20 year high

Posted on August 18, 2023 by grim

From NPR:

Mortgage rates just hit their highest since 2002

Mortgage rates jumped to their highest level in more than two decades, making home-ownership even less affordable for many would-be buyers.

The average interest rate on a 30-year, fixed-rate home loan climbed to 7.09% this week, according to mortgage giant Freddie Mac. That’s the highest it’s been since April 2002 and comes after the Federal Reserve has raised interest rates aggressively in a bid to fight inflation.

Mortgage rates have more than doubled in the last two years, sharply raising the cost of a typical home loan. The monthly payment on a $350,000 house today, assuming a 20% down payment, would be $1,880, compared to $1,159 in 2021, when interest rates were below 3%. 

“A lot of buyers have been priced out,” said Robert Dietz, chief economist of the National Association of Home Builders. “If you don’t have access to the bank of mom and dad to get that down payment, it’s very challenging.”

Rising interest rates not only make it harder for first-time buyers to become homeowners. They also discourage people who already own homes from trading up. 

“If you’re a homeowner who’s got a 2% or 3% mortgage, you’re not in a hurry to put your home up for sale because that would require a higher mortgage rate,” Dietz said. “So resale inventory is about half of what it should be.”

Posted in Economics, Housing Bubble, Mortgages | 71 Comments

Too much money, too few options, more records

Posted on August 16, 2023 by grim

From News 12:

Home prices on Long Island hit record high 

Home prices on Long Island are hitting record highs this summer.

In July, Nassau County’s median closing price was $725,000.

The price is $30,000 more than the month before, and the highest on record. 

Meanwhile, Suffolk’s median closing price was also up — tying a record high at $575,000.

The numbers are according to OneKey MLS, which tracks housing prices.  

Posted in Housing Bubble, National Real Estate, NYC | 124 Comments

9.7% of North Jersey homes over a $1m

Posted on August 15, 2023 by grim

From Redfin:

Nearly 1 in 10 U.S. Homes Are Worth at Least $1 Million, Close to All-Time High

Just over 8% of U.S. homes are worth $1 million or more, near June 2022’s all-time high of 8.6%. 

This analysis estimated current home values using the Redfin Estimate, public records and MLS data, and past home values using public records and MLS data. The figures in this report represent June 2023, unless otherwise noted. See the end of this report for a detailed methodology.

The share of homes worth seven figures is on the upswing after dipping to a 12-month low of 7.3% in February. That’s because home prices are rising on a year-over-year basis after falling at the beginning of the year. The median U.S. home-sale price rose 3% in July, the biggest increase since last November. Prices are rising faster for high-end homes, with the median sale price of U.S. luxury homes up 4.6% year over year to $1.2 million in the second quarter. 

Today’s elevated mortgage rates are discouraging potential home sellers, with homeowners staying put to keep their relatively low mortgage rates. Inventory is so low that even though many buyers are sidelined by high rates, those who are in the market are competing for the few homes for sale. That’s driving home prices up and pushing many of those on the cusp above the million-dollar mark. 

“The supply shortage is making many listings feel hot,” said Redfin Economics Research Lead Chen Zhao. “In most of the country, expensive properties that are in good condition and priced fairly are attracting buyers and in some cases bidding wars, mostly because for-sale signs are few and far between right now.” 

“Still, there’s no rush to offload high-value homes,” Zhao continued. “Recent economic signals that the U.S. may avoid a broad recession could cause high-end buyers to feel more confident in making a major purchase in the coming months. There may be more demand coming down the pipeline.”

For homebuyers, the uptick in homes worth seven figures illustrates ongoing challenges with housing affordability in the U.S. And for buyers using loans, monthly payments on million-dollar homes are even more expensive than they were a year ago. A buyer purchasing a $1 million home would have a monthly mortgage payment of $6,604 with June’s average 6.7% mortgage rate, up from $5,984 with last June’s typical rate of around 5.5%. 

