Short term looking good for NJ, long term? Ummm…

Posted on June 13, 2018 by grim

From the APP:

NJ jobs: Companies hiring, and this is why you’d better grab a job now

New Jersey employers are recruiting aggressively to fill job openings, but clouds are beginning to build, which could force them to temper their enthusiasm, a new economic report shows.

The U.S. Conference of Mayors report found an economy performing at its strongest level in a decade. But higher oil prices, rising interest rates and the fading impact of federal tax cuts could slam on the brakes for the Garden State.

The outlook was from the mayors’ annual  report that looked at data from 2017 and 2018 and forecasts through 2022. It was expected to be presented Friday at the mayors’ annual meeting in Boston.

New Jersey has been enjoying a rare dose of good economic news.

The suburban state, long hurt by the migration of the millennial generation to cities, has shown signs of life. The past year, it added 58,600 jobs. And its employment growth rate of 1.4 percent ranked 18th nationwide, beating its three neighbors, according to data from the U.S. Bureau of Labor Statistics.

Employers appear to be in good spirits. A survey by the New Jersey Bankers Association found 42 percent said the state’s economic health is “good,” compared with 15 percent who said the same two years ago.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 103 Comments

Last cheap house at the shore?

Posted on June 12, 2018 by grim

From the Star Ledger:

While there is a significant amount of hype around an Atlantic City revival in 2018, that upward swing hasn’t happened just yet. You know what that means? It is still relatively inexpensive to buy real estate there.

In fact, in Realtor.com’s annual ranking of the most affordable beach towns, the real estate listings website ranked Atlantic City as the fourth most affordable one in the country, with a median home listing price of $229,800.

Realtor.com mentions that the casino town has had a litany of recent rough patches, ranging from the destruction that Hurricane Sandy caused to some of the most prominent casinos closing down.

“People walked away from their properties, [and] foreclosures and short sales went up,” Todd Gordon, a real estate agent at Hartman Home Team, told the website.

But they do make the case that Atlantic City is in the midst of a rejuvenation, while also already having desirable qualities, like an iconic boardwalk and a wide beach.

“Over the past year, the region has seen a surge in development. Look no farther than the $500 million renovation of the former Trump Taj Mahal, which will reopen later this month as the new ‘n’ improved Hard Rock Hotel & Casino,” Realtor.com wrote. “New projects such as this have helped to give oceanfront condo buying a lift. The rock-bottom prices are a big draw for buyers from Philadelphia and New York City.”
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Zillow’s median home value index offers an even starker look at what real estate is worth in Atlantic City. According to Zillow, the median home value in Atlantic City is $80,400, which is up more than 40 percent from last year. In comparison, the median home value in popular Shore town Point Pleasant is $364,200.

Posted in Shore Real Estate | 154 Comments

How far can home prices go?

Posted on June 11, 2018 by grim

From CNBC:

US house prices are going to rise at twice the speed of inflation and pay: Reuters poll

An acute shortage of affordable homes in the United States will continue over the coming year, according to a majority of property market analysts polled by Reuters, driving prices up faster than inflation and wage growth.

After losing over a third of their value a decade ago, which led to the financial crisis and a deep recession, U.S. house prices have regained those losses — led by a robust labor market that has fueled a pickup in economic activity and housing demand.

But supply has not been able to keep up with rising demand, making homeownership less affordable.

Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years.

The latest poll of nearly 45 analysts taken May 16-June 5 showed the S&P/Case Shiller composite index of home prices in 20 cities is expected to gain a further 5.7 percent this year.

That compared to predictions for average earnings growth of 2.8 percent and inflation of 2.5 percent 2018, according to a separate Reuters poll of economists.

U.S. house prices are then forecast to rise 4.3 percent next year and 3.6 percent in 2020.

“We are not seeing a temporary phenomenon. House prices have been outrunning family incomes for several years in the U.S. and while demand has cooled off a bit, the supply side is still very tight,” said Sal Guatieri, senior economist at BMO Financial Group.

“I think house prices will continue to outrun family incomes for at least another year and it will take some time for demand to slow and to some extent supply to increase.”

Posted in Demographics, Economics, Employment, Housing Bubble | 139 Comments

Housing market got it’s swimmies back

Posted on June 9, 2018 by grim

From CNBC:

US homeowners gained $1 trillion in the last year as their housing values jumped

Fast-rising home prices may be a roadblock for buyers, but they are putting some homeowners on Easy Street. As home prices rise, so does the percentage of home equity for those owners with a mortgage.

