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

Line ’em up

Posted on June 10, 2023 by grim

From the Star Ledger (Hat Tip JB):

This 2-family home on the market for $590K got 88 offers in less than a week

It was a quick sell for a home in Bergen County that hit the market for just six days and got 88 offers.

The two-family in Lyndhurst drew more than 200 people to an open house and 184 appointments for showings.

“There was a line of people waiting to get in … before my agent got there,” said Jan R. Kwapniewski, president of Coccia Realty. “In the 38 years I have been selling real estate, I never had such an amount of showings on a single house in six days.”

The two-family house has four bedrooms and three bathrooms. The first unit, which includes the first floor and a finished basement, has two bedrooms and three bathrooms. The second unit occupies the second and third floors and has two bedrooms and one bathroom.

It was listed for $590,000 on May 22 and the final showings were on May 28.

“Although we had offers in the first few days, we advised the seller it was in their best interest to keep the property on the market for a full week,” Kwapniewski said. “This was a good strategy as the ‘phenomenal offers’ received two days into the listing were low in comparison to the offers received after a full week of showings.”

All of the offers were over list price, and some were as high as 20% over list price. The contract price can’t be disclosed until after closing.

“The seller did not accept the highest dollar offer but selected an offer where the buyer made certain concessions – namely a waiver of lender appraisal and a waiver of the home inspection contingency clause as well as a 30 day closing,” Kwapniewski said.
…
A two family home in Clifton recently generated 120 offers and sold for $150,000 over its $449,000 asking price.

Posted in General | 80 Comments

Buying a home in La La Land

Posted on June 9, 2023 by grim

From the Philly Inquirer:

The Philly area doesn’t have enough homes available for low- and middle-income buyers

More than one million homes nationwide were available for sale in late April. But high prices mean that what’s out there doesn’t match what people at various income levels can afford, according to a new report from the nation’s Realtors.

Basically, home listings affordable for middle- and lower-income households are missing. The country needs more homes that households at all income levels can buy to chip away at the problems of low affordability and low housing supply, according to a report that the National Association of Realtors and Realtor.com released Thursday.

“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental marketor on the sidelines and delaying their purchase until conditions improve,” Danielle Hale, Realtor.com’s chief economist, said in a statement.

The report breaks down the number of homes missing for each income level by comparing the number of listings available in April to the number that would need to be available to accommodate buyers. Realtors said they hope local and federal governments can use their analysis to ease the twin problems of affordability and housing supply.
…

“Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through home ownership,” Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors, said in a statement.

In the Philadelphia metropolitan area, households making $50,000 faced the largest shortage of available home listings. In April, 3,440 listings affordable to buyers with this income were missing, according to the report. These households should be able to afford 32% of listings, but they were only able to afford 13%.

Posted in Demographics, Economics, Employment, National Real Estate, Philly | 69 Comments

How much higher can rents go?

Posted on June 8, 2023 by grim

From Zumper:

New York City Metro Report

Posted in Demographics, Economics, Employment, New Jersey Real Estate, NYC | 71 Comments

What recession?

Posted on June 7, 2023 by grim

From the Hill:

Goldman Sachs sees recession odds falling

In a Monday research note, the investment bank put the odds of a recession within 12 months at 25 percent, down from 35 percent earlier this year.

Goldman Sachs economist Jan Hatzius attributed the decline to two major factors: the apparent end of the banking crisis triggered by the collapse of Silicon Valley Bank and the recent bipartisan debt ceiling deal.

Hatzuis also noted that the U.S. economy has cranked out “large numbers of jobs while keeping the unemployment rate very close to its pre-pandemic level” of 3.5 percent.

And while the job market is still strong, Hatzuis said that a slowdown from the torrid pace of hiring earlier in the post-pandmeic recovery may help inflation come down to stable levels.

“Each of our preferred measures of labor market balance has now reversed significantly more than half of its post-pandemic overshoot, but most still have some way to go before they are consistent with 2% inflation,” the research note said.  

The Goldman Sachs note follows a week of unexpectedly strong economic data, including a robust May jobs gain and a surprising jump in consumer spending.

