Maybe they aren’t so bad?

Posted on July 16, 2024 by grim

From NorthJersey.com:

Really, rankings? These two Jersey cities are consistently ‘the worst.’ We beg to differ

Newark and Jersey City are New Jersey’s most populated cities, so it’s no wonder that they’re often the target of the various “worst places” reports on behalf of the Garden State.

This includes Newark being named the worst city for renters in the nation by Forbes and the seventh worst city for renters by WalletHub; ranking as the fourth worst city to raise a family; and the third worst city for renovating a fixer upper home.

Both Jersey City and Newark were also named in the top 10 noisiest cities; ranked among the worst cities for their average size of new apartments; ranked in the 10 worst cities for recreation; and named in the bottom half of 180 cities for their selection of fun spots.

Despite all of the flak people give these two North Jersey cities, whether it’s for good reason or not, there are actually some great attractions to visit in these places.

So we’d like to use this opportunity to do what we do best here in North Jersey: Talk about how great we are so everyone else can know it too.

Posted in Demographics, Gold Coast, New Jersey Real Estate | 177 Comments

Shore rentals starting to look shaky?

Posted on July 15, 2024 by grim

From the Philly Inquirer:

Jersey Shore rental market sees cancellations, dropped prices, vacant weeks. What’s going on?

Is the “Shore crowd in Italy”? Again?

That’s the buzz, or rationalization, among some renters, real estate agents and homeowners at the Jersey Shore, who are seeing another summer of vacant weeks, price drops, and a rising chorus of people who say they can go to other destinations — Aruba, North Carolina, Italy — for less money than they’re being asked to pay Down the Shore.

And in those far-flung places, they don’t have to bring their own sheets and toilet paper, a time-honored practice at many Jersey Shore rental properties.

The cracks began to show last summer.

And the panic is setting in even earlier this season, with owners offering discounted weeks, incentives for last-minute bookings, and tossing out long-standing practices, like requiring renters to book Saturday to Saturday.

Facebook groups like Main Liners Shore House Rentals are filled with properties with vacancies, like the Avalon house that sleeps 10 asking weekly rates ranging from $5,250 in July to $3,000 in September. Or the Ventnor house that sleeps 12 and is now asking $7,600 a week (”just added — 6 seater golf cart and 2 paddle boards!”).

After a couple years of heady economics — with the pandemic sending people to the Shore in droves, buying up real estate, moving here year-round, and forgoing fancier vacations — reality is continuing to set in by the beach.

“I’ll tell you that there was a lot of inventory that went unrented for people asking $30,000 a month for houses that are only worth $20,000 a month,” said Cole Checkoff, who runs a short-term rental management website, Host House Rentals, in the Atlantic City to Ocean City area.

“That put me in a good position,” he said. “I slice up the calendar a little bit more, [offering rentals for a week or less]. Things have been booking more last-minute. The booking window has been reduced over the last couple of summers.”
…
One recent investment property buyer in Sea Isle, who did not want to be identified, raised his rents this year to help cover his mortgage, and said he’s been surprised at the difficulty in filling out a full season this summer.

“Last summer, I had the whole place rented,” he said. “People were reaching out left and right. I upped my rates slightly, the highest at $3,500 to $3,750. It’s a lot of work. I’m not making a lot of profit. I thought I’d have just an easier time filling it.”

Posted in Demographics, Economics, Shore Real Estate | 59 Comments

Mortgage pressure easing

Posted on July 14, 2024 by grim

From the MPA:

Mortgage rates see immediate relief after positive economic data

Mortgage rates fell this week, following positive economic data that suggests the Federal Reserve may ease up on interest rates later this year.

Freddie Mac’s latest Primary Mortgage Market Survey shows a slight decrease in both 30-year and 15-year fixed rates. The 30-year fixed-rate mortgage (FRM) averaged 6.89% for the week ending July 11, down from 6.95% the previous week.

The 15-year FRM also saw a decrease, averaging 6.17%, down from 6.25% last week and 6.30% a year ago.

“Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week, and mortgage rates followed suit,” Sam Khater, Freddie Mac’s chief economist, said in the PMMS report.

Khater also pointed to a boost in housing inventory, including properties with price reductions, as a positive sign for potential buyers.

