Are PILOTs good or bad?

Posted on August 13, 2018 by grim

From ROI-NJ:

Is fixing PILOT regulations a way to fix school funding?

Marc Pfeiffer, assistant director at Rutgers University’s Bloustein Local Government Research Center, said the last time payments in lieu of taxes were addressed in the state was 1992.

The timing for another look couldn’t be better.

Pfeiffer was part of the Legislature’s Economic and Fiscal Policy Review Committee, which released a series of recommendations to improve the New Jersey economy Thursday in Trenton.

Pfeiffer said reworking PILOTs to make sure they support local funding, could have big impact on spurring economic development.

Pfeiffer had some recommendations regarding how to handle PILOT revenues:

Have a more transparent process in municipalities to understand add-ons to the levy cap to justify expenses of PILOTs and new assessments;

Share some of the revenue from PILOTs with school districts, which currently receive funding only from the land tax; meanwhile, the county and local governments share the PILOT revenue in a 5-95 percent split, respectively.

PILOTs have been a hot topic because residents often feel they are being cheated out of the economic benefit of a new commercial ratable on the scene, and school districts feel they are being cheated out of more revenue that municipalities are benefiting from.

This split increasingly has become a point of contention in places such as Edison, which has seen an ongoing presence of school board members and municipal meetings demanding a portion of the PILOT revenues.

Pfeiffer said it’s time to start the discussion.

“In today’s redevelopment environment, with all the other incentives that we now provide to businesses, and new incentives to come — more specifically on that is the federal Opportunity Zones, which we think are going to be a game-changer down the road — what is the place for payment in lieu of taxes as part of a new redevelopment?” he said.
…
Michael Bruno, and attorney with Giordano, Halleran & Ciesla, said at the July event that the political leanings of the municipality often determine where the greatest pushback comes from.

“It depends on the political bend of the municipality,” he said. “Financially, it almost always comes out that it’s a better deal for the municipality. You can almost always negotiate a deal where they are going to end up with more money than they would under conventional terms. That’s why municipalities like it so much.”

Posted in New Development, New Jersey Real Estate, Politics, Property Taxes | 37 Comments

Nothing will be done

Posted on August 10, 2018 by grim

From the Star Ledger:

Huge change for N.J.: Public worker benefit cuts, merging schools, more toll roads pushed by top lawmaker

Frustrated by endless growth in property taxes and public worker benefit costs, New Jersey’s most powerful lawmaker earlier this year turned to a panel of accountants, economists and budget experts for help.

Their final report is out, and it includes huge plans for change in New Jersey, including merging school districts, adding tolled fast lanes and cutting government employee health care and pension benefits.

State Senate President Stephen Sweeney, D-Gloucester, said he’s trying to prevent New Jersey from confronting billion-dollar budget deficits in the near future.

“New Jersey is at the crossroads. In fact we’re beyond the crossroads. We’re in trouble,” Sweeney said at a Statehouse news conference Thursday.

But these recommendations are likely to face strong headwinds from public labor unions, local government and school officials and Gov. Phil Murphy, a Democrat.

Sweeney said Thursday that New Jersey’s fiscal plights and that of its homeowners are too great to continue on unaltered.

He and state lawmakers will take their report on the road during the summer break leading up to the fall elections to build support.

“We are going to get moving on this now,” Sweeney said, “because time is of the essence.”

The report draws an outline of the powerful Democrat’s legislative agenda.

It’s not clear which of these proposals will become legislation. Many will likely require Sweeney to recruit Republican lawmakers to push through proposals likely to anger unions.

Sen. Steven Oroho, R-Sussex, who sat on the panel, said many of the recommendations have been studied before but now there exists the “political will and courage” to move on them.

The proposals target property tax bills by merging the more than 300 K-6 and K-18 school districts into K-12 regional districts which typically have a lower per-pupil cost.