Posted in Economics, Employment, National Real Estate | 75 Comments

Boomers back in charge

Posted on June 6, 2023 by grim

From Bank of America:

The Great Migration continues

The rise of Boomers as the main homebuyer

The latest Home Buyers and Sellers Generational Trends report from the National Association of Realtors found that for the first time since 2014, Baby Boomers overtook Millennials as the generation with the biggest share of homebuyers. From July 2021 to July 2022, 39% of surveyed homebuyers were Baby Boomers, followed by 28% of Millennials and 24% of Gen X (Exhibit 6).

The rise of Baby Boomers as the primary homebuyers can be attributed to three main reasons. First, as this generation retires, they move closer to family and friends. Second, demand for smaller homes increases as their children move out. Last but not least, Baby Boomers hold the greatest wealth across generations at $73 trillion in 4Q 2022, eight times that of Millennials (Exhibit 7). In the current environment of high home prices and interest rates, Baby Boomers are better equipped financially for home purchasing. In fact, only 49% of older Boomers (68-76 y/o) financed their home purchase in 2022, compared with 93% of those aged 33-42 y/o, according to the same National Association of Realtors report.

Given the importance of Baby Boomers in the housing market, where are they moving to?

The generational breakdown of Bank of America internal data suggests Baby Boomers’ migration patterns over the past few years have been different from other generations. Specifically, while Austin continues to attract inward migration overall, the number of Baby Boomers in the city has declined over the past year. The exodus of the group with the most cash could have added to the downward pressure on Austin’s home prices over the last year.

Las Vegas, Phoenix, Tampa, and Orlando are among the most popular destinations for Baby Boomers, according to Bank of America internal data (Exhibit 8). Note that the pace of migration slowed for Vegas and Phoenix over the past year, but was relatively unchanged for Tampa and Orlando. In our view, this could partly explain the still resilient home price appreciation in Tampa and Orlando relative to other cities.

Alternatively, Baby Boomers, similar to other generations, are leaving some of the largest cities in the US, including the Bay area, New York and Seattle (Exhibit 9).

Millennials will likely drive home buying in the longer term

Source: Bank of America internal data

For Millennials, the most popular destination for domestic migration is Austin, with the number of Millennial customers up 16% in 1Q 2023, relative to three years ago, which led other cities by a wide margin. Cleveland, Tampa, and Dallas each saw a 6% increase in Millennial population over the past three years.

In the near term, many of this cohort are staying on the home buying sidelines. A recent Bank of America Global Research survey found that increasing concerns about affordability are the top reason many Millennials are staying out of the housing market. But hopeful buyers who may be waiting for the market to cool are still forging ahead in their own way. In a separate Bank of America 2023 Homebuyer Insights Report, over half of respondents who are not planning to purchase a home in the near term are still actively scrolling through real estate marketplace apps.

This means that demand for home purchasing will likely return when we move past the current housing cycle, especially in the case of younger Millennials, who are entering prime home buying age. In 1Q 2023, the home ownership rate for those younger than 35 years old was 39%, 23 percentage points lower than that for 35–44-year-olds.

Posted in Demographics, Economics, National Real Estate, NYC | 54 Comments

It’s a bargain, darling.

Posted on June 5, 2023 by grim

From the NY Post:

Beach bargains: Hamptons luxury home prices are dropping

After numerous record-breaking, pandemic-fueled, $100-million-plus mega-mansion sales, the hyped up Hamptons may have finally hit a wall. 

The number of East End home sales fell to their lowest level in 14 years in the first quarter of the year, according to Douglas Elliman. 

Meanwhile, the median home price saw a 7.6% decline, down to its lowest point since 2019, according to Town & Country Real Estate.

“The overall feeling is that there are buyers and that there is still demand,” says Scott Bradley, a Hamptons specialist with Saunders & Associates. “I think inventory is the leading culprit of the sluggish sales we’ve seen.”

Most of the trophy homes that traded during the pandemic remain happily occupied, leaving little for hungry buyers to choose from. And many have taken a wait-and-see approach due to soaring interest rates, a shaky stock market and the looming threat of “the R word.”

