Pay up suckers

Posted on November 11, 2019 by grim

From HousingWire:

Are homes under $250,000 nearing extinction?

A recent report by economic research consultancy Capital Economics shared a stunning statistic: The number of vacant single-family homes for sale priced under $250,000 has halved since 2012.

According to the report, at the start of the third quarter of 2019, there were only 550,000 vacant homes on the market priced under $250,000. That’s half as many as there were just seven years ago.

Capital Economics attributes part of this to lower housing inventory, in general, stating that the overall number of vacant single-family homes for sale has dropped 25% in the last seven years. 

“The homeowner vacancy rate, that is the number of vacant homes for sale (which account for just over half of all homes for sale) as a share of all owner-occupied homes did see a marginal rise to 1.45% in the third quarter,” the report stated, citing the latest U.S. CensusHousing Vacancies and Homeownership survey. 

“But that was up from a 40-year low in the second quarter,” the report continued. “Sales are therefore being held back by a lack of homes on the market, and in particular a shortage of cheaper homes.”

…

Capital Economics cites that in the past two years since this year’s Q3, 2.9 million new households were formed. For comparison, only about 1.9 million households were formed in the two years to the third quarter of 2017. 

Household formation could lead to more people being ready to buy a home, but the report issues a warning there as well. 

“New households will have found it increasingly hard to find an affordable home to buy,” the report states. “The share of vacant single-family homes for sale priced under $250,000 has been on a steady downward trend since 2014, and averaged just 57% in the year to Q3 2019.”

“Moreover, with credit conditions relatively tight, and getting tighter, potential homebuyers will not be able to stretch their budgets to buy a more expensive home,” the report continued. “…until homebuilders ramp up production of cheaper properties, home sales, and in particular sales to first-time buyers, will see only minimal growth.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 157 Comments

Democrats lose NJ

Posted on November 7, 2019 by grim

From the Star Ledger:

How Gov. Murphy helped Republicans win

Assemblyman Jon Bramnick, the Republican leader, says he is grateful that Gov. Phil Murphy engaged so heavily in this week’s election because it helped Republicans like him win close races.

“Did Murphy help me?” Bramnick asked. “Absolutely and without a doubt. The last thing Democrats wanted was his face on TV.”

Murphy has a lock on the progressive wing of the Democratic Party, but he is not a popular governor overall. The latest Monmouth University poll put his approval rating at 41 percent, and after two years in office, 20 percent have no opinion.

The gift he gave to Republicans in this election was to remind voters that Democrats are likely to raise taxes. That came during a talk at Rowan University when he answered a question with this gem: “If you’re a one-issue voter, and tax rate is your issue…we’re probably not your state.”

In his defense, he spoke the truth about taxes New Jersey has the highest property taxes in the country, and we rank #9 in combined state and local taxes, as a share of income.

But it was another rookie mistake by our sophomore governor, because it sounded like he was telling people to quit whining and accept punishing taxes as a fact of life. Republicans saw an opportunity and pounded it over and over, especially in the swing districts they were worried about losing, like Bramnick’s in Union County.

Murphy then helped more by purchasing $2 million in TV ads featuring his face, barnstorming in suburban districts where he’s deeply unpopular, and even claiming credit for his imaginary fix of NJ Transit’s woes.

The bottom line in this election is that Democrats missed an opportunity and lost some ground. Republicans picked up a Senate seat and at least two Assembly seats. That doesn’t challenge Democratic control, but it will make it tougher to win close fights, like the effort to legalize marijuana or extend voting rights to those on parole and probation.

Posted in New Jersey Real Estate, Politics, Property Taxes, Unrest | 145 Comments

So Much For Reurbanization

Posted on November 6, 2019 by grim

From Forbes:

Millennials With Families Are Leaving Major Cities For The Suburbs, Transforming Them Into ‘Hipsturbia’ 

Just as their parents flocked to the suburbs, city-loving Millennials are doing the same yet transitioning some areas to “Hipsturbia,” a phrase revealed in the Urban Land Institute’s  (ULI) joint report with PwC, Emerging Trends in Real Estate® 2020. The data comes from interviews and surveys of over “2,200 real estate, development, and investment experts.” 

