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.”
…
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.
…
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.
…
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.
…
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

Those were the days…

Posted on January 17, 2024 by grim

From Fox:

This was the average cost of an American home in the decade you were born

1940

In 1940, without adjusting for inflation, the average cost of a home in the United States was $2,938, according to the United States Census Bureau.

The inflation-adjusted price in 2024 dollars would make that $64,372.84.

1950

In the span of 10 years, from 1940 to 1950, the average cost of a home jumped to $7,354, according to Census data.

That equals $93,602.08 today as adjusted for inflation, FRED reports.

1960

The average cost of a home jumped significantly in the early years, with the cost of homes finally surpassing $10,000.

In 1960, homes cost $11,900 or $123,320.18 when adjusted for inflation, the Census documented.

Once 1963 arrived, the average cost of a home hit $19,300, which equates to $193,470.52 in 2024.

1970

The ’70s showed an overall increase of nearly $50,000 from the beginning of the decade to the end, per FRED calculations.

Between 1970 and 1975, the average cost of a home jumped from $27,000 to $40,900 — which would be $213,457.27 and $233,195.38 in 2024, respectively.

1980

One of the biggest surges in home prices occurred in the 1980s, in terms of the numbers at the start of the decade compared to the numbers in the transition to the ’90s.

Over the course of 10 years, from the start of the decade to the end of it, the average cost of a home jumped from $73,600 to $151,200. 

A house priced at $73,600 would cost $273,986.72 in 2024 — while dwellings listed for $151,200 would be $374,032.22 in 2024 due to inflation, FRED reports.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 61 Comments

You’ve got to be crazy to live in NJ

Posted on January 16, 2024 by grim

No, just tripping. From the Record:

NJ looks to make magic mushrooms legal for recreational use and to treat mental health

It took at least five years of public debate, lobbying and bill amendments for New Jersey to make marijuana legal for recreational use in 2021. Now the state may do the same with psychedelic mushrooms — but much faster.

After it was pulled back for revisions late last year, a bill was reintroduced in the state Senate last week that sets up a legal framework for the manufacture and sale of products containing psilocybin — the chemical in magic mushrooms that produces a hallucinogenic effect.

The bill would decriminalize the use of psilocybin by anyone over 21 and expunge past and pending offenses involving the drug.

Although language in the bill, called the “Psilocybin Behavioral Health Access and Services Act,” is centered around mental health, its provisions would decriminalize recreational use. Anyone 21 or older could “possess, store, use, ingest, inhale, process, transport” 4 grams or less of psilocybin.

Unlike with marijuana, residents would be allowed to grow their own mushrooms for personal use in their homes under the bill.

Posted in Humor, New Jersey Real Estate | 51 Comments

Shrinkflation, even in housing

Posted on January 15, 2024 by grim

From Fox 5:

Renting in NYC: $1,700 gets you a living room sized apartment, study reveals

Renters from every borough in NYC agree that prices are soaring and living spaces are shrinking, but a new study sheds light on just how tough it is. 

A mere $1,700 a month, which might secure a fairly spacious apartment in most cities nationwide, barely gets you an area the size of a living room in the Big Apple. 

A new study by RentCafe looked at October 2023’s average rents by ZIP code in the nation’s 50 largest cities.

It found that the average national rent of $1,700 gets you an apartment of about 944 square feet… except in New York City.

How little space does $1,700 get you in New York City? Well, in Manhattan’s 10013 ZIP code, which covers TriBeCa and parts of Lower Manhattan, $1,700 gets you a measly 211 square feet. That’s roughly the size of the average American living room, measuring 12 feet wide by 18 feet long. 

Of the top 50 ZIP codes offering the least square footage for $1,700, a staggering 36 are in New York City. 

Even more striking, of the top 10 most expensive ZIP codes with the least space for $1,700, nine are in Manhattan, with the tenth in Long Island City in Queens, offering a “spacious” 234 square feet.

Now, if space is what you’re looking for, head to Memphis. In the city’s 38108 ZIP code, $1,700 gets you a whopping 1,996 square feet of space, the most in the nation. 

Posted in Demographics, Economics, Housing Bubble, NYC | 22 Comments

Foreclosure Do-Over

Posted on January 13, 2024 by grim

From NJ Monitor:

Gov. Murphy signs new foreclosure protection program into law

New Jerseyans facing foreclosure will have a new path back to homeownership under a bill Gov. Phil Murphy signed Friday.

The new law creates the community wealth preservation program, which will give homeowners facing foreclosure — plus their families and certain nonprofits — the right of first refusal to purchase their home at a sheriff’s sale.

“With today’s bill signing, we are creating a new avenue to homeownership for individuals and families throughout New Jersey, giving many the opportunity to remain in the homes and communities they cherish while also protecting our neighborhoods from rapid investor-driven homebuying,” Murphy said in a statement.

To reclaim a foreclosed home, the homeowner or their family must be preapproved for a loan that matches the home’s original upset price — the lowest price for which a home would be sold — or its final starting upset price, whichever is lower.

The upset price is typically equal to the combined total of any outstanding mortgage on the property, plus interest, fees, and other associated costs.

“This bill is a creative opportunity for families to save their wealth at the time of a foreclosure sale by using financing,” said Sen. Britnee Timberlake (D-Essex), who sponsored the bill as an assemblywoman. “This legislation also levels the playing field for renters, affordable housing nonprofit developers and people who want to purchase an abandoned home to restore and live in or to create affordability.”