Under one proposal, state and local government and school employees employees would move to less expensive health care plans. Under another, future retirees would have to contribute to the cost of their health care.

A third still would alter retirement benefits for new employees and those with fewer than five years of public employment. The first $40,000 of their salary would be pensionable, but any salary above that would become part of a retirement plan that acts more like a 401(k) than a pension. Under another iteration, those same workers would be shifted entirely into that hybrid retirement plan.

These proposals would cut increases in pension and health benefit costs by a third, according to the report.

One plan would pledge the New Jersey Turnpike as an asset to the public worker pension fund — and add toll roads to pump new dollars into the cash-strapped pension system.

To raise more money, the state would create express lanes on federal highways such as Routes 78 and 80 that would charge motorists tolls for the convenience of driving on lanes with less traffic. Such lanes are in use in Maryland and Virginia.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 91 Comments

Not sure I believe the analysis here

Posted on August 9, 2018 by grim

From the Star Ledger:

The death of N.J.’s suburbs might be a total myth. Even the experts are surprised

Want to be on the cutting edge of the hot new trend in housing?

It may be time to take a second look at the suburbs.

After bleeding population for the better part of a decade, northern New Jersey’s suburbs appear to be swinging back into favor, new Census data shows.

That’s right, those places with garages and yards once seen as so uncool might be on the rebound as Millennials begin seeking greener pastures.

Hunterdon, Monmouth and Hudson saw their year-over-year population losses slow or halt between 2016 and 2017, while more urbanized counties like Hudson and Union experienced significant slowdowns in their recent breakneck growth.

“It could be a blip in the data, but we were quite surprised,” said James Hughes, dean emeritus of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy.

While one year doesn’t make a trend, Hughes, who has been studying the flight from the suburbs since 2014, said it’s worth noting that housing prices in urbanized counties have skyrocketed with the demand of recent years.

That might be sending young people looking elsewhere for more affordable living, especially as they begin to think about growing their families.

“It could be that they’re going to follow the same pattern of previous generations,” Hughes said.
…
Hughes said there will be challenges for both urban and suburban communities in the years moving forward. Popular urban centers like Jersey City have soaring housing prices and low-ranked schools.

Meanwhile, suburban towns built out in the sprawl of the 1980s and 1990s have no central downtown, have an abundance of antiquated office space and no immediate access to public transit.

“Everything is in flux,” he said. “We’re destroying jobs and creating new ones at the same time. But there can be some pretty quick adaptations that towns can make.”

Posted in Demographics, Housing Recovery, New Jersey Real Estate | 97 Comments

Will the pause continue?

Posted on August 8, 2018 by grim

Great piece from Citylab this morning:

This Housing Price Spike Is Different

Housing prices are cooking. Across the nation, the price of homes is rising faster than the rate of inflation—in some places by a factor of three. That’s true of high-cost cities such as Seattle and San Francisco and lower-cost cities such as Charlotte and Tampa alike. And the overheated market for homes is costing the middle class the American dream.

Nationwide, the price for homes is approaching the zenith seen in 2006, just before the market fell into a foreclosure crisis and the economy sank into the Great Recession. No major city appears to be spared from these rising temperatures. New highs or near highs in Los Angeles and Washington, D.C., are mirrored by similar (relative) highs for Cleveland and Chicago.

But there are key differences between the housing peak in 2006 and the housing peak today. This surge in housing prices is not necessarily evidence for a bubble—much less any indication that a bubble is about to burst. Understanding the difference is critical to knowing how high housing costs may affect the economy going forward.

Late in July, the S&P CoreLogic Case–Shiller U.S. National Home Price NSA Index tracked a 6.4 percent annual gain in home prices for May 2018. This index has recorded year-over-year increases of at least 5 percent every month since August 2016—a sign of the strength of the recovery. Len Kiefer, deputy chief economist for Freddie Mac, shared a visualization for these data; in Seattle, which saw a year-over-year price increase of 13.6 percent for May, home prices are already well above the 2006 high-water mark.