But there is some good news for fearless shoppers: Discounts. Spectacular summer homes from Quogue to Montauk are chopping prices to entice wallflowers to the dance floor.

At 335 Town Lane in Amagansett’s estate section, Alec Baldwin is asking $22.5 million for his sweet-as-can-be stunner on 10 acres. 

The two-story, 10,000-square-foot, cedar-shingle modern farmhouse, with five bedrooms and five full baths, listed back in November 2022 for $29 million, before being reduced in January and again in March to its current price. 

Back on the beach, 33 Lily Pond Lane — a 7,000-square-foot, six-bedroom, eight-bathroom, oceanfront oasis in East Hampton — hit the market in the heady days of August 2021 asking $64 million. 

That’s been whittled down to its current ask of $44.5 million. 

Priced to move, the mansion comes with all the bells and whistles, including a pool, a six-room pool house, game rooms, a sauna, gardens, a koi pond and the only lit private tennis court in East Hampton. Hedgerow Exclusive Properties has the listing with Douglas Elliman’s Michaela Keszler and Erica Grossman.

Posted in Economics, NYC, Price Reduced, Shore Real Estate | 56 Comments

NJ labor force participation at 10 year high

Posted on June 4, 2023 by grim

From Insider NJ:

New Jersey Labor Market Remains Robust; Unemployment Rate Steady at 3.5% 

New Jersey’s labor market remained strong in April, with nonfarm employment increasing by 15,800 jobs to a seasonally adjusted level of 4,332,300, and the unemployment rate holding steady at 3.5 percent, according to preliminary estimates from the U.S. Bureau of Labor Statistics.

The gain occurred entirely in the private sector, which recorded a month-over-month increase of 15,900 jobs while the public sector shed 100 jobs for the month. The labor force participation rate continued to rise, reaching 65.0 percent in April, the highest rate since June 2013.

The March preliminary employment estimates were revised upward by 5,400, for a gain of 2,800 jobs from February to March. Preliminary estimates indicated a loss of 2,600. The March unemployment rate remained at 3.5 percent.

In April, seven out of nine major private industry sectors experienced job growth. Sectors that recorded employment increases were professional business services (+7,600), trade, transportation, and utilities (+3,600), education and health services (+2,700), leisure and hospitality (+1,200), financial activities (+600), construction (+300), and other services (+200). Sectors that recorded a loss were information (-300) and manufacturing (-100).

Over the past year, New Jersey has added 99,100 nonfarm jobs. These gains were distributed across industries, with eight out of nine major private industry sectors recording job gains. The industries recording year-over-year gains were education and health services (+45,400), leisure and hospitality (+25,600), trade, transportation, and utilities (+8,100), professional and business services (+5,500), other services (+4,000), construction (+3,800), manufacturing (+3,700), and information (+1,400). The only private sector industry to record a loss from April 2022 to April 2023 was financial activities (-200). Year-over-year, the state’s public sector added 1,700 jobs.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 15 Comments

How much money would you dump into 900 square feet?

Posted on June 2, 2023 by grim

From the NYT:

Priced Out of the City, They Bought a Tiny Suburban Home. Now What?

Much has been written about “good enough” marriages, but what of “good enough” houses in “I guess we have to live somewhere” neighborhoods?

This is the story of a family who began with low expectations and then fell in love.

In 2016, Amanda and Alain de Beaufort were renting an apartment with a garden in Sunset Park, Brooklyn, where they had access to a new school with a Spanish/English program for their two children. (Mr. de Beaufort, 49, is from Colombia.) The family had achieved urban-suburban balance in a community they treasured. They were happy.

Then one day, their landlord sold the building for cash and gave them a month to pack up and move out.

“OK, we’ll just buy something in Sunset Park,” Ms. de Beaufort, 46, recalled saying, before making the cruel discovery that no affordable properties remained in the neighborhood. The couple cast their eyes on nearby Bay Ridge, Brooklyn. They flirted with Westchester County.

They did not consider New Jersey. “It wasn’t cool,” Ms. de Beaufort said.

