Lowball! Alpine Edition

Posted on April 1, 2023 by grim

From NJ1015:

New Jersey’s most expensive home finally sells — look inside

The Stone Mansion in Alpine — New Jersey’s most expensive home for sale — has finally sold years after it was listed.

The sale price, which started out at $68 million in 2010 before it was even finished, was dropped over the years and finally sold for $27.5 million. The home was completed in 2013 and has been on the market ever since.

So, what does that much money get you? First off, 30,000 square feet of living space; 12 bedrooms, 15 full bathrooms and four half-baths. From the Sotheby’s listing, you also get:

Reception rooms of grand scale proportions include a ballroom, martini parlor, his and her libraries, formal living room, formal dining room, north and south art galleries, and wine tasting room.

It has a 65-foot saltwater pool (the pool house has its own kitchen), a tennis court, an elevator to all levels, and a heated driveway.

Posted in Housing Bubble, Lowball, New Jersey Real Estate | 84 Comments

Why wouldn’t they?

Posted on March 31, 2023 by grim

From CNBC:

More home sellers are sitting out of the spring housing market

It might seem like a great time to list your home for sale. Buyers are flooding back into the market, mortgage rates have fallen off their recent highs, and there are still far too few homes for sale to meet demand. But potential sellers aren’t budging.

New listings continued to fall in March, according to Realtor.com, down 20% from the same month last year. That decline in new listings outpaced the 16% drop posted in February. New listings in March were nearly 30% below pre-pandemic levels.

The active inventory of homes for sale is, however, 60% higher than the start of last spring, but that is only because homes are taking longer to sell. Inventory is also half of what it was at the start of spring in 2019, before the Covid pandemic caused an unprecedented run on housing.

Homes are now sitting on the market an average of 54 days, up from an average of 36 days at the start of last spring. Time on market was longer in all of the top 50 metropolitan markets, but the greatest increases were in Raleigh, North Carolina (up 42 days), Kansas City, Missouri (up 37 days), and Austin, Texas (up 37 days). 

“Amid fewer new choices on the market and still rising home prices, home shoppers have shown that they are very rate sensitive, only jumping back in the market when rates dip, and so what happens with rates this spring will likely play a strong role in determining whether the housing market bumps along or picks up speed this year,” said Danielle Hale, chief economist at Realtor.com.

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

Big Discount?

Posted on March 30, 2023 by grim

From the Star Ledger:

More N.J. homes are selling below asking price

List price and what buyers actually paid for a home in New Jersey have been wildly different for the past few years.

Bidding wars that drove up sales prices were a hallmark of the pandemic market. And now that the market is cooling — largely due to higher interest rates on mortgages — buyers are gaining more control in the residential real estate market.

“People don’t have as much money to spend because interest rates are so much higher,” said Marybeth Mcgee of RE/MAX Bay Point Realtors. “What they could afford last year is now almost $100,000 less.”

Home prices have risen 36% since 2020, and interest rates have doubled since August 2021.

A person making $100,000 per year with a 10% down payment could’ve afforded a home for $383,355 in August 2021. By December 2022 their buying affordability dropped to $279,733, according to data from the Otteau Group.

And a person with an income of $200,000 could’ve afforded a home for $1,085,861 in August 2021. In December 2022 the affordable price tag dropped to $808,295.

Typically home prices increase only 4 to 5 percent per year, said Jeffrey Otteau, a real estate economist and president of the Otteau Group. Between 2013 and 2019, home prices increased an average of 3.5%.

Prices were bid up by people coming from New York City and adjusting them to their own income levels. “People working in New Jersey cannot afford house prices in New Jersey because of this dynamic,” Otteau said.

Percent of list price paid on closed sales in New Jersey dipped below 100% for the first time in December 2022, when it hit 99.8%. It slipped further in January, to 99.4%, and to 99.1% in February, according to data from New Jersey Realtors.