But since most workers aren’t earning 6 percent raises year after year, eventually this party has to come to an end. (Indeed, for four-fifths of privately employed workers, wages are actually falling.) Housing prices will stabilize or soften because they have nowhere else to go. The prevailing trend is unsustainable. “If something can’t go on forever, sooner or later it will end,” says David Blitzer, managing director for S&P Dow Jones Indices. With mortgage rates and prices rising, sales in both new homes and existing homes are starting to slow. “Either buyers have gone for the summer, because it’s too hot to look at housing, or they’re pausing to see what’s going on,” Blitzer says. “If the pause continues, you’ll see sales go down.”

Posted in Demographics, Economics, Employment, Housing Bubble, Housing Recovery | 132 Comments

Is Newark sure it wants Amazon?

Posted on August 7, 2018 by grim

From Vice (first time ever?):

Cities Are for Rich People Now and Wooing Amazon Only Makes It Worse

If there are two facts of life in the modern American city, they are that rent will be too damn high, and that attracting investment from a mega corporation will seem to some local power players like the best way to stave off economic disaster. The rent part is an old, old story. Under-construction of affordable and publicly-funded housing units targeted at the working- and middle-classes is a trend that started around the 1970s. Combine that with spiraling income inequality, the erosion of tenants’ rights, and stagnant real wages, and it makes paying for a roof over your head almost impossible in many metropolises. At the same time, the decline of manufacturing and the federal government’s general unwillingness to invest in major job-creation programs (like infrastructure) means civic leaders have long been tripping over each other to woo companies who might act as job creators for the populace and, not incidentally, help those politicians keep their own jobs.

Enter Amazon, the corporation to rule them all. CEO Jeff Bezos is the richest man ever, and his empire has been dangling construction of “HQ2,” its new headquarters outside the company’s original home base of Seattle, for nearly a year now. Dozens of cities have made bids, Olympics-style, to win the company’s favor, and 20 cities are still in the running as finalists. Their thirst makes some sense: After all, tens of thousands of high-paying tech jobs could be in the offing, not to mention all the money those new arrivals (or maybe even newly-employed locals) might be spending at local businesses.

The company, for it all its questionable labor practices and pernicious effects on everything from book publishing to retail clothing, does seem to be able to offer the prospect of a real economic boon. That’s what unprecedented corporate consolidation means—one company really does have the power to boss around an entire city because its sway over jobs (and its attendant political influence) are that enormous. The leaders of places as varied as Toronto to Newark (two finalists for the HQ2 bid) are not crazy to be offering massive (and possibly secret) tax breaks in hopes of winning Amazon’s favor—it really could improve their short-term finances or at least attract a lot of tourism and the wealth that comes with it.

But shipping in a bunch of tech workers and their ilk could also mean even higher rent and worse gentrification. And since cities don’t seem to have any idea how to actually drive down rent for the poor, it’s fair to wonder if they might be better off without that Amazon money entirely—even if it means losing out on jobs and development in the interim.

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 70 Comments

Expensive to buy, expensive to rent

Posted on August 6, 2018 by grim

From the Star Ledger:

Who the heck can afford N.J.? Search up-to-date prices in every N.J. town for renting, buying

If you or anyone you know has been in the New Jersey real estate market, you feel the pain.

On the rebound from the housing crash, New Jersey real estate keeps getting hotter, and the battle of bids and demand for homes continues to get worse.

Home values have risen slightly, while inventory has plunged dramatically, making it harder to find a home in strong real estate markets, which tend to be Jersey’s most desirable areas.

All of that makes for a toughening market for buyers, especially in a state that already has one of the highest median home prices in the country, according to Zillow, a real estate website. Rent prices have remained stable, but they, too, are much higher than the national average.

