January a mixed bag for NJ real estate

Posted on February 3, 2024 by grim

From NorthJersey.com:

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

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

Just about half of New Jersey’s 21 counties saw an increase in new home listings compared to January 2023 — a positive sign following a long period of low housing inventory across the state. And, all 21 counties saw home prices increase in January compared to last year — a benefit to those looking to sell, but bad news for those looking to buy.
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According to housing data from Realtor.com, 10 of North Jersey’s 21 counties had an increase in new home listings compared with January 2023.

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

In contrast, Passaic and Morris Counties saw a decrease in new listings in January. While Passaic County saw a 2.17% decrease and 180 new listings, Morris County had the greatest decrease across the state at 2.16%, with 254 new listings.
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Compared to last year, all 21 New Jersey counties saw increases in median home listing prices in January, and 17 of those counties saw increases of more than 10%.

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

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

Finally slowing?

Posted on February 2, 2024 by grim

From CNBC:

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

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

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

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

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

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

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

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

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

NJ second worst state to retire in

Posted on February 1, 2024 by grim

From WalletHub:

Best and Worst States to Retire (2024)

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

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

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

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

Uh oh…

Posted on January 31, 2024 by grim

From NJ.com:

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

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

Blame taxes for the inventory?

Posted on January 30, 2024 by grim

From CNN:

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

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

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

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

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

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

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

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

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

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

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

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

NJ Homes for $1

Posted on January 29, 2024 by grim

From Patch:

$1 Homes For Sale In Newark; Public Lottery Will Mark Milestone

Buy a house for a buck? That’s the dream that’s about to become reality for some lucky Newark families on Monday, when the city launches its first public lottery for a new homeownership program.

Taking place at City Hall at 10 a.m., the lottery will mark a watershed moment for Newark’s Homeownership Revitalization Program.

Under the program, local residents get the chance to buy a city-owned property for as little as $1. 

“Program participants must be Newark residents, and commit to reside in the properties for a minimum of 10 years. The selection of Newarkers approved to participate is based upon their ability to carry out financial and other necessary obligations for successful homeownership. All accepted applicants would be eligible for NACA’s Best in America mortgage that requires no down payment, no closing cost, no fee, and no mortgage insurance at a below market fixed rate, without consideration of one’s credit score. Accepted applicants also receive guidance and instruction from NACA’s HUD certified counselors to become well-informed homebuyers and owners who can successfully redevelop their properties.”

Posted in Demographics, Economics, New Jersey Real Estate, Politics | 64 Comments

Zillow: Up, up, and away!

Posted on January 28, 2024 by grim

From Fortune:

Zillow just raised its home price forecast, seeing a 3.7% jump in 2024, and it’s all because of ‘external factors’

Just as things had started looking up for the U.S. housing market, with mortgage rates dropping modestly, on Thursday Zillow revised its outlook for home pricesin 2024. Its previous forecast had called for home prices to stay flat this year, but now it sees home values rising 3.7% this year. 

Zillow said its revision is based on “external factors,” including a decline in mortgage rates and an improved inflation outlook from the Federal Reserve. In other words, it’s not a big change within the composition of housing itself or the activity of homebuyers—like some kind of huge rush of inventory or a sellers’ market suddenly morphing into a buyers’ market. The recent decline in mortgage rates means that monthly payments on a new mortgage for a typical home are now $1,790, which is $413 cheaper than in October 2023, Zillow senior economist Nicole Bachaud tells Fortune. 

“This unlocks some more buyers to be able to shop for a home if rates stay lower this spring, which will increase competition,” she says. An improved inflation outlook could mean mortgage rates “staying off their peaks and floating down to a small degree,” which would “also bring both buyers and sellers back to the market, putting some upward pressure on home prices.”

Redfin also reported on Thursday that home prices were up 5.1% during the four weeks ended Jan. 21, the biggest increase since October 2022. Asking prices were up 6.5%, also the largest jump since October 2022. However, Redfin predicts a 1% decline in home prices year over year in the second and third quarters of 2024, marking the first time prices would decline since 2012, chief economist Daryl Fairweather tells Fortune.

