Not time to drop?

Posted on October 5, 2019 by grim

From HousingWire:

CoreLogic says U.S. home-price gains will accelerate through 2020

CoreLogic Chief Economist Frank Nothaft said the pace of home-price gains will quicken over the next 12 months as low mortgage rates give buyers the ability to pay more for properties.

Home prices probably will increase 5.8% in the 12 months through August 2020, Nothaft said in an exclusive interview with HousingWire. That’s a faster pace than the 3.6% growth seen in August 2019 from a year earlier. 

Rates for fixed mortgages will probably stay below 4% through the end of 2020, Nothaft said. Cheap financing allows homebuyers to qualify for a bigger loan because the amount they can borrow is based on their monthly payment, which drops as financing costs fall.

“We’re in a very special environment for housing demand – for the first time since at least World War II we have mortgage rates below 4% while at the same time the unemployment rate is below 4%,” Nothaft said. “That’s a golden period that will stimulate activity, and we expect sub-4 mortgage rates and sub-4 unemployment rate through at least the end of 2020.”

Posted in Economics, Employment, Housing Bubble, National Real Estate | 81 Comments

Not so good in NYC

Posted on October 2, 2019 by grim

From the very rarely cited Fox News:

NYC housing prices in near ‘free fall,’ conditions mirror recession era following tax hikes

The Manhattan real estate market stumbled in the third quarter of 2019, new reports show, as prices plunged and fewer buyers were willing to purchase higher-priced properties in the wake of two recent tax increases.

The median sales price for properties fell 17 percent from the same quarter last year, to $999,950, according to new data from CORE. The average sales price dropped 12 percent, to $1.64 million. 

Condo sales fell 8 percent, logging 946 transactions. Co-op sales, on the other hand, were up a modest 2 percent year over year.

“The third quarter of 2019 was undoubtedly the most challenging quarter in recent memory, especially for condo sales,” Garrett Derderian, managing director of market analysis at CORE, said in a statement. “Market prices have gone from what was once described as the kindest, gentlest correction to a near free fall. The last time conditions were described in such a way was in the height of the recession.”

Posted in Economics, Housing Bubble, NYC | 167 Comments

Retire in Bayonne … or Clifton

Posted on September 30, 2019 by grim

What the f*ck?

Looking to retire in New Jersey? This Hudson County city is the place to go, rankings say

Bayonne is the “it” place in New Jersey — for seniors.

The Peninsula City has been ranked the No. 1 city in the state to retire, according to rankings by Chamberofcommerce.org.

Bayonne Mayor Jimmy Davis, not surprisingly, was not surprised. The lifelong city resident pointed out “services provided by our Office On Aging, the Bayonne Economic Opportunity Foundation (BEOF), senior centers, senior apartment buildings … and non-profit organizations.”

“Bayonne is a walkable community that also offers bus service and light rail. In the very near future, we will also be able to offer ferry service to Manhattan. All of these factors make Bayonne an attractive, convenient place for active seniors.”

Bayonne, sandwiched between the Hudson River and Newark Bay, was ranked the 31st-best city in the entire country to retire, behind the likes of Yonkers, New York (13th), Waukesha, Wisconsin (26th) and Boca Raton, Florida (28th). Two Massachusetts cities, New Bedford and Quincy, are Nos. 1 and 2, respectively. New York City is No. 4.

Sorry Jersey City, but Clifton, in Passaic County, was the only other New Jersey City to make the list, at No. 99.

The website examined all cities with more than 10,000 people and ranked them in eight different categories, such as percentage retirees in the 65-and-older city population, overall poverty rate, percentage of the college-educated residents, median monthly housing costs and violent crime per 100,000 population.

Some residents ridiculed the results, while other pointed out items they say are drawbacks to living in Bayonne.

“Is this a joke,” Joy Ciarla said on a Facebook post that asked for Bayonne residents’ reaction to the rankings.