“Companies are slowing down their pace of hiring, which is the result that the Federal Reserve is looking for. Mortgage rates fell on the prospect of one or two Fed rate cuts this year,” added NerdWallet mortgage expert Holden Lewis.

While mortgage rates are down, affordability remains a concern. Rising shelter inflation, a key component tracked by the Fed, continues to put upward pressure on housing costs.

However, First American chief economist Mark Fleming is optimistic about a potential shift in Fed policy based on recent inflation data.

“The June CPI data is music to the Fed’s ears,” said Fleming, adding that a decline in shelter inflation, combined with other positive signs, increases the likelihood of a Fed rate cut in September, possibly followed by another by year-end.

This could be good news for homebuyers, as anticipation of lower rates is already influencing the market.

Despite the potential for lower rates, a recent Fannie Mae survey revealed a cautious outlook among homebuyers. A larger share of respondents believe both home prices and mortgage rates will rise in the coming year – up from 31% to 33%.

“If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand,” Fannie Mae chief economist Doug Duncan said in a statement.

Posted in Demographics, Economics, Housing Bubble, Mortgages, National Real Estate | 31 Comments

The Gold Coast is Back!

Posted on July 12, 2024 by grim

From Bloomberg:

What We Can Learn From Jersey City’s Luxury Housing Boom

US renters say there’s now a 60% likelihood they’ll never own a home — the highest reading in at least a decade — and that can help explain why we’re seeing crowding in rental markets such as New York, a closely watched global real estate market. 

There, renters are facing a whole new level of competition. The average time an apartment sat on the market hit an all-time low of 24 days in June, and renters paid a record 1.4% premium above the listing price on average, according to brokerage Douglas Elliman and appraiser Miller Samuel.

As such, increased prices are leading renters to look for alternatives. And in Manhattan, moving just across the Hudson River into a brand new Jersey City high-rise is becoming a popular option for those who can’t necessarily afford homeownership, but can dish out the cash for extra space and modern amenities that come with luxury rentals. More on that in a minute, but first…

Three things to know: 

  • High rates are failing to dent record stock and house prices.
  • A NYC penthouse sold for $135 million in the priciest deal since 2022.
  • Gen Z trading stocks at 19 signals a new age of market speculation.

…now back to rental trends. From 2019 to 2023, there was a 50% increase in new housing units completed in Jersey City, and as a result, almost 30% of its population arrived in 2021 or 2022, according to data from SmartAsset, a financial information provider. 

The act of moving outside of a city center like Manhattan in favor of space and other conveniences is nothing new. Real estate agents in Jersey City have long argued that looking at the New York skyline is better than living there. But what’s interesting about the most recent migration is that well-off young professionals are choosing to give up the glamour of NYC living without the perks of homeownership.

Posted in Demographics, Economics, Employment, Gold Coast, Housing Bubble | 88 Comments

The real estate boom is …. coming?

Posted on July 11, 2024 by grim

From Fox Business:

Real estate tycoon explains when house prices will start to drop and ‘open the floodgates’

Over the next year, two macroeconomic indicators may align and create booming opportunities in real estate, according to RE/MAX’s chairman and co-founder.

“I estimate that there’s between 9 and 11 million people who want to be homeowners that can’t afford to be homeowners right now,” Dave Liniger said on “The Claman Countdown,” Monday, “because of the cost of the interest rate, or because they already got a house with a very low interest rate that wouldn’t transfer to the new purchase.”

“[But] all of a sudden, we’re getting more inventory on. It makes for a quick sale. There’s lots of buyers,” he continued. “So as the inventory increases, you’ll start seeing price pressure, and you’ll probably see some price relaxation throughout the country.”

Liniger’s comments come as the cost of buying a new home just hit another all-time high, new data from Redfin shows.

The median U.S. home sale price soared to $397,954 in June – a nearly 5% increase from a year earlier. That marks the highest level on record and the biggest annual increase since March.

Thus, the monthly mortgage payments at that price, when accounting for the 6.86% median interest rate for a 30-year mortgage, is now $2,749. That figure is reportedly $88 shy of April’s record high.