Millennials are transforming suburbs as they seek out walkable downtowns where they can live, work, play and raise families. Urban planners, municipalities, large employers and developers are paying attention. As Millennials face the realities of raising children and growing their families, the big cities they love are losing their shine. No surprise there. 

Listen to Anita Kramer, SVP, Center for Capital Markets and Real Estate at ULI. “It’s kind of coming from a few different directions. We know that Millennials are attracted to urban core living which is a major reason for the revitalization of suburbs into an urban walkable lifestyle and all the liveness that comes with that.”

…

The ULI-PwC report explains that “our interviewees and focus groups have uncovered the desire of the suburbs to create their own versions of the live/work/play district.” The key to Hipsturbia is a having a happening downtown, just as the cities these Millennials are leaving do. The report cites New Jersey communities including Maplewood and Summit as “well along the path,” to Hipsturbia. 

…

Does this mean hip cities will soon lose scores of Millennials waiting in line for Sunday brunch at their fave neighborhood places amid stroller gridlock? “We don’t see the cities emptying. Hipsturbia can happen best in suburbs closer in,” Kramer said.  

Take Brookline, Massachusetts, long known as a desirable close-in suburb of Boston since it borders the city on several sides. Brookline’s streets are now clogged with Audis and Range Rovers packed with young families vying for parking spaces around core areas with restaurants of all types and coffee houses. Housing prices always high because of Brookline’s prime location continue to escalate. The biggest trend there which follows the report is developers snapping up older two-family homes, tearing them down and replacing them with family living condominiums, with asking prices of up to $3.2 million each.

Posted in Demographics, Economics, Housing Recovery, National Real Estate, New Development | 67 Comments

Will they buy?

Posted on November 3, 2019 by grim

From HousingWire:

The homebuyers are coming. The homebuyers are coming

A flood of first-time homebuyers is about to hit the market over the next three years, according to newly released analysis from TransUnion. 

TransUnion is currently projecting that at least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and 2022. 

That figure is more than any three-year period in the last decade, according to TransUnion’s report. 

On top of that, if economic growth exceeds expectations, the number of looming first-time homebuyers in the next three years could reach as high as 9.2 million. 

“While we’ve recently seen a boom in refi activity, actual homeownership rates are down. Challenges have included high home prices, sluggish wage growth and limited housing inventory,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion. 

“But we may be starting to see daylight as slowing home price appreciation, low unemployment, increased wage growth and low interest rates are helping affordability,” Mellman added. “As a result, we are optimistic that first-time homebuyers will contribute more to home ownership than at any time since the start of the Great Recession.”

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

Slay the Zombies

Posted on November 1, 2019 by grim

From HousingWire:

ATTOM: Zombie foreclosures are ticking down

The amount of vacant homes in the U.S. continues to sit at a lull, slowly ticking down, according to a new data set from ATTOM Data Solutions. 

In the fourth quarter of 2019, there were 1,527,142 single-family homes and condos left vacant, representing 1.5% of homes in the U.S.

In Q3, 1.6% of homes were vacant in the U.S., meaning there was a small tick down in the vacant home sector in this quarter.

…

“While pockets of zombie foreclosures remain, neighborhoods throughout the country are confronting fewer and fewer of the empty, decaying properties that were symbolic of the fallout from the housing market crash during the recession,” Teta said.

Washington, D.C. continues to have the highest percentage of zombie foreclosures, at 10.5%. Kansas (7.9%); Oregon (7.9%); Montana (7.4%); Maine (6.7%) and New Mexico (5.8%) are all states that sit above the national average of zombie foreclosures, which is 2.9%.

New York had the highest number of zombie properties, with 2,266. Florida followed with 1,461; Illinois with 892; Ohio with 823 and New Jersey with 398. However, these numbers were all lower than they were in Q3.

