New Jersey Real Estate Report

From HousingWire:

Home prices soared in March amid record demand

This is getting to be a problem. Home prices in the U.S. soared 18% year-over-year in March 2021 to a median of $356,000, according to a report Redfin released Friday that provided stark evidence of a housing market where demand greatly exceeds supply.

Homes sold in March were on the market for 21 days, per the report, the shortest period between listing and sale since 2012. Forty-six percent of homes sold within a week after the hitting the market.

At first, such high demand was leading to record home sales. A National Association of Realtors’report from 2020’s end found the highest volume of home sales since 2006. But the NAR reported this week that home sales in March fell for the second month in a row as inventory plunged and home prices climbed to record levels.

Where matters are becoming problematic is that high demand is now a direct cause for the low inventory.

For months there was a question in the market “about whether fear of coronavirus infection was keeping homeowners from selling,” stated Daryl Fairweather, chief economist at Redfin.

But with a third of U.S. adults now vaccinated, Fairweather explained, it’s increasingly clear that people don’t fear contact with strangers as much as not having a new home to move into.

Another reason for low inventory – active listings were down 47% in March compared to March 2019, per the report – are low mortgage interest rates. Freddie Mac reported Thursday that interest on an average fixed-rate mortgage is now less than 3%. Instead of looking for a new home, Fairweather found, homeowners are just refinancing the mortgage payment on their current one.

Updated Vaccination by Age Range for NJ:
Morning of 4/19 vs Morning of 4/22

At Least 1 Dose
Total Pop: 8.9m
Total 1st Doses: 3.9m – 44% of total pop (Up from 43%) – Bloomberg reporting 47%

16-17 – 230k population – 39k dosed – 17% 1 dose (Up from 0%)
18-29 – 1.4m population – 390k dosed – 28% 1 Dose (Up from 24%)
30-49 – 2.3m population – 1,053k dosed – 46% 1 Dose (Up from 41%)
50-64 – 1.9m population – 1,131k dosed – 60% 1 Dose (Up from 58%)
65-79 – 1.1m population – 975k dosed – 89% 1 Dose (Down from 97%)
80+ – 400k population – 312k dosed – 78% 1 Dose (Down from 95%)

From the Star Ledger:

It’s Game of Homes in N.J.’s wild real estate market

Last week’s Letter From Your Editor included a note about how our reporters were looking into the residential real estate market in New Jersey and looking for agents, buyers, sellers and others to share their stories.

Whoo, boy, did you folks share some stories.

Fistfights at the open house. Cash incentives out of the pocket of agents hoping to close a sale. Full price, sight-unseen offers. Love letters, free Netflix, and tacos for everyone! It’s a full-on Game of Homes out there.

And this isn’t even counting the houses that change hands before they ever have a sign in the yard — check out your town’s Facebook or Nextdoor page. If your school district is any good, it’s a safe bet buyers are in there schmoozing around looking to get an early chance at a deal.

My husband and I are watching all this warily, as we’re getting closer to time-to-downsize, and thinking about how bizarre the market was the last time we sold and bought.

Back in 2004, the housing market in Ocean County was flush with easy mortgages and bloated with folks from Staten Island moving to Jersey. The market was so competitive that the first buyer’s agent knocked on the door before the house even hit the MLS. She tried to wheedle her way in for an early look while I was shampooing carpets with a toddler underfoot. It didn’t work.

But within a week of listing, we had multiple offers above asking price. When one of the bidders wrote us a letter complimenting the genuinely terrible faux-finish paint job I’d done on the dining room, I knew things were getting ridiculous.

Fortunately for us back then, we were moving from rapidly-developing Jackson to a still mostly rural part of Gloucester County, where housing prices and taxes were lower. We knew our house would sell quickly, and that we could afford to buy the next one.

Now, with every corner of the state sizzling — even in the tiny, not-upscale Delaware Bay town where my Mom lives, knock-down cottages are commanding big money — the next move isn’t so clear.

How hot is NJ’s spring real estate market? Cash offers, bidding wars, forgone inspections

With two children and a third on the way, Heather and Patrick Healy decided their 1,900-square-foot home in New Providence was just too small. Knowing the real estate market was hot early this year, the couple figured looking in the million-dollar range would give them a cushion. But the market was just too tough.

They lost out in bidding wars for homes in Chatham and Basking Ridge before snaring a Basking Ridge 4,300-square-foot colonial revival built in the 1980s. The purchase price: $1,082,000.       

“There’s no room for negotiations,” said Heather Healy, 34. “You have to be willing to pull the trigger right away.”

Welcome to the COVID pandemic real estate market in New Jersey, where homes are selling as soon as they are listed, often with multiple offers. Low inventory — coupled with the increased appeal of suburban living  — has created a fiercely competitive market for buyers. Even as COVID restrictions about showing homes lifted, properties are still not coming on the market.