Posted in Demographics, Economics, Humor, New Jersey Real Estate | 52 Comments

Turns out millennials are not all that different

Posted on September 27, 2019 by grim

From the WSJ:

Millennials Continue to Leave Big Cities

Large U.S. cities lost tens of thousands of millennial and younger Gen X residents last year, according to Census figures released Thursday that offer fresh signs of cooling urban growth.

Cities with more than a half million people collectively lost almost 27,000 residents age 25 to 39 in 2018, according to a Wall Street Journal analysis of the figures. It was the fourth consecutive year that big cities saw this population of young adults shrink. New York, Chicago, Houston, San Francisco, Las Vegas, Washington and Portland, Ore., were among those that lost large numbers of residents in this age group.

The drop in young urban residents last year was smaller than in 2017, when big cities lost nearly 54,000 residents in this age group. But the sustained declines signal a sharp reversal from the beginning of the decade, when young adults flooded into cities and helped lead an urban revival.

…

Separate Census figures show the majority of people in these age groups who leave cities move to nearby suburbs or the suburbs of other metro areas.

City officials say that high housing costs and poor schools are main reasons that people are leaving. Although millennials—the cohort born between 1981 and 1996—are marrying and having children at lower rates than previous generations, those who do are following in their footsteps and often settling down in suburbs.

Posted in Demographics, Economics, National Real Estate | 104 Comments

Murphy blows it

Posted on September 26, 2019 by grim

From the Star Ledger:

N.J. public worker pension investments fall short 

New Jersey’s government-worker pension fund investments fell short in the fiscal year that ended in June.

The pension fund returned 6.27 percent, trailing the 7.5 percent the pension system assumes it will earn on investments over the long term.

…

The public pension fund is among the worst-funded in the U.S. but has been improving as the state increases how much money it contributes each year. Investment earnings play a big role in the health of the fund, as well.

Investment-grade credit and real estate were “bright spots” in the performance of the pension fund’s portfolio last year, Division of Investment Director Corey Amon told the State Investment Council Wednesday. Investment-grade credit returned more than 10 percent and real estate was up 8.7 percent, according to Division of Investment reports.

Private equity, part of the state’s alternative investment program, returned 10 percent. It has in recent years been the fund’s best-performing asset class.

U.S. equities were up 7.85 percent but suffered somewhat because the pension fund’s U.S. equities portfolio focused on small cap stocks, which underperformed, and value stocks while holding fewer growth stocks that actually did better than expected, Amon said.

…

Shortly before leaving office, Gov. Chris Christie lowered the assumed rate of return from 7.65 percent to 7 percent. Gov. Phil Murphy reversed course, citing the hardship that placed on the state and local governments, which would have had to come up with another $700 million in pension contributions.

Murphy set the assumed rate of return at 7.5 percent, putting in place a plan to gradually reduce it to 7.0 percent in 2023.

Posted in Economics, New Jersey Real Estate, Politics | 20 Comments

July Case Shiller – eh

Posted on September 25, 2019 by grim

From HousingWire:

Case-Shiller: U.S. home-price gains were lethargic in July

July 2019 saw an annual increase of 3.2% for home prices nationwide, matching the previous month’s pace, according to the Case-Shiller Home Price Index from S&P Dow Jones Indices and CoreLogic.

The 10-City and 20-City composites reported a 1.6% and 2% year-over-year increase, respectively. During the month, 15 of 20 cities reported increases both before and after seasonal adjustment.  

“Year-over-year home prices continued to gain, but at ever more modest rates,” says Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices. “Charlotte surpassed Tampa to join the top three cities, and Seattle may be turning around from its recent negative streak of YOY price changes, improving from -1.3% in June to -0.06% in July.”

According to the index, Phoenix, Las Vegas and Charlotte reported the highest year-over-year gains among all of the 20 cities.