“However, there is much uncertainty,” she notes. “Although I think a price decline is more likely than a price increase, a price increase is still possible.” 

Posted in Housing Bubble, National Real Estate | 59 Comments

So much for 2023…

Posted on January 26, 2024 by grim

From the NJ Association of Realtors:

Monthly Indicators – December 2023

From NJ Business Magazine:

Closed Home Sales in NJ Down 22.1% in 2023

New Jersey Realtors has released its 2023 year-end residential real estate housing market data revealing the continued impact of low inventory and two-decade-high mortgage rates on home sales.

The townhouse-condo market segment experienced the highest percent change in closed sales at -24%, amounting to 19,175 closed sales in 2023, 6,063 less than 2022. There were -23.2% fewer single family closed sales in 2023, while the adult community market had -6.2% fewer closed sales. Closed sales totaled 84,305 in New Jersey in 2023, a -22.1% percent change over 2022.

The total market median sales price rose 6.3% in 2023 to $455,000, while the single-family market median sales price increased 6.3% to $502,500. While prices remained high in 2023, sellers received more than the list price. In the total market, homes received 101.8% of the list price, a percent change of just -0.3%.

There were 107,517 new listings in 2023, down -20.1% compared to 2022. Of those new listings, single family homes made up the majority, with 71,701 single family new listings in 2023.

“I’m optimistic about the 2024 housing market,” said New Jersey Realtors 2024 President Gloria Monks. “If interest rates come down as predicted, we could see more first-time buyers enter the market this year and more sellers ready to list their home.”

Posted in Demographics, Economics, New Jersey Real Estate | 129 Comments

#hodlforever

Posted on January 25, 2024 by grim

About time the rest of the industry noted the behavioral trend that we were one of first to identify and discuss.

2) Mortgage lock-in, and this is one of the major trends I’m looking at in the near future. Should mortgage rates go up, borrowers are going to be less inclined to move if it means losing their sweetheart mortgage rate. I know I wouldn’t give up my 3.95% for a 5.5%. So what’s it mean? I’ll stay longer.

February 2013

Likewise, this will further intensify the “mortgage lock in” dynamic that I’ve noted here on numerous occasions. If interest rates rise significantly in the future, borrowers with extremely low rate mortgages will be less likely to trade up or laterally as their financing costs will rise dramatically. Instead they may chose to stay and in some cases remodel or expand instead of selling. We already have this with the HARP 2 borrowers, HARP 3 will significantly increase the number of homeowners in this group.

January 2013

From Newsweek:

Housing Market Data Is Warning Sign for Americans: Peter Schiff

As the U.S. housing market grapples with its lowest sales since the mid-1990s, economist Peter Schiff warns of a looming crisis in which homeowners are resorting to renting their properties to retain their existing mortgage in what he calls a deteriorating economy.

With the National Association of Realtors (NAR) reporting a slump in existing home sales and a surge in median sales prices last week, Schiff, on his The Peter Schiff Show podcast, pointed to a potential trend in the real estate market in which homeowners will begin renting out their homes to retain the properties on which they have low mortgage rates versus selling on the open market, which would cause them to take on a new mortgage with a higher interest rate.

“Existing homes aren’t selling,” Schiff said. “The people who are in them have low mortgages and they’re not motivated to sell, and the people who want to buy them can’t afford to buy them because they can’t get those rock-bottom mortgage rates.

“The guys that own the homes don’t want to sell because where are they going to live? I mean, they’ve got these cushy low mortgages that they don’t want to give up. Now, maybe they’ll rent out their homes so they can hang on to the mortgage.”
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The situation, which is forcing homeowners into what experts call the “lock-in” effect, is compounded by the interest rate hike campaign that the Federal Reserve embarked on last year aimed at curbing inflation. While the Fed has signaled that its job is done in terms of rate hikes, the effects are long lasting, especially on mortgage rates.

Posted in Crisis, Economics, Housing Bubble, Mortgages | 59 Comments

Fairest lawn of all

Posted on January 24, 2024 by grim

From NJ.com:

Bidding war results in suburban N.J. home selling for $115K over the asking price

A house in Fair Lawn was priced to sell – and it sure did. For more than $100,000 over the asking price.

Posted in Housing Bubble, New Jersey Real Estate | 75 Comments

How long to sell?

Posted on January 23, 2024 by grim

From NJ.com:

Homes taking longer to sell in N.J. See latest county-by-county rankings.

Median Days on Market

Burlington County40
Gloucester County40
Camden County42
Union County44
Middlesex County45
Somerset County46
Mercer County46
Cumberland County49
Bergen County50
Essex County51
Passaic County51
Morris County51
Warren County52
Hudson County57
Monmouth County57
Ocean County58
Atlantic County58
Sussex County58
Hunterdon County60
Salem County72
Cape May County73
Posted in Economics, Housing Bubble, New Jersey Real Estate | 69 Comments

Prices to fall in 2024?

Posted on January 21, 2024 by grim

From Fast Company:

Fannie Mae expects U.S. home prices to rise in 2024; Morgan Stanley disagrees

“When we published our year-end forecast, we were expecting [housing] affordability to improve. . . . If mortgage rates were to stay here that improvement would be occurring far more quickly than we originally anticipated,” Morgan Stanley housing strategist James Egan said on a recent Morgan Stanley podcast.

Egan added that Morgan Stanley originally anticipated existing home sales would rise 2.5% in 2024, while new home sales would rise 7.5%. But “if this affordability improvement were to really solidify here,” he says, a slightly bigger sales improvement would be expected in 2024.

But despite predicting that home sales will rise this year, Morgan Stanley’s forecast model still expects U.S. home prices, as measured by Case-Shiller, to fall 3% in 2024.

“While we do expect [home] sales to increase, we’re also expecting for sale inventory to increase [in 2024]. Even if only at the margins. What our models are telling us is that increasing off multi-decade lows from an inventory perspective, is enough to push [national] home prices down a little bit in 2024 despite the increase in [housing] demand we’re forecasting. We’re still calling for [national] home prices to decrease by about 3% year over year,” Egan said.

But that would hardly be a crash, let alone a “material” correction.

“I would stress we think this is a moderation, not a correction in [national] home prices,” Egan said. “We also don’t think there’s a lot of downside down below that 3% number as homeowners do remain the strong hands in this cycle. By that we mean we don’t think they are going to be forced to sell into materially weaker bids. That has [added] and will continue to add a lot of support for home prices this cycle. We just don’t think that support doesn’t mean home prices can’t decline marginally on a year-over-year basis in 2024.”

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

Nobody selling, nobody buying

Posted on January 20, 2024 by grim

From PBS Newshour:

U.S. existing home sales drop to near 30-year low

Sales of previously occupied U.S. homes sank in 2023 to a nearly 30-year low as mortgage rates climbed to the highest level in more than two decades and prices hit record highs, pushing homeownership out of reach for many Americans.

The National Association of Realtors said Friday that existing U.S. home sales totaled 4.09 million last year, an 18.7% decline from 2022. That is the weakest year for home sales since 1995 and the biggest annual decline since 2007, the start of the housing slump of the late 2000s.

The median national home price for all of last year edged up just under 1% to record high of $389,800, the NAR said.

Mortgage rates surged in 2023, climbing to a two-decade high of 7.08% by late October as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation.

The sharply higher home loan borrowing costs limited home hunters’ buying power on top of years of soaring prices. A stubbornly low level of homes for sale also kept many would-be homebuyers and sellers on the sidelines.

Mortgage rates have been mostly easing since November, echoing a pullback in the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield has largely come down on hopes that inflation has cooled enough for the Federal Reserve to shift to cutting interest rates this year.
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Despite easing mortgage rates, existing home sales fell 1% in December from the previous month to a seasonally adjusted annual rate of 3.78 million, the slowest sales pace since August 2010, the NAR said.

December’s sales fell 6.2% from a year earlier. Last month’s sales pace is short of the roughly 3.83 million that economists were expecting, according to FactSet.

“The latest month’s sales look to be the bottom before inevitably turning higher in the new year,” said Lawrence Yun, the NAR’s chief economist. “Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.”

Home prices continued to rise last month. The national median home sales price rose 4.4% in December from a year earlier to $382,600, the NAR said.

Posted in Housing Bubble, National Real Estate | 10 Comments

Cheers!

Posted on January 19, 2024 by grim

From 42 Freeway:

New Jersey Liquor License Overhaul Signed.  Much More To It Than The Press Release

So it’s clear that New Jersey lawmakers are not happy that over 1,500 full alcohol plenary licenses are sitting unused for years, which can be a commercial impact to the townships who would rather see restaurants developed with the licenses.

As I interpret the legislation, an unused full liquor license is allowed to be “inactive” for 2 years, which can be extended to a third by the municipality. Before the final inactive license expiration, the license must be utilized or sold. 

For the existing inactive licenses, many of which have been inactive for decades…there are provisions in the new legislation to move them through the process towards expiration. Based on how long a license in inactive, it could have from 1 to 4 years to start utilizing or sell.

If a plenary licenses move to full expired status the license holder loses the license, and the municipality then can offer the license up to sale, typically in a “best price” auction.
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I also wonder if the requirements of ”use it or lose it” starts bringing down the prices for full liquor licenses in New Jersey, as owners sitting on plenary licenses are effectively forced to sell the license or utilize in a business, in just the next few years.
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As an example, regarding the traditional plenary (full alcohol) licenses…  This new law could have an immediate impact in towns like Harrison Township, where one business (Madison Marquette) has been sitting on FOUR plenary licenses for over 10 years… and the new legislation basically forces a “use it or lose it” set of requirements!

Posted in Economics, New Jersey Real Estate, Politics | 57 Comments

Oh Shiitake

Posted on January 18, 2024 by grim

From Fast Company:

Decoding the U.S. housing market: What Opendoor’s performance reveals about home prices

At the edge of the sprawling desert community of North Las Vegas, the four-bedroom home at 7473 Moonglade Street epitomized the impact of the mortgage rate shock in 2022. During this period, mortgage rates surged from 3% in January 2022 to over 6% by June 2022. That placed iBuyers—online home-buying companies—and flippers in a vulnerable position as cities like Phoenix, Las Vegas, and Austin, which were once pandemic-era darlings, transitioned into full-blown housing corrections. 

In April 2022, Opendoor acquired the house for $494,000. However, when the iBuyer tried to flip the property back onto the market in May 2022 for $551,000, it found Las Vegas had rapidly shifted from a housing boom to a home price correction. Throughout the second half of 2022, the home experienced nearly a dozen price cuts. When it finally sold in April 2023, Opendoor only received $396,000, a 19.8% decrease from the purchase price.

So-called iBuyers like Opendoor make speedy offers to home sellers in exchange for a “service fee.” These iBuyers then handle any necessary repairs or cosmetic upgrades and put the property back up for sale. The business model is a new take on flipping; however, both business models have the same downside risks if pricing becomes destabilized.

“When the shiitake mushrooms hit the fan, [iBuyers/flippers] want to get out first. The way to do that is to figure out where the lowest sale is, and be 2% below that. And if it doesn’t sell in the first weekend, move it down [again],” Redfin CEO Glenn Kelman told me 15 months ago in October 2022, just days before announcing thatRedfin would close down its iBuyer business. “We notice immediately when fewer people are on our website and fewer signing up for tours . . . we’re sitting on $350 million worth of homes for sale that we bought with our own money, or worse bought with borrowed money. And what we always told investors is that we would protect our balance sheet by acting quickly. We don’t have hope as a strategy. We immediately started marking [things] down.”

Posted in Economics, General, National Real Estate, Price Reduced | 68 Comments