Yet with homeownership getting more expensive, many people are choosing to remain renters, instead. About 36 percent of New Jersey homes were renter-occupied in the 2012-2016 Census snapshot, a 7.5 percent increase from 10 years before.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 119 Comments

Other peoples money

Posted on August 5, 2018 by grim

From the APP:

Tax relief better be on the horizon if Phil Murphy wants to get re-elected

For more than a decade, the Asbury Park Press has been a tireless advocate for property tax relief. We have written dozens of investigative stories documenting the problem and spelling out the reasons New Jersey’s tax burden is the highest in the nation. And we have offered countless, commonsense suggestions for relieving the burden.

There is no shortage of ways to reduce taxes. We, and a long list of oped contributors, have detailed many of them. Yet, for the most part, it has been like banging our heads against the wall. Bills have been drafted that would provide some relief, but few have survived legislative hearings and found their way to the governor’s desk for a signature.

The 2 percent property tax cap, signed into law eight years ago, has helped limit the rate of increases. But there has been no concerted effort to roll back taxes. The only thing standing in the way of doing so is political will, which has been in short supply in Trenton.

For those who have held out even a glimmer of hope that things might change, the election of liberal Democratic Gov. Phil Murphy, whose focus has been largely on how and where to spend more money rather than on how to spend less of it, was deflating.

But soon after Murphy was inaugurated, Senate President Steve Sweeney, D-Gloucester, announced the creation of a task force to broadly review issues affecting taxes and spending at all levels of government. Its members, drawn from academia and New Jersey’s public and private sectors, all have extensive experience in fiscal policy.

On Thursday, the task force will issue a report that provides a series of recommendations that could have a substantial positive impact on taxpayers. A Senate staffer says the report will be the most consequential review of ways to improve government efficiency since the SLERP Commission study years ago. The SLERP report included 111 different recommendations; not nearly enough of them were implemented. It’s likely that many of those same recommendations will end up in the latest report. Will they go unheeded, as has been the case with previous studies?

Posted in New Jersey Real Estate, Politics, Property Taxes, Unrest | 26 Comments

The Big Slow

Posted on August 3, 2018 by grim

From the Philly Inquirer:

Is Philly’s housing market still hot? As buyers grow nervous and tired, home prices are slowing

Even before she and her husband started seriously house-hunting for their first home, Nicole Benson Paul had heard the stories of Philadelphia’s cutthroat real estate market.

There were reports of crazy bidding wars, as buyers sparred and scrapped for limited homes. Home prices seemed to be rising each month in most neighborhoods. At the start of this year, as the newlywed couple started to browse, listings that interested them flew off the market before they could even schedule a tour.

In the red-hot housing market that Philadelphia has been experiencing, it would have been no surprise — understandable, even — for Paul and her husband, Zach, to succumb to the trend that has captured thousands of city residents in the last few years: diving head-first into the market, voraciously bidding for properties, and overpaying or waiving contingencies to obtain a home when necessary.

Instead, the Pauls are part of what Philadelphia real estate agent Ashley Lauren Farnschlader calls the new “wait-and-see” buyers — a new category of house-hunters who are tired of searching, exhausted from bidding, and hesitant to go all-in on a house. Whether they are skeptical about where the market and economy are heading, recovering from buyer fatigue, or simply waiting to find the right home at the right price, many Philadelphia buyers are no longer clamoring for homes the same way they did in 2016 and 2017, local agents say.

“Buyers are buying smarter,” said Dylan Ostrow, an agent for Berkshire Hathaway HomeServices Fox & Roach in Center City, who helped the Pauls buy their first home in June. “I’ve told so many different clients … ‘We can wait for the right property. Something will come along priced correctly.’ ”
…
According to an analysis of the single-family housing market in the second quarter of 2018 — meaning April, May, and June — Philadelphia economist Kevin Gillen found that the increase in home values citywide significantly slowed for the first time in more than four years. Compared with the year before, home values in the 2018 spring season — typically the hottest market of the year — appreciated 0 percent, Gillen found, analyzing data provided by Houwzer and the city’s Recorder of Deeds.

