Up Up Up

Posted on July 2, 2023 by grim

From JerseyDigs:

Study Says New Jersey Home Sale Prices Have Jumped Almost 18% in Two Years

Real estate in New Jersey has continued its upward ascent despite choppy economic conditions and a new study of home sales shows New Jersey’s home values have continued to increase in a post-COVID environment.

Real estate website New Jersey Real Estate Network recently analyzed data from Zillow detailing historical average house prices in every East Coast state. The study looked to gauge which state has had the highest home sale price increases from 2021 to 2023.

Including every state that fronts the Atlantic Ocean, New Jersey ranked eighth in sale price jumps over the past two years. The Garden State’s average sale price in April 2021 was $388,005 and rose to $457,044.57 in April 2023, which represents a 17.79% increase in two years.

Despite the high home values in New York City’s suburbs, Cape May County has led the way since 2021. The Jersey Shore destination saw home sale prices increase higher than the state’s average, coming in at 28.33%.

On the lower end of the scale is Hudson County, with an average sale price increase of 9.98% since 2021. New Jersey’s overall average sale price of just over $338k ranked behind only Massachusetts in the study, which saw the lowest increase over the last two years but still clocked in at coast-leading $501,215.

Connecticut came in just behind the Garden State at ninth place with a 17.78% increase and a $309,127 average home sale price. New York saw a 15.93% increase over the same time frame, while Pennsylvania’s home sale prices in 2023 jumped to an average of $248,121.

Florida saw the highest increase in property sale prices by quite some pace, with the average home now selling for $385,157. The represents an increase of 35.16% from 2021. Georgia came in second with a 29.55% increase over the same period, while North Carolina had the third highest increase with a 29.48% jump from 2021.

Posted in Demographics, Economics, Housing Bubble, National Real Estate, New Jersey Real Estate | 148 Comments

The Great Migration Continues

Posted on June 30, 2023 by grim

From Redfin:

Drought-Stricken Phoenix Is the Top Destination For Relocating Homebuyers

A record share of homebuyers are relocating because high mortgage rates have made housing more expensive than ever, making relatively affordable areas more attractive. Phoenix, Las Vegas and Miami–where the typical home is much less expensive than coastal cities like San Francisco and New York–are the most popular metros for homebuyers moving to a different part of the country. That’s in spite of those places facing ever-worsening climate risks like heat, drought and flooding. 

But that doesn’t mean more homebuyers are looking to relocate. In fact, the number of homebuyers looking to relocate to a new metro is down 7% from a year ago, the biggest decline on record, as elevated mortgage rates push many Americans out of the homebuying game altogether. Still,  out-of-town moves are holding up better than in-town moves: The number of homebuyers looking to move within their current hometown is down a record 18%. 

In other words,  the overall homebuying pie has shrunk, but buyers moving to a new metro make up the biggest piece of that pie on record. 

Posted in Demographics, Economics, National Real Estate | 80 Comments

Recovery!

Posted on June 28, 2023 by grim

From CNBC:

Home prices rose for third straight month in April, S&P Case-Shiller index says

Home prices peaked last June, falling sharply through the beginning of this year. Now, they’re recovering steadily.

Home prices in April were still down 0.2% compared with April 2022, according to the S&P CoreLogic Case-Shiller national home price index. They were, however, 0.5% higher month to month, after seasonal adjustments. Prices are now just 2.4% below their June 2022 peak.

Miami, Chicago, and Atlanta were still seeing big gains in April, with prices up 5.2%, 4.1% and 3.5% year over year, respectively. When compared with a year ago, the price declines were larger in April than in March in 17 of the top 20 index cities. Boston, San Francisco and Cleveland showed slight increases.

A major jump in mortgage rates last summer caused a decline in prices. But, rates are still high, and homebuyers appear to be adjusting to the new normal. Demand is strengthening.

“The ongoing recovery in home prices is broadly based,” Craig Lazzara, managing director at S&P DJI, said in a release.

“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument,” he added. “Whether we see further support for that view in coming months will depend on the how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”

Before seasonal adjustments, prices rose in all 20 cities in April, as they had also done in March. Seasonally adjusted data showed prices rising in 19 cities in April versus 14 in March.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 78 Comments

I’m going where there’s no depression, to the lovely land that’s free from care. 

