s $789,000, an analysis of data from Realtor.com shows.

Compared with January 2023, the median home list price increased 13.9% from $699,950.

The statistics in this article only pertain to houses listed for sale in Monmouth County, not houses that were sold. Information on your local housing market, along with other useful community data, is available at data.app.com

Monmouth County’s median home was 1,960 square feet, listed at $388 per square foot. The price per square foot of homes for sale is up 12.6% from January 2023.

Listings in Monmouth County moved briskly, at a median 65 days listed compared with the January national median of 69 days on the market. In the previous month, homes had a median of 57 days on the market. Around 524 homes were newly listed on the market in January, a 10.3% decrease from 584 new listings in January 2023. 

The median home prices issued by Realtor.com may exclude many, or even most, of a market’s homes. The price and volume represent only single-family homes, condominiums or townhomes. They include existing homes, but exclude most new construction as well as pending and contingent sales.

Across the New York-Newark-Jersey City metro area, median home prices rose to $741,500, slightly higher than a month earlier. The median home had 1,509 square feet, at a list price of $533 per square foot.

Posted in Housing Bubble, New Jersey Real Estate, Shore Real Estate | 57 Comments

NYC’s rent controlled time bomb

From Bloomberg:

Why NYC Apartment Buildings Are on Sale Now for 50% Off

Even in the crisp afternoon sunlight, the two-bedroom Manhattan apartment has a ghostly pallor, its cracked walls yellowing like an ancient black-and-white photograph. Paint chips are falling from the ceiling. A dead pigeon lies on the kitchen floor.

Its landlord, Douglas Peterson, is making a stop on a dispiriting tour of a 21-unit building he bought in 2018 for $4.8 million. Peterson’s City Skyline Realty Inc. specializes in a subgenre of real estateinvestment: properties subject to the New York City rent-regulation system, the oldest and biggest program in America. For this well-situated apartment on West 164th Street in Washington Heights, the quickly gentrifying Dominican enclave immortalized in a Lin-Manuel Miranda musical, he can charge no more than $650 a month, perhaps a quarter of the market rate.

For landlords the playbook had long been simple and lucrative. Buy run-down buildings that are, in New York lingo, rent-stabilized. Fix them up. Pass along the expense to tenants by raising rents, which was allowed under the regulations. Cash out. Repeat. Once rents approached $2,800 a month, owners could charge what the market would bear, and the apartments became a potential gold mine. “You just had to be patient,” Peterson says.

But his bet on raising rents has gone disastrously bad, as it has for landlords across the city. In 2019, alarmed about the decline in affordable housing, New York state lawmakers rewrote the rules. In one key change they sharply reduced how much landlords could raise rents after renovations. In an even more important shift, the apartments no longer leave the program when rents rise high enough.

Peterson—who’s bought more than 40 properties for $300 million over 20 years—is now in distress. He’s falling behind on his mortgages and scrambling to find money for repairs. In October, Fannie Mae, the government-backed home loan company, started foreclosure proceedings against a dozen of his properties, including the building on 164th Street. “My career is over,” Peterson says. “Now it’s just a question of: What’s my legacy going to be? Is it going to be that I abandoned the ship when it was sinking, or that I stayed and fought?”

Last year, New York buildings with at least one rent-­stabilized apartment sold on average for $203,000 a unit, down 34% since 2019, according to Maverick Real Estate Partners, a New York investment manager. By contrast, the price of nonregulated apartments rose 23%. The value of rent-stabilized units declined by as much as $75 billion, Maverick found. In December the Federal Deposit Insurance Corp. unloaded $15 billion in loans backed primarily by New York rent-stabilized apartments—at a 40% discount. Last week, amid concern over real estate exposure, shares of New York Community Bancorp Inc.—which holds about $37 billion in apartment loans, half backed by rent-regulated units—dropped 38% in a single day. “A lot of owners I’m speaking with want to walk away from buildings,” says Lazer Sternhell, chief executive officer of Cignature Realty Associates Inc. in the city.

Posted in Crisis, Demographics, Economics, NYC, Politics, Price Reduced | 55 Comments

Shocker: Rental agents say you should rent…

From CBS/Philly:

Jersey Shore real estate experts urge families to book summer rentals quickly as warm weather approaches

Jersey Shore real estate experts are urging families to book their summer rentals quickly as they expect a spike in demand for homes in the coming weeks.

Maria Kirk, who runs the 20-year-old website Shore Summer Rentals, said traffic to her site is up 20% since the start of the new year.

“Soon as New Year’s passed, a light bulb goes on, and everyone starts booking,” Kirk said. “We had a really strong January and an even stronger February.”

She said the recent stretch of sunny weather has also nudged people to browse rentals.

“I have a feeling this year is going to be just like last year, maybe even better,” Kirk said. “Last year was a little slower, but at the end, everybody was booked.”