In other words: The typical Philadelphia home is worth no more today than it was one year ago
…
For a market that has experienced seemingly unstoppable jumps in home values since Philadelphia’s housing recovery began in 2012 — home values are now 19 percent higher than the city’s previous peak during the housing bubble in 2007 — the sudden plateau in values is a surprising and puzzling shift, especially as supply remains low and demand remains high. Notably, the number of homes on the market in the second quarter fell to an all-time low, with just 3,460 homes listed at the end of June — a phenomenon that should push prices up. At the same time, Gillen’s data show, the number of sales climbed to 6,460 in the three-month period, the highest in a decade.

The unusual mismatch between buyer demand and home values has left economists and real estate agents with one big question: Is Philadelphia experiencing a momentary cooling, or could this be the start of a downturn?

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 128 Comments

Yep, this will end well

Posted on August 2, 2018 by grim

From MarketWatch:

The new housing play: Helping priced-out renters become long-distance landlords

Leland Char is a 28-year-old product manager for a large San Francisco-based tech company. He loves the Bay Area’s “very authentic Asian food and new American cuisine, smart well-educated people, the multiple job opportunities, the friends that I’ve made, and fantastic hiking.”

What Char hates is the house prices, and the fact that even with a dual income, he and his fiancée can scarcely afford to buy a home in their community, let alone have in-laws join them as they put down roots.

So he settled on a solution that’s unorthodox, but which suits him: he bought eight houses in Texas.

He’ll continue to rent his own home in San Francisco, and has leased out the far less expensive properties in Texas, expecting to reap a better return than he could from stocks or bonds, while also building up equity.

Char, who built extensive spreadsheet models with all kinds of scenarios to test assumptions, doesn’t see a contradiction in becoming a “first-time homeowner” of a property he may never set foot in. Like a good tech worker, he found a way to make his investments online, using a fintech startup called Rootstock.

Launched in late 2015, Roofstock is one of the leading platforms for the burgeoning market in single-family house rentals for long-distance investors. While there have been landlords for as long as there’s been property, this particular market moved in a different direction in the aftermath of the housing crisis, when large institutional investors like Blackstone began scooping up houses by the thousands at fire-sale prices in order to rent them out.

Posted in Housing Bubble, National Real Estate, Risky Lending | 91 Comments

May Case Shiller

Posted on August 1, 2018 by grim

From HousingWire:

Case-Shiller: Home prices rising at least twice the rate of inflation

To absolutely no one’s surprise, home prices increased once again in May, and even showed double-digit gains in some markets on the West Coast, and increasing at two to three times the rate of inflation across the U.S., according to the latest report from S&P Dow Jones Indices and CoreLogic.

Home prices increased 6.4% in May, the same annual increase that was seen the month before, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine census divisions.

The 10-City Composite posed an annual increase of 6.1% in May, down from April’s increase of 6.4%, and the 20-City Composite increased by 6.5%, down from the increase of 6.7% the previous month.

The West Coast saw the highest annual gains out of all the top 20 cities. Seattle, Las Vegas and San Francisco increased the most with annual home price gains of 13.6%, 12.6% and 10.9% respectively.

Seven of the nation’s top 20 cities reported a higher increase in the year ending in May than the year ending in April.

“Home prices continue to rack up gains two to three times greater than the inflation rate,” said David Blitzer, S&P Dow Jones Indices managing director and chairman of the Index Committee. “The year-over-year increases in the S&P CoreLogic Case-Shiller National Index have topped 5% every month since August 2016.”

“Unlike the boom-bust period surrounding the financial crisis, price gains are consistent across the 20 cities tracked in the release; currently, the range of the largest to smallest price change is 10 percentage points compared to a 20 percentage point range since 2001, and a 25 percentage point range between 2006 and 2009,” Blitzer said. “Not only are prices rising consistently, they are doing so across the country.”