Percent of list price peaked in New Jersey in June 2022 at 105.1%. At that same time — two months after the interest hiked began — price reductions became more common across the state.

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

Home prices continue falling

Posted on March 29, 2023 by grim

From CNBC:

Home prices cool in January, even falling in some cities, S&P Case-Shiller says

Home prices cooled in January, up only 3.8% nationally than they were a year earlier, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. That is down from 5.6% in December.

Prices have been falling for seven straight months, but the decline was a bit smaller in January. That was likely due to a brief drop in mortgage rates and a resulting jump in sales.

The 10-city composite rose 2.5% year over year, down from 4.4% in December. The 20-city composite also rose 2.5%, down from 4.6% in the previous month.

Home prices have been cooling due to higher mortgage rates. The average rate on the popular 30-year fixed mortgage set more than a dozen record lows during the first two years of the pandemic, briefly going below 2%, but it grew sharply. Since fall, the rate has been hovering in the high 6% range, although it’s been volatile in recent weeks due to several bank failures and the resulting stress on the overall banking industry.

“Despite this, the Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near-term,” said Craig Lazzara, managing director at S&P DJI, in a release. “Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”

Prices were lower year over year in San Francisco (-7.6%), Seattle (-5.1%), Portland, Oregon (-0.5%) and San Diego (-1.4%). They were flat in Phoenix.

Miami, Tampa and Atlanta again saw the hottest annual price gains of the top 20 cities. Miami prices were up 13.8%, Tampa prices up 10.5%, and Atlanta prices rose 8.4%. All 20 cities, however, reported lower prices in the year ending January 2023 versus the year ending December 2022.

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

Spring!

Posted on March 27, 2023 by grim

From Fox News:

Spring home buying season shows ‘steady demand’ as mortgage rates slip for second week

The spring home buying season is showing “steady demand” as mortgage rates slip for a second week in a row. 

On Wednesday, the Federal Reserve raised its key interest rate by a quarter-percentage point and signaled that it could soon pause the increases amid the worst banking crisis since 2008.

Despite the Fed’s announcement this week, Redfin says its overall housing-market outlook for this spring hasn’t wavered. 

“Mortgage rates are likely to temporarily decline but not plummet, and demand is likely to swing up and down based on fluctuations in rates and availability of homes on the market,” the real estate brokerage reported.

Over the past week, in particular, demand increased as the average 30-year fixed mortgage rate slipped to 6.42% as of March 23, down from 6.6% a week prior, according to mortgage buyer Freddie Mac. As a result, the typical U.S. homebuyer’s monthly housing payment was pulled down from its peak two weeks ago, according to Redfin. 

Redfin also noted that mortgage-purchase applications are up 17% from a month ago and the number of homebuyers contacting Redfin agents for tours also rose this week. 

The issue, though, is that there is still a tight supply of homes given that “sellers are typically slower to return than buyers,” according to the brokerage. 

New listings during the four weeks ending March 19 fell 22% compared to a year earlier, marking “one of the biggest declines since the housing market nearly ground to a halt in the beginning of the pandemic.” 

On top of that, Redfin projected that competition could increase further as we get deeper into spring as long as rates stay closer to 6% than 7%. 

Posted in Housing Bubble, Mortgages, National Real Estate | 158 Comments

NJ adds 4,600 jobs in Feb

Posted on March 24, 2023 by grim

From the NJ Department of Labor and Workforce Development:

NJ’s Strong Labor Market Continues in February

New Jersey continued to experience a strong labor market, preliminary estimates produced by the U.S. Bureau of Labor Statistics show, with 4,600 nonfarm jobs added in February to a seasonally adjusted level of 4,321,400.

According to the estimates, the state’s private sector added 3,600 jobs, and the unemployment rate increased by 0.1 percentage point to 3.5 percent.

New Jersey has added 105,400 jobs over the past year.

