If you have to ask…

Posted on April 25, 2022 by grim

From Fortune:

Another housing bubble? ‘We’re skating close to one,’ says Realtor.com economist

This might be the hottest housing market ever recorded. Over the past 12 months, U.S. home prices are up a staggering 19.2%. For comparison, in the years leading into the 2008 housing bust, the biggest 12-month jump was 14.5%.

Heading into 2022, real estate research firms forecasted that the ongoing housing boom would lose some steam and home price growth would decelerate. It hasn’t come to fruition—yet. Actually, if anything, this year it has gotten a bit hotter, with housing inventory on Zillow down 52% from pre-pandemic levels. 

That stubbornly hot housing market now has housing economists flirting with the real estate industry’s most feared word: Bubble.

“We’re not in a housing bubble just yet—but we’re skating close to one if prices continue rising at the current pace,” said George Ratiu, a housing economist at Realtor.com, in an article published last week on the home listing site.

It isn’t just Ratiu. There’s a growing chorus of economists speculating that if home price growth doesn’t abate soon, the housing market could eventually overheat. Or worse: We could wind up in another full-fledged housing bubble. 

Back in March, researchers at the Federal Reserve Bank of Dallas sent a shockwave through the industry after releasing a paper titled “Real-time market monitoring finds signs of brewing U.S. housing bubble.” The Dallas Fed researchers were blunt in their assessment: “U.S. house prices are again becoming unhinged from fundamentals.”

But even if we’re in a housing bubble, the Dallas Fed researchers don’t think it’d be a 2008 repeat. For starters, homeowners are in much better shape now than they were heading into the 2008 meltdown. At the height of the 2000s housing bubble, U.S. households were spending 7.2% of disposable personal income on mortgage debt payments. As of the fourth quarter of 2021, that figure is just 3.8%. In addition, subprime mortgages are less of a worry these days, given the 2010 Dodd-Frank Act outlawed many of the shady loans that plagued the aughts.

“There is no expectation that fallout from a housing correction would be comparable to the 2007–09 global financial crisis in terms of magnitude or macroeconomic gravity. Among other things, household balance sheets appear in better shape, and excessive borrowing doesn’t appear to be fueling the housing market boom,” write the Dallas Fed researchers.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 79 Comments

How not to do NJ real estate

Posted on April 24, 2022 by grim

From the NY Post:

Alicia Keys and Swizz Beatz lose more than $6M on NJ mansion sale

What a hit! Grammy Award winners Alicia Keys and her producer husband Kasseem “Swizz Beatz” Dean have finally sold their 5-acre New Jersey estate — at a massive loss.

The music power couple bought the property from Eddie Murphy in two separate transactions for a $12.1 million sum nearly a decade ago. 

They first put it on the market for $14.9 million in 2015, but slashed the price to $9.9 million last August. It was still asking that price when it went into contract in February.  

Now, Gimme can exclusively reveal the closing price: The spread went for just $6 million. 

“It’s an insane price. I can’t believe it went that low,” said an insider familiar with the deal.

…

The 25,000-square-foot property at 191 Brayton St. comes with six bedrooms, an indoor pool, a two-lane bowling alley, a movie theater, two elevators — and a state-of-the-art recording studio. 

Keys and Dean had first plunked down $10.42 million on the 32-room mansion in 2013. A year later, they bought an adjacent empty lot from Murphy for $1.7 million at 286 Johnson Ave.

Posted in Lowball, New Jersey Real Estate | 15 Comments

Nothing to worry about

Posted on April 22, 2022 by grim

From Wealth of Common Sense:

4 Reasons the Housing Market Won’t Crash

  • Millennials are the biggest demographic in the country
  • We don’t have enough housing supply
  • No one wants to sell
  • Consumer balance sheets remain strong

Discuss.

Posted in Demographics, Economics, National Real Estate | 152 Comments

Expensive everywhere you’d want to live

Posted on April 20, 2022 by grim

From Yahoo Finance:

Homebuyers just got another grim new statistic: Average home prices in 11 housing markets now exceed $500,000

The U.S. housing market’s half-million dollar club is growing, with more cities than ever posting average home prices above $500,000.

Across the nation, home prices have soared during the pandemic, as low home inventory ran into surging demand. Fervent competition ensued, and home prices have since gained 19.2% over the past 12 months, locking many would-be homebuyers out of the market.