Posted in Economics, Foreclosures, Housing Recovery, National Real Estate | 95 Comments

August Case Shiller

Posted on October 30, 2019 by grim

From CNBC:

Home price gains heat up in August but slow in major markets, S&P Case-Shiller index says

Home prices are heating up again on a national level, but some of the largest cities are lagging. That may be due to already overheated prices in those cities as well as new tax laws that limit the amount of deductions homeowners can take.

Prices rose 3.2% in August, up from the 3.1% gain in July, according to the S&P CoreLogic Case-Shiller National Home Price Index. Prices in the nation’s 10 major cities rose 1.5%, down from the 1.6% gain in July. On the index’s 20-city composite, prices were 2% higher, unchanged from July’s gain.

Seven of the top 20 cities reported greater price increases in the year that ended in August versus the year that ended in July.

“A shift in regional leadership may be underway beneath the headline national index,” said Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices. “Phoenix saw an increase in its YOY price change to 6.3% and retained its leading position.”

Las Vegas, however, dropped from number two to number eight among the cities of the 20-city composite, falling from a 4.7% annual gain in July to just 3.3% in August.

“When you look at how gradually home prices have been going up lately, the rate of appreciation is more like what we considered to be normal for many years. In past decades, when prices went up by 3 to 5% per year, we thought that was pretty good appreciation,” said Janet Carpenter, president of the Greater Las Vegas Association of Realtors. “With demand staying strong and our local housing supply remaining tight, I wouldn’t be surprised to see this trend continue into the foreseeable future.”

Posted in Demographics, Economics, Housing Bubble, Housing Recovery, National Real Estate | 65 Comments

High end not so dead?

Posted on October 29, 2019 by grim

From Forbes:

Hamptons Home Prices On The Rise Again After Two Years Of Declines 

Home prices in the Hamptons, the summer playground of Wall Street titans and Hollywood celebrities, are on the rise again after almost two years of declines. 

The median price of a home on the eastern tip of New York’s Long Island rose 5.5% to $857,000 in the third quarter from a year earlier, the first year-over-year gain in seven quarters, according to a report from Miller Samuel and Douglas Elliman Real Estate. 

It was the one bright data point for a market that continues to struggle with weakened demand stemming from the revamped federal tax code capping the deductibility of state and local property taxes, known as SALT. Low mortgage rates helped to offset some of that impact, leading to the price gains that gave the most help to the lower end of the market, Douglas Elliman said in a statement accompanying the report.

“In the Hamptons, reduced affordability continues to be a challenge resulting from SALT, slowing down sales and causing a steady increase in inventory,” Douglas Elliman said. “However, this negative effect was partially offset by the sharp drop in mortgage rates, as well as sellers’ expanded willingness to negotiate.” 

The number of Hamptons sales fell 15% to the lowest third-quarter level in eight years, according to the report. The new tax bill that went into effect last year capped SALT deductions at $10,000, making it more expensive to own property in states like New York and California where home prices and property taxes are high.

Posted in Economics, National Real Estate | 24 Comments

Great market! Everywhere but here.

Posted on October 26, 2019 by grim

From Forbes:

Home Prices Jump In 95% Of Cities, Reaching Record High 

Home prices have hit a new high. According to stats from ATTOM Data Solutions, median home prices jumped 2.9% over the third quarter of 2019 and 8.2% since last year. Clocking in at $270,000, it’s now the highest median sale price on record, according to ATTOM.

Though home price growth had been slowing for some time, Todd Teta, ATTOM’s chief product officer, says Q3 bucked this trend.

“The seven-year U.S. housing boom is back in high gear,” Teta said. “After a series of relatively small price increase quarters, home prices saw quite the uptick, seller profits rose, and the problem of distressed sales continued to fade, helping to make the third quarter the strongest in four years.”

…

All in all, home prices jumped in 95% of U.S. markets. The only major metros to see a drop in prices were Kansas City, Missouri (down 9.4%); San Jose, California (-3.3%); and Hartford, Conn. (-0.3%). 

Home prices are now above pre-recession peaks in four out of every five major metro markets.