Home equity jumped 13.3 percent in the first quarter of this year compared from a year earlier, according to CoreLogic. For the average borrower, that translates to $16,300 in additional home equity gained during the year, or a collective $1.01 trillion. That is the biggest gain in four years.

Despite the big value gains in the past few years, 2.5 million borrowers or 4.7 percent of all homeowners with a mortgage are still underwater on their home loans, meaning they owe more than the homes are currently worth. However, in the first quarter of this year, 84,000 borrowers came up from underwater, regaining equity.

The negative equity rate fell 21 percent from a year earlier, when just over 3 million borrowers were underwater. Negative equity peaked in 2009 at 26 percent of all mortgaged properties.

“Home-price growth has accelerated in recent months, helping to build home-equity wealth and lift underwater homeowners back into positive equity, the primary driver of home equity wealth creation,” said Frank Nothaft, CoreLogic’s chief economist. “The CoreLogic Home Price Index grew 6.7 percent during the year ending March 2018, the largest 12-month increase in four years.”

Posted in Economics, Foreclosures, Housing Recovery, National Real Estate | 77 Comments

Bankers not happy with Murphy

Posted on June 7, 2018 by grim

From NJBIZ:

Bankers: Economy weakening under Murphy

A majority of the state’s local bankers say New Jersey’s economy would worsen under policies proposed by Gov. Phil Murphy.

In New Jersey Bankers Association’s annual survey on the economy, almost 69 percent of respondents expect the state economy to weaken or decline if proposals are enacted such as a “millionaires tax” and raising the sales tax back to 7 percent.

NJBA surveyed bankers from 92 local banks in its membership. The survey was conducted with Rutgers University’s Bloustein School of Planning and Public Policy.

Despite the negative view of the Murphy administration, a majority of the bankers said the state’s economy is currently strong. Nearly 42 percent of respondents rated the state’s current economy as “good,” compared to just 15 percent in 2016. A record 10 percent of respondents rated the state’s economy as “excellent.”

Some 75 percent of the respondents saw the U.S. economy improving under the policies of President Trump, almost as many said those same policies will hurt New Jersey’s economy – most notably this year’s federal tax reforms that limit property-tax deductions.

Posted in Economics, New Jersey Real Estate, Politics | 182 Comments

NJ Population Growth & Decline Visualized

Posted on June 4, 2018 by grim

From the Star Ledger:

This county is booming, but most Shore areas haven’t recovered their mojo. Here’s the breakdown

Posted in Demographics, Economics, New Jersey Real Estate | 196 Comments

What the hell do accountants know about running business in NJ anyway…

Posted on June 3, 2018 by grim

From NJBIZ:

State CPAs take dim view of economic future

New Jersey’s accountants do not have a favorable outlook on the state’s economy.

In a survey of 786 CPAs in the state conducted by the New Jersey Society of CPAs, 31 percent believe the state’s economy will get significantly worse under Gov. Phil Murphy, while 44 percent said it will get “marginally worse.”

Just 14 percent said the economy will improve.

Overall, nearly 55 percent of the respondents assessed the state’s current economy at “fair,” compared to 28 percent who said it is “good,” and 17 percent who said it’s “poor.” Only 1 percent rated the current economy as “excellent.”

Posted in Economics, Employment, New Jersey Real Estate, Property Taxes | 26 Comments

Nothing left to buy?

Posted on June 2, 2018 by grim

From CNBC:

Pending home sales fall more than expected as costs for buyers rise

Potential homebuyers out shopping in April may have been spooked by a sharp rise in mortgage interest rates. Pending home sales, which measure signed contracts to buy existing homes, fell a wider-than-expected 1.3 percent compared to March, according to the National Association of Realtors. It was the third lowest level of the past year.

Pending sales were 2.1 percent lower compared to April of 2017 the fourth straight month showing an annual decline. The Realtors point, again, to the continuing supply crisis in housing today.

“Feedback from Realtors, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher,” said Lawrence Yun, chief economist for the NAR in a release. “The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels.”

Weakening affordability is going hand-in-hand with short supply, especially on the lower end of the market. As home prices continue to rise, potential buyers have less and less wiggle room in their wallets.

Mortgage rates jumped sharply in April, with the average rate on the popular 30-year fixed hitting its highest level in seven years. Buyers out shopping were having to recalculate their budgets for homes.