January employment estimates were revised downward by 4,800 to a total gain of 19,400 jobs. The January unemployment rate was unchanged at 3.4 percent.

In February, four out of nine major private industry sectors experienced job growth. Sectors that recorded employment increases were education and health services (+3,500), professional and business services (+2,600), manufacturing (+600), and financial activities (+100). Sectors that recorded a loss were leisure and hospitality (-1,600), other services (-900), trade, transportation, and utilities (-500), and information (-100). Construction had no change. Month-over-month, the state’s public sector increased by 1,000 jobs.

Between February 2022 and February 2023, preliminary estimates show that job growth in New Jersey was broad based, with all nine major private industry sectors recording job gains. In descending order, these industries are education and health services (+47,700), leisure and hospitality (+22,800), trade, transportation, and utilities (+8,400), manufacturing (+6,600), other services (+5,500), professional and business services (+4,100), information (+2,700), financial activities (+2,400), and construction (+1,200). Year-over-year, the state’s public sector added 4,000 jobs.

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

Don’t sell, rent.

Posted on March 23, 2023 by grim

From Fortune:

Homeowners who held onto a 3% mortgage rate are becoming ‘accidental landlords’

The era of lower-than-ever mortgage rates is long gone, and it’s been replaced with rates hovering around 7%. But homeowners who locked in lower ratesbefore or during the Pandemic Housing Boom aren’t selling. In fact, some of them are becoming “accidental landlords,” simply because they don’t want to lose their low rates of the past. 

That being said, the so-called lock-in effect is putting pressure on both sides of the market. There aren’t as many buyers looking for new digs and not as many sellers looking to move up or downsize, if they’ll get stuck with a mortgage rate more than twice as high as their old one.

Redfin’s chief economist Daryl Fairweather told Fortune that high rates are constricting activity. “They’re looking at their monthly payment, which is quite low if they locked in a 3% mortgage rate compared to what their monthly payment would be if they sold and bought again, which would be quite high given how high mortgage rates are,” Fairweather said. “And it just makes a lot of sense for them to hold on to that low interest rate.”

Although rates are down from their 7.37% peak, the 30-year fixed mortgage ratecame in at 6.57% on Monday. According to Goldman Sachs, 99% of borrowers have a mortgage rate lower than the current market rate. 

So if you took on a $700,000 mortgage with a 7% rate, your total monthly payment would be $4,657. But with the same size loan at a 4% rate, your monthly payment would be $3,342. Let’s say it’s a 3% rate with the same size loan, your monthly payment would be $2,951. It’s the golden-handcuffs of mortgage rates, and it’s keeping homeowners with low rates from selling and turning some into landlords.

Fairweather said there’s both anecdotal evidence and data showing that homeowners are holding on tight to their low rates. For example, new listings of homes for sale fell 21.7% year-over-year for the four-week period ending March 5, making it the biggest decline in two months, according to Redfin. In the same period, the biggest declines were seen in Sacramento (at -45.6%), Oakland (-44.5%), Portland (-42.3%), San Jose (-42.1%), and Seattle (-41.2%). 

Michael Zuber, author of One Rental at a Time and former tech worker turned real estate investor, told Fortune that a 30-year fixed mortgage at a rate of 3% is without question one of the best assets most homeowners will ever have. 

“They shouldn’t sell, they should rent it out,” Zuber said, adding that several people on Twitter have told him they’re making around $1,000 a month after expenses from doing exactly that, sarcastically adding that the prospect of that “doesn’t suck.” 

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 140 Comments

NAR: First price decline in 11 years

Posted on March 22, 2023 by grim

From CNBC:

Home sales spike 14.5% in February as the median price drops for the first time in over a decade

Sales of previously owned homes rose 14.5% in February compared with January, according to a seasonally adjusted count by the National Association of Realtors. That put sales at an annualized rate of 4.58 million units.

It was the first monthly gain in 12 months and the largest increase since July 2020, just after the start of the Covid-19 pandemic. Sales were, however, 22.6% lower than they were in February of last year.