RE/MAX’s co-founder expanded on his prediction that market pressures could finally start to cool from years of underbuilding homes and the Fed’s aggressive rate campaign.

“Our homebuyers have been used to a 15-year period of the lowest interest rates in the country’s history… And so they’re reluctant to move out of that into something that’s 7 or 8%,” Liniger explained.

“It’s important to understand: the average interest rate since we started RE/MAX in 1973 is 7.78%. But this 15-year period has thrown everything out of kilter,” he added. “So if you start seeing the interest rate dipping down towards 6%, 5.9%, I think it would open the floodgates.”

Posted in Demographics, Economics, Mortgages, National Real Estate | 110 Comments

Jersey Market Slowing?

Posted on July 10, 2024 by grim

From NorthJersey.com:

Real estate update: Nearly half of NJ counties saw housing inventory increase in June

June marked the eighth consecutive month of housing inventory growth across the nation, with 36.7% more homes actively for sale than this time last year.

The Northeast, however, is bridging the inventory gap at a much slower pace than other regions of the country, according to Realtor.com. While inventory grew 48.9% in the South, 35.8% in the West and 21.5% in the Midwest, the Northeast saw inventory increase by just 12.5%.

Despite this inventory gap, the New York metropolitan area has seen the greatest increase in price per square foot in the nation. According to Realtor.com, this signals that there are more smaller, affordable homes hitting the market.
…
Across the state, 11 counties saw an increase in new home listings compared with June 2023, while 10 counties saw new home listings increase compared with May.

In North Jersey, Passaic, Morris and Hudson counties all saw inventory increase from this time last year. With 596 new listings, Morris County saw an increase of 15.95% from June 2023 and 9.56% from last month. Passaic County had 440 new listings in June, a 8.37% increase from last year, and Hudson County had 11.56% more listings than last year at 328.

Sussex County was the only county to see a decrease in the number of new listings compared with both June 2023 and last month. Here, there were 224 new listings, a 8.94% decrease from last year and a 8.94% decrease from May. Bergen and Essex had 940 and 544 new listings, respectively — decreases of 5.24% and 5.88% from June 2023.
…
Compared to June 2023, active listings stayed on the market for a shorter period of time in 17 New Jersey counties. But when compared to last month, 16 counties had new listings stay on the market for a longer period of time.
…
In North Jersey, homes stayed on the market for the shortest period of time in Morris and Essex counties at 19 and 22 days, respectively. Listings stayed on the market for about 23 days in Passaic County, 24 days in Bergen County, 31 days in Sussex County and 32 days in Hudson County.

Posted in Demographics, Economics, Housing Bubble, New Jersey Real Estate | 89 Comments

The backyard economy has sprung a leak

Posted on July 8, 2024 by grim

From CNBC:

The pool party’s over as Americans ease up on backyard upgrades

Americans will be splashing around this summer in the backyard pools they’ve already got, but not splashing out as much on new ones. 

Swimming pool installations were part of the home improvement frenzy that swept the country during the pandemic as Americans were stuck at home. But recent signs show demand is slowing as households with spending money shift it more toward vacations than renovations.

Pool Corp., a national pool equipment distributor with a roughly $11 billion market valuation, said last week it expects new pool construction to fall by 15% to 20% this year. Some local contractors across the country are seeing a pullback, too.

Skip Ast III, sales director at Shasta Pools in the Phoenix metropolitan area, said the local industry has been having a harder time since roughly 2022.

“If 2023 wasn’t already considered — by pool volume — kind of disastrous, this year’s been worse,” he said, but added that the company has managed to adapt.

While consumers aren’t cutting back on overall record spending, those with extra money in their budgets are increasingly burning it on experiences like travel, dining out and other service-sector purchases.
…
In 2020, installations of all kinds of pools, from in-ground and hot tub pools to typically cheaper inflatable and above-ground models, rose by 20%, according to property analytics firm Cape Analytics.

At the time, “people started settling in for, ‘OK, we’re going to be at home for a while, we need to bring the vacations into our backyards,’” said Ast, whose family has been in the pool construction business for nearly 60 years. He recalled suppliers struggling to keep up with a crush of orders and contractors facing monthslong backlogs.