Buyers are also seeing higher prices for gas, which, while not a major factor for everyone, may weigh on consumer confidence. Buying a home is usually the largest investment most people ever make, and confidence is therefore key.

“The combination of paying extra at the pump, while also needing to save more for a down payment because of higher rates and home prices, may weigh on the psyche of those looking to buy,” said Yun.

Regionally, pending home sales in the Northeast were unchanged for the month and 2.1 percent lower than one year ago.

In the Midwest, sales decreased 3.2 percent monthly, and were 5.1 percent lower than April 2017.

Pending sales in the South declined 1.0 for April but were 2.7 percent higher than last April. Sales in the West dropped 0.4 percent monthly and were down 4.6 percent annually.

Posted in Demographics, Economics, National Real Estate | 32 Comments

Another Strong Spring Market

Posted on June 1, 2018 by grim

From the Otteau Group:

MarketNEWS May 31, 2018 Edition

NJ YTD Purchase Contracts Back Up

After home sales recorded a 6% retraction in March, New Jersey recorded more than 11,000 purchase contracts during the month of April equating to a 7% increase compared to the same month last year. As a result, the number of year-to-date purchase contracts (January-April) in New Jersey is up marginally by 1%, or roughly 425 contracts. While misinformation about the newly implemented tax reform is partially to blame, statewide housing inventory is also holding back sales, especially for homes priced below $400,000 where there is only 3 months of supply.

While the number of year-to-date home sales has increased by 1% overall, that is not the case for all price ranges. Contract activity for homes priced under $400,000 has declined by 1% due to supply shortages, with unsold inventory having dropped by 15% year-to-date. At the opposite end of the spectrum, contract activity for luxury priced homes over $2.5-Million has increased by 15%, which is somewhat misleading, given the smaller sample size of sales within this price point.

Shifting to the supply side of the equation, inventory remains restricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has fallen to its lowest point since 2005, having declined by 3,200 (-7%) over the past year. This is also 44% less than the amount of homes (32,000 fewer) on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to just 3.7 months of sales (non-seasonally adjusted), which is lower than one year ago, when it was 4.2 months.

Currently, all of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Middlesex County has the strongest market conditions in the state with just 2.5 months of supply, followed by Union, Essex, Hudson, Passaic, Monmouth, Mercer and Burlington Counties, which all have fewer than 3.5 months of supply. The counties with the largest amount of unsold inventory (5 months or greater) are concentrated in the southern portion of the state including Cumberland (5.0), Atlantic (5.9), Salem (6.1) and Cape May (6.5), however, these counties have shown vast improvement and are exhibiting strengthening conditions.

Demand for rental apartments continues to expand in NJ with statewide occupancy ratesbeing among the highest in the US. Statewide vacancy increased slightly from the prior quarter, rising by 10 basis points to 3.6%. The rise in vacancy is attributable to the rapid growth in pipeline supply, which has increased from 6,400 apartments in 2008 to 30,000 today. Nationally, the average vacancy rate increased by 20 basis points to 4.7%. Still, statewide and national vacancy rates remain well below their 2010 peak having fallen by 160 bp and 330 bp, respectively.

Consistent with national trends, the homeownership rate in New Jersey declined following the onset of the Great Recession. More recently however, the State’s homeownership rate has risen to 64.3% in 2018.Q1, due largely to increased market participation by Millennial homebuyers, which is favorable to housing development. Still, the homeownership rate at both the state and national levels have declined by 10% and 7% from their respective peaks. Because of this shift, there are approximately 231,000 additional renters in New Jersey.
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The percentage of delinquent mortgage loans in New Jersey that are 90+ days past due fell by 10 basis points from the prior month, falling to 3.3%. Most of the nation has seen a decline in delinquency rates over the past year apart from storm-ravaged states like Florida and Texas whose delinquency rates have increased by 100% and 50%, respectively, over the past 6 months. Florida leads the nation with 5% of mortgages being 90+ days delinquent. Rounding out the list of states with the highest delinquency rates are New York (3.7%), New Jersey (3.4%), Louisiana (3.3%), Mississippi (3.3%), Maine (2.7%), Texas (2.6%) and Delaware (2.5%).

New Jersey foreclosure filings in 2017 recorded a decline (-5%) over the prior year, falling from 74,200 to 70,150. This is the second consecutive annual decline that the state has seen since 2010. Based upon year-to-date data (January-April), foreclosures are projected to decline further, falling by -8% in 2018, with filings estimated to be about 64,350. The greatest concentrations of mortgage delinquencies in New Jersey continue to be in the state’s urban and rural places, such as Warren and Atlantic Counties who lead the state in the ratio of foreclosure actions-to-housing units.