“It’s crazy. It’s really crazy,” said Ann Marie Battaglia, a real estate agent at KL Sotheby’s International Realty in Madison.

Updated Vaccination by Age Range for NJ:
Morning of 4/9 vs Morning of 4/12

At Least 1 Dose
Total Pop: 8.9m
Total 1st Doses: 3.4m – 38% of total pop (Up from 32%)
18-29 – 1.4m population – 306k dosed – 22% 1 Dose (Up from 21%)
30-49 – 2.3m population – 850k dosed – 37% 1 Dose (Up from 35%)
50-64 – 1.9m population – 986k dosed – 52% 1 Dose (Up from 49%)
65-79 – 1.1m population – 952k dosed – 87% 1 Dose (Up from 81%)
80+ – 400k population – 340k dosed – 85% 1 Dose (Up from 80%)

Updated Vaccination by Age Range for NJ:
Afternoon of 4/5 vs Morning of 4/9

At Least 1 Dose
Total Pop: 8.9m
Total 1st Doses: 3.2m – 36% of total pop (Up from 34%)
18-29 – 1.4m population – 288k dosed – 21% 1 Dose (Up from 19%)
30-49 – 2.3m population – 800k dosed – 35% 1 Dose (Up from 33%)
50-64 – 1.9m population – 928k dosed – 49% 1 Dose (Up from 46%)
65-79 – 1.1m population – 896k dosed – 81% 1 Dose (Up from 77%)
80+ – 400k population – 320k dosed – 80% 1 Dose (Up from 75%)

Will we recover the other half?

From ROI-NJ:

N.J. has recovered half of jobs lost to pandemic

New Jersey employment grew slightly in February, but it was enough for the state to now have recovered more than half of the jobs that were lost by the pandemic.

Preliminary estimates released by the U.S. Bureau of Labor Statistics on Thursday indicate that total nonfarm wage and salary employment in New Jersey increased in February by 10,700, to reach a seasonally adjusted level of nearly 3.88 million. The gains were concentrated in the private sector (12,100) of the state’s economy.

With the totals, New Jersey has now recovered 364,000 jobs, or about 51% of the number lost in March and April 2020 due to the coronavirus pandemic and measures taken in response to it.

Weekly COVID Vaccine Allocations – New Jersey

From the Star Ledger:

American Dream mega mall owners default on loan. Lenders to take stake in its other properties.

Lenders behind the American Dream mega mall project are in the final stages of taking a 49% stake in two other malls owned by developer Triple Five that were used as collateral for a $1.2 billion construction loan in New Jersey, the Financial Times reported, citing people involved in the deal.

The loan that was defaulted on is held largely by JP Morgan, along with Goldman, Starwood Capital, CIM Group, Soros Fund Management, Wafra and iStar. The restructuring, the Financial Times reported Friday, was expected to close as early as “this week,” although the process has been complicated by the number of lenders and could be delayed.

A spokesperson for American Dream declined to comment.

The cash crisis at American Dream came to light earlier this month when Kurt Hagen, senior vice president of development for Triple Five, told a joint meeting of the Bloomington, Minn. city council and its port authority that the pandemic created a “very significant cash flow crisis” for American Dream and that collecting on the collateral was “likely to happen.”

Hagen described the collateral pledge as an indirect ownership interest that does not include any assets or Mall of America property. “It simply means that once we return to profitability, 49% of those profits would go to the American Dream lenders until such time as that collateral is released,” Hagen said.

The developer has also filed a lawsuit against a prospective tenant for breach of contract because it failed to open two eateries. And construction companies have filed nearly $41 million in liens against Triple Five, saying they are owed for work performed at the site.

From Mansion Global:

‘Concerning’ Rise in U.S. Home Prices as Median Reaches Record High

Low supply and high demand have pushed U.S. home prices to record levels during the Covid-19 pandemic. 

The median sale price for a home in the U.S. hit an all-time high of $331,590 during the four-week period ending March 21, a 16% jump compared to the same time in 2020, according to a report Friday from Redfin. 

At the same time, active listings plummeted 42% year over year for the month ending March 21, marking the biggest decline since at least 2016, when Redfin began tracking the data.The number of new listings was down 12% in the same time period, while the asking price rose to $349,973, an 11% increase. 

“It’s concerning how much home prices have risen during the pandemic,” the chief economist of Redfin, Daryl Fairweather, said in the report. “When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans. That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society.”

Homes are also selling faster than ever, according to the report. 

So much traffic…

From ABC 7:

Home prices on Long Island skyrocket due to high demand, low inventory

The median home selling price on Long Island rose by at least $73,000 throughout the last year, according to broker listing database OneKey MLS, due to high buyer demand and low inventory of homes.

“It’s a great time to be a seller,” said real estate agent Christine Tabacco-Weber, with Cold Spring Harbor-based Lucky to Live Here Realty. “It’s a really tough time to be a buyer.”