The share of homes worth seven figures has doubled since before the pandemic; just over 4% of homes were valued at $1 million or more in June 2019. The share has shot up because home prices skyrocketed in 2020 and 2021 as record-low mortgage rates and remote work drove Americans to buy homes. 
…
Parts of New England are gaining million-dollar homes fastest. Just over one-quarter (25.8%) of homes in the Bridgeport, CT metro–which is made up of many popular New York City suburbs–are worth at least $1 million, up from 23.1% a year ago, the biggest increase of the metros in this analysis. It’s followed by Boston, where the share increased from 20.3% to 21.5%, and Newark, NJ (8.7% to 9.7%). 

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 45 Comments

When will rates impact housing?

Posted on August 14, 2023 by grim

From HousingWire:

Where are mortgage rates headed?

ast week ended with a wild ride for mortgage rates. We anticipated the two inflation reports could help mortgage rates, however, we had a bad bond auction last Thursday, and the 10-year yield rose sharply. Weekly active inventory grew slowly again and purchase apps were down week to week again.

  • Weekly active listings rose by only 4,270
  • Mortgage rates went from 7.03% to 7.19%
  • Purchase apps were down 3% week to week

Last week we started with lower bond yields as we anticipated inflation reports to continue the trend of slower year-over-year inflation data. This happened as expected, except we had a lousy bond auction, which meant too much debt supply came online with insufficient buyers. This pushed yields higher Thursday and Friday to move mortgage rates to 7.19%.

A valid case for higher mortgage rates in the short term is that we are simply going to be in an environment where we don’t have a lot of bond buyers versus the supply coming in, thus making it harder for mortgage rates to go lower. We saw an example of that last week. 

For my 2023 forecast, my range on the 10-year yield has been between 3.21%-4.25%, emphasizing that the bond yields can go lower than 3.21% only if the labor market breaks. The labor market breaking to me is if jobless claims on a four-week moving average go over 323,000; currently, that data is 231,000. As the economy has stayed firm, bond yields are at a higher level of my range for 2023.
…
The painful housing inventory story of 2023 continues as we had yet another week of slow inventory growth. Last year when mortgage rates spiked higher, inventory growth was much faster, but we were also working from the lowest levels recorded in history in March of 2022. This year, it’s been a much different story. 

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

Peak Shore?

Posted on August 13, 2023 by grim

From the Philly Inquirer:

Did Shore house owners push their luck with high rents? Prices are dropping and weeks are open.

Last summer, her Shore house in Avalon fully booked, Katie Leighton took the family on a vacation to Europe. But this summer, a gaping hole emerged in prime season as some of her regular renters decided to take their families to Europe.

So she and her family spent a lovely week at the Jersey Shore.

“My kids have never spent a week at the beach at high season because it was always rented,” said Leighton, of Wilmington. “They were doing cartwheels.”

After three summers of a pandemic-bloated crush of demand that filled up Shore homes, created new investors, and pumped up rental and sale rates, things this summer are quite different. Unheard of in past summers, weeks are going unrented, and rental prices are dropping.

Maryellen Sheehan, who owns five Shore houses in Ocean City and manages others, says the market has definitely softened this summer.

One owner of a home she helps manage dropped a prime week’s price of a five-bedroom place with ocean views from $10,000 to $5,000 in order to get it booked.
…
It’s a big deflation from the last three summers, when it seemed nobody went anywhere else but the Shore.

But as owners raised their rates, people began to balk.
…
Overall, she said, there were 5,174 available listings at the Jersey Shore in June, down to 4,988 in July. This still represented a 13% increase in availability from a year earlier, possibly reflecting an increase in investors new to the market. Demand did not keep pace, she said.

Posted in New Jersey Real Estate, Shore Real Estate, Unrest | 23 Comments

You’ll need to find another way to launder money

Posted on August 11, 2023 by grim

From Reuters:

US set to unveil long-awaited crackdown on real estate money laundering

The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains.

The long-awaited rule is expected to require that real estate professionals such as title insurers report the identities of the beneficial owners of companies buying real estate in cash to the Treasury’s Financial Crimes Enforcement Network (FinCEN).