But while prices have been rising most everywhere, some housing markets have become prohibitively expensive to some prospective buyers. A recent analysis by online real estateand financial planning site OJO Labs found that a housing price benchmark that was once considered rare is now becoming increasingly common, as average home prices are now topping $500,000 in more and more cities.

…

Austin, is the newest arrival in the exclusive club, according to OJO Labs’ survey, which crunched the numbers of March final home sale prices in America’s largest cities.

The list now includes 11 metro areas. Prices in some of these cities were already well above $500,000 even before 2020, while in others they have soared spectacularly since the pandemic started.

Here is the full list:

  1. San Francisco (median home price: $1.3 million)
  2. San Diego ($825k)
  3. Los Angeles. ($720k)
  4. Seattle ($626k)
  5. Denver ($565k)
  6. Boston ($560k)
  7. Sacramento ($550k)
  8. New York ($520k)
  9. Portland, Ore. ($505k)
  10. Salt Lake City ($503k)
  11. Austin ($500k)

Some of these cities, including Austin, San Diego, and Denver, have seen home prices rise more than 20% over the past 12 months. In Salt Lake City—which has enjoyed a population and job market boom during the pandemic—prices are up over 30%.

Posted in Demographics, Economics, National Real Estate | 84 Comments

Priced Out

Posted on April 19, 2022 by grim

From CNN:

Renters are growing pessimistic they will ever own a home as prices keep rising

Faced with a white-hot real estate market, renters are losing confidence they will ever own a home.

On average only 43.3% of renters expect to own a home at some point in the future, down sharply from 51.6% in 2021, according to a Federal Reserve Bank of New York survey released on Monday.

That’s the lowest level since the NY Fed began asking the question in 2015.

High prices appear to be a driving factor: Twenty-two percent of households in the survey report they planned to buy a home but now view renting as a better financial decision. Most respondents either prefer to rent (36%) or said they were waiting for prices to come down before buying (42%). 

The findings come after home prices spiked last year by the most on record, surpassing even the blockbuster growth of the early 2000s housing bubble. Some people who had hoped to buy have been priced out of the market, forcing them to rent instead. That in turn has helped to drive up rental rates.

The shift in sentiment in the NY Fed survey was driven by families with less college education and lower income.

Posted in Demographics, Economics, National Real Estate | 83 Comments

What does 3000 new units look like

Posted on April 18, 2022 by grim

From TAP Wayne:

Mapping the New Housing Developments in Wayne 

This article is to help Wayne residents visualize where each of the proposed new residential developments will be built in Wayne over the next several years. Below, you will find images of concept plans taken from the Wayne Township Planning Board Department webpage on Affordable Housing over sections of Google Maps showing where each will be built in Wayne

 As part of the township’s affordable housing obligation, seven new developments will be built in Wayne, adding a total of 2,961 new residential units – 528 of these units will be “set aside” as “affordable.”

An eighth development at 1655 Valley Rd is still under negotiations. This is currently an office building with several tenants – each with long-term leases. It is unclear how many residential units will be added, or if the project will move forward at all. But it is mentioned in the final Fair Share Housing settlement agreement, so is worth mentioning here.

The largest development by far will be built on the Toys R Us property. This is also still being negotiated, though the number of units has been settled. A whopping 1,360 residential units will be created, likely in several multi-level apartment buildings. No details are available as to what this will look like.

Posted in Demographics, New Development, New Jersey Real Estate | 63 Comments

NJ Unemployment Falls To 4.2%

Posted on April 15, 2022 by grim

From NJ1015:

NJ adds 17,800 jobs, with unemployment and labor force down

Employers in New Jersey added 17,800 jobs in March, helping push the state’s unemployment rate down by 0.4 percentage points to 4.2%.

Eight of the nine major private industry sectors recorded gains, all except for information, according to monthly data issued Thursday by the state labor department. The top increases were 4,900 in leisure and hospitality, 4,300 in professional and business services and 4,200 in trade, transportation and utilities.

New Jersey’s economy has gained jobs in 16 straight months. It has added back 679,400 jobs in the last 23 months, since bottoming out in April 2020 when lockdowns were being imposed at the start of the coronavirus pandemic.