Posted in Demographics, Economics, Employment, Foreclosures, Housing Recovery, New Jersey Real Estate | 138 Comments

But are we ready to change?

Posted on May 31, 2018 by grim

From the comments the other day, but good enough to get top page billing. From the NY Times:

As Office Parks Empty, Towns Turn Vacancies Into Opportunities

Perched off a busy road in northern New Jersey with sweeping vistas of a vast reservoir sits a new relic of the suburban panorama: the international headquarters of Toys “R” Us slogging through its final days after the company announced that it would be shutting down for good.

The decline of the toy giant prompted wistful recollections across the country of the increasingly bygone era of brick-and-mortar retail, but concern in this town quickly turned to the exoskeleton that the company leaves behind — a roughly 200-acre plot with multiple office buildings scattered across the land that once housed as many as 1,600 workers.

While the worry locally is focused in part on what an extended vacancy might mean for the town’s tax base, the fate of the once thriving headquarters illustrates a much broader reality confronting many towns across America: the era of the suburban office parks is coming to an end.

Outside Silicon Valley and other areas that have benefited from the technology boom, what were once the lifeblood of many suburbs have now become eyesores, forests of empty glass and concrete boxes that communities must figure out what to do with.
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“The model as it played out in New Jersey is now seemingly obsolete,” said Louise A. Mozingo, the chairwoman of the department of landscape architecture and environmental planning at University of California, Berkeley.

Suburban office parks have lost their luster for a variety of reasons, including a growing preference among younger workers for life in more dynamic urban centers than in sometimes staid and sleepy suburbs. And the rapid pace of technological advancement has made the need for many clerical and processing jobs and the real estate to house those workers increasingly obsolete.

But it was the recession and its aftermath that sounded the death knell for many suburban parks; New Jersey lost about 100,000 office-related jobs since 2008, according to James W. Hughes, a professor at Rutgers University. By 2010, the majority of the state’s suburban office inventory was between 20 and 30 years old, built during a much more primitive information technology era.

“So, not only do we have a lot of obsolete space, but we also have workplace densification occurring at the same time,” said Mr. Hughes, referring to the move by many companies toward smaller, shared work spaces. “That’s the dilemma that really burst onto the scene maybe three years ago or four years ago.”

In the 1980s, about 90 to 100 million square feet of suburban office space was built in New Jersey, accounting for 80 percent of the state’s inventory, Mr. Hughes said. By contrast, only 50 percent of the national suburban office inventory was built in the same period.

New Jersey currently has over 6.5 million square feet of vacant office park space, according to CoStar, a commercial real estate company. In northern New Jersey, 23 percent of office space is listed as available, which includes vacant spaces and buildings that are emptying out as leases end, according to Newmark Knight Frank, a commercial real estate firm.

But vacant office parks are important to municipal coffers because they remain on property tax rolls. Yet the longer they sit vacant, the faster their assessments plummet, forcing municipalities to find other sources of revenue and in some cases raise real estate taxes in a state that already has the country’s highest property taxes.
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“None of these millennials want to work in a corporate campus in western Morris County and have to commute long distances to meet their friends at a bar,’’ said Carl Goldberg, a developer who has been vocal about the redevelopment of office parks. “It’s just not the lifestyle that they’re interested in.”
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In Wayne, where the Toys “R” Us logo still welcomes passers-by to the campus, Mayor Christopher P. Vergano said he believed the site would prove desirable, though possibly as something far different.

“I think there will be change,’’ he said, “only because we don’t see big corporate tenants buying 200-acre properties anymore.”

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 159 Comments

Another month, another jump in prices

Posted on May 30, 2018 by grim

From MarketWatch:

Home prices are still on a tear, Case-Shiller says

The numbers: The S&P/Case-Shiller national index rose a seasonally adjusted 0.4% and was up 6.5% compared to a year ago in March. The 20-city index rose a seasonally adjusted 0.5% and was 6.8% higher than a year ago.

What happened: Home-price growth showed no sign of slowing down. Demand is strong, supply is short and favorable economic conditions are making it possible for many people to bid prices up.

In fact, yearly price gains in the closely-watched 20-city index have accelerated every month since last June. The annual gain in the March report, which actually covers the three-month period ending in March, was the strongest since mid-2014.