These sales counts are based on closings, so the contracts were likely signed at the end of December and throughout January, when mortgage rates had fallen sharply. The average rate on the popular 30-year fixed loan hovered in the low 6% range throughout January after reaching a high of 7% last fall.
…

Higher mortgage rates have been cooling home prices since last summer, and for the first time in a record 131 consecutive months — nearly 11 years — prices were lower on a year-over-year comparison. The median price of an existing home sold in February was $363,000, a 0.2% decline from February 2022.

That lower median price could be a sign that homes on the more affordable end of the market are selling.

Sales might have been even higher were it not for what is still very low supply. There were just 980,000 homes for sale at the end of February, according to the Realtors, flat compared with January. At the current sales pace, that represents a 2.6-month supply. A balanced market between buyer and seller is considered a 4- to 6-month supply.

“Inventory levels are still at historic lows,” Yun added. “Consequently, multiple offers are returning on a good number of properties.”

This could start to heat prices again, but with mortgage rates now higher than they were in January it will be harder for some buyers to compete.
…
All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022. Individual investors returned, making up 18% of buyers, up from 16% in January but down from 19% in February 2022.

When looking at sales at different price points, they were all down in the range of 20% from February last year, with sales down the most in the top, million-dollar-plus segment.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 93 Comments

Fed to take a breather?

Posted on March 21, 2023 by grim

From the Hill:

Goldman Sachs expects pause in Fed’s interest rate hikes

Analysts at Goldman Sachs expect the Federal Reserve to pause its interest rate hikes this week, citing concerns about uncertainty in the global financial system spurred by a string of destabilizing bank failures.

The Fed has been on a path of monetary tightening as it continues its fight against inflation, and it was expected to raise rates by another 0.25 percentage points at its upcoming policy meeting March 21-22. But bank failures, like the fall of Silicon Valley Bank, have put immediate tightening on a possible halt.
…
“We expect the FOMC (Federal Open Market Committee) to pause at its March meeting this week because of stress in the banking system,” Goldman economists, led by Jan Hatzius, said in a analysis.

“While policymakers have responded aggressively to shore up the financial system, markets appear to be less than fully convinced that efforts to support small and midsize banks will prove sufficient.”
…
Goldman economists argued that not raising rates at the end of this month would only be a “pause” in the fight against inflation, saying the Fed will still be able to reach its long-term goals related to inflation if it does not increase interest rates immediately.

“This would mean taking a pause in the inflation fight, but that should not be such a problem. Bringing inflation back to 2% is a medium-term goal, which the FOMC expects to solve only gradually over the next two years,” the economists said. “The FOMC can get back on track quickly if appropriate, and the banking stress could have disinflationary effects.”

Posted in General | 109 Comments

And then there were 3

Posted on March 20, 2023 by grim

From CNN:

UBS is buying Credit Suisse in bid to halt banking crisis

Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month. 

“UBS today announced the takeover of Credit Suisse,” the Swiss National Bank said in a statement Sunday. It said the rescue would “secure financial stability and protect the Swiss economy.”

UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday. Owners of $17 billion worth of “additional tier one” bonds — a riskier class of bank debt — will lose everything, Swiss regulators said.

Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.

Credit Suisse (CS) had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

Shares in the 167-year-old bank fell 25% over the week, money poured from investment funds it manages and at one point account holders were withdrawing deposits of more than $10 billion per day, the Financial Times reported. An emergency loan of nearly $54 billion from the Swiss National Bank failed to stop the bleeding. 

But it did “build a bridge” to the weekend, to allow the rescue to be pieced together, Swiss officials said Sunday night. 

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue,” UBS chairman Colm Kelleher told reporters.

“It is absolutely essential to the financial structure of Switzerland and … to global finance,” he told reporters.