Posted on June 27, 2023 by grim

From Ritholtz:

What Recession?

Rising rates, falling savings, increased deficits, dubious GDP: Ever since the yield curve inverted and warnings of “imminent recession” filled the air, the Philly Fed’s map of State Coincident Indexes has provided a good real-time snapshot of the state of the economy. Friday’s release might have snuck by, but its filled with upside surprises that are worth looking at.

The overview is simple: Over the past 3 months, the coincident indexes for all 50 states indexes have increased (Diffusion index = 100). Last month (May 2023), indexes increased in 47 of 50 states, were flat in 2 states (Minnesota and Rhode Island), and fell in just 1 (Wisconsin). Other states that were softish include New Jersey, Arkansas, and Kentucky.

Ned Davis Research crunches the state coincident indexes into a probability chart that shows but a 1% chance we are currently in a recession. This is not a prediction, but rather, a reading of the coincident indexes as a current recession indicator.

Posted in Demographics, Economics, Employment, National Real Estate | 59 Comments

Getting uglier in the UK

Posted on June 26, 2023 by grim

From CNBC:

Mortgage catastrophe brews in Britain as millions are pushed toward insolvency

There is intensifying pressure on Britain’s government to do more to help struggling households, with the country’s shadow finance minister warning of a “mortgage catastrophe” as millions are pushed to the brink of insolvency.

The Bank of England last week hiked interest rates by 50 basis points to 5%, a bigger increase than many had expected. The BOE’s 13th consecutive rate rise takes the base rate to the highest level since 2008.

The surprise move — which is designed to lower inflation — will affect millions of homeowners as the interest rates on many mortgages in the U.K. are directly linked to the central bank’s base rate. Renters, too, are likely to see their payments increase as buy-to-let landlords pass on higher mortgage repayments.

Research by the National Institute of Economic and Social Research, a leading independent think tank, estimated that the BOE’s latest interest rate hike would see 1.2 million U.K. households (4% of households nationwide) run out of savings by the end of the year because of higher mortgage repayments.

That would take the proportion of insolvent households to nearly 30% (roughly 7.8 million), NIESR said last week, with the largest impact set to be incurred in Wales and the northeast of England.

“The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency,” said Max Mosley, an economist at NIESR. “No lender would expect a household to withstand a shock of this magnitude, so the government shouldn’t either.”

Posted in Crisis, Economics, Foreclosures, Mortgages | 36 Comments

NJ last state in the nation to outlaw pumping gas

Posted on June 24, 2023 by grim

From Jalopnik:

Drivers In Oregon Will Finally Be Allowed To Pump Their Own Gas

For most of the country, the idea of pulling into a gas station and then waiting for someone to come over and pump your gas for you is just weird. Millions of people pump their own gas every day without blowing themselves up or dumping it all over the ground. But with some exceptions, if you’re getting gas in Oregon, you haven’t actually been allowed to pump your own gas. Until now. 

Oregon Live reports that state lawmakers recently passed a bill that will end the requirement for an attendant to pump your gas for you. You’ll still be able to get the full-service experience if you want, but now only half the pumps will be required to have attendants. The rest can be opened for self-service. Either way, though, you’ll be paying the same price because the bill doesn’t allow for a discount if you pump your own gas.
…
The bill had the support of the Northwest Grocery Association, which reportedly claimed it’s hard to hire enough attendants, which means half of the pumps are frequently closed anyway, so it wouldn’t eliminate jobs. And while some Oregon residents have been adamant that they don’t want to give up the convenience, plenty of others expressed support for being allowed to skip the line and pump their own gas just like nearly everyone else in the U.S.
…
Assuming Governor Tina Kotek signs the bill, it would go into effect immediately, leaving New Jersey as the only state that still doesn’t allow self-service. Come on, New Jersey. Give it up. Join the other 49 states. We’re doing just fine.

Posted in Crisis, New Jersey Real Estate, Unrest | 51 Comments

Home prices finally dip (a little)

Posted on June 23, 2023 by grim

From CNN:

US home prices fall by largest amount annually since December 2011

US home prices fell in May at the largest annual rate in more than a decade, according to a National Association of Realtors report released Thursday.

The median existing home price was $396,100 last month, down 3.1% from a year ago, marking the largest year-over-year price reduction since December 2011.