Big picture: Many economists have expected headwinds like the recent tax law changes that changed home-ownership itemization, not to mention the sheer lack of inventory, to stifle the housing market, but that hasn’t showed up in pricing yet.

Posted in Housing Bubble, Housing Recovery, National Real Estate | 137 Comments

Up Up Up Up Up

Posted on May 29, 2018 by grim

From Mortgage Professional:

Mortgage rates keep climbing

Mortgage rates continued their steady climb through the week ending May 24 to reach their highest level since May 5, 2011, according to the Primary Mortgage Market Survey released by Freddie Mac.

Rates for the 30-year fixed-rate mortgage averaged 4.66%, with an average 0.4 point, up from the previous average of 4.61%. The latest average also marks an increase from the 3.95% average a year ago at this time.

The 15-year fixed-rate mortgage averaged 4.15%, with an average 0.4 point, up from 4.08%. A year ago at this time, the mortgage averaged 3.19%.

The average rate for the 5-year Treasury-indexed hybrid adjustable-rate mortgage was 3.87%, with an average 0.3 point, an increase from the previous 3.82% average. In the year ago period, the mortgage averaged 3.07%.

“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years,” Freddie Mac Chief Economist Sam Khater said. “Through May, rates have risen in 15 out of the first 21 weeks (71%), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”

Posted in Mortgages, National Real Estate | 74 Comments

Fix it, Sell it, or Get Out

Posted on May 28, 2018 by grim

From the APP:

A tool for targeting the ‘zombie houses’ of Toms River, throughout the Shore

They’re called “zombie houses,” and they can suck the life out of any neighborhood.

Zombie homes are properties whose owners have walked away from them during the foreclosure process. With New Jersey’s foreclosure process one of the longest in the nation – more than 1,000 days – abandoned houses that are in foreclosure often aren’t maintained.

Grass becomes overgrown, roofs collapse, and animals, like raccoons, possums, and even feral cats, can move in.

Just ask JoAnn Petruzel, who owns Barnacle Bill’s Amusements in Ortley Beach with her husband, Bill. Near the amusement arcade are at least two properties that haven’t been repaired since superstorm Sandy struck the beachfront community more than five years ago.

One small house on Route 35 north, shoved off its foundation by Sandy’s surge, is boarded up, its utilities disconnected. Neighbors have heard it’s for sale.

“It’s right on the highway,” Petruzel said of the small house. “It’s a shame, people come through Ortley beach, and yes, the whole landscape has changed a lot. People have built bigger, nicer homes. But when you are driving on the highway and see that, it doesn’t have a good representation.”
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Toms River joins other towns, including Asbury Park and Neptune, that have adopted similar ordinances that enforce the state’s Abandoned Property Rehabilitation Act. The measure, signed into law in 2004, expedites a town’s right to intervene when owners fail to maintain their property.

Under a newly adopted ordinance, the township will create a registry of abandoned properties. Owners will be billed a $750 registration fee during the first year; that fee will rise to $2,000 if the property is still abandoned the next year, and $3,000 in the third year.

The idea, according to Township Administrator Don Guardian, is to give property owners an economic incentive to either sell the distressed home or make improvements.

The ordinance enforces the state’s Abandoned Property Rehabilitation Act, a 2004 that makes it easier for towns to intervene when owners fail to maintain their properties. Other towns along the Shore, including Neptune, Asbury Park and Brick, have adopted similiar ordinances.
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“If they are going to do something positive with the house, like selling it or fixing it up, these are not the property owners we’re going to target,” Guardian said. “It’s these financial institutions, that are sitting on it for months and years, hoping that the value goes up so they can sell it.”

Posted in New Development, New Jersey Real Estate, Politics | 21 Comments

Hey Democrats, where’s our pot?

Posted on May 26, 2018 by grim

From the Washington Post:

N.J. Democrats loved the idea of taxing the rich — until they actually could do it

Democrats in the New Jersey state legislature approved a tax hike on millionaires five separate times under then-Gov. Chris Christie (R) — knowing he would veto it.

But now that the state has a liberal governor eager to sign the bill, Democratic legislators are backing off the “millionaire’s tax,” echoing some of the concerns once expressed by Christie.

“This state is taxed out. If you know anything about New Jersey, they’re just weary of the taxes,” said New Jersey State Senate President Steve Sweeney (D), lead advocate of the millionaire’s tax during Christie’s tenure, in an interview.