Posted in Economics, Housing Recovery, National Real Estate, New Jersey Real Estate | 26 Comments

September Existing Home Sales

Posted on October 24, 2019 by grim

From Reuters:

U.S. existing home sales drop more than expected in September

U.S. home sales fell more than expected in September as the market continues to struggle with a dearth of properties for sale, especially for cheaper homes.

The National Association of Realtors said on Tuesday that existing home sales fell 2.2% to a seasonally adjusted annual rate of 5.38 million units last month, reversing two straight months of gains. August’s sales pace was upwardly revised to 5.50 million units. 

Economists polled by Reuters had forecast existing home sales declining 0.7% to 5.45 million units. 

The U.S. Federal Reserve has cut interest rates twice this year, which has bolstered the housing market by lowering mortgage rates. Investors expect another interest rate cut when policymakers meet next week. 

The 30-year fixed mortgage rate has dropped more than 125 basis points since last November’s peak to an average of 3.69%, according to data from mortgage finance agency Freddie Mac.

But home sales have seesawed for much of this year as a chronic lack of properties on the market has inflated prices, keeping them unaffordable for many would-be homeowners. Land and labor shortages have also crimped supply. 

There were 1.83 million homes in the market last month, a decline of 2.7% compared to a year ago. It was the fourth consecutive month of year-on-year inventory declines.

…

Existing home sales rose 3.9% from one year ago, the NAR said. Sales fell across the nation’s four regions last month. They dropped 3.1% in the Midwest and 2.8% in the Northeast. They declined 2.1% in the South and edged 0.9% lower in the West. 

Posted in Demographics, Economics, National Real Estate | 37 Comments

Get with the times NJ

Posted on October 22, 2019 by grim

From CNBC:

Backyard bungalows are becoming big business for homeowners and builders

They’re not just she-sheds or he-sheds or granny pods or tiny homes. The latest housing trend in the backyard is now front and center for a new breed of homebuilder and landlord.

Second homes, formally called auxiliary dwelling units (ADUs), are cropping up in back and side yards across America, acting as either rental units or additional space for aging parents and still-nested adult children.

Growth in the sector has been fueled by changes to local and state zoning rules. Some municipalities are struggling with a lack of affordable housing and see these additional units as one remedy.

In 2010 Portland, Oregon, waived impact fees for ADUs, making them significantly less expensive. As a result, the number of ADU permits jumped from 86 in 2010 to 660 in 2018, according to a count by accessorydwellings.org.

In California, when a 2017 state law forced cities to relax ADU regulations, permits jumped even more dramatically.

And that all translates into big growth for ADU builders, like Prefab ADU, based in the California Bay Area. It built and installed about 100 ADUs this year but expects to expand that to at least 1,500 next year.

Posted in Demographics, Economics, National Real Estate, New Development | 89 Comments

The Trump Effect

Posted on October 21, 2019 by grim

From CNBC:

Robert Shiller: Recession likely years away due to bullish Trump effect

Nobel-prize winning economist Robert Shiller believes a recession may be years away due to a bullish Trump effect in the market.

According to the Yale University professor, President Donald Trump is creating an environment that’s conducive to strong consumer spending, and it’s a major force that should hold off a recession.

“Consumers are hanging in there. You might wonder why that would be at this time so late into the cycle. This is the longest expansion ever. Now, you can say the expansion was partly [President Barack] Obama,” he told CNBC’s “Trading Nation” on Friday. “But lingering on this long needs an explanation.”

Shiller, a behavioral finance expert who’s out with the new book “Narrative Economics,” believes Americans are still opening their wallets wide based on what President Trump exemplifies: Consumption.

“I think that [strong spending] has to do with the inspiration for many people provided by our motivational speaker president who models luxurious living,” said Shiller.

…

Despite Shiller’s optimistic stance, he cautions not everything is rosy in the economy. His Shiller PE Ratio, also known as CAPE, tracks the price-to-earnings ratio based on average inflation-adjusted earnings over the last 10 years. He cautions it’s still at a concerning level.

“I’m not saying that I’m so bullish because I have a CAPE ratio that is bearish,” said Shiller, who predicted on “Trading Nation” last March there was a 50% chance the economy would tip into a recession within 18 months.