…

“The 10-City and 20-City Composites both experienced lower YOY price gains than last month, declining to 1.6% and 2.0% respectively. However, the U.S. National Home Price NSA Index remained steady with a YOY price gain of 3.2%, the same as prior month,” Murphy said. “Home price gains remained positive in low single digits in most cities, and other fundamentals indicate renewed housing demand.”

Posted in Demographics, Economics, Employment, National Real Estate | 66 Comments

Nobody wants to sell?

Posted on September 24, 2019 by grim

From HousingWire:

U.S. housing market experiences largest inventory decline since last year

In August, America’s home sales slid 1.6%, marking the sixth month of 2019 that produced fewer sales than the previous year, according to the RE/MAX National Housing Report.

RE/MAX reports buyer demand outpaced homes listed for sale in August, causing the largest inventory decline in 13 months. Overall, the number of homes for sale fell 5.5% from 2018’s level and 1.5% from the previous month.

…

The modest inventory growth that started last fall has been swallowed up by demand as buyers have returned to the market, likely spurred on by attractive interest rates, RE/MAX CEO Adam Contos said.

“Home sales dipping at the same time inventory falls suggests there may have been some reluctance on the part of sellers to list their homes,” Contos said. “Nevertheless, demand is again ahead of supply, extending the favorable seller’s market that has been in place for several years.”

According to RE/MAX, August posted a 2.8-month supply of inventory, falling from 2.9-month supply in August 2018. Homes spent 44 days on the market, which is one day longer than they did last year.

The median price for a home was $263,00 in August, rising 5.7% from last year. Going back to February 2012, prices have now climbed on an annual basis in 89 of the past 91 months.

Posted in Economics, Housing Recovery, National Real Estate | 56 Comments

NJ UE Record Low

Posted on September 20, 2019 by grim

From NBC:

New Jersey Unemployment Drops to Record Low of 3.2 Percent

New Jersey’s jobless rate has fallen to a record low of 3.2 percent.

That’s according to the figures released Thursday by the state Labor and Workforce Development Department. It’s the lowest monthly rate since state-level records began in 1976.

The August unemployment rate fell from 3.3 percent the previous month, and the state added 1,100 jobs.

But the department says private sector jobs declined more than they increased, and the net increase was reached because of the addition of 2,300 public sector jobs.

Besides public sector jobs, growth also happened in health, education and other service jobs. The declines occurred in the leisure and hospitality, manufacturing, information, transportation and construction industries.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 52 Comments

Fewer options for rent controlled areas

Posted on September 16, 2019 by grim

From HousingWire:

Trump’s housing-finance plan aims to curb GSE lending in areas with rent control

Buckle your seatbelts, California. You may be in for another showdown with the Trump administration. You too, New York and Oregon.

When Treasury released its housing finance reform plan a week ago, there was one proposal buried in the middle that didn’t get much attention: curbing Fannie Mae and Freddie Mac multifamily lending in areas that adopt rent control. It was marked “administrative,” meaning Treasury believes it can be done without input from Congress.

hen the plan was released, New York had recently expanded its rent control law and Oregon had adopted statewide rent control. This week, lawmakers in California, the most populous U.S. state, joined Oregon in passing a statewide bill to control rents, and Gov. Gavin Newsom has already said he’s going to sign it.

“This is the Trump administration against the blue states,” Ed Mills, a public policy analyst with Raymond James in Washington, said in an interview with HousingWire. “This matches their philosophy, but it has the added benefit of Trump, using administrative actions, being able to influence policies in states run with Democratic majorities.”

But, perhaps that one suggestion, buried in the middle of a 53-page report, will never see the light of day?

“This is absolutely going to happen,” Mills said. “It’s just a matter of the scale and timing. The lesson I’ve had through observing the Trump administration is: They tell you in advance what they are going to do and they more often than not follow through.”

The plan cites rent control as interfering “with the functioning of local housing markets, tending to decrease the supply and quality of the available housing.” 