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — rose 0.2% from April to May. Annually, sales were down 20.4% from a year ago, and the seasonally adjusted annualized sales pace dropped from 5.4 million units a year ago to 4.3 million in May.

Mortgage rates remain volatile — so far this year, average rates have ranged from 6.09% to 6.79%, but were fairly steady in April when some of the homes closed in May would have gone under contract.

“Mortgage rates heavily influence the direction of home sales,” said Lawrence Yun, NAR chief economist. “Relatively steady rates have led to several consecutive months of consistent home sales.”

There are marked regional variations in prices, however. From last year, prices dropped most in the West (down 5.7%), followed by the South (down 2.7%). But prices were still climbing from last year in the Northeast (up 2.5%) and the Midwest (up 1.1%).

Nearly one-third of the homes sold in May sold for above list price, Yun said. 

“That is due simply to lack of inventory,” he noted.

Total housing inventory at the end of May was 1.08 million units, which is down 6.1% from a year ago, according to the NAR. Prior to the pandemic, there were nearly twice as many homes on the market, Yun said. 

Unsold inventory sits at a three-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022.

Posted in Crisis, Housing Bubble, Mortgages, National Real Estate | 55 Comments

Bottom?

Posted on June 22, 2023 by grim

From Redfin:

There Were Fewer Homes for Sale in May Than Any Other Month on Record

The number of homes for sale in the U.S. fell 7.1% year over year to 1.4 million on a seasonally adjusted basis in May. That’s the lowest level in Redfin’s records, which date back to 2012, and the first annual decline since April 2022.

By comparison, there were 2.2 million homes for sale in May 2019—before the pandemic rocked the U.S. housing market—meaning housing supply was 38.6% below pre-pandemic levels this May.

America’s housing stock is dwindling because there are very few people selling homes. New listings of homes for sale declined 25.2% year over year in May to the third lowest level on record on a seasonally adjusted basis, as homeowners were handcuffed by high mortgage rates. 

Nearly every homeowner with a mortgage has an interest rate below 6%, meaning many are opting to stay put because selling and buying a new home would mean taking on a higher monthly mortgage payment. The average 30-year-fixed mortgage rate in May was 6.43%, up from 5.23% a year earlier and a record low of 2.65% in 2021.

Housing supply had already been lacking for years due to a steep dropoff in homebuilding following the 2008 financial crisis. The shortage intensified in 2020 and 2021 because rock-bottom mortgage rates prompted scores of people to buy homes.

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

Could be worse, we could be the UK

Posted on June 19, 2023 by grim

From the Guardian:

Millions are facing soaring mortgage rates. How did we leave them so vulnerable?

There is a cross-party consensus that Britain as a property-owning democracy should promote home ownership. To that end, 7.5 million people hold a record £1.7tn of mortgage debt. Yet that debt is more exposed to short-term movements in interest rates than in any other advanced country – placing millions of households in danger of extreme privation when, as now, interest rates suddenly rise. It is a lack of duty of care bordering on criminal neglect.

By next December, cumulatively 4.4 million households will have been forced to refix their mortgages at steeply higher rates since Russian tanks rolled into Ukraine last February and interest rates started climbing. Then, two-year fixed-rate mortgages were available at under 3%: today they cost close to 6%. The Resolution Foundation thinktank, assuming that the two-year fix will remain above 6% until next year, estimates that mortgage holders’ annual payments will jump by £15.8bn as their two-year fixes come to an end. Given that so few households have more than £2,000 of savings, the Institute for Fiscal Studies forecasts 2.9 million mortgage holders exhausting their savings completely.

Public trust in the Bank of England and its handling of inflation and interest rate policy has unsurprisingly plummeted to new lows. Last week, its hapless governor, Andrew Bailey, accepted in giving evidence to the House of Lords that mistakes had been made. But his focus was not on institutional reform or innovation that might change the dynamics of the mortgage market, but rather the Bank’s economic model, which had obviously given wrong forecasts. The Bank, he promised, would launch an internal review.

A review? Britain is experiencing the sharpest, fastest rise in interest rates since the 1980s, with more expected – and that after 13 years of rates at 0.5% or below.

