New Jersey Real Estate Report

From Philly Magazine:

Philly Houses Are Selling Faster — and for More Money — Than Ever. How Long Can That Last?

Right now, the competition for properties is so fierce that decent houses get a flood of offers and sell quickly, and even the turkeys find buyers at asking price.

According to Kevin C. Gillen, senior research fellow at Drexel University’s Lindy Institute for Urban Innovation, this market is like none he’s seen in his years of analyzing Philadelphia residential real estate sales. Since last summer, he says, the market has outstripped even the 2008 market, the peak year of the real-estate bubble: “It’s the hottest market I’ve ever seen in terms of turnover rate, the amount of sales, the million-dollar sales, the price appreciation, the rapid turnover of homes once they’re listed. On any metric you want to bring to bear, the market is between red-hot and white-hot.”

Some of this, Gillen says, is due to cyclical factors that routinely affect the housing market. One of those is interest rates that stand at all-time lows: “When interest rates are low, houses become more affordable, and that tends to push prices up.” Combine that with extremely low inventories of houses for sale, and the prices rise even further. “But the other big factor is that after the pandemic, there’s been a structural shift in the economy, from spending outside of the house to spending in the house.”

That’s due to two main factors, he says. “First of all, you have more people working remotely from home than ever before, so your house isn’t just where you live; it’s now your office. Since you spend more time there, you’re incentivized to make the house more pleasant for you.

“On top of that, because of COVID, you couldn’t go out, so all the money that would be spent on dining out or going to the theater and museums or traveling on vacation, people are spending in their home. So your home isn’t just where you live and work; it’s where you play — it’s your gym, it’s your spa, it’s your theater, it’s your restaurant. Your yard is your park.” And people have been willing to spend on home amenities as well as on homes that have them. Gillen says that since the pandemic began, outdoor items such as swimming pools and tennis courts, which usually add no value to a property at best, have skyrocketed in worth. Broker Mike McCann of Keller Williams Philly says that in the suburbs, “People are telling me it takes a year or more to get a pool installed. Even getting servicing for a pool is taking forever.”

From CNBC:

Pending home sales drop in June — more evidence of a housing turnaround

Pending sales of existing homes in June as measured by signed contracts fell 1.9% from May, according to the National Association of Realtors.

Sales were also down 1.9% compared with June 2020. Pending sales are a forward-looking indicator of closed sales in one to two months.

“Pending sales have seesawed since January, indicating a turning point for the market,” said Lawrence Yun, Realtors’ chief economist. “Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat.”

Prices in May were up nearly 17% compared with May 2020, according to the latest reading from the S&P Case-Shiller national home price index. That is the largest annual gain on record. Prices in June could very well top that, given the still tight supply of homes for sale, especially on the low end of the market.

Updated Vaccination by Age Range for NJ:
7/17 vs 7/29

At Least 1 Dose
Total Pop: 9.2m
Total 1st Doses: 5.7m – 62% of total pop (Up from 61%) – Bloomberg reporting 65.6%

12-15 – 450k population – 171k dosed – 38% 1 Dose (Up from 37%)
16-17 – 240k population – 114k dosed – 48% 1 Dose (Up from 47%)
18-29 – 1.5m population – 855k dosed – 57% 1 Dose (Up from 52%)
30-49 – 2.4m population – 1.65m dosed – 69% 1 Dose (Up from 68%)
50-64 – 2m population – 1.54m dosed – 77% 1 Dose (Up from 76%)
65-79 – 1.1m population – 1.03m dosed – 93% 1 Dose (Down from 96%)
80+ – 415k population – 342k dosed – 82% 1 Dose (Up from 81%)

Not much summer left to get your C19 pool installed:

These Are the Most Luxurious Pools Now For Sale in New Jersey

Something a bit lighter I guess. Anyway, this is my favorite, but I’m not sure what the hole on the right is. The round columns and balusters were clearly the wrong design choice given the angular nature of the rest of the design.

Updated Vaccination by Age Range for NJ:
6/30 vs 7/17

At Least 1 Dose
Total Pop: 9.2m
Total 1st Doses: 5.6m – 61% of total pop (Up from 59%) – Bloomberg reporting 64.5%

12-15 – 450k population – 168k dosed – 37% 1 Dose (Up from 36%)
16-17 – 240k population – 112k dosed – 47% 1 Dose (Up from 45%)
18-29 – 1.5m population – 784k dosed – 52% 1 Dose (Up from 50%)
30-49 – 2.4m population – 1.62m dosed – 68% 1 Dose (Up from 65%)
50-64 – 2m population – 1.51m dosed – 76% 1 Dose (Up from 73%)
65-79 – 1.1m population – 1.06m dosed – 96% 1 Dose (Up from 93%)
80+ – 415k population – 336k dosed – 81% 1 Dose (Up from 78%)

From the Asbury Park Press:

There’s more to NJ’s labor shortage than unemployment benefits. Here’s why

It’s been more than a year since Ken Gaughran lost his job in radio promotions due to the pandemic, and he is slowly losing hope of getting back into that field.