While lots of economists would agree with that, they wouldn’t all agree that the solution is to further restrict housing stock by limiting government-back multifamily lending. 

According to the housing finance plan that Treasury Secretary Steven Mnuchin said had been approved by President Donald Trump, the Federal Housing Finance Agency, the independent regulator of Fannie Mae and Freddie Mac, should make multifamily lending tougher to secure in rent-controlled areas.

“Treasury recommends: FHFA should revisit the GSEs’ underwriting criteria for acquisitions of multifamily loans secured by properties in jurisdictions that adopt rent-control laws or other undue impediments to housing development,” the plan stated.

Posted in Economics, Mortgages, National Real Estate, Politics, Unrest | 84 Comments

Leading Indicator?

Posted on September 13, 2019 by grim

From Forbes:

The California Real Estate Boom Is Over. What Now?

If you had invested in a property in San Francisco five years ago and cashed out in 2019, you would have made a 50% profit, never mind the rental income. But if you had bought a year ago and sold today you would have made exactly zero.

The California boom is over and investors need to switch to Plan B, which is the answer to the Jeopardy question: How do you deal with a market that at best will be moving sideways, but could also drop 20%?

The end of the boom in California also poses troubling questions for investments elsewhere in the country. Will other tech economies follow suit? What are the prospects for booming markets in Arizona, Nevada, Utah, Texas and Florida? And will panic selling drive down prices everywhere, as it did in 2008, pushing an already weakened national economy into recession?

Posted in Economics, Housing Bubble, National Real Estate | 154 Comments

Sorry JC, not good enough.

Posted on September 11, 2019 by grim

From JerseyDigs:

Study Finds Jersey City Will Add as Many Apartments as Manhattan in 2019

Posted in Gold Coast, National Real Estate, New Development, New Jersey Real Estate | 124 Comments

Why NJ is f*cked

Posted on September 10, 2019 by grim

From the Star Ledger:

N.J. is facing a $1.2B public-worker pension time bomb

In the waning days of his administration, Gov. Chris Christie left his successor Phil Murphy a parting gift, of sorts.

For years, New Jersey had assumed its public pension fund would make more money on its investments than it could realistically expect. So, Christie went ahead and changed it.

Without notice, the outgoing governor cut how much the pension system should expect to earn on investments from 7.65 percent to 7 percent a year.

Doesn’t seem like much, right?

But Christie’s sudden move — and Murphy’s reaction to it — set into motion a complex and controversial budget quagmire that will soon become a ticking $1.2 billion time bomb for New Jersey.

When it will explode: 2022 (the year after the next gubernatorial election).

At stake: Benefits to nearly 800,000 active and retired state and local workers.

A likely result: Your state taxes could go up.

And how the state will manage to pay the bill when it comes due remains to be seen.

…

The change was praised by the pension fund actuaries, who say expecting a 7 percent return on investments is closer to what other large funds can reasonably figure they’ll get over the long term.

But there’s an impact to all of this, which means the decision sent ripples through the pension system.

When you assume you’ll reap more from investments, it makes the pension funds look healthier than they really are, even if it isn’t realistic. When you expect less, the system looks less healthy.

That all figures into the calculations that determine how much money state and local governments will need to pay for benefits to nearly 800,000 active and retired workers. In short, expecting less in investments means governments would have to pay more to keep the pension system afloat.

Christie’s move would have cost local governments, which by law have to pay the full contribution recommended by actuaries, an additional $422.5 million in Murphy’s first year, according to an NJ Advance Media analysis.

Posted in Economics, Politics, Property Taxes, Unrest | 85 Comments

Millennials want homes?

Posted on September 6, 2019 by grim

From CNBC:

Older millennials are driving home prices higher again

They may have waited longer than previous generations, but millennials are now showing a strong desire to become homeowners, especially older millennials. That is strengthening overall demand for the limited supply of homes for sale, and consequently reigniting the fire under home prices.