Yet, he’s sticking with the idea that the economy and markets should have a lot of runway left for gains if President Trump remains in office due to his pro-spending, pro-business narrative.

Shiller contends the next recession may not hit for another three years, and it could be mild.

“Let’s not make the mistake of assuming it’s right around the corner,” Shiller said. “If the economy is strong, which is what he built is case on, ‘make America great again,’ he has a good chance of getting re-elected.”

Posted in Economics, Employment, National Real Estate, Politics | 15 Comments

NJ UE 3.1%

Posted on October 19, 2019 by grim

From NJBIZ:

NJ unemployment dips again in September

While job levels remained relatively unchanged, the state’s unemployment rate continued its downward trend for the sixth month in a row.

September’s 3.1 percent rate marked a 0.1 percentage point drop – continuing the trend of once again registering New Jersey’s lowest monthly rate since recording began in 1976. That’s according to data released by the New Jersey Department of Labor and Workforce Development on Thursday, citing estimates from the U.S. Bureau of Labor Statistics.

New Jersey’s unemployment rate also came in under the national rate of 3.5 percent.

Total non-farm wage and salary employment fell by 200 to a seasonally adjusted level of 4,197,200, LWD said. But, year over year, employment was up by 44,600 jobs. Compared with September 2018, 43,400 of gains were in the state’s private sector and 1,200 in the public.

Five out of nine industries in the state’s private sector exhibited gains for September: “other services” were +3,100; leisure and hospitality +2,200; financial activities +1,000; and both construction and manufacturing +500, each.

Professional and business; trade, transportation and utilities; information; and education and health services all recorded losses in September, down by 4,100, 1,100, 800 and 400, respectively.

LWD revised total nonfarm employment estimates for August, lowering the number by 3,000, to show a decrease of 1,900 jobs — whereas preliminary estimates had indicated an increase of 1,100 jobs. However, the August unemployment rate remained unchanged at 3.2 percent.

Posted in Economics, Employment, New Jersey Real Estate | 27 Comments

Housing a bright spot

Posted on October 17, 2019 by grim

From Housingwire:

Federal Reserve report cites “rebounded” housing market

The housing market was the bright spot in the Federal Reserve’s monthly economic snapshot released on Tuesday.

While consumer spending “softened,” business equipment spending was “sluggish,” and payroll growth has been “moderate,” the housing market has “rebounded,” the Fed said.

“Housing activity indicators displayed further gradual improvement in August,” the report said. “Single-family housing starts and permits have rebounded over the past three months. New and existing home sales rose in August. A still-strong labor market and low mortgage rates could continue to provide support to housing.”

Under the sub-head “Favorable mortgage rates spur the housing market,” the Fed pointed to August’s 7.1% gain in new-home sales to 713,000 at a seasonally adjusted and annualized pace, which was 18% above the year-earlier month. And, the Fed cited the 1.2% gain in existing home sales in August that put the sales pace 2.9% above a year earlier. 

The report also singled-out homebuilding for mention. Housing starts jumped 12.3% in August, the highest level since June 2007, the Department of Commerce reported last month.

“It appears that single-family starts are finally beginning to respond to the steep decline of mortgage interest rates that has occurred over the past year,” the report said. “Single-family housing starts rose 4.4% in August, the third consecutive monthly increase, and are now up 3.4% on a year-over-year basis.”

The downside for the housing market has been the shortage of homes for sale, the report said.

“Favorable labor market conditions and a substantial decline in mortgage interest rates continue to act as positive forces,” the report said. “Inadequate inventories in affordable price ranges continue to be a drag on sales and to fuel home-price increases.”

Posted in Demographics, Economics, Employment, National Real Estate | 117 Comments

Hey New Jersey – Trump didn’t do anything to your home values

Posted on October 16, 2019 by grim

From Patch:

Don’t Blame Trump Tax Cuts For Essex County Home Values: Opinion 

Is President Donald Trump responsible for home values in Essex County? Point the finger somewhere else, some local residents say.