FinCEN is slated to propose the rule sometime this month, according to its regulatory agenda, though the timeline could slip, said two people briefed on the developments. Anti-corruption advocates and lawmakers have been pushing for the rule, which will replace the current patchwork reporting system.

Criminals have for decades anonymously hidden ill-gotten gains in real estate, Treasury Secretary Janet Yellen said in March, adding that as much as $2.3 billion was laundered through U.S. real estate between 2015 and 2020.

“That’s why FinCEN is taking this important step to put something officially on the books that would root out money laundering through the sector once and for all,” said Erica Hanichak, government affairs director of advocacy group the FACT Coalition.

Some advocates say FinCEN, which declined to comment on the timing of the proposal, has moved too slowly. Officials first said in 2021 that they planned to implement the rule.

Posted in Housing Bubble, National Real Estate, Politics | 74 Comments

Another day, another record

Posted on August 10, 2023 by grim

From CNBC:

The average Manhattan rent just hit a new record of $5,588 a month

Rents in Manhattan hit a new high in July, as higher interest rates and low supply continued to drive up prices.

The average monthly rent in July was $5,588, up 9% over last year and marking a new record. Median rent, at $4,400 per month, also hit a new record, along with price per square foot of $84.74, according to a report from Miller Samuel and Douglas Elliman. It was the fourth time in five months that Manhattan rents hit a record.

Despite a loss in population during the pandemic, average rents in Manhattan are now up 30% compared to 2019. Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm, said August rents could mark a new record because it is typically the peak rental month as families look to move before the start of the school year.

“We could see another month of records,” Miller said.

Manhattan’s soaring rents have continued to defy predictions of analysts and economists. The borough’s population dropped by 400,000 between June 2020 and June 2022, according to U.S. Census data. While experts say the population has increased since last year, they say it is still likely below 2019.

What’s more, offices in Manhattan remain less than half occupied due to remote work. According to Kastle Systems, New York offices were only 48% occupied at the end of July.

Yet despite the population loss and rise of remote work, Manhattan rents continue to soar. Brokers say the lack of apartments for sale, due to higher interest rates, have forced many would-be buyers to rent. Younger workers also have flocked to the borough since the pandemic.

Posted in Demographics, Economics, Employment, NYC | 40 Comments

Tipping Point

Posted on August 9, 2023 by grim

From MSN:

The shrinking American home: As demand rises, builders go smaller

“It’s pretty consistent nationally,” said Mikaela Arroyo, director of the New Home Trends Institute at John Burns Real Estate Consulting. 

In an April report, JBREC surveyed 290 residential architects, designers and design-oriented builders and learned exactly how much homes are shrinking: A third of detached homes now being planned and built are expected to be under 2,000 square feet, and 70% will be under 2,500 square feet, the company found.  Townhomes are expected to be between 1,500 and 2,000 square feet. “While overall home sizes will shrink, townhomes may grow as would-be detached homes become attached to increase density,” the report said. 

And although “a lot of the market has historically been really resistant to density,” Arroyo said, even markets where lots and homes are typically bigger are seeing it increase. “Areas like Texas, where density wasn’t very common, we’re now seeing it increasing just because that’s the only way to get prices to an affordable level.”

As newly built homes get smaller, builders are allocating more space for more heavily trafficked areas of the house.

Builders are saying goodbye, for instance, to the formal dining room and welcoming a bigger kitchen island with seating. They’re adding another small bedroom instead of a bigger walk-in closet for the primary bedroom and including more outdoor space by forgoing a loft or a bonus room upstairs.

“We’re seeing a lot of deletion of separate, defined spaces,” Arroyo said.

“Think about the dining room and the living room. In the past, you would have had the downstairs of the house, which includes the kitchen, dining and living rooms. Now it’s just one great room and one kitchen,” she said. “And the kitchen is actually getting larger than it used to be, because we’re taking away the dining room.” 