Home price gains had been shrinking over the last year, but the increases turned higher again this summer. Home prices were up 3.6% in July compared with July 2018, according to CoreLogic. That is stronger than the 3.4% gain in June. CoreLogic is now predicting an even larger 5.4% annual gain by July 2020.

“Sales of new and existing homes this July were up from a year ago, supported by low mortgage rates and rising family income,” said Frank Nothaft, chief economist at CoreLogic. “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”

…

More than a quarter of the nation’s largest generation said they were interested in buying a home in the next 12 months, according to a survey conducted by CoreLogic with RTi Research during the first half of this year. The problem is there is still precious little for sale, and supplies are falling once again. At the end of July, the inventory of homes for sale was nearly 2% lower compared with a year ago, according to the National Association of Realtors. There was just a 4.2-month supply of homes for sale. A six-month supply is considered a balanced market between buyers and sellers.

“A growing number of millennials are expressing an interest in buying homes, reinforcing the theory that this cohort is continuing to engage within the housing market,” said Frank Martell, president and CEO of CoreLogic. “But, with so few homes available for sale, the imbalance has created an affordability crisis that is getting worse every day. Demand exceeds supply and we’re unsure of when the two will balance out.”

Posted in Demographics, Economics, Employment, National Real Estate | 58 Comments

Millennials – Still no home for you

Posted on September 2, 2019 by grim

From Curbed:

Sorry, millennials: A recession won’t help you buy a house

The 2008 financial crisis brought the global economy to its knees and sent American home prices into freefall. For anyone who managed to hang on to their job, savings, and credit score, the aftermath of the crisis was a prime opportunity to buy a house at a bargain price.

The Great Recession is the only economic downturn millennials have lived through as adults, so, naturally, they might think that the next recession—which more and more economists believe will hit by 2021—will present a chance for many millennials to finally join the ranks of homeownership.

It doesn’t bring me joy to report that this is unlikely to be the case.

The last recession was an anomaly in more ways than one, and its effect on the housing market is the biggest outlier relative to other recessions. The 2008 recession didn’t cause the housing market to go into freefall. The housing market going into freefall caused the recession.

In the years leading up to that collapse, mortgage lenders were issuing mortgages that were destined to fail. Those mortgages were bundled into bonds and distributed across the global financial system. When people started defaulting on those mortgages, the financial system collapsed, and millions of homes went into foreclosure. Prices dropped.

In contrast, the next recession—should it hit—will signal the natural end of a long economic expansion since 2008. Another forcing mechanism is the trade war between the United States and China, as new tariffs lead businesses to scale back on investing and hiring, causing the economy to slow down.

In other words, it would be a fairly standard recession that has nothing to do with mortgages or the housing market, and its severity is not expected to rival the one in 2008. An upcoming recession would also encounter a housing market that’s almost the inverse of what it was in 2008: tight mortgage credit instead of loose mortgage credit, housing supply shortage instead of a housing surplus.

Posted in Demographics, Economics, Foreclosures, National Real Estate | 86 Comments

June Case Shiller

Posted on August 30, 2019 by grim

From Inman:

Home price gains continue to slow down in June: Case-Shiller

Annual home price gains continued to slow in June, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, released Tuesday. Home prices, on average, achieved an annual 3.1 percent gain in June, down from 3.3 percent the previous month.

“Home price gains continue to trend down, but may be leveling off to a sustainable level,” Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices, said in a statement.

The overall average price gain slowed, Murphy said, but one less city experienced lower year-over-year price gains than in May.

“The Southwest – Phoenix and Las Vegas – remains the regional leader in home price gains, followed by the southeast – Tampa and Charlotte,” Murphy said. “With three of the bottom five cities – Seattle, San Francisco, and San Diego – much of the West Coast is challenged to sustain year-over-year gains.”

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 58 Comments