Posted in Economics, Housing Bubble, National Real Estate | 50 Comments

$8m Middle Sedge Mansion Torn Down

Posted on July 7, 2024 by grim

From NBC:

Jersey Shore mansion on private island now demolished after abandoned for years

It was an unusual house that turned heads for decades along the Jersey Shore. Now, it is no more.

The home and adjacent guest house on a remote Ocean County island came down about a month after crews started the demolition work in early June — the end of the line for a landmark that never recovered from Superstorm Sandy.

The secluded mansion was built on a private island in Barnegat Bay, and had long been a source of fascination. The abandoned mansion was only accessible only by boat, but has now left the landscape.

“It was always unique. It was always a conversation,” said Pat Hallock, a realtor in Chadwick Beach.

A crew had been bringing down the home piece by piece on Middle Sedge, situated just over a half-mile from the Chadwick Beach section of Toms River. The mansion dated back to 1991.

“Back in the day it was a beautiful house,” said Chadwick Beach resident Phil Liantonio. “Then the storm just kind of messed everything up and they never repaired it.”

Superstorm Sandy left the home in ruins. The condition of the property only got worse after the devastating 2012 storm and had become a hazard, with people trespassing on there.
…
“A lot of the island itself was washed away, the bulkhead was destroyed,” said Hallock. “There’ll be environmental issues, there’ll be issues we’ll have to discuss with the government.”

The owner of the mansion previously told NBC New York that the future of the island is still undecided. The job of clearing away the rubble will likely take a couple weeks, as the familiar and curious sight finally disappears years after nature’s wrath led to its downfall.

Posted in New Jersey Real Estate, Shore Real Estate | 7 Comments

Lowball! Baseball Edition.

Posted on July 6, 2024 by grim

From NorthJersey.com:

Derek Jeter’s Greenwood Lake ‘castle’ sold for a third of original asking price

Former Yankees captain Derek Jeter has sold his home on Greenwood Lake.

The $5.1 million sale closed on Wednesday, less than two months after hitting the market for a list price of $6.3 million, listing agent Diane Mitchell of Wright Bros Real Estate Inc. confirmed. The 24-room estate at 14 Lake Shore Road had previously been listed for nearly $15 million.

The property just north of the New Jersey state line was originally built up in 1903 by New York City doctor Rudolph Gudewill as a getaway for his wife. The adopted parents of Jeter’s grandfather William Connors, John and Julia Tiedemann, bought the estate in 1952. By the turn of the century, it had fallen into disrepair.

Jeter transformed the property into a four-acre compound with a renovated main house, guest house, pool house and boat house. The estate today holds an infinity pool, a lagoon and 700 feet of manicured lakefront.

The home was first put on the market by Jeter six years ago for $14.75 million. The price dropped to $12.75 in 2021. Following a failed auction, it was relisted earlier this year for $6.3 million by Mitchell, who brokered the deal with agent Elena Bertussi-Bachman of Howard Hanna Rand Realty.

Jeter grew up in Kalamazoo, Michigan, but was born in Pequannock at Chilton Memorial Hospital. For a short time after, he lived in North Arlington.

Jeter took ownership of the Greenwood Lake property in the early 2000s from the Tiedemann family trust. Then, he was the starting shortstop for the New York Yankees.

Posted in Lowball | 16 Comments

Welcome to the Peak

Posted on July 2, 2024 by grim

Some great charts over at Visual Capitalist:

Mapped: The Growth in U.S. House Prices by State in 2024

In 2024, U.S. home prices are steadily rising across nearly every state in America.

Overall, home prices rose 6.6% annually as of the first quarter of 2024, the highest increase since 2022. A combination of low inventory and homeowners’ reluctance to sell is driving up home values as interest rates remain persistently high.
…
Vermont leads in growth, with home prices climbing by 12.8% as home inventory dropped to its lowest point in over a decade.

Next in line are Northeastern states New York, New Jersey, and Delaware—each with double-digit growth. Pushing up prices are the influx of buyers moving to more affordable metros nearby major cities along with a lack of inventory. On a metropolitan level, many of the nation’s hottest housing markets are in these states, including Camden, New Jersey and Syracuse, New York.