Builders are shrinking homes in part to reduce costs, according to the JBREC report. Designers said that they were redesigning projects to reduce the cost of building by 7% to 10%. 

Posted in Demographics, National Real Estate, New Development, Where's the Beef? | 37 Comments

How high can we go?

Posted on August 8, 2023 by grim

From Black Knight:

Home Prices Hit New Record Highs in 60% of Major Markets as Annual Growth Rate Rises, Boosting Homeowner Equity Levels

The Black Knight Home Price Index (HPI) hit an all-time high in June, this time on both seasonally adjusted (SA) and unadjusted levels, with nearly every major market experiencing month-over-month growth

Prices have now reached new peaks in 30 of the 50 largest markets, with several northeastern metros currently 5-8% above 2022 highs

Home prices rose by +.67% (SA) month-over-month in June, while after slowing for 14 consecutive months, the annual growth rate rose to +0.8% in June, up from a revised +0.2% in May

Broadly speaking, annual growth is strongest among Midwest and Northeast markets, while West Coast and pandemic boom markets continue to see prices run below last year’s levels

Despite overall outstanding mortgage debt surpassing $13T for the first time ever, home price growth has also pushed homeowner equity levels back to within 3% of 2022 peaks

Total mortgage holder equity topped $16T again in June, with tappable equity – the amount that can be accessed while retaining a 20% equity stake – climbing to $10.5T, within $434B (4%) of 2022 peaks

While the number of underwater homeowners is up nearly 70% from last year, it remains 52% below 2019 levels, with just 344K (0.65%) of mortgage holders nationwide currently owing more than their home is worth

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate | 32 Comments

Where NJ goes

Posted on August 7, 2023 by grim

From NJ 92.7:

Leaving New Jersey: Where People Choose to Live Next

#10. Delaware

  • Moved from New Jersey to Delaware: 6,955 (3.0% of residents that moved)
  • Moved from Delaware to New Jersey: 1,066
  • New Jersey is the #9 most common destination for people moving from Delaware.

#9. Maryland

  • Moved from New Jersey to Maryland: 8,021 (3.5% of residents that moved)
  • Moved from Maryland to New Jersey: 3,772
  • New Jersey is the #12 most common destination from Maryland.

#8. Georgia

  • Moved from New Jersey to Georgia: 8,455 (3.7% of residents that moved)
  • Moved from Georgia to New Jersey: 1,915
  • New Jersey is the  #25 most common destination from Georgia.

#7. Virginia

  • Moved from New Jersey to Virginia: 9,511 (4.1% of residents that moved)
  • Moved from Virginia to New Jersey: 4,810
  • New Jersey is the  #17 most common destination from Virginia.

#6. Texas

  • Moved from New Jersey to Texas: 10,319 (4.5% of residents that moved)
  • Moved from Texas to New Jersey: 4,489
  • New Jersey is the #31 most common destination from Texas.

#5. California

  • Moved from New Jersey to California: 10,812 (4.7% of residents that moved)
  • Moved from California to New Jersey: 9,155
  • New Jersey is the #21 most common destination from California.

#4. North Carolina

  • Moved from New Jersey to North Carolina: 15,297 (6.7% of residents that moved)
  • Moved from North Carolina to New Jersey: 4,294
  • New Jersey is the #16 most common destination from North Carolina.

#3. Florida

  • Moved from New Jersey to Florida: 28,222 (12.3% of residents that moved)
  • Moved from Florida to New Jersey: 12,032
  • New Jersey is the #14 most common destination from Florida.

#2. New York

  • Moved from New Jersey to New York: 31,942 (13.9% of residents that moved)
  • Moved from New York to New Jersey: 58,664
  • New Jersey is the #1 most common destination from New York.

#1. Pennsylvania

  • Moved from New Jersey to Pennsylvania: 43,295 (18.9% of residents that moved)
  • Moved from Pennsylvania to New Jersey: 22,445
  • New Jersey is the #3 most common destination from Pennsylvania.

Posted in Demographics, Economics, National Real Estate, New Jersey Real Estate | 82 Comments

Jobs Day!