This blue state’s sudden allergy to taxing the rich is an ominous sign not just for Democratic Gov. Phil Murphy, who swept to office last fall promising to fund a suite of new social programs via a millionaire’s tax, but for other liberals running for statewide office this year.

Democratic candidates in several states are campaigning on higher taxes on millionaires to pay for the robust social programs increasingly demanded by the party’s base, such as universal prekindergarten, expanded health-care benefits and free community college. But the unexpectedly rocky reaction to the plan in New Jersey underscores the difficulty in implementing higher taxes on the rich, even when Democrats have full control of the government.

“It’s easy to gain popular support for the millionaire’s tax on the campaign trail, since most people wouldn’t be impacted by it,” said Elaine Maag, a tax expert at the Tax Policy Center, a nonpartisan think tank. “But in reality, it’s very difficult to raise taxes on high-income people because they tend to be very well politically connected and vocal.”
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The fight in New Jersey suggests that higher taxes on the rich may be easier to campaign on than to enact.

Murphy ran for office promising universal prekindergarten and free community college. To fund these initiatives, he is partly relying on the millionaire’s tax, which would start taxing income over $1 million at a new rate of 10.75 percent. That would raise $765 million annually for state coffers, according to Murphy’s office.
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Now the plan is being tested as New Jersey works to complete a budget by June 30 — or risk shutting down the state government. The budget, which also directs funding to New Jersey’s transit system, wouldn’t fulfill Murphy’s campaign promises on their own without additional tax hikes. Murphy is also pushing a sales tax hike and new taxes on ride-hailing services such as Uber and Lyft. The combined package amounts to about $1.5 billion in new taxes.

Democratic leaders in the statehouse say that is untenable. They have blamed the tax law passed by Congress last December for their reversal, saying the tax overhaul already punishes wealthy New Jersey taxpayers by capping at $10,000 the amount of state and local taxes they can deduct from their federal taxes. (Previously, the deduction was limitless.)
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About 40 percent of New Jersey’s richest 1 percent also do not benefit from the tax cut on “pass-through” business entities and will therefore see a “sizable” tax hike under the law, said the spokesman, Mark Magyar.

Imposing a second round of new taxes could force many of these millionaires to leave the state, Sweeney said.

“The Trump tax increase for New Jersey changed the game for us here,” said Sweeney, who tweeted on election night last year that the millionaires tax should be the party’s first priority. “Circumstances change.”
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Tax experts disagree about whether a millionaire’s tax would help New Jersey, with some conservative economists agreeing it will force rich taxpayers to flee the state. In turn, they say, that would shrink the state’s tax base and saddle the remaining middle-class taxpayers with a greater tax burden.

“We’re the most unaffordable state and least competitive, business-wise, by many metrics,” said Tom Bracken, president of New Jersey’s Chamber of Commerce. “Increasing taxes on job creators doesn’t help the situation.”

Posted in New Jersey Real Estate, Politics | 59 Comments

Fed not taking the juice away … yet

Posted on May 25, 2018 by grim

From HousingWire:

Fed changes tune on raising interest rates this year

The Federal Reserve has been forecasting an average two to four rate hikes in 2018, however the minutes from its latest meeting reveal a more dovish approach.

Many experts have been more bullish in their approach to increases to the federal funds rate in 2018, forecasting a total of four rate hikes for the year. Last year, experts even predicted the President Donald Trump’s selection for Federal Reserve Chair wouldn’t matter – the market would still see four rate hikes.

And after the administration passed tax reform at the end of last year, experts again forecasted an increase in the federal funds rate, saying it could cause the Fed to speed up rate hikes.

Now, Fed funds futures are forecasting the chances of four rate hikes in 2018 at 37%, down from the previous 40%.

This decrease in confidence for four rate hikes is due to minutes from the Federal Open Markets Committee’s May meeting, which revealed a more dovish approach to raising rates. The minutes showed that while the Fed still holds that the economy warrants gradual increases to the federal funds rate, in several Districts, contacts expressed concern about the possible adverse effects of tariffs and trade restrictions, including the potential for postponing or pulling back on capital spending.
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Now, that number remains relatively unchanged as most still expect to see a rate hike next month. Traders in the federal funds futures market currently see more than a 90% chance of a June rate hike.

And May’s minutes seemed to confirm this outlook.

“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes stated.

And while many expected about three to four rate hikes in 2018 followed by about three more in 2019, Dallas Fed President Robert Kaplan said the central bank may only have four more total rate