Posted in Crisis | 53 Comments

Pandemic boomtowns get crushed

Posted on March 18, 2023 by grim

From the Real Deal:

US home prices drop annually for first time in 12 years

How long has it been since the median U.S home price fell year-over-year?

Hint: Gotye’s “Somebody That I Used to Know” was the top song, Superstorm Sandy caused more than $60 billion in damage and mass shootings in Connecticut and Colorado traumatized America.

The answer is 2012 — or was, until last month, when the median sale price dropped 1 percent from February 2022 to $386,700, according to Redfin.

“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they’re still adjusting to the fact that their home won’t sell for what their neighbor’s did a year ago,” Redfin agent Andrew Vallejo said in a press release.
…
Austin’s price plunge can be explained by a nation-leading increase in supply, as active listings in the Texas tech hub were 79 percent more numerous last month than they were a year before. Nashville (up 72 percent), Fort Worth (69 percent) and Tampa (63 percent) also had big inventory jumps.
…
The number of sales in February fell 44 percent in Miami from a year earlier, more than in any other metro area that Redfin analyzed. New York was second worst with a 40 percent drop, followed by San Jose and Baton Rouge at 38%, and Long Island at 37.

The smallest drops in closed sales were in Dallas (-1 percent), Richmond (-8 percent) and Fort Worth (-10 percent).

The price and sales data are a lagging indicator, as they reflect contracts largely signed in December and January.

Redfin noted that the biggest drops in prices and sales were inexpensive coastal markets and pandemic boomtowns. They were the most stable in affordable areas; Pittsburgh, Oklahoma City and Cleveland. 

Posted in Economics, Housing Bubble, National Real Estate | 77 Comments

Can’t buy? Just rent!

Posted on March 17, 2023 by grim

From the NY Post – Hat Tip ChiFi:

North Jersey beats out NYC for the hottest rental market in the US

As interest rates remain high to combat languishing inflation, warding off potential home buyers, the rental market has been very competitive. 

And while New York City’s Manhattan and Brooklyn boroughs have seen the biggest leaps in competitiveness, neighboring North Jersey is now considered the most aggressive market for renters in the nation, according to a new study. 

Data from RentCafe’s newest Rental Competitivity Report shows that North New Jersey — which makes up Bergen, Essex, Hudson and Passaic counties in the city suburbs — earned the top spot for rental demand.

The study found that those North Jersey areas — which comprise Jersey City, Hoboken, East Orange and Hackensack — are twice as competitive as Manhattan due to a drastic housing shortage.

Specifically, an influx of renters is pushing occupancy close to 97%.

Posted in Demographics, Economics, New Jersey Real Estate | 93 Comments

NJ – The Independent State

Posted on March 16, 2023 by grim

From WalletHub:

2023’s Most & Least Federally Dependent States

RankStateTotal ScoreState Residents’ DependencyState Government’s Dependency
1Alaska83.1832
2West Virginia76.0219
3Mississippi71.3175
4Kentucky70.95510
5New Mexico69.73217
6Wyoming64.23241
7South Carolina59.86627
8Arizona58.86136
9Montana57.77147
10Louisiana57.46223
11North Dakota55.91435
12Indiana55.34919
13Maine54.251112
14Alabama53.481016
15South Dakota52.22294
16Vermont50.131911
17Missouri44.13288
18Oklahoma41.601531
19Pennsylvania41.102022
20Idaho40.572315
21Rhode Island39.653113
22Tennessee37.942618
23New Hampshire37.394114
24Maryland36.361636
25Michigan34.672724
26Hawaii33.25850
27Oregon33.232530
28Arkansas33.184020
29Texas32.713921
30Minnesota32.291742
31Connecticut30.451844
32Virginia30.381246
33Georgia30.303528
34Florida30.203032
35Ohio29.124623
36Nebraska29.054226
37North Carolina28.433733
38Wisconsin27.892140
39New York27.274429
40Colorado25.183634
41Nevada23.453837
42Delaware22.235025
43Iowa19.283243
44Massachusetts17.324838
45California17.274541
46Illinois17.054739
47Kansas15.703447
48Utah14.963348
49Washington14.634345
50New Jersey8.414949
Posted in Economics, Politics | 124 Comments