Posted on August 4, 2023 by grim

From Morningstar:

July Jobs Report Forecast: Few Signs of a Slowing Economy

Forecasts for the July U.S. jobs report call for yet another month of healthy gains in the labor market, with no signs of a recession. Still, if the report comes in on target, economists see little reason for the Federal Reserve to respond with yet another increase in interest rates from their already-high levels. While job growth is solid, it is down from peak levels, and as long as inflation continues its moderating trend, that should keep the Fed on the sidelines.

“The reality is that the labor market is strong, and that’s a big part of the reason the economy has been so resilient,” says AllianceBernstein chief economist Eric Winograd.

After the June jobs report showed solid increases, economists expect another round of similar gains. Nonfarm payroll employment is expected to increase by 200,000, according to FactSet’s consensus estimates. This follows an increase of 209,000 in June, and it would be down substantially from the 339,000 increase seen in May.

“While the labor market has been strong, there is some evidence that it is gradually starting to decelerate,” Winograd says. “I don’t want to say ‘weakened’ because it isn’t weakening. It is getting strong at a slower pace.”

The monthly jobs report is also notoriously volatile, and consensus forecasts are often off by a wide margin. Winograd notes that going back to early 2022, economists have tended to underestimate the pace of job growth: “Forecasters have been too low in14 out of the last 15 months.”

Economists predict the unemployment rate will remain at 3.6%, in line with levels seen since early 2022. Kevin Nicholson, a chief investment officer at RiverFront Investment Group, points to the rate at which employers are filling in vacancies as a factor keeping the unemployment rate steady. “We’re replacing workers at the same level as we are adding more groups, in the sense that you have retirees that roll off payrolls and you have new workers that are added to the payrolls,” he says.

Posted in Economics, Employment, New Jersey Real Estate | 116 Comments

Losing the greatest fools

Posted on August 3, 2023 by grim

From CNBC:

Foreign buyers are bailing on the U.S. housing market. Here’s why

International buyers are pulling back from the U.S. housing market, as high mortgage rates, soaring home prices, a meager supply of homes for sale and a strong dollar all make the purchases much less financially attractive.  

From April of last year to this March, international buyers bought roughly 84,600 homes; that’s the lowest number since the National Association of Realtors began tracking such purchases in 2009 and a 14% drop from the year before.

And while overseas buyers bought fewer homes, they paid more for them. The median price of homes they purchased was $396,400, the highest the Realtors ever recorded.

China, Mexico, Canada, India and Colombia were the top five countries of origin for international buyers of existing homes by number of houses, not dollar volume. The survey does not count new construction, where international buyers are also active. 

Chinese buyers had the highest average purchase price, at $1.23 million, likely because a third of them bought in California, where home prices are highest. In total, 15% of foreign buyers bought homes worth more than $1 million.

“Home purchases from Chinese buyers increased after China relaxed the world’s strictest pandemic lockdown policy, while buyers from India were helped by the country’s strong GDP growth,” said Lawrence Yun, NAR’s chief economist, in a press release. “A stronger Mexican peso against the U.S. dollar likely contributed to the rise in sales from Mexican buyers.”
…
Foreign buyers continue to flock to the same places as they have in the past, namely Florida (23%), California (12%), Texas (12%), North Carolina (4%), Arizona (4%) and Illinois (4%). Chinese buyers in particular like California, as they often buy so that their children can attend local schools and universities.  
…
About 42% of foreign buyers used cash. As for why they are buying, half purchased the properties for use as a vacation home, rental property or both, up from 44% the previous year.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 69 Comments

NJ tops the chart

Posted on August 2, 2023 by grim

From MarketWatch:

New Jersey house prices rise at fastest rate in the nation — but other states saw prices fall by up to 8%

Good news for homeowners in New Jersey — home-price growth in the Garden State in June was the highest in the nation, according to real-estate data company CoreLogic.

Despite having the highest property taxes in the nation, New Jersey ranked first as its homes rose in value by 6.9% in June year-over-year. Nationally, home prices grew 1.6% on the year in June, the CoreLogic Home Price Index said.