So in recent months, the 27-year-old Toms River resident has searched for employers that offer a decent wage and benefits, all while wondering how long he can wait before he needs to search for a restaurant or retail job.

“We all had our careers, now what are we going to do?” Gaughran said. “They’re gone. That’s been the toughest part.”

If Gaughran sounds confused, he’s not alone. New Jersey’s labor market continued to emerge from its pandemic freeze in June, gaining thousands of jobs and convincing more unemployed workers to get off the sidelines.

But the state’s job growth doesn’t appear to be fast enough to bring relief to employers who have struggled to find enough staff to operate.

And a state report provided little clarity about what the post-pandemic economy will look like. Will workers surge back into the labor force in September when schools reopen and enhanced federal unemployment benefits expire? Or are they in the same boat as Guaghran, wondering if their careers are gone?

Hat tip to Joyce for this gem, from the Star Ledger:

Property tax breaks would be restored under Senate budget bill, Menendez says

A $3.5 trillion spending bill for health care, child care, education and climate change also will address the $10,000 cap on deducting state and local income and property taxes, a key senator said Wednesday.

U.S. Sen. Robert Menendez, a member of the tax-writing Senate Finance Committee that will help draft the spending bill, said the measure will deal with the deduction, known as SALT.

“My understanding is there is a SALT provision in there that would provide relief,” Menendez told NJ Advance Media.

It’s unlikely that the deduction would be fully restored immediately because that would cost $673 billion over ten years, according to the Tax Foundation, a conservative research group.

But raising the deduction cap by thousands of dollars would benefit middle class homeowners who were hit hard by the provision, including those in New Jersey, which has the nation’s highest property taxes. 

Menendez said the details have yet to be worked out.

From HousingWire:

Home prices accelerating in areas without mass transit

As more of the country moves to permanent work-from-home arrangements, home prices in car-dependent areas have risen twice as fast as those in transit-accessible areas, according to a recent study by Redfin.

The median home-sale price in car-dependent areas, nationwide, has increased 32.8% to a record $418,100 since January 2020, while it has risen 15.6% to a record $540,500 in transit-accessible neighborhoods.

Suburbs, rural areas and small towns have been hot since the beginning of the pandemic, with Redfin searches for rural areas and small towns spiking last spring and housing markets in the suburbs heating up more than other neighborhood types throughout 2020, according to Steven Majourau, a Redfin agent in California’s Central Valley.

“Since the start of the pandemic, there has been a huge influx of people moving out here from the Bay Area, and the reason is simple — the houses are bigger and the prices are lower,” Mojourau said. “For most people, the tradeoff wouldn’t have been worth it two years ago because of the hours-long commute into San Jose or San Francisco every day, either by train or by car. With remote work, buyers can prioritize the actual home above its proximity to transportation.”

The report is based on data that rates locations based on how convenient they are to public transportation. A place is deemed “transit accessible” if public transit is convenient for most trips; “car dependent” means there are limited public transportation options.

States with larger — and cheaper — lots have grown in popularity for would-be homebuyers in the last 18 months, as well. Utah, Colorado, Idaho and Arizona have become go-to destinations for many Californians and West Coast transients, in particular, as companies allow employees to live anywhere with an Internet connection. That often means moves to cities with lower home prices, according to Daryl Fairweather, Redfin’s chief economist. 

“Remote work has allowed many homebuyers to leave cities for far-flung suburbs. Those suburbs often lack public transit, so new residents drive more often,” Fairweather said. “Hopefully, a less frequent commute will mean fewer hours behind the wheel. But as offices reopen, we may see commuters who used to live in the city and use public transit spending more time driving and emitting more carbon. Governments need to plan for this new reality and start providing more green transit to areas outside of major cities.”

From MSN/Money:

After a Year of High Prices, Homebuyers Are Burned Out

Alexandra Lashner and her husband have been saving for a home since they got married in 2018. Their plan was to buy in the Philadelphia area this year, close to where they grew up and to their parents.

Like the rest of the country, demand for homes and prices have been through the roof in the Greater Philadelphia area. Knowing that, the couple was wary of going over budget or paying over asking price and didn’t want to waive their right to a home inspection like many buyers have in order to win homes. But after nine months, losing out on two homes and seeing their pre-approval letter expire, the couple is hitting the pause button on their search.

“It’s becoming impossible for us to buy a home where we grew up, and in the area where my parents grew up before me,” says Lashner, an account executive with Frank Advertising in New Jersey. “It’s downright exhausting and we’re burned out.”

The Lashners aren’t alone. In June, just 32% of consumers said it was a good time to buy a home — the lowest percentage in the history of Fannie Mae’s Home Purchase Sentiment Index. (That’s despite super low mortgage rates and a sense in some circles that everyone is buying right now.)

