Landlords making Newark unaffordable?

Posted on January 23, 2023 by grim

From Patch:

Corporations Own Most Of Newark’s Homes. New Laws Are Pushing Back

It wasn’t long ago that a study from the Rutgers Center on Law, Inequality and Metropolitan Equity made a startling claim about home ownership in New Jersey’s largest city: nearly half of Newark’s residential properties are owned by corporations.

Researchers said the phenomenon is one of the leading reasons behind the rising cost of rental housing in the area. But according to Mayor Ras Baraka, action is being taken on one of the longest-running sources of wealth inequality in the Brick City.

Affordable housing has been a perennial hot-button issue in Newark, where many residents and activists have been complaining about the high cost of living for years.

On Thursday, Baraka detailed several ways that city officials have been fighting to keep housing affordable. They include the creation of new local ordinances, rolling out programs for first-time homeowners, and establishing a municipal “land bank” that helps turn abandoned properties into homes for local residents.

“In cities and even suburbs across America, limited liability companies (LLCs) are eroding the American dream of homeownership as they convert owner-occupied homes into corporately owned rental units,” Baraka said.

“In Newark, where we have worked hard to expand homeownership, we have created a strategy to do everything possible to fight this dangerous trend,” he continued.

Posted in Economics, Employment, New Jersey Real Estate, Politics | 130 Comments

Hey 2010!

Posted on January 21, 2023 by grim

From Reuters:

U.S. home sales slump to 12-year low; glimmers of hope emerging

U.S. existing home sales plunged to a 12-year low in December, but declining mortgage rates raised cautious optimism that the embattled housing market could be close to finding a floor.

The report from the National Association of Realtors on Friday also showed the median house price increasing at the slowest pace since early in the COVID-19 pandemic as sellers in some parts of the country resorted to offering discounts.

The Federal Reserve’s fastest interest rate-hiking cycle since the 1980s has pushed housing into recession.

“Existing home sales are somewhat lagging,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. “The decline in mortgage rates could help undergird housing activity in the months ahead.”

Existing home sales, which are counted when a contract is closed, fell 1.5% to a seasonally adjusted annual rate of 4.02 million units last month, the lowest level since November 2010. That marked the 11th straight monthly decline in sales, the longest such stretch since 1999.

Sales dropped in the Northeast, South and Midwest. They were unchanged in the West. Economists polled by Reuters had forecast home sales falling to a rate of 3.96 million units. December’s data likely reflected contracts signed some two months earlier.

Home resales, which account for a big chunk of U.S. housing sales, tumbled 34.0% on a year-on-year basis in December. They fell 17.8% to 5.03 million units in 2022, the lowest annual total since 2014 and the sharpest annual decline since 2008.

Posted in Demographics, Economics, Housing Bubble, Mortgages, National Real Estate | 90 Comments

32 months of job growth

Posted on January 20, 2023 by grim

From the NJ Department of Labor and Workforce Development:

NJ’s Job Gains Continue with Slight Uptick in December

New Jersey’s labor market grew slightly in December, adding 1,400 nonfarm jobs to a seasonally adjusted level of 4,265,700, according to preliminary estimates produced by the U.S. Bureau of Labor Statistics.  

Private sector employment rose by 100 jobs for the month, continuing a streak of 32 consecutive months of growth starting in May 2020. The unemployment rate held steady at 3.4 percent.  

November employment estimates were revised upward by 6,400, for an adjusted gain of 18,100 jobs between October and November. The unemployment rate remained unchanged, at 3.4 percent. 

In December, four out of nine major private industry sectors recorded job growth. They were education and health services (+4,400), trade, transportation, and utilities (+2,200), other services (+500), and information (+100). Sectors that recorded a loss for the month were construction (-3,400), professional and business services (-2,500), manufacturing (-500), financial activities (-400), and leisure and hospitality (-300). Month-over-month, the state’s public sector increased by 1,300 jobs. 

For all of 2022, preliminary estimates show job growth was broad-based, with all but one of the nine major private industry sectors recording job gains. The sectors that added jobs for the year were trade, transportation, and utilities (+38,700), education and health services (+38,200), leisure and hospitality (+37,600), other services (+15,600), professional and business services (+13,000), financial activities (+4,200), manufacturing (+2,400), and information (+300). Construction (-8,900) was the only sector to record a loss. Year-over-year, the state’s public sector added 7,800 jobs. 

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 58 Comments

Thorough, in-depth, housing forecast from smart Harvard guy.