Post Pandemic Job Recovery

Posted on March 15, 2023 by grim

From the State of NJ:

Updated Labor Data: New Jersey Experienced Higher Employment Growth Over Past 2 Years Than First Reported

TRENTON – The state’s job market performed better than initially estimated over the past two years, with 34,000 additional jobs gained, according to updated data from the Bureau of Labor Statistics (BLS). The information also shows the Garden State’s employment recovery from the pandemic occurred months earlier than first reported.
…

The BLS’s benchmark process, a required annual review and adjustment of previously released employment data at the state and metropolitan area levels, adjusts monthly, sample-based survey estimates to full-universe counts of employment, primarily derived from records of the unemployment insurance tax system.

The annual benchmarking adjustments indicate that the over-the-year (Dec. 2021 – Dec. 2022) change in total nonfarm jobs was revised to a gain of 129,700, a smaller increase from the previously reported gain of 148,900. However, including higher revisions made for 2021, the two-year job gain now stands at 395,300 – 34,000 more jobs than originally estimated.

Benchmarked data also revised employment losses due to the pandemic. The revisions show that in March and April 2020, New Jersey lost a total of 730,200 nonfarm jobs, or 17.3 percent of the state’s nonfarm employment total in February 2020. Previous estimates had shown 732,600 jobs lost. Revisions also indicate the total nonfarm employment recovery back to February 2020 levels occurred earlier than previously estimated. The payroll gain was fully realized in April 2022 – rather than in August 2022.

The revised data show that over the December 2021 – December 2022 period, all nine major private industry sectors added to their payrolls. The year-over-year gains were led by education and health services (+41,400), trade, transportation, and utilities (+29,200), leisure and hospitality (+26,900), other services (+9,300), professional and business services (+7,100), manufacturing (+6,700), information (+4,700), financial activities (+2,400), and construction (+1,800). Public sector employment was essentially flat, recording a year-over-year gain of just 100 jobs.

Labor force estimates for New Jersey residents were also revised. The average annual unemployment rate was 3.7 percent for 2022, a decline from 6.6 percent in 2021, and just one-tenth of a percentage point above the 2022 national rate of 3.6 percent. 

Posted in Economics, Employment, New Jersey Real Estate | 114 Comments

Mortgage rates drop

Posted on March 14, 2023 by grim

From CNBC:

Mortgage rates tumble in the wake of bank failures

The average rate on the popular 30-year fixed mortgage dropped to 6.57% on Monday, according to Mortgage News Daily. That’s down from a rate of 6.76% on Friday and a recent high of 7.05% last Wednesday.

Mortgage rates loosely follow the yield on the 10-year Treasury, which fell to a one-month low in response to the failures of Silicon Valley Bank and Signature Bank and the ensuing ripple through the nation’s banking sector.

In real terms, for a buyer looking at a $500,000 home with a 20% down payment on a 30-year fixed mortgage, the monthly payment this week is $128 less than it was just last week. It is still, however, higher than it was in January.

So what does this mean for the spring housing market?

In October, rates surged over 7%, and that started the real slowdown in home sales. But rates then started falling in December and were near 6% by the end of January. That caused a surprising 8% monthly jump in pending home sales,which is the National Association of Realtors’ measure of signed contracts on existing homes. Sales of newly built homes, which the Census Bureau measures by signed contracts, also surged far higher than expected.

While the numbers for February are not in yet, anecdotally, agents and builders have said sales took a big step back in February as rates shot higher. So if rates continue to drop now, buyers could return once again — but that’s a big “if.”

Posted in Economics, Housing Recovery, Mortgages, National Real Estate | 115 Comments