Posted in Demographics, Economics, Housing Bubble, National Real Estate, New Jersey Real Estate | 217 Comments

Dining rooms and jello molds

Posted on June 30, 2024 by grim

From The Atlantic:

Why Dining Rooms Are Disappearing From American Homes

The dining room is the closest thing the American home has to an appendix—a dispensable feature that served some more important function at an earlier stage of architectural evolution. Many of them sit gathering dust, patiently awaiting the next “dinner holiday” on Easter or Thanksgiving.

That’s why the classic, walled-off dining room is getting harder to find in new single-family houses. It won’t be missed by many. Americans now tend to eat in spaces that double as kitchens or living rooms—a small price to pay for making the most of their square footage.

But in many new apartments, even a space to put a table and chairs is absent. Eating is relegated to couches and bedrooms, and hosting a meal has become virtually impossible. This isn’t simply a response to consumer preferences. The housing crisis—and the arbitrary regulations that fuel it—is killing off places to eat whether we like it or not, designing loneliness into American floor plans. If dining space keeps dying, the U.S. might not have a chance to get it back.

The apex predator of the dining room is the “great room”—a combined living room and kitchen, bridged by an open dining space. “It’s not that Americans don’t want dining rooms. It’s that they want something else, and that takes up space,” explains Stephen Smith, the executive director of the Center for Building in North America, a nonprofit that advocates for building-code reform. “In a single-family home, that’s a great room. And so that’s what developers build.”

According to surveys in 2015 and 2016 by the National Association of Home Builders, 86 percent of households want a combined kitchen and dining room—a preference accommodated by only 75 percent of new homes. If anything, the classic dining room isn’t dying fast enough for most people’s taste.

The transition from the classic dining room to the great room mirrors the changes in gender norms and family formation that have occurred over the past 125 years. The dining room emerged in the early 20th century, when an ascendant upper middle class hired migrant laborers as servants. Many American homes from that era were designed around creating a separate sphere for “the help,” with sectioned-off kitchens, laundry rooms, and servants’ quarters. You can still find anachronistic allowances for servants’ quarters tucked away in zoning codes that otherwise ban secondary units.

Posted in Demographics, National Real Estate, Where's the Beef? | 137 Comments

Fire up the money machine

Posted on June 29, 2024 by grim

From Yahoo Finance:

Mortgage rates decline for 4th straight week

The national average on the 30-year, fixed-rate mortgage inched down to 6.86% from 6.87% a week prior, according to Freddie Mac’s report published on Thursday. Rates have declined for four consecutive weeks and are at the lowest since April.

The housing market has been sluggish — many home sellers have stayed put to keep their favorable mortgage rates, while buyers facing affordability challenges retreated from the market. However, both inventory and affordability could ease up as rates are projected to decline for the remainder of the year.

“We are probably going to see rates decline slowly from here through the end of the year,” Joel Kan, deputy chief economist for the Mortgage Bankers Association, told Yahoo Finance. “And if our forecast is right… that helps potential homebuyers.”
…
The Mortgage Bankers Association is currently predicting the Federal Reserve will cut its benchmark federal funds rate twice in 2024, lowering mortgage rates to around 6.5% by the end of this year.

“I think the odds are still fluctuating, but that’s the base case,” Kan said, citing improving inflation data as the primary driver for potential falling interest rates. Annual inflation eased in May, with consumer prices rising 3.3% year over year.

Wells Fargo’s June economic summary forecasted mortgage rates would reach 6.5% by year-end, while Fannie Mae expects them to land at 6.7%.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 16 Comments

No home for you

Posted on June 28, 2024 by grim

From CNN:

The housing market is ‘stuck’ until at least 2026, Bank of America warns

Help may not be on the way for first-time homebuyers frustrated by high mortgage rates and even higher home prices.

Economists at Bank of America warned this week that the US housing market is “stuck and we are not convinced it will become unstuck” until 2026 — or later.

The bank said home prices will stay high and go even higher. The housing shortage will persist. And mortgage rates may not fall much — even if the Federal Reserve finally delivers long-delayed interest rate cuts.

“This will take many years to work itself out. There isn’t a magic fix,” Michael Gapen, head of US economics at Bank of America, told CNN in a phone interview. “The message for first-time homebuyers is one of patience and frustration.”