In another recent study, 33% of people who considered purchasing a home this year decided against it, according to ServiceLink, a mortgage services provider.

Of those, 31% said the reason they weren’t buying was because housing options had become too expensive. Home prices have increased by double digits every month since last summer. In May, the median existing home price rose to $350,300, up 24% year-over-year, according to the National Association of Realtors.

From Bloomberg:

Soaring U.S. Rents Are the Sticky Inflation With Staying Power

The cost of renting a home is soaring in cities across the U.S., squeezing the finances of low-income households and posing a threat to the consensus that pandemic inflation will soon fade away.

The median national rent climbed 9.2% in the first half of 2021, according to Apartment List. While part of the increase reflects a bounce-back in prices that dropped earlier in the pandemic, the real estate firm says rents are now higher than if they had stayed on their pre-Covid track.

And they’re still rising at a rapid clip — just at the time of year when the largest number of lease renewals fall due, locking millions of tenants into bigger monthly bills. Surveys by the New York Fed and Fannie Mae suggest renters are braced for further hikes of 7% to 10% in the coming year.

Higher rents are the kind of price increase that’s hard to reverse -– unlike many of the ones that have accompanied the economy’s reopening, from lumber to used cars.

That means a sustained run-up in rents could represent a bigger challenge to the Federal Reserve’s view –- shared by most investors –- that the current spike in inflation will prove transitory.

From the NYT:

Manhattan Real Estate Finally Bounces Back to Normal

As vaccination levels rise and businesses reopen, residential real estate has finally bounced back to where it was before Covid devastated New York.

In Manhattan this spring, the number of apartments that sold was more than double what it was a year ago, when the city was locked down in the early days of the pandemic, according to a half dozen market reports released Thursday.

Though in many ways the market had no where to go but up — apartment showings were restricted for most of last spring — the surge in closed deals is even strong by historical standards. Not since 2015, a time of a major boom, has there been a three-month period with comparable activity, the reports show.

There was more of a mixed picture in terms of prices, with co-ops and condos trading for an average of $1.9 million and a median of $1.1 million, up slightly from last spring. Brokers say the so-so improvement can be explained by an oversupply of apartments, which has fueled discounts.

But the spike in sales volume seems to have the real estate industry wiping sweat from its troubled brow.

“The way people were looking at the city a year ago, it would now be a dystopian hellscape with nine people left in Manhattan,” said Jonathan Miller, the appraiser who wrote the report for the brokerage Douglas Elliman, referencing early fears that many New Yorkers would decamp permanently to the suburbs or second homes outside the city. “But it seems that cooler heads have prevailed.”

From Bloomberg:

Suburban NYC Housing Frenzy Slows With Buyers Showing Fatigue

Contracts to buy suburban New York homes have scaled back from their frenzied pace at the height of the pandemic.

That doesn’t mean buyers have lost interest in acquiring spacious abodes — they’re just not finding much on the market. And they’re getting tired of fighting off competitors for what little there is.

“Losing your fifth bidding war on a property is discouraging,” said Jonathan Miller, president of appraiser Miller Samuel Inc. “Part of this is consumers being fatigued with the process, and having other options in life these days, like vacations and travel.”

As Covid restrictions ease and more workers start plotting a return to the office, suburban sales are still rising at a clip that would please the owner of any real estate brokerage. But annual increases in signed deals are more measured than they’d been for much of the past year.

In Long Island, contracts to buy single-family homes were up 14% in June from a year earlier, according to a report Friday by Miller Samuel and Douglas Elliman Real Estate. That’s down from May and April, when deals soared 160% from the corresponding months in 2020.

Westchester County saw 20% more contracts last month than in June 2020. But in May, the annual increase was 81%. In Greenwich, Connecticut, June’s 50% jump in contracts was the smallest year-over-year gain in data going back to last July.

“You know what happened? We ran out of inventory,” said Scott Durkin, president of Douglas Elliman.

Updated Vaccination by Age Range for NJ:
6/22 vs 6/30

At Least 1 Dose
Total Pop: 9.2m
Total 1st Doses: 5.4m – 59% of total pop (Up from 58%) – Bloomberg reporting 62.8%

12-15 – 450k population – 162k dosed – 36% 1 Dose (Up from 24%)
16-17 – 240k population – 108k dosed – 45% 1 Dose (Up from 44%)
18-29 – 1.5m population – 756k dosed – 50% 1 Dose (Up from 49%)
30-49 – 2.4m population – 1.57m dosed – 65% 1 Dose (Up from 64%)
50-64 – 2m population – 1.46m dosed – 73% 1 Dose (Up from 72%)
65-79 – 1.1m population – 1.03m dosed – 93% 1 Dose (Up from 91%)
80+ – 415k population – 324k dosed – 78% 1 Dose (Up from 77%)