That amounts to 92.7% of the 732,600 jobs lost in March and April of 2020, a rate slightly ahead of the 91.5% of lost jobs that have been recovered nationally.

State-by-state data will be released by federal government Friday. As of one month ago, when New Jersey had regained 89.9% of the jobs lost through the initial February report, the state’s recovery rate ranked 21st highest among the 50 states.

Posted in Demographics, Economics, Employment | 97 Comments

Slowdown?

Posted on April 13, 2022 by grim

From Reuters:

Early signs of cooling housing market seen in some U.S. cities, Redfin says

There are early signs of a cooldown in some of the hottest corners of the U.S. housing market, Redfin said in a report on Friday, a fresh indication that high house prices and rising mortgage rates are cutting into homebuyer demand.

Among those early tells, according to Redfin: Google searches for “homes for sale” dropped by double digits in Baltimore, Boston, San Francisco and Los Angeles in the second week of March from a year earlier; tours of homes for sale in California were down 21% as of March 31 from the first week of 2022, data from ShowingTime shows; Redfin agents in San Francisco, Los Angeles, Washington DC, Boston and Seattle reported a drop in requests for homebuying help at the start of this year compared with last year, even as requests nationwide surged; and agents in California say they are seeing fewer offers on each home than previously.

…

The average interest rate on a 30-year-fixed mortgage, the most popular U.S. home loan, rose last week to 4.9%, a fresh three year high, data from the Mortgage Bankers Association (MBA) showed this week.

The U.S. housing market is still hot, however, even in cooling California cities. The average home in Los Angeles, for instance, is sold for 5% over its asking price, with a record share selling within a week of listing, Redfin said.

But the signs are there already, the report said, of a price slowdown in coming months.

Posted in National Real Estate, Price Reduced | 71 Comments

Welcome to 2007

Posted on April 10, 2022 by grim

From Forbes:

The housing market just hit a level not seen since 2007

The financial sting of soaring home prices—up 32.6% over the past two years—was lessened, to a degree, by historically low mortgage rates during the pandemic. Even as prices soared, many buyers’ monthly payments remained reasonable. Those days are behind us: Now that rates have returned to pre-pandemic levels, new homebuyers are starting to feel the full weight of record prices.

Back in December the average 30-year fixed mortgage rate sat at 3.11%. A borrower who took out a $500,000 mortgage at that 3.11% rate would’ve seen a monthly principal and interest payment of $2,137. Now that the average rate is up to 4.72%, a new loan at that size would equal a $2,599 monthly payment. Over the course of 30 years, that’s an additional $166,106.

This swift jump in mortgage rates puts homebuyers in the worst position since 2007. At least that’s according to one metric produced by Black Knight, a mortgage technology and data provider. 

At current mortgage rate levels, the typical American household would have to spend 29% of their monthly income if they were to make a mortgage payment on the average priced U.S. home. That’s according to data provided by Black Knight to Fortune. Black Knight’s mortgage payment-to-income ratio—which averaged 19.9% during the 2010s decade—hasn’t topped 29% since 2007. It also marks a massive jump from December, when the ratio was sitting at 24%.

Posted in Economics, Housing Bubble, Mortgages | 173 Comments

Donuts anyone?

Posted on April 7, 2022 by grim

From Bloomberg:

New Yorkers Plan to Cut Time Spent in the Office by Half, Survey Finds

Most New Yorkers who worked from home during the pandemic plan to cut their time in the office by nearly half and spend less money in the city annually, illustrating the challenges the city faces as companies adjust to hybrid schedules. 

The average New York City office worker intends to reduce time in the office by 49% and slash annual spending in the city by $6,730, down from an estimated $12,561 before the pandemic, according to Nicholas Bloom, an economics professor at Stanford University. 

At a conference at the Federal Reserve Bank of New York Thursday, Bloom said the remote work push could cost New York between 5% and 10% of its city-center population, softening real-estate values, but that “the city will continue to thrive.” 

…

New York City is second to San Francisco in terms of reduction of time in the office, but first in terms of decreased spending.

“People used to live in cities because they had to come into the office five days a week,” said Bloom, who has surveyed about 5,000 workers and 1,000 companies about their work habits and policies throughout the pandemic. “If they don’t have to, and they want a backyard, they move out to the suburbs. We see that across cities, and call it the doughnut effect.”  