Successful bidders must make a deposit equal to 3.5% of their bid amount and would be required to use the home as their primary residence for at least seven years. Those who attempt to sell a home reclaimed under the program within that time period would face a $100,000 fine on their first offense and $500,000 fines on subsequent offenses.

Exemptions in the bill allow homeowners to sell the property within the seven-year period. Those exceptions are generally related to hardship, including the death of a spouse or child, a divorce, or a change in employment, among others.

The bill is in part an effort to slow investor purchases of foreclosed New Jersey homes.

Posted in Economics, Housing Bubble, Mortgages, New Jersey Real Estate, Risky Lending | 30 Comments

Philly still hot

Posted on January 12, 2024 by grim

From the Philly Business Journal:

Philadelphia-area home prices rose at fastest pace in December since spring 2022

The end of 2023 didn’t bring any relief in median home prices in Greater Philadelphia, with the year’s largest price spike coming in December, leaping close to 10% year over year.

The $350,000 median home price in the region, according to data from Bright MLS, was 9.4% higher than the $320,000 seen last December, making it the greatest year over year growth since May 2022, when the real estate market was still feeding off of a pandemic-fueled frenzy.

Median year over year sale prices rose throughout most of Greater Philadelphia, jumping by double digits in four of the 11 counties Bright MLS includes in the metro area. Burlington County in South Jersey and Mercer County in Central Jersey, which Bright MLS considers part of the metro, both saw more than 20% increases.

Philadelphia was the only local county that saw a year over year price drop, down 3.4% to $240,000.

The uptick in median prices came as inventory continues to remain near record lows. The number of new listings in the Philadelphia-area was down nearly 9% year over year with 3,582 new listings in December. That was the lowest number of monthly new listings in more than two decades, according to Bright MLS.

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate, Philly | 72 Comments

December a mixed bag for NJ real estate

Posted on January 11, 2024 by grim

From Yahoo Finance:

Real estate market update: What happened with listings in North Jersey in December

December is a traditionally slow month for real estate in New Jersey and across the nation. So it’s no surprise that North Jersey experienced a decrease in new home listings and an increase in the number of days properties stayed on the market.

Still, more than half of New Jersey’s 21 counties saw more new home listings compared to December 2022. While this time of year remains slow for homebuyers, this could indicate an increasingly active market compared to that of recent years. Mortgage rates fluctuating between recent lows of 6% and 7% may also play a role in this increased activity.

According to housing data from Realtor.com for December, nine of New Jersey’s 21 counties experienced a decrease in new home listings compared with December 2022.

The North Jersey counties of Bergen, Passaic, Morris and Essex all continued to see a decline in new home listings. With the largest new listing decreases in December at 28.3% and 19.15%, Morris County and Passaic County both saw 152 new listings. Bergen County saw a decline of 6.9%, with 364 new listings, and Essex County saw a decline of 2.08% with 188 new listings.

In contrast, Sussex and Hudson counties both saw an increase in new home listings compared with 2022. Hudson County saw a significant increase, at 71.93%, and Sussex County saw an increase of 21.74% with 112 new listings.

Active home listings spent more time on the market in December than in previous months. In Sussex County, active listings stayed on the market for 58 days — the longest period of time in North Jersey. Hudson County was a close second, with listings staying on the market for about 57 days.

In Passaic, Morris and Essex counties, listings typically stayed on the market for 51 days, while listings typically stayed on the market for 50 days in Bergen County.

Median listing prices have increased for 20 of New Jersey’s 21 counties from 2022, but nine counties saw a decrease in median listing prices from November to December.

In North Jersey, Hudson and Bergen County had the highest listing increases from November to December — 3.94% and 3.36% — with median listing prices of $679,000 and $779,990, respectively. In Morris County, listing prices increased by .87%, with a median listing price of $695,000.

Passaic County actually saw listing prices decrease from November to December by 2%, with a median listing price of $479,450. Then, in Essex and Sussex counties, median listing prices did not experience a change from November to December, with median listing prices of $499,000 and $399,999, respectively.

Posted in Demographics, Economics, Housing Bubble, Mortgages, New Jersey Real Estate | 66 Comments

You too can be a corporate raider

Posted on January 10, 2024 by grim

From NorthJersey.com:

North Jersey home of legendary RJR Nabisco CEO on the market for $1.5 million

After nearly 40 years, a Sparta estate once home to one of the most legendary CEOs of the era of excess, RJR Nabisco’s F. Ross Johnson, is back on the market.

Johnson’s former hilltop retreat at 210 East Mountain Road is quickly gaining interest, however, partially due to its four-season splendor, said Ryan McGurl, the listing agent with Prominent Properties Sotheby’s International Realty. Listed for about $1.5 million, the home offers five bedrooms, five full bathrooms and unparalleled views of nearby Lake Mohawk and the Northern Highlands beyond.

Though built in the mid-1930s, the home’s most famous owner came in 1981. Johnson, born in December 1931 in Winnipeg, Canada, took ownership of 210 East Mountain the same year his company Standard Brands merged with Nabisco, then based in East Hanover. Called “a symbol of corporate greed” by the New York Times, Johnson was known for living a lavish corporate-funded lifestyle that often had him elbow to elbow with celebrities, star athletes and other high-profile executives of the 1980s.

After taking the helm at Nabisco, Johnson led the company’s 1985 merger with RJ Reynolds before attempting to take control of the public company itself. Ultimately, RJR Nabisco was sold to a private equity firm in a leveraged buyout and many of its assets were divested over the following years. Johnson was ousted but netted more than $50 million in severance pay before retreating south to run his own private investment company.

Posted in Employment, New Jersey Real Estate | 64 Comments