According to OneKey MLS, the median home sale price in Suffolk County in February 2020 was $402,444, compared to $475,000 in February 2021.

In Nassau County, the median home sale price in February 2020 was $525,000, compared to $600,000 in February 2021, an increase of $75,000.

At the same time, inventory has dropped significantly since this time last year, creating all-out bidding wars between buyers.

…

She said buyers are paying for seller’s moving costs, closing costs, and even are offering sellers to live in the house by paying rent or staying there completely free for a certain period of time.

“If you want to leave New York, this is the time,” she said. “Your house will probably sell in a weekend.”

From the Star Ledger:

‘Now is the time’ for schools to reopen, Murphy says as pressure mounts 

Gov. Phil Murphy urged more New Jersey schools to return to in-person learning Wednesday, just days after rallying parents placed blame for lingering closures squarely at the governor’s feet.

“Now is the time for all of our schools to meaningfully move forward with a return to in-person instruction, whether it be full-time or with a hybrid schedule,” Murphy said during his regular coronavirus briefing in Trenton.

The governor pointed to billions in federal funding headed to schools from the American Rescue Plan and said his administration is doing everything in its power “to get as many kids back safely and responsibly into a classroom.”

Murphy’s comments come as the number of students with the opportunity to attend classes in person continues to grow. The governor reported 142 school districts, serving 107,498 kids, are now providing full in-person instruction. Another 534 districts, representing 843,394 students, are operating under hybrid schedules.

However, 317,044 students across 98 districts remain in all-remote instruction a full year after most schools initially closed due to the coronavirus pandemic. Parent frustration in many of those communities has long since boiled over, leading to parent rallies, legal battles and even a police investigation into the suggestion of “physical violence” against those keeping schools closed.

From the Star Ledger:

N.J. could soon face a historic housing crisis. A city devastated by COVID-19 might be the epicenter.

Thousands of families forced from their homes. Homelessness at historic levels. A city already devastated by COVID-19 facing yet another crisis.

Newark is on the brink of a housing emergency — hastened by the coronavirus — that could have cascading effects across New Jersey.

More than 14,000 eviction cases are pending in Essex County court — most of them thought to involve Newark tenants — delayed because evictions have been suspended during the pandemic under Gov. Phil Murphy’s emergency order.

But as more people get vaccinated and the state climbs out of the devastation wrought by the pandemic, Newark and other cities could be plunged into an eviction crisis they’re not prepared to face.

“Unless there is something systemically done to address this overwhelming backlog and imminent avalanche (of evictions), I do not think things are going to be back to normal,” said Khabirah Myers, a lawyer in Newark’s Office of Tenant Legal Services. “We’re going to see potential homelessness at historic levels.”

The problem is not confined to Newark. A staggering number of New Jersey residents could be thrown out of their housing unless substantial funding is earmarked for rental assistance for tenants who have fallen behind on rent and evictions are further delayed, experts say.

Around 60,000 evictions are pending across the state, data from the state judiciary shows. Matt Shapiro, president of the New Jersey Tenants Association, said those likely represent only a fraction of evictions that will be filed once the moratorium ends.

“Most landlords haven’t filed evictions because of the lockout moratorium,” Shapiro said. “If we don’t do something, you’re going to see 200,000, 300,000 pending evictions.”

From Politico:

Soaring home prices are starting to alarm policymakers 

The booming housing market helped stave off economic collapse in 2020. But soaring prices are starting to worry policymakers, who fear the market could lock a generation of would-be buyers out of homeownership.

Home prices in January — typically a slow month for the market — were up 14 percent over the same month the previous year, while sales jumped 24 percent, despite an unemployment rate that was almost twice as high. Demand for existing homes is so strong that the average residence is on the market for just three weeks, and inventory is at a record low after seeing its steepest drop last year since the data was first tracked in 1999.

It all threatens to freeze broad swaths of the population out of the market, leaving millions of Americans in a less secure financial position, widening the racial wealth gap and forcing millennials, already lagging previous generations in building wealth and forming families, to fall even further behind.

“The dream of homeownership is out of reach for so many working people,” said Senate Banking Chair Sherrod Brown (D-Ohio). “Rising home prices and flat wages means that many families, especially families of color, may never be able to afford their first home.”

Brown, who insists on calling his panel the “Senate Banking and Housing Committee,” vowed that these issues will be a top priority in the months ahead as the country struggles to recover from the pandemic-induced recession. Among other things, he said he plans to work with the Biden administration to address the rising cost of housing and expand access to homeownership “so that more families can rent and own homes in inclusive communities.”

The last time the U.S. saw such skyrocketing home prices, the ensuing crash brought down the global economy. Most industry analysts say the current boom is not a “bubble” akin to that frenzy of more than a decade ago, which led to the financial crisis.