Mary Ann Madrak, who lives in Berwyn, Pennsylvania, said her family already booked their summer rental in Ocean City.

“We didn’t want to miss out on the opportunity, and we had very specific needs as far as location, number of bedrooms, things like that,” Madrak said. “We were able to find something that suited us, so it took a little bit of planning and contacting different real estate agents to find the perfect place that would be best for us.”

Posted in Philly, Shore Real Estate | 100 Comments

Best geopolitical news in a decade

Has nothing to do with real estate, but our neighbors on this side of the world really should be our strongest trade partners. From Quartz:

The US imported more from Mexico than China for the first time in decades

For the first time in two decades, US imports from Mexico surpassed those from China, according to data from the US Census Bureau, signaling a shift in global trade due to tensions between the US and China

The US’s trade deficit, which represents exports minus imports, with China fell, with imports falling 20% to $427.2 billion last year, noting that consumers and businesses in the US also turned to Canada and countries in Europe and Asia to import goods such as auto parts and raw materials. Meanwhile, exports from Mexico to the US were worth $475.6 billion, staying close to last year’s number.

While the US’s total trade deficit slimmed to 18.7% last year, its exports around the world increased in 2023. However, the report shows US consumers and businesses bought less goods such as crude oil and cellphones, leading imports to fall. 

In January, US Census Bureau data showed that US imports from China from January to November 2023 fell over 21% when compared to the same period the previous year, while US imports from Mexico grew almost 5% at the same time.

The Census Bureau also reported that Chinese imports to the US from January to November 2023 made up 13.9% of the US’s total imports—its lowest level since 2004. At the same time, Mexico’s share of total imports to the US grew to 15.5%, which was a record high.

The recent fall in Chinese trade with the US is partially due to high demand during the pandemic, the New York Times reported, noting that during the pandemic, US consumers bought many Chinese-made products. 

Posted in Economics, Politics, Unrest | 106 Comments

Jersey Shore Timeshares

Sorry, this one is behind the paywall, but I couldn’t help but post it. From the Philadelphia Business Journal:

With Jersey Shore home prices soaring, owners are now selling fractions of their houses

With skyrocketing home prices and rental rates at the Jersey Shore pricing out many families, the owner of a $3.39 million home in Stone Harbor is offering fractional ownership stakes in his house — and he’s not the only one.

Posted in Crisis, Housing Bubble, New Jersey Real Estate | 127 Comments

Short refi window closes

From CNBC:

Mortgage rates jump back over 7% as stronger economic data rolls in

The average rate on the popular 30-year fixed mortgage crossed over 7% on Monday for the first time since December, hitting 7.04%, according to Mortgage News Daily.

It comes after the rate took the sharpest jump in more than a year Friday, after the January employment report came in much higher than expected. Rates then moved up even more Monday after a monthly manufacturing report came in high as well.

Mortgage rates have been on a wild ride since the summer, briefly crossing to a 20-year high of 8% in October. Rates then fell sharply, as investors saw more and more evidence that the Federal Reserve would end its latest phase of interest rate increases.

“The rapid increase in rates over the past two days is actually not too surprising given the fact that the market was widely seen as overly optimistic on the Fed rate cut outlook. The Fed has repeatedly pointed to economic data having the final say in that outlook and data has been shockingly unfriendly to rates as of Friday morning’s jobs report,” said Matthew Graham, chief operating officer at Mortgage News Daily.

As mortgage rates fell over the past two months, buyers seemed to be returning to the market. That coincided with a slight uptick in the number of homes for sale. Total inventory, however, is still historically low and is keeping competition high. It is also keeping home prices stubbornly hot.

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

Sorry Texas

… Louisiana, and Mississippi.

Posted in Economics, Housing Bubble, National Real Estate | 78 Comments

January a mixed bag for NJ real estate

From NorthJersey.com:

Real estate snapshot: Did North Jersey home prices increase in January?

In January, New Jersey’s real estate market saw both positive and negative trends for potential homebuyers.

Just about half of New Jersey’s 21 counties saw an increase in new home listings compared to January 2023 — a positive sign following a long period of low housing inventory across the state. And, all 21 counties saw home prices increase in January compared to last year — a benefit to those looking to sell, but bad news for those looking to buy.

According to housing data from Realtor.com, 10 of North Jersey’s 21 counties had an increase in new home listings compared with January 2023.

In North Jersey, Bergen, Essex, Sussex and Hudson counties all experienced an increase in new listings. Hudson County had the highest increase in the region at 9.32%, with 352 new listings in January 2024. With increases of 7.43% and 5.48%, Essex and Sussex counties saw 376 and 154 new listings, respectively. In Bergen County, there was a 1.9% increase, with 536 new listings — the highest number of new listings in North Jersey and the third highest number in the state.