True, other economies are facing interest rate increases. But what is unique about Britain is the degree to which borrowers are left to face so much interest rate risk alone. We need more than a review. We need a top-to-bottom investigation into the structure of British finance and how it could be made to work more fairly. And the institutions of economic policymaking need a makeover too.

Posted in Crisis, Demographics, Economics, Mortgages, Philly | 76 Comments

Past Peak Mortgage?

Posted on June 17, 2023 by grim

From CNN:

Mortgage rates tick down for the second week in a row

Mortgage rates ticked down this week for the second week in a row, as investors absorbed the Federal Reserve’s expected pause on raising the federal funds rate after 10 consecutive rate hikes.

The 30-year fixed-rate mortgage averaged 6.69% in the week ending June 15, down from 6.71% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.78%.

Mortgage rates have remained over 5% for all but one week during the past year and even went as high as 7.08%, last reached in November.

“Mortgage rates decreased slightly this week in anticipation of the pause in rate hikes by the Federal Reserve,” said Sam Khater, Freddie Mac’s chief economist. “As inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next.”

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

Posted in Economics, Mortgages, National Real Estate | 33 Comments

Pending sales tracking far below previous years

Posted on June 16, 2023 by grim

From Redfin:

Housing Market Update: There Are Nearly 40% Fewer Homes For Sale Than Pre-Pandemic

The total number of U.S. homes for sale dropped 6% from a year earlier during the four weeks ending June 11, the biggest decline in 13 months. New listings dropped 23%, continuing a 10-month streak of double-digit declines. Those add to the deepening post-pandemic inventory shortage; there are 39% fewer homes for sale now than there were five years ago, in June 2018. 

The inventory crunch is partly due to a homebuilding slump that’s lasted for over a decade and partly to mortgage rates falling to record-low levels during the pandemic, then shooting up. Mortgage rates have more than doubled since 2021, landing at close to 7% this week. The record-low mortgage rates of 2020 and 2021 drove a homebuying boom, depleting inventory. When rates started going up in the beginning of 2022, many would-be sellers backed off, failing to fill the inventory hole. Elevated rates discourage homeowners who would prefer to hold onto a comparatively low rate from selling. 

Pending home sales are down 17% year over year, the biggest decline in over four months, but it isn’t all due to a lack of demand. People are still showing interest in buying. Mortgage-purchase applications rose 8% over the last week, and Redfin’s Homebuyer Demand Index–a measure of requests for tours and other services from Redfin agents–is up over the last two weeks and near its highest level in a year.  That means there’s a fair amount of pent-up demand, and many buyers will be ready to pounce when more homes hit the market. Demand outpacing supply is preventing home prices from falling drastically: The median sale price is down just 1.1%, the smallest annual decline in three months. 

This week’s economic news indicates that mortgage rates are unlikely to decline in the next few months, which may mean new listings stay low for the time being and the inventory shortage deepens. The latest inflation report shows that price increases have continued to cool, and the Fed announced that it will pause interest-rate hikes this month after nearly a year of increases but may hike a couple more times this year. 

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 63 Comments

Fed presses pause

Posted on June 15, 2023 by grim

From CNN:

The Fed holds rates steady, pausing its rate-hiking campaign

The Federal Reserve said Wednesday it would pause its historic rate-hiking campaign as it waits for the effects to trickle further through the economy, but signaled that additional rate hikes are likely this year.

The vote to skip a rate increase this meeting was unanimous.

Since March 2022, Fed officials have raised the central bank’s benchmark interest rate 10 times in a row in an attempt to cool the US economy and battle inflation that is still double the Fed’s target.

The Fed’s post-meeting statement confirmed that officials deem the pause a prudent move, but most officials think additional hikes are necessary this year, according to the Fed’s latest Summary of Economic Projections.

“Looking ahead, nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down 2% over time,” Fed Chair Jerome Powell said in his post-meeting news conference.
…
Most officials estimate the federal funds rate will top out at a range of 5.63-5.87% in 2023, suggesting there might be as many as two more quarter-point hikes this year. Rate increases larger than a quarter point are not likely since the Fed is inching closer to its inflation goal and officials thought it made “obvious sense to moderate our rate hikes as we got closer to our destination,” Powell said.