Recently, ProPublica and Fortune released a list of the 30 counties which have seen the largest percentage declines in the values of their homes after the Trump administration enacted its controversial Tax Cuts and Jobs Act of 2017.

Essex County – where homeowners saw an 11.3 percent dip – was right at the top of the list.

The 2017 tax reforms capped federal deductions for state and local real estate and income taxes at $10,000 a year and also eliminated some mortgage interest deductions. However, that’s not the reason property values are stagnating in New Jersey, said Adam Kraemer, a Republican candidate for the Essex County Board of Chosen Freeholders.Subscribe

The study and the reporting of the study, may be accurate on a technical basis. but is misleading in telling what is really occurring because of the omission of certain other parts of the economic situation in the state of New Jersey and omitting other parts of the changes in the tax code from 2018 forward. The capping of the the state and local tax credit at $10,000 against federal income tax in combination of lower federal tax rates for all and larger standard deductions for federal income tax fillers that started in tax year 2018 was a progressive tax change. People, with less income rent more often and if they own homes they tend to be of lesser value and thus subject to less property tax. Those with lower income, also tend to have less state income taxes. Thus lower income tax filers did not benefit from previous federal tax code, with regard to state and local taxes being deductible from federal income taxes. So the negative impact of the federal tax code change was on people in New Jersey and in other places, with high incomes who paid a lot in state income tax, and/or those with high value homes that paid a lot in property taxes. The reduction in corporate tax rate in the nation has resulted in increased wages and increased job growth across the nation as corporations had more cash on hand to invest and grow business. Even in New Jersey, a state know for high business taxes and extensive regulation on business job growth occurred and wages increased. Thus, the tax code has generally, been good for the nation and for New Jersey.

Posted in Demographics, Economics, Employment, Humor, New Jersey Real Estate | 124 Comments

Mortgage company CEO wants tax break so he can write more mortgages

Posted on October 14, 2019 by grim

From Marketwatch:

Opinion: This tax break for first-time home buyers could keep the housing market afloat

It’s not easy being a home buyer these days. U.S. home prices are high, housing inventory is low, and consumer sentiment is wobbling. A federal tax break for first-time home buyers will help.

Even with the recent interest rate cuts, there hasn’t been a material increase in the number of homes being purchased: new home sales dropped 12.8% in June, the largest decline since July 2013, and continue to be sluggish. Instead, these cuts have boosted the refinance market. The total volume of mortgage refinancings is on track to swell $678 billion in 2019 from $458 billion in 2018, the Mortgage Bankers Association reports. This refinancing boom should continue at least for the next several months, given that more than 8 million homeowners are eligible to save  $266 per month on average by lowering their monthly payment.

As the purchase market remains soft, I’m concerned that this deceleration will continue, especially as the broader U.S. economy weakens. Having managed a large mortgage company during and after the financial crisis of 2008, I know that it’s vital for the U.S. housing market to remain robust and resilient. 

That’s why a tax break for first-time owners is necessary so that they can more easily afford to purchase a home. Most of these first-time buyers are millennials. This generation of young Americans make up the largest group of home buyers, at 37% of the overall market.

…

It’s time to re-adopt the tax break for first-time home buyers at the federal level. A similar measure was introduced in 2008 and provided a credit up to $7,500 for first-time home buyers. This initiative could be structured as a zero-interest loan that is paid back over several years or as a full credit. This eligibility for this credit could be targeted exclusively to first-time buyers over the next two years, which could be enough time for many young Americans to take advantage of this opportunity. 

While many states have their own versions of first-time home buyer programs, it’s important to have a nationwide initiative so that home buyers are treated equally and fairly across the country. Pairing such a narrow-in-scope credit with the mortgage interest-rate tax deduction should serve as tailwinds for home buyers who are currently unable to purchase a home, even though they have the capability and intention to repay a loan. Such a tax break is indeed a counter-cyclical policy that should help to sure up confidence in the housing market before it deteriorates more fully.

Posted in Economics, Housing Bubble, Housing Recovery, Mortgages, National Real Estate | 101 Comments