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

All your homes are belong to us

Posted on July 31, 2018 by grim

From Reuters:

Spiders, sewage and a flurry of fees – the other side of renting a house from Wall Street

The rental home seemed so beautiful when McKayla Ferreira first laid eyes on it. The roof had three gables, fruit trees grew in the backyard, and the front porch gleamed with a fresh coat of paint.

Then Ferreira moved in.

First, she noticed water leaking through the bathroom and kitchen ceilings. Then she found a furry black mold spreading across the walls and raw sewage sluicing through the crawl space. Worst, to her, were the black widow spiders swarming her kitchen cupboards and linen closets. “Those spiders were so big you could hear them,” Ferreira said. “They sounded like fingernails scraping a table.”

Ferreira called her landlord, Invitation Homes Inc, a creation of private equity giant Blackstone Group LP. The spiders were a “housekeeping issue,” the company representative told her, and she should “clean the place up.” Invitation Homes wasn’t enthusiastic about fixing the leaks, either. Two months passed before it sent someone to cut through the ceiling and fix the pipes, Ferreira said. Then the company took seven more months to patch it all up.
…
Invitation Homes pitches itself as a singular landlord providing unprecedented ease and comfort for renters of its tens of thousands of single-family homes. But in interviews with scores of the company’s tenants in neighborhoods across the United States, the picture that emerges isn’t as much one of exceptional service as it is one of leaky pipes, vermin, toxic mold, nonfunctioning appliances and months-long waits for repairs.

Tenants also complain about excessive rent increases and fees that can add up to hundreds of dollars a year. In a proposed class-action lawsuit filed in May in the U.S. District Court for Northern California, renters accuse the company of “fee-stacking.” They allege that Invitation Homes charges tenants $95 if their rent is one minute late – even if the late payment is due to the company’s own nonfunctioning online payment portal – and then files an eviction notice to add more fees, penalties and legal costs if the tenant wants to stay in the home.
…
As a Blackstone vehicle, Invitation Homes led Wall Street’s charge into the single-family-home rental business, snapping up houses at fire-sale prices. After its merger last November with Starwood Waypoint Homes, another private-equity-backed foray into the market, Invitation Homes became the largest landlord of single-family homes in the United States by number of rental units.

Today, Invitation Homes manages 82,000 properties, most of them entry-level three- and four-bedroom houses in 17 metropolitan areas concentrated in the Sun Belt. Its portfolio – though still less than one percent of the overall single-family rental market – is 58 percent larger than that of its nearest competitor, American Homes 4 Rent.
…
Affordable-housing advocates, real estate professionals and other critics of Wall Street’s push into the rental market say the tenant complaints suggest that rapid growth has stretched Invitation Homes’ ability to manage its properties. They also assert that there’s a deeper problem: Invitation Homes, like some of its Wall Street-backed peers, adheres to a business model that pressures it to lean hard on tenants to satisfy investors.

These companies have financed their growth by selling billions of dollars in bonds – the rental-market equivalent of the mortgage-backed securities that led to the financial crisis – to pension funds and other big institutions. Industry critics say that to keep payments to bond investors rolling, companies like Invitation Homes must minimize maintenance costs and maximize rents and fees.
…
Among those tenants is Contrell Wethersby in Atlanta, who told Reuters she had to go for more than a year without heat or a functioning refrigerator, stove, microwave or garage door – not to mention having to endure a leaky ceiling and black mold.
…
Some renters, like Willie Jean Brister in Los Angeles, have seen their rent increase by as much as 50 percent over three years. During that time, Brister has filed work orders for an exterminator and repairs on a bathtub, faucets, bathroom door, cabinet doors, fence, hot water and garbage disposal – all of them reviewed by Reuters on the company’s web portal. The grandmother with five children in the house said the portal keeps saying “ ‘work completed,’ but the work is never completed. You get worn out, like you are paying all this rent and not getting any services.”
…
Invitation Homes has been raising rents by as much as an average of 10 percent a year in places like Oakland, California – nearly double the norm in that market – according to the Alliance of Californians for Community Empowerment (ACCE), an advocacy group. At the same time, the company has been adding to the types of fees it charges tenants – not just for late payments, but for things like rent paid on debit cards, which incurs a $30 charge.