Several housing markets in the Northeast gave a strong performance in June, CoreLogic said. New Jersey was followed by New Hampshire and Vermont, which both saw home prices grow by 6.4%. CoreLogic expects home prices nationally to increase to 4.3% by June 2024. 

Home prices fell the most in June 2023 as compared to June 2022 in the West, led by Idaho where values fell by 8%. Washington and Montana followed, with home prices falling 5.8% and 5.7% respectively. Homes in California saw their values fall by 2.2% from June. 
…
The U.S. housing market is currently facing a supply-and-demand crisis. Home buyers across the U.S. are struggling with a major lack of home listings, as homeowners find few reasons to sell their houses. But demand continues to hold strong, despite the 30-year mortgage rate hovering at 7%.

“While the continued imbalance between buyers and sellers continues to pressure home prices, June’s annual bump in price growth echoes economic resiliency, a thriving U.S. job market and strong consumer spending,” Selma Hepp, chief economist for CoreLogic, said in a statement.

Posted in National Real Estate, New Jersey Real Estate | 65 Comments

Prices Up, Inventory Down, Sales Cratering

Posted on July 30, 2023 by grim

From NJ Business:

NJ Home Prices Rise but Inventory Falls

Residential housing data released this week from New Jersey Realtors, the state trade association representing more than 61,000 Realtors, continues to point to a slower-than-usual summer market, with low inventory and higher borrowing costs restricting some market activity.

The single-family home median sales price for June was $530,000, which is $20,000 more than it was in June 2022, representing a 3.9% increase. New listings for this category were down 33.8% for the month, with just 7,167 new single-family homes listed. Closed sales were down a similar 21.1% over last year, with pending sales down 15%. The percent of list price received remains well over 100%, but reduced to 103.8% over last June’s 105.1%. There were just 12,975 single-family homes for sale in June, a 35% decrease over last year.

Mortgage rates ticked up slightly to an average of 6.81% for a 30-year fixed-rate mortgage as of July 27, and remain elevated over the rates from the same time last year.

The numbers for townhomes and condos have followed a similar pattern. Closed sales for the townhouse/condo market were down 22.9%, to just 1,993 recorded for the month. The median sales price rose to $370,000, a 2.8% increase over June 2022.

Posted in Housing Bubble, New Jersey Real Estate, Where's the Beef? | 85 Comments

Did the housing recession even start?

Posted on July 28, 2023 by grim

From the National Association of Realtors:

NAR Economist: ‘Housing Recession Is Over’

Contract signings picked up the pace last month, and home buyers are increasingly facing multiple offer situations. NAR releases its housing forecast for the remainder of the year and 2024.

Pending home sales rose slightly in June, and the latest indicators are showing a housing market on the mend. Median existing-home sales prices in June soared to their second highest on record in the last two decades, and more buyers are facing multiple offer situations once again, the latest reports from the National Association of REALTORS® shows. NAR’s Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—rose 0.3% in June, the first increase in four months.

“The recovery has not taken place, but the housing recession is over,” says Lawrence Yun, NAR’s chief economist. “The presence of multiple offers implies that housing demand is not being satisfied due to a lack of supply. Homebuilders are ramping up production and hiring workers.” 

Housing inventories remain at historical lows, down 13.6% from even last year’s low levels. “There are simply not enough homes for sale,” Yun said in a recent report. Seventy-six percent of existing homes sold in June were on the market for less than a month, NAR’s data shows.

Home buyers are faced with limited choices, higher home prices and higher mortgage rates. But they may find some relief soon: Mortgage rate increases may be mostly over, and that would bode well for home-buying, Yun says. 

“With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out,” Yun says. “Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.”

NAR forecasts that the 30-year fixed-rate mortgage could reach 6.4% by the end of the year, followed by 6% in 2024. Over recent weeks, mortgage rates have been nearing 7%, far from their ultra-low 2% or 3% averages just over a year ago. 

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