Future policy moves depend on what economic indicators show in the coming weeks and months, including the resilient job market. Payroll growth remains solid, as do wage gains, which put some upward pressure on prices. Top economists argue the still-tight labor market will prove to be a stubborn source of inflation that would need to rebalance in order to help inflation successfully fall to the central bank’s 2% target. Most officials in the Federal Open Market Committee, which sets monetary policy, expect the unemployment rate to rise to a range of 4-4.1% this year.

“The Fed is putting more weight on the strong jobs data and sticky core inflation than the slowing headline inflation numbers and is clearly trying to avoid a 1970s style resurgence in inflation,” wrote Seema Shah, chief global strategist at Principal Asset Management, in an analyst note. “The Fed had to do something to knock market optimism today, otherwise it risks a tougher inflation fight and deeper economic woes down the line.”

Posted in Economics, Employment, Mortgages, National Real Estate, Politics | 93 Comments

NYC not bulletproof

Posted on June 14, 2023 by grim

From the Real Deal:

I-sales recap: Midtown offices sell for steep discounts

A pair of Midtown office buildings once valued above $40 million recently sold for about half of that amount, dragging the properties into the mid-market range and topping the list of commercial real estate deals between $10 million and $40 million that hit city records last week.

  1. Having permanently closed after 100 years, DuArt unloaded its 11-story office building at 245 West 55th Street in Midtown for $28.5 million. The identity of the buyer, listed only as 245 West 55th Street LLC, is unclear.
  2. TA Realty took a massive haircut on a Diamond District office building at 1200 Sixth Avenue, selling it for $22.3 million after buying it in 2017 for $43 million. According to Crain’s, the buyer is Josh Rahmani and Ebi Khalili’s Empire Capital Holdings, which has picked up a slew of Midtown properties in recent months.
Posted in Economics, National Real Estate, NYC | 51 Comments

Keep Spending, Boomers.

Posted on June 13, 2023 by grim

From CNN:

Gen Z and Millennials are scrimping. Boomers? Living it up

Baby Boomers are living it up, splurging on cruises and restaurants. Younger Americans are struggling just to keep up.

Bank of America internal data shows a “significant gap” in spending has opened recently between older and younger generations.

While Baby Boomers and even Traditionalists (born 1928-1945) are ramping up spending, Gen X, Gen Z and Millennials are cutting back as they grapple with high housing costs and looming student debt payments.

“It’s fairly unusual,” David Tinsley, senior economist at the Bank of America Institute, told CNN in a phone interview. 

Overall, household spending dipped 0.2% year-over-year in May, according to the bank’s card data — but the generational breakdown showed a more varied picture.

Spending increased by 5.3% for Traditionalists and 2.2% for Baby Boomers. In contrast, spending fell by about 1.5% for younger generations. 

If not for the aggressive spending by Boomers, Tinsley said, overall consumer spending would have been even more negative.

Posted in Demographics, Economics, National Real Estate | 88 Comments

Filling it in

Posted on June 12, 2023 by grim

From the Jersey Journal:

Jersey City considers allowing ‘cottage’ industry that could ease city’s housing dilemma

Need a little extra income? Looking to move an aging relative or out-of-work college grad back home, but just don’t have the room?

Jersey City feels your pain, and at the same time can ease its housing shortage — so the city is proposing to allow homeowners to add accessory dwelling units on their property under new zoning amendments.

The city planning board is expected to review and discuss proposed zoning amendments to the city’s zoning map and land development as part of the city’s master plan at Tuesday’s meeting.

In the 54-page document detailing potential changes to zoning districts, residential districts (RH1, R1, and R2) or areas with one to three-family homes could add an accessory dwelling unit “regardless of lot size and in addition to unit(s) in the principal structure.”

An accessory dwelling unit (ADU), also known as a “granny flat,” is a smaller residential living space located on the same lot of often a single-family home, either attached or detached to the primary house. ADUs tend to be a detached garage that has been converted into their own studio or one-bedroom apartment with a kitchen and bathroom.

City spokeswoman Kimberly Wallace-Scalcione said the new changes are zoning recommendations based on the city’s master plan.

“It allows ADUs over or in garages as an accessory building, not another primary building,” Wallace- Scalcione said. “This is yet another creative tool the administration is implementing on the local level that is proven to help improve affordability in densely populated residential neighborhoods.”

Posted in Economics, New Development, New Jersey Real Estate, Politics | 49 Comments