Housing affordability is a major problem in America.
…
Bank of America expects home prices will climb by 4.5% this year and then by another 5% in 2025 before eventually dipping by 0.5% in 2026.
…
In a recent Gallup poll, just 21% of Americans said it is a good time to buy a house, tied for the worst reading in Gallup history. An overwhelming majority — 76% — say it’s a bad time to buy.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 78 Comments

No chance of home price declines?

Posted on June 27, 2024 by grim

From Marketwatch:

When will home prices go down? Six economists weigh in.

“The U.S. housing shortage is still lingering based on our estimate of 4.5 million additional housing units that are required to make up for the gaps accumulated from population growth in the last decade,” said Lawrence Yun, chief economist at the National Association of Realtors. “Therefore, home-price declines appear unlikely.”

To be sure, there are a few markets — such as Austin, Texas, and Boise, Idaho — where home prices have declined, Yun said. In May, home prices in Austin were down 2.5% from the same month a year earlier, according to data from the American Enterprise Institute, the lowest among the 60 largest metropolitan areas in the U.S.

“However, with rapid job growth, the temporary improved housing affordability will be short-lived before prices are pushed up to new highs,” Yun added.
…
“Home prices are unlikely to fall because of continued demographic tailwinds. There are still plenty of millennials looking to get into the housing market,” said Chen Zhao, head of economic research at Redfin. 

“However, with affordability being historically bad, price growth could slow in the coming quarters,” Zhao added. “The key piece of uncertainty is whether mortgage rates will fall as expected, and what will happen to prices when that happens.”
…
Inventory is the most important piece of the housing puzzle, said Andy Walden, vice president of enterprise research at ICE Mortgage Technology. 

“When it comes to home prices today, it’s all about inventory,” Walden said. “In markets where prices have softened at various points over the past two years, the common denominator has been inventory returning to or near prepandemic averages.”
…
To be sure, home prices could crash — but only in the event of an economic catastrophe, said Selma Hepp, chief economist at the real-estate-data company CoreLogic. 

“For home prices to fall, there would need to be a significant shock to the U.S. economy that would lead to massive job losses,” she said. “Still, as we saw during the pandemic, the continued imbalance between pent-up demand and lack of supply suggests that home prices have a floor and are unlikely to fall notably.”

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 82 Comments

What’s the next year hold?

Posted on June 26, 2024 by grim

From Fast Company:

Updated home price forecasts from Zillow and Moody’s for 400 housing markets

Despite strained housing affordability, national home prices, as measured by the Zillow Home Value Index, increased by 3.9% from May 2023 to May 2024 (see map below).

Over the short term, economists at Zillow and Moody’s expect national home price growth to decelerate.

Zillow’s latest forecast for U.S. home prices from May 2024 to May 2025 is -1.2%.

Moody’s latest forecast for U.S. home prices from May 2024 to May 2025 is +0.4%.

Zillow’s 12-month national home price forecast (-1.2%) predicts softer home prices than Moody’s (+0.4%), which is a bit surprising. Over the past two years, Zillow’s forecast model has consistently predicted more appreciation, while Moody’s has been relatively more bearish.

“The effects of ‘rate lock,’ owners holding on to their existing homes and low-rate mortgages, appear to be lessening over time, even as most outstanding mortgages have a rate well below what’s currently being quoted on the market,” wrote Zillow chief economist Skylar Olsen in a report this month.

Olsen added, “Home sellers are returning to the market but finding buyers hesitating. Fresh listings of houses rose significantly over last year, outpacing sales and cooling buyer competition and home price appreciation. Zillow forecasts further price relief on the horizon—further injections of inventory and mortgage rates expected to stay elevated through the year should temper competition.”

Similar to Zillow’s chief economist, the chief economist at Moody’s, Mark Zandi, believes an easing lock-in effect will soon soften home price growth.

“We expect homes for sale to steadily increase as more existing homeowners need to sell for demographic reasons—death, divorce, children, job change—and lower mortgage rates help ease their interest rate lock. The lower rates will also support housing demand, but the increase in housing supply will be even more significant, weighing on house price gains,” Zandi told ResiClub.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 19 Comments