Posted on January 19, 2023 by grim

From the NY Post:

Why US home prices will fall another 10 percent, according to Harvard economist

Pain across the US housing market that began last year is likely just getting started if interest rates remain high, star economist Ken Rogoff warned on Tuesday.

Rogoff, a professor at Harvard University and former top economist at the International Monetary Fund, said home prices in both the US market aboard will fall “certainly another 10%” over the “couple of years.”

The economist cited the restrictive policy stances taken by the Federal Reserve and other central banks, which have caused a spike in mortgage rates and cooled demand among buyers.

“If, as I think, interest rates are going to stay high for some time to come, I think there’s still a lot of downward adjustments in the housing markets globally, not just in the United States,” Rogoff told Bloomberg Television during an appearance at the World Economic Forum in Davos, Switzerland.

The Federal Reserve is expected to implement more interest rate hikes early this year after a string of seven straight supercharged interests in 2022. Fed Chair Jerome Powell has signaled that rates will rise and then hover in restrictive territory until policymakers have clear evidence that inflation has cooled.

Rogoff noted that the housing and stock markets each tend to struggle whenever central banks hike interest rates – though downticks in home prices tends to occur a longer period of time.

“Equities and housing move in sync with interest rates, but equities move much faster. Housing famously, prices, especially down, move much more slowly. People sit on their house, they don’t want to sell their house,” Rogoff said.
…
Rogoff’s estimate for home prices is conservative compared to some other experts. Pantheon Macroeconomics chief economist Ian Shepherdson has predicted that prices will sink 20% by later this year.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 134 Comments

Oh that’s a cute idea, good luck.

Posted on January 18, 2023 by grim

From NJ.com:

Companies are flocking back to the U.S. Let’s get them to move here.

It’s the time of year when many people make New Year’s resolutions. Some people might go on a diet, or start working out. New Jersey needs to do both for the sake of our economy before it is too late.

New Jersey’s high taxes are taking away from people, and, as a result, taking resources away from economic growth. The Garden State’s most consistent economic rating is ‘nation’s worst business environment’ and ‘dead last for fiscal health.’

We are at a critical stage in the global economy where many businesses will want to move back to the U.S. to avoid supply chain problems that occurred during and after the pandemic. New Jersey isn’t a destination for them, but it can be if we make simple changes.

First and foremost is gradually lowering our nation-high tax rate – and globally high if you consider the national tax on top of it – on businesses to 2.5%, which would be among the lowest in the nation. Pennsylvania is lowering its corporate tax rate to 5%. They are gearing up to take our businesses and the businesses that want to increase their domestic presence.

If you have doubts that lowering the corporate business tax to 2.5% will work, I have evidence that it does.

In 2013, North Carolina started gradually cutting its corporate business tax to that low rate. Every time revenue went up, the tax would lower a proportionate amount. That’s right, they cut their tax and revenue increased — which allowed North Carolina to cut its tax more and get more revenue out of it.

The state received more revenue because after cutting its business tax, it led the nation in economic growth for three years. More jobs, better pay, lower unemployment, and all-around economic growth.

Despite the efforts of the New Jersey Economic Development Authority, our state continues to be the worst state in the nation for business. I support the EDA, tax credits are a useful tool; but we need to help every business, not just those the government thinks are worthy. That should be New Jersey’s New Year’s resolution.

Posted in Economics, Employment, New Jersey Real Estate, Politics | 87 Comments

That’s it??

Posted on January 17, 2023 by grim

From Fortune:

Up from here? The free-fall in housing market activity just concluded, says Capital Economics

Not only did spiking mortgage rates prompt the Pandemic Housing Boom to fizzle out in the summer of 2022, they also pushed housing market transactions into free-fall mode. By December, mortgage purchase applications were down over 40% on a year-over-year basis.

But there might finally be some good news for builders and agents: Researchers at Capital Economics believe housing market activity is bottoming out.

“There are growing signs that housing market activity may be close to a trough. The decline in mortgage rates over the past couple of months has led to a small improvement in affordability and a rise in homebuyer sentiment, albeit from a record low. Corroborating this, mortgage applications for home purchase have ticked higher in the past couple of months, which should feed through to higher sales,” writes Sam Hall, property economist at Capital Economics.

It isn’t just Capital Economics. There’s a growing optimism among brokers and agents across the country. They’re hoping that loosening financial conditions, which saw the average 30-year fixed mortgage rate fall from 7.37% to 6.09% over the past two months, will help to give the looming spring season a little juice.