Fees have helped lift earnings by 20 to 30 percent a year. In a recent earnings call, the company attributed rising profits in part to its “system” to “track resident delinquency on a daily basis.” This system allows the company to start charging fees and penalties the minute a tenant fails to pay on time.

Posted in National Real Estate, Unrest | 85 Comments

Where rents have gone up the most

Posted on July 30, 2018 by grim

From the Star Ledger:

Rent prices are skyrocketing in these 15 N.J. real estate markets

It’s not a renter’s market in New Jersey. The state has the fifth-highest median rent in the nation, along with high housing costs that force tenants to stay in their apartments rather than purchase a home.

But there’s a bright spot for renters out there: New Jersey’s median rent fell slightly in the past year, by 1.1 percent, while the rest of the nation increased 1.3 percent. Those slight differences might add up in the coming years.

Other towns are seeing a boom in rent prices, particularly by the Shore. Most of the towns on this list also have a median rent above the New Jersey median of $2,014.

1. Berkeley Heights, Union County
Median rent: $3,177
Change: 19.75 percent

2. Point Pleasant Beach, Ocean County
Median rent: $2,540
Change: 19.53 percent

3. Bay Head, Ocean County
Median rent: $6,561
Change: 18.3 percent

4. New Providence, Union County
Median rent: $3,163
Change: 17.85 percent

5. Cedar Grove, Essex County
Median rent: $2,443
Change: 16.33 percent

6. Hardwick, Warren County
Median rent: $1,893
Change: 13.69 percent

7. Readington, Hunterdon County
Median rent: $2,642
Change: 13.39 percent

8. Lavallette, Ocean County
Median rent: $2,135
Change: 11.02 percent

9. Caldwell, Essex County
Median rent: $2,367
Change: 10.45 percent

10. Fairfield, Cumberland County
Median rent: $1,360
Change: 10.39 percent

11. Raritan, Hunterdon County
Median rent: $2,532
Change: 9.52 percent

12. Madison, Morris County
Median rent: $3,248
Change: 9.47 percent

13. Seaside Park, Ocean County
Median rent: $1,965
Change: 9.17 percent

14. Bethlehem, Hunterdon County
Median rent: $2,440
Change: 9.12 percent

15. East Amwell, Hunterdon County
Median rent: $2,438
Change: 8.74 percent

Posted in Demographics, Economics, New Jersey Real Estate | 65 Comments

Will affordable housing make NJ unaffordable for the rest of us?

Posted on July 28, 2018 by grim

From the Star Ledger:

N.J. needs to build 155,000 affordable housing units. No one can agree on how or where

As New Jersey reigned as one of the most expensive places in the country to live, the state agency tasked with regulating and implementing affordable housing guidelines failed to do so from 1999 to 2015.

While some say the state is lacking 80,000 affordable housing units and housing advocates say it’s lacking 200,000 units, everyone agrees: New Jersey does not have enough affordable housing.

And in an overflowing room at the Statehouse on Wednesday, people from all over New Jersey said just that.

How to fix that problem clearly divided the room during a public hearing in front of the Assembly Housing and Community Development Committee.

“This is an incredibly complicated issue,” Assemblywoman Holly Schepisi (R-Bergen) said after nearly four hours of testimony from local officials, community leaders and residents.

Earlier in the week, Schepisi wrote that affordable housing and the process surrounding it “might be the most urgent issue in our state.”
…
Nearly every person who spoke Wednesday, whether it was a local mayor or a concerned citizen, prefaced their testimony with “I support affordable housing, but ….”