In contrast, Passaic and Morris Counties saw a decrease in new listings in January. While Passaic County saw a 2.17% decrease and 180 new listings, Morris County had the greatest decrease across the state at 2.16%, with 254 new listings.

Compared to last year, all 21 New Jersey counties saw increases in median home listing prices in January, and 17 of those counties saw increases of more than 10%.

Bergen and Morris counties had the highest increases in North Jersey at 15.73% and 13.32%, with median listing prices of $785,250 and $691,225, respectively. In Sussex and Hudson counties, home prices increased by 12.73% and 12.26%, with median listing prices of $399,900 and $650,000, respectively. Listing prices in Passaic County increased by 10.69% and the median listing price there is $475,000.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 38 Comments

Finally slowing?

From CNBC:

Home prices began to cool in November after nine straight months of gains, S&P Case-Shiller says

Home prices in November fell 0.2% from October, according to the S&P CoreLogic Case-Shiller national home price index.

While that may not seem like a lot, it is the first monthly drop since January 2023. Mortgage rates rose sharply in October to their highest level in more than 20 years, making houses hard to afford.

Seattle and San Francisco reported the largest monthly price declines, falling 1.4% and 1.3%, respectively. Meanwhile, six cities registered a new all-time high in November. Those were Miami; Tampa, Florida; Atlanta; Charlotte, North Carolina; New York; and Cleveland.

Prices nationally were still higher than the year before, and those annual gains increased again relative to the prior month. They rose 5.1% from November 2022, up from a 4.7% annual increase in October. The 10-city composite climbed 6.2%, up from a 5.7% advance in October. The 20-city composite rose 5.4%, up from a 4.9% increase in the previous month.

“The house price decline came at a time where mortgage rates peaked, with the average Freddie Mac 30-year fixed rate mortgage nearing 8%, according to Federal Reserve data,” said Brian Luke, head of commodities, real and digital assets at S&P DJI. “The rate has since fallen over 1%, which could support further annual gains in home prices.”

For the second straight month, Detroit reported the highest year-over-year gain among the 20 cities. Prices rose 8.2% in November, followed again by San Diego with an 8% increase.

Portland, Oregon, was the only city showing prices lower from the prior year, down 0.7%, compared with November 2022.

Posted in Demographics, Economics, Housing Bubble, Mortgages, National Real Estate | 124 Comments

NJ second worst state to retire in

From WalletHub:

Best and Worst States to Retire (2024)

Many people fear that retirement will mark the end of their financial security, and others worry they might never actually get to retire. That’s understandable when 28% of non-retired adults haven’t saved any money for retirement and Social Security benefits replace only about 37% of the average worker’s earnings.

Living in the right place after you retire can make your money go a lot further. To determine the best states to retire, WalletHub compared the 50 states across 46 key indicators of retirement-friendliness, from financial factors like tax rates and the cost of living to things like access to quality medical care and fun activities.

To supplement this report, WalletHub also released a retirement savings survey that examined Americans’ attitudes on retirement and the money they have set aside for it.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 90 Comments

Uh oh…

From NJ.com:

New listings of home sales spiked 72% in this N.J. county. Latest rankings by county.

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

Blame taxes for the inventory?

From CNN:

Boomers are not moving out of their big homes. Here’s why

After 33 years and four children, Baby Boomers Marta and Octavian Dragos say they feel trapped in what was once their dream home in El Cerrito, California.

Both over 70, the Dragos are empty nesters, and like many of their generation, they’re trying to figure out how to downsize from their 3,000-square-foot, five-bedroom home.

“We are here in a huge house with no family nearby, trying to make a wise decision, both financially and for our well-being,” said Dragos, a retired teacher.

But selling and downsizing isn’t easy, appealing or even financially advantageous for many homeowners like the Dragos family.

Many Boomers whose homes have surged in value now face massive capital gains tax bills when they sell. This is a kind of tax on the profit you make when selling an investment or an asset, like a home, that has increased in value.

Plus, smaller homes or apartments in the neighborhoods they’ve come to love are rare. And with current prices and mortgage rates so high, there is often a negligible cost difference between their current home and a smaller one.

“For now we’re staying put,” Dragos said. “Better to hold steady than to do something we will regret.”

Fewer older homeowners selling is part of what is keeping the inventory of homes historically low and pushing prices ever higher in markets across the US. Empty nesters of this age own more larger homes — three bedrooms or more — than Millennials with kids do.

Dragos said she understands that, as homeowners, theirs are enviable problems. They own an asset that has soared in value, after all.

But as she and her husband sit at their dining table discussing the morbid math — what is left after capital gains taxes, what happens if he dies first, what if she goes before him — she says they see no good options for how to get out from under their home while keeping an acceptable amount of profit from its sale, which they’d like to use to fund their retirement.

Posted in Demographics, Economics, Housing Bubble, Politics, Property Taxes | 94 Comments