Let’s be clear: Even if housing market activity (i.e. home sales) have indeed bottomed, it doesn’t guarantee that home sales will have a swift recovery. After all, housing affordability remains “pressurized” to a historic degree. That’ll happen when U.S. home prices soar 41% in just over two years and mortgage rates spike from 3% to over 6% in just a 12-month span.

“But any recovery in housing market activity this year will be tepid. Stretched affordability, a weakening economy and falling house prices will all weigh on activity. As a result, we expect 2023 will be the weakest year for sales since 2011 and for starts since 2014,” write Capital Economics researchers.

Posted in Economics, Housing Bubble, National Real Estate | 108 Comments

Helping with the mortgage

Posted on January 16, 2023 by grim

From Yahoo Finance:

Housing expert: ‘Sellers are absolutely having to negotiate’

Housing expert: ‘Sellers are absolutely having to negotiate’

It’s the same housing story across the U.S., according to real estate agents in three U.S. cities. Sellers are offering more concessions as buyer demand wanes and listings linger on the market.

“Gone are the days of, ‘hey, my next door neighbor just sold last year for $100,000 over list price.’ Sellers are absolutely having to negotiate,” Dan O’Brien, an agent at Trueblood Real Estate covering Indianapolis, told Yahoo Finance.

And that’s good news for buyers.

“Now, we actually have buyers that are being protected by contingencies, like inspection and appraisal,” O’Brien said, “where a lot of times, those were out the window during the peak craziness of the COVID market.”
…
“Right now, sellers are operating to help with the interest rate increase. So they are offering 2-1 buydowns,” said Kathy Casey, a Coldwell Banker residential brokerage realtor in Denver. “What that means is for the first two years, your interest rate would be lower than the market rate right now.”
…
Like other markets, Charlotte’s sellers are providing inducements to make deals, especially paying for closing costs and buying down the interest rate, according to Sir Ashley Harrison, a real estate broker at the Harrison Group with Fathom Realty in Charlotte. Pricing, though, isn’t moving as much.

“We’re seeing more inventory, but less new listings,” Harrison said. “And we are getting a lot more seller concessions, but pricing has remained very sticky.”

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 47 Comments

Hybrid NJ

Posted on January 14, 2023 by grim

From NorthJersey.com:

‘Working remotely is here to stay’: NJ considering new tax break for hybrid offices

New Jersey officials say they’re contemplating a new tax break designed to lure companies interested in having their staff work from home rather than in the office full time.

Teased by Gov. Phil Murphy in his State of the State address Tuesday, the proposal is still under development and would require approval from state lawmakers. It’s an attempt to align the state’s incentive programs with a new post-pandemic reality where employees expect flexible work schedules, said Tim Sullivan, CEO of the New Jersey Economic Development Authority.

“There’s economic opportunity for New Jersey residents to get good jobs in remote or hybrid work settings, and as long as those people are paying New Jersey taxes, then there’s a framework whereby it makes sense to incentive them,” he said in an interview.

Under the broad outlines sketched by Sullivan, the state would offer tax breaks to companies willing to buy small, satellite offices in New Jersey to serve as occasional workspaces for their local employees. Currently, those employees may be classified as working in New York, Philadelphia or wherever else their main offices are located. Under Murphy’s vision, they’d be considered New Jersey workers, steering more tax revenue toward the Garden State.
…
Plans for a new hybrid-work incentive were first reported by Politico New Jerseyon Wednesday.

According to Sullivan, the new tax credit could be funded by unused subsidies from other programs. The incentive would accompany and not replace the much larger NJ Emerge, a 2020 program that seeks to attract large employers to the state but has so far found few takers.

“We must recognize that in the new, post-pandemic business environment, not every new job created for a New Jerseyan is going to be housed in a physical office in New Jersey,” Murphy said in his State of the State address. “For many New Jerseyans, working remotely is here to stay.

Posted in Economics, Employment, New Jersey Real Estate, Property Taxes | 57 Comments

You take the good, you take the bad, you take them both, and there you have…

Posted on January 12, 2023 by grim

From the Times Union:

Hudson Valley housing prices exploded in 2020. What happens now?

In the late summer of 2019, when the word “pandemic” was most likely to call up images of the Spanish flu or the Black Death, the average house in Greene County sold for $185,000, according to figures from Hudson Valley Pattern for Progress.