What came after “but” often varied.

Many people were worried about how hundreds (or in some cases, thousands) of new units would affect the school system, the municipality’s infrastructure or how a town with no access to a water or sewer system, like Hopewell, which settled with Fair Share on 653 units, could meet these numbers.

“We believe in affordable housing,” Hopewell Deputy Mayor Julie Blake said. “We are friends of everyone here. We believe in that cause, but it is too much on our property owners.”
…
Another concern is that more housing than just the court-mandated number of affordable housing units would probably have to be built. If a municipality chooses to have a for-profit developer plan and build the housing, those developers will often set aside the state standard of making 20 percent of the units for low- and moderate-income residents and the rest of them market-rate units.

This means if a town like West Windsor, which still needs to plan for 500 affordable units, used a for-profit developer, that would most likely mean 2,500 total units.

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 95 Comments

“Uh Oh”s keep coming

Posted on July 25, 2018 by grim

From CNBC:

Southern California home sales crash, a warning sign to the nation

Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.

Sales fell 1.1 percent compared with May, but the average change from May to June, going back to 1988, is a 6 percent gain.

The weakness was especially apparent in sales of newly built homes, which were 47 percent below the June average. Part of that is that builders are putting up fewer homes, so there is simply less to sell.

“A portion of last month’s year-over-year sales decline reflects one less business day for deals to be recorded compared with June 2017,” noted Andrew LePage, a CoreLogic analyst. “But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown, which applied to all six of the region’s counties and across most of the major price categories.”

The median price paid for all Southern California homes sold in June was a record $536,250, according to CoreLogic, a 7.3 percent increase compared with June 2017. While part of that is due to a mix shift, since there are fewer lower-priced homes for sale, it is becoming increasingly clear that fewer buyers are able to play in the higher price ranges.

“Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”
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In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country. Home prices have been rising everywhere, amid a critical housing shortage. Prices usually lag sales by several months, and sales are beginning to crumble, even as more inventory comes on the market. The supply of homes for sale increased annually in June for the first time in three years, according to the National Association of Realtors, but sales fell for the third straight month.

Posted in Demographics, Economics, Housing Bubble, National Real Estate | 336 Comments

Uh Oh

Posted on July 24, 2018 by grim

From CNBC:

Existing home sales fall for third straight month

U.S. home sales fell for a third straight month in June as a persistent shortage of properties on the market pushed up house prices to a record high, likely sidelining some potential buyers.

The National Association of Realtors said on Monday existing home sales fell 0.6 percent to a seasonally adjusted annual rate of 5.38 million units last month. May’s sales pace was revised down to 5.41 million units from the previously reported 5.43 million units.

Economists polled by Reuters had forecast existing home sales gaining 0.5 percent to a rate of 5.44 million units in June. Sales rose in the Northeast and Midwest, but fell in the West and populous South.

Existing home sales, which make up about 90 percent of U.S. home sales, fell 2.2 percent from a year ago in June. They have dropped on a year-over-year basis for four consecutive months and declined 2.2 percent in the first half of 2018. Sales are being stymied by an acute shortages of homes on the market.

Rising building materials costs as well as shortages of land and labor have left builders unable to bridge the inventory gap, pushing up house prices. Supply constraints have largely accounted for the sluggish housing market but there are growing concerns that the higher house prices together with rising mortgage rates will slow down demand.

Supply has been especially tight at the lower end of the market, which accounts for a large portion of the housing market. There were 1.95 million previously-owned homes on the market in June, up 4.3 percent from May.

Inventory increased 0.5 percent in June from a year ago. That was the first year-on-year increase since June 2015. Supply still remains very tight.

At June’s sales pace, it would take 4.3 months to exhaust the current inventory, up from 4.1 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

The median house price increased 5.2 percent from a year ago to an all-time high of $276,900 in June. That was the 76th consecutive month of year-on-year price gains.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 128 Comments