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 233 Comments

Welcome back to five

Posted on April 6, 2022 by grim

From CNBC:

30-year fixed mortgage crosses 5% 

The average rate on the popular 30-year fixed mortgage just crossed 5%, now standing at 5.02%, according to Mortgage News Daily. This is the first time it has crossed that threshold since 2011, save two days in 2018. It stood at 3.38% one year ago today. 

Mortgage rates, which follow loosely the yield on the U.S. 10-year Treasury, have been climbing since the start of the year, partially due to the Federal Reserve’s policies to curb inflation as well as the global economic turmoil resulting from the Russian invasion of Ukraine.

Bonds were already having a rough morning, but then comments from Federal Reserve Vice Chair Lael Brainard that the pace of the Fed’s balance sheet reductions would be significantly bigger than last time and that the maximum pace of reductions would be achieved significantly sooner hit bonds hard.

“To hear her speak about bond-buying adjustments in such blunt, urgent terms is unsettling for the market with just over 24 hours to go before we see the minutes from the most recent Fed meeting,” said Matthew Graham, chief operating officer at Mortgage News Daily. “At this point, traders are taking Brainard’s comments to foreshadow an extremely unfriendly conversation about bond buying to be revealed in the minutes.”

Posted in Economics, Mortgages, National Real Estate | 90 Comments

The B-Word

Posted on April 3, 2022 by grim

From CBS News:

Federal Reserve issues warning over “brewing U.S. housing bubble”

Homebuyers have faced a tough choice during the pandemic: Swallow rapid price increases and forgo typical steps like house inspections, or risk getting left out of the real estate market. Those dynamics have caused some observers to question whether the U.S. is repeating the housing bubble of the early 2000s, which led to a painful housing crash in 2006 and the Great Recession the following year. 

The answer, warns the Federal Reserve Bank of Dallas, is that the property market is showing “signs of a brewing U.S. housing bubble.”

That may be unsettling to millions of potential homebuyers who are coping with myriad financial pressure points. For one, mortgage rates are swiftly rising, reaching an average of 4.67% for a fixed 30-year loan for the week ended March 31 — the highest since 2018, according to Freddie Mac. And the national median listing price for a home has jumped to a record $405,000, Realtor.com said on March 31.
…
First, the economists looked at a statistical model that tracks “exuberance,” or when prices increase at an exponential rate that can’t be justified by economic fundamentals. When their exuberance measure reaches a 95% threshold, that signals 95% confidence that the market is experiencing “abnormal explosive behavior,” they noted.

The current exuberance measure: 115%.

Next, the economists looked at another measure of valuation: Comparing home prices against the sum of discounted future rents. It’s a similar concept to how investors determine the value of a stock by looking at discounted future dividends, the economists noted.

That, too, is showing exuberance that is “comparable to the run-up of the last housing boom,” they said. 

Third, the analysts examined the ratio of home prices to disposable income, another measure of housing affordability. This hasn’t risen to the level of exuberance, but the economists noted that household disposable income was buoyed during the pandemic by stimulus checks as well as a decrease in household spending due to lockdowns — transitory factors, in other words.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 158 Comments

Did NYC kill NYC?

Posted on March 31, 2022 by grim

From the NY Post:

NY’s job deficit continues to grow from already high pre-pandemic levels: federal data

New York still has 454,000 fewer private-sector jobs than it had two years ago before the coronavirus pandemic hammered the city and state — a 4.1 percent employment deficit that is the worst in the mainland U.S., an analysis of new federal labor statistics reveals.

As of February, job counts in 21 states had surpassed their pre-pandemic employment levels, according to the federal Bureau of Labor Statistics.

The US as a whole recovered 19.6 million of the 21 million jobs lost in the spring of 2020 –putting it within 1.1 percent of fully recovering all the jobs lost during the pandemic, said the analysis of the federal jobs data by EJ McMahon, senior fellow with the Empire Center for Public Policy.

But New York State was still 4.1 percent below its pre-pandemic employment level. The city’s population has also plummeted — particularly in Manhattan. 

“On a percentage basis, only Hawaii and Alaska were worse off,” McMahon said.

…

McMahon said the COVID-19 lockdowns and other public health restrictions that impacted commerce doesn’t explain why New York has lagged in job recovery.