Three years later, in the late summer of 2022, the average home sold for $330,000 —  an increase of 78 percent.

But as interest rates rise, will this trajectory be sustainable? Will it plateau? Or will there be a dreaded crash?

Gary DiMauro, the executive vice president at Four Seasons Sotheby’s, which sells high-end homes throughout upstate New York, called price increases in the Hudson Valley’s housing market during the pandemic “unheard of in U.S. history.”

The tale is by now well-known: The mad rush to escape the petri dish of New York City resulted in bidding wars for properties, often between cash buyers, that jacked up housing prices as demand lapped supply. Hudson and Kingston’s metropolitan areas (which included all of Columbia and Ulster counties, respectfully) had the biggest jump in net in-migration in the entire country, according to a New York Times analysis.

Posted in Demographics, Economics, Employment, NYC | 152 Comments

Is it really so bad?

Posted on January 11, 2023 by grim

From Fox Business:

Concerns over a ‘white collar recession’ grow as Goldman Sachs, Morgan Stanley, Amazon and others cut jobs

Concerns about a “white collar recession” grew Tuesday after Goldman Sachs began to lay off workers as part of a plan to cut 3,200 jobs in an effort to cut costs. 

Goldman Sachs is just the latest firm to reduce its size in recent months. Morgan Stanley announced that it would cut two percent of its staff in December, Amazon plans to cut over 18,000 jobs, and Salesforce announced it would cut ten percent of its workforce and close some offices last week.

While white collar workers were less affected by the COVID-19 pandemic lock-downs than their blue collar counterparts, many jobs were simply done remote instead of being cut, professionals are now bearing the brunt of the economic headwinds America faces. 

Goldman’s layoffs represent one of its biggest yet since the 2008 financial crisis.

“26,000 more layoffs announced today alone… from Amazon & Salesforce no less (they both have cash to weather this storm, but are taking the medicine) The white collar recession is very real & it will increase FB, Uber, MSFT, Google & Apple will all announce in Q1 I predict,” investor Jason Calacanis tweeted.

Posted in Demographics, Economics, Employment, National Real Estate | 107 Comments

Confidence improves … a little

Posted on January 10, 2023 by grim

From CNBC:

Consumer confidence in housing finally rises, thanks to falling home prices

Mortgage rates are still twice what they were a year ago, but home prices have been falling since June, and that’s finally making consumers feel better about what had been an overheated, highly competitive housing market.

A monthly housing sentiment index from Fannie Mae showed sentiment improving from November to December. The index is still lower than it was a year ago and just slightly off its record low set in October and November.

The share of respondents saying now is a good time to buy a home was still low, at just 21%, but it was up from 16% in October. The share saying now is a bad time decreased.

On selling, however, sentiment continued to drop. The share of respondents saying now is a good time to sell dropped to 51% from 54%, while the share saying now is a bad time to sell increased.

More consumers now believe home prices will fall in the next 12 months, and more also said they believe mortgage rates will come down.

Prices in November, the most recent measurement, were 2.5% lower than the spring 2022 peak, according to CoreLogic. They were still over 8% higher year over year, but that annual comparison is now half of what it was in June.

The average rate on the popular 30-year fixed mortgage hit a recent high of 7.37% in October but then fell back into the mid-6% range throughout November and into December. As of last Friday it had dropped to 6.2%, according to Mortgage News Daily.

“As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices — from the perspective of the buyer — may not produce sufficient purchasing power,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist, in a release. “At the same time, existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable.”

Posted in Economics, Housing Bubble, National Real Estate | 99 Comments

Not even that hot…

Posted on January 7, 2023 by grim

From Insider:

The most honest man in real estate thinks the housing market isn’t going to crash

Miller is a polymath: he has guided Floridians through understanding how Miami could adjust and profit off of the influx of New York-based buyers in 2020; he’s predicted how a downtown Manhattan office-turned-condo building could cause a surplus of residences for sale that will push down sales prices in the area for years to come; and in the spring, he explained the impact of the ultra-luxury market on real estate in the bougie ski destination of Aspen, Colorado. 

His most relevant hot take right now isn’t even that hot: Miller opposes the idea that the US housing market will crash now the way it did during the Great Recession. Like many of his peers, he argues that there are too few properties on the market compared to those seeking homes for that to happen, and that the market varies too much locally. 

‘When things are bad, I say they’re bad’

His honesty has not always been welcome. 

In the years that preceded the Great Recession, he said, he had to start requiring mortgage-broker clients working for banks to pay his company before the appraisal because so many refused to pay if they did not get the valuation they wanted. 