Soon, she was sleeping on the sofas of friends as she house-hunted, while her husband and children bunked at her parents’ home in New Hampshire. In this precarious state, they succumbed to a campaign waged by a friend in Maplewood, N.J., who described that township, about 20 miles west of New York City, as a cross-Hudson-River extension of Brooklyn. (At least one newspaper article has made the same comparison.)

The couple bought a small house on a pretty, tree-lined street in Maplewood and declared it their not-forever home.

If they were going to move to the suburbs, they thought, they might at least enjoy ample space. But the 1923 colonial was roughly 900 square feet, with three tiny bedrooms and a sliver of backyard — smaller than New York City apartments they had occupied. Furthermore, its previous owner, whom Ms. de Beaufort described as “a DIY guy,” had a fondness for murky colors and copious, awkwardly placed storage nooks.

Posted in Demographics, Economics, New Jersey Real Estate, NYC | 91 Comments

Something’s going to give

Posted on June 1, 2023 by grim

From Seeking Alpha:

Mortgage Rates Re-Spike To 7% Range As It Sinks In That Fed Won’t Cut Rates ‘Anytime Soon,’ Mortgage Applications Plunge To 1995 Levels

Spring selling season was a dud. But what comes next may be worse, that’s what mortgage applications and investors tell us

The 7% mortgages are back. The average interest rate on 30-year fixed-rate mortgages with conforming balances jumped to 6.91%, the highest since November, according to the weekly measure by the Mortgage Bankers Association on Wednesday.

The daily measure by Mortgage News Daily already went over 7% a few days last week and earlier this week.

“Inflation is still running too high, and recent economic data is beginning to convince investors that the Federal Reserve will not be cutting rates anytime soon,” is how the Mortgage Bankers Association explained what has been obvious to us here for months.

And so, with these kinds of mortgage rates, spring selling season – the time of the year when sales and prices nearly always rise from the dreary days of the winter – has turned into an amazing dud.

What comes next may get sloppy. Mortgage applications to purchase a home are a forward-looking indicator of where home sales as measured by closed deals are headed in a month or two. The 7% mortgages are indigestible at current home prices – something has to give, and it’s not going to be mortgage rates.

Posted in Economics, Mortgages, National Real Estate | 72 Comments

Musk knows real estate?

Posted on May 31, 2023 by grim

From Insider:

Elon Musk warns house prices are set to plunge – and says commercial real estate is in meltdown

Elon Musk is once again ringing the alarm on the US real-estate sector. 

“Commercial real estate is melting down fast. Home values next,” the Tesla and SpaceX chief tweeted on Monday. 

The tech billionaire made the comment in response to a tweet by the Craft Ventures founder David Sacks, who said that a big chunk of commercial real-estate debt was due to mature soon. 

Musk has previously warned that cracks could appear in property markets following turmoil in the banking sector. For example, the clean-energy pioneer said commercial real estate was “by far the most serious looming issue,” and cautioned regional banks could experience a wave of defaults because of their huge exposure to the sector. 

The debt-fueled industry has kept investors on edge in recent months, given that it faces a raft of headwinds. These include higher interest rates, tighter credit conditions, and work-from-home trends. 

JPMorgan estimated that about $450 billion in commercial real-estate debt set to expire this year could default. Meanwhile, Morgan Stanley Wealth Management said commercial-property prices could tumble 40% from their peak in light of the sector’s troubles. 

The US housing market is also dealing with similar problems, which likely explains Musk’s view that prices were set to topple. Morgan Stanley reported that home sales have bottomed as higher borrowing costs crippled demand with experts warning of a potential 15% to 20% plunge in prices.

Posted in Demographics, Economics, National Real Estate | 97 Comments

NJ Shutdown Ahead

Posted on May 30, 2023 by grim

From Insider NJ:

Murphy Unlocks the Nuclear Launch Codes

Skipping over the preliminaries — meetings, discussions, negotiations or compromises with legislative leaders — Gov. Phil Murphy went directly to the nuclear option— shutting down state government on July 1 if the Legislature sends him a fiscal 2024 budget that includes extending the corporate tax surcharge to finance a new broad property tax reduction program targeted at senior citizens.

Within 24 hours of Senate President Nick Scutari’s (D-Union) favorable comments in support of a proposal floated by Assembly Speaker Craig Coughlin (D-Middlesex) to target property tax relief to senior citizens, the Murphy Administration — in a rare public outburst of intra-party disagreement — dared the leaders to move ahead against his wishes and risk bringing state government to a halt.

In a stern “don’t call my bluff” warning, the governor said he would veto any budget provisions to continue the five-year-old surcharge and if the Legislature failed to agree by the July 1 constitutional deadline for a new spending plan, government operations would come to a halt.

Driving home his seriousness, Murphy said he’s already ordered contingency plans drawn up for a government shutdown while continuing to provide essential services.

The 2.5 percent surcharge on businesses with over $1 million a year in taxable income will expire at the end of this year and Murphy has made it clear that he stands firm in his view that when it was enacted in 2018 a specific sunset provision was included and government is obligated to abide by it.

Its’ expiration is estimated to result in a loss of $332 million for the remainder of the current fiscal year and $1 billion by fiscal 2025.

While details of Coughlin’s plan are scarce, Murphy criticized it as unfair by singling out a segment of property owners — senior citizens — regardless of financial circumstances and without means testing.

Moreover, the governor has questioned the wisdom of enacting a major multi-billion dollar program at a time of economic uncertainty. Any downturn or revenue loss in the outyears will likely result in scaling back or eliminating the relief program.

Posted in Demographics, New Jersey Real Estate, Politics, Property Taxes | 66 Comments

Sorry about the price of your buildings

Posted on May 27, 2023 by grim

From the NY Post:

Remote work is cutting NYC office value by half: Study

Working from home is killing office buildings’ worth. 

As remote and hybrid work prove to be enduring trends, researchers are predicting grim fates for the future value of New York City’s commercial workplaces. 

New York University and Columbia University researchers have updated a 2022 study to reflect new findings that offices will be even more impacted by remote work than they previously calculated. 

“We now estimate a more persistent work-from-home regime, which has more of an impairment of office values even in the long run,” Arpit Gupta, co-author of the study, “Work From Home and the Office Real Estate Apocalypse,” told the Real Deal of the revised projection. 

The revision comes as post-pandemic rates of workers returning to the office appear to have plateaued around 50%, much lower than many expected. 

While last year, in its initial publication, the paper estimated that NYC’s office stock would lose 28% of its pre-pandemic value by 2029, an update this month has significantly upped that number to 44%. 

The appraisal is not unique to New York: “The numbers for NYC are not an outlier; we find similar effects across many of the largest office markets,” the study warns.

Nationwide, they estimate this means a loss of $506.3 billion in value, a shift that has significant repercussions for local public finances. 

Office stock will not feel the impact evenly, though, with higher quality buildings much more buffered than lower quality offices, which will bear the brunt of the devaluation.

The fallout is already visible, with an increasing number of landlords defaulting on loan payments, corporate tenants reconsidering long-term leases and the amount of vacant office space in the US surging, The Post previously reported.

Posted in Demographics, Economics, National Real Estate, New Development, NYC | 35 Comments

Hottest in NJ?

Posted on May 24, 2023 by grim

From NJ1015:

These NJ counties have some of the hottest real estate markets

This will come as no surprise to anyone who’s been house shopping in New Jersey for the past few years, but the Garden State is home to some of the hottest real estate markets in the country.

According to NJ.com, six New Jersey counties are among the hottest 100 in the U.S., based on Realtor.com data for March of this year. They basically look at supply and demand for listed properties, and how quickly they sell.

The six hottest New Jersey counties, with their national rank:

Somerset (#37)

Burlington (#46)

Hunterdon (#48)

Morris (#53)

Camden (#66)

Union (#67)

Houses in these markets often get multiple offers and then sell for more than the list price; and the list prices are pretty high! The median price for a house listed in Somerset is $649k; in Burlington it’s $349,900. In Hunterdon the median list price is $526,500; in Morris, it’s $633,450; for a home in Camden, the median list price is only $278,950 and in Union, it’s $510,625.

Posted in Housing Bubble, New Jersey Real Estate | 182 Comments