Neighboring New Jersey, Connecticut and Massachusetts were also hit hard and early by the COVID-19 outbreak and imposed identical lockdowns and restrictions starting in March 2020. So, did California.

Yet New Jersey and California are less than a half percentage point away — 0.4% — from recovering all the pre-pandemic jobs reported in February 2020.

Meanwhile, Florida and Texas have added jobs during the pandemic — 3.4% and 2.9% respectively.

Posted in Demographics, Economics, Employment, NYC | 173 Comments

A lot to stomach

Posted on March 28, 2022 by grim

From Fortune:

The housing market faces its biggest test yet

There has been no shortage of theories on how the ongoing housing boom is going to end. Reopening corporate offices were supposed to tamp down on remote workers buying in far-flung places. As stimulus aid got further in the rearview mirror, it was thought home shoppers would pull back. And the wind-down of the government’s mortgage forbearance program last fall was projected to pile additional inventory onto the market.

So far, nothing has done much to slow down the housing market.

But the red-hot housing market now faces its biggest test yet: Soaring mortgage rates. 

Over the past 12 weeks, mortgage rates have posted their largest jump since the ’90s. As of March 24, the average 30-year fixed mortgage rate stood at 4.42%—up from 3.11% in December. And it isn’t over yet: Industry insiders tell Fortune it’s likely to go higher this week.

When the pandemic struck two years ago, the Federal Reserve quickly put downward pressure on mortgage rates. By the summer of 2020, the average rate was below 3%. The enticement of record low mortgage rates encouraged more buyers to jump into the market. As home prices soared, those low rates also helped to alleviate some of the burden for homebuyers. But as mortgage rates rise, it will have the opposite effect: Higher rates will increase buyer’s borrowing costs at a time when they’re already stretched thin by record home price growth. Simply put: This swift move up in mortgage rates amounts to an economic shock.

“If rates rise above 5% you will price buyers out of the market,” Devyn Bachman, vice president of research at John Burns Real Estate Consulting, tells Fortune. “The higher rates could also discourage investor activity, which accounts for a large portion of home sales today.”

To see why spiking mortgage rates put downward pressure on a housing market, just look at buyers’ monthly payments. If a borrower takes out a $400,000 mortgage at a 3.11% fixed rate, they’d owe a monthly payment of $1,710 over 30 years. At a 4.42% rate that payment climbs $2,008. But if rates do climb to 5%, that mortgage payment becomes a whopping $2,147. That’s a lot to stomach—especially when considering they’re shopping in a market where U.S. home prices are up 18.8% over the past year. 

Posted in Demographics, Economics, Mortgages, National Real Estate | 294 Comments

NJ Unemployment down to 4.6%

Posted on March 26, 2022 by grim

From the APP:

NJ has regained nearly 90% of jobs lost to pandemic, and pay is rising too

New Jersey employers added 25,900 jobs in February, the state Department of Labor and Workforce Development reported Thursday, continuing the job market’s rapid recovery from the early days of the pandemic.

The job growth helped the unemployment rate drop to 4.6% from 5.1% in January. Part of that decline was due to fewer people actively looking for work.

But employers that once offered minimum wage now are offering upwards of $17 an hour, a sign that job hunters continue to have the upper hand.
…
February’s jobs report was the strongest since last July and showed that New Jersey is making up ground.

Through February, New Jersey recovered 89.9% of the jobs it lost in March and April of 2020, while the U.S. recovered 90.4%, according to Rutgers University economist James W. Hughes.

Job growth in February was spread across most sectors. Trade, transportation and utilities added 9,000 jobs; leisure and hospitality added 5,200 jobs; and education and health services added 4,300 jobs.

Financial activities was flat, and the public sector lost 300 jobs.

The recovery has left some sectors faring better than others. Trade, transportation and utilities, a sector that includes New Jersey’s hot warehouse industry, has more than made up for the jobs it lost in March and April 2020, according to the February report.

Leisure and hospitality remains 4.5% below its pre-pandemic peak. It’s not for a lack of trying. In Brick alone, Five Guys is offering up to $17.50 an hour for crew members, while Houlihan’s is advertising a signing bonus of $250 for servers, hosts and hostesses and bussers.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 40 Comments