In order to attract and keep business, other appraisers would assess properties higher than their actual value in New York City, he said. One time, he even saw a luxury condo appraised at $15 million over its actual value. 

“We weren’t morally flexible,” he said. “And that made us a pariah for mortgage brokers.” 

So Miller Samuel had to pivot away from relying so heavily on institutional players, which had made up 75% of its business. He instead started catering to individuals who needed appraisals, like private lawyers or co-op boards, to keep the company from going under, Miller said. 

Posted in Economics, National Real Estate, NYC | 87 Comments

Jobs Day!

Posted on January 6, 2023 by grim

From the NYT:

U.S. Labor Market Expected to Slow

The Labor Department’s latest reading on nationwide employment is due at 8:30 a.m. Eastern time on Friday. Forecasters expect the report to show that payrolls grew by about 200,000 in December, down from an average of 272,000 over the previous three months.

Even with the prospect of a deceleration in job creation, the resilience of the labor market has been striking. Employers’ desire to hire remained strong going into December, the Labor Department announced this week, with only a slight decline in job openings in November and a rising share of workers voluntarily quitting their jobs.

The number of people filing initial claims for unemployment insurance reached a three-month low at the end of December, as employers remained broadly reluctant to let go of staff members despite high-profile layoff announcements from large tech firms.

That mismatch between supply and demand, particularly in the service industries where compensation drives prices, has continued to heat up wage growth faster than the Federal Reserve would like to see. The Fed’s program of interest-rate increases is meant to cool the labor market, and with it, the climb in wages.

Posted in Economics, Employment, National Real Estate | 123 Comments

NJ beats the US Avg.

Posted on January 5, 2023 by grim

From the Philly Fed:

State Coincident Indexes – November 2022

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for November 2022. Over the past three months, the indexes increased in 35 states, decreased in 11 states, and remained stable in four, for a three-month diffusion index of 48. Additionally, in the past month, the indexes increased in 30 states, decreased in 13 states, and remained stable in seven, for a one-month diffusion index of 34. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.8 percent over the past three months and 0.3 percent in November.

Pennsylvania

In the three months to November, the coincident index for Pennsylvania rose 1.2 percent. The level of payroll employment increased over the past three months but remained slightly lower than that of February 2020. The unemployment rate fell during the three-month period. However, average hours worked in manufacturing fell. Overall, Pennsylvania’s economic activity as measured by the coincident index has risen 6.5 percent over the past 12 months.

New Jersey

In the three months to November, the coincident index for New Jersey rose 1.7 percent. The level of payroll employment increased over the past three months. The unemployment rate fell significantly during the three-month period. In addition, average hours worked in manufacturing remained stable. Overall, New Jersey’s economic activity as measured by the coincident index has risen 5.5 percent over the past 12 months.

Posted in Economics, Employment, New Jersey Real Estate | 164 Comments

Manhattan prices dip

Posted on January 4, 2023 by grim

From Bloomberg:

Manhattan Home Prices Slip 5.5% in First Decline Since Mid-2020

Manhattan’s homebuying market weakened at the end of last year, but didn’t foreshadow a deep freeze heading into 2023.

Co-ops and condos traded for a median of $1.1 million in the fourth quarter, a 5.5% drop from the same period in 2021, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the first year-over-year decrease in prices since sales stalled at the beginning of the pandemic, in the second quarter of 2020.

The quarter, though, doesn’t appear to be the start of a steep tumble.

“You’re going to see a modest decline in pricing over the year, but not a correction,” said Jonathan Miller, president of Miller Samuel.

Tight inventory is “underpinning” property values and keeping them from falling more dramatically, according to Miller. As is the case across the US, Manhattan sellers are reluctant to settle for discounted prices or give up the low mortgage rates they secured before the Federal Reserve began raising interest rates in early 2022.

There were 6,523 homes on the market at the end of the fourth quarter. While that’s up  5.1% from a year earlier, it’s down 16% from the previous three months, and still a low level for Manhattan.
…
Even as short-term comparisons might suggest that Manhattan is struggling, the fourth-quarter data show a market that’s stronger than just before the pandemic. While prices have retreated from their highs, they’re still 10% above the $999,000 median at the end of 2019, and closings totaled nearly 6% than three years ago.

“The overall narrative is more negative than it actually is,” Miller said. 

Posted in Housing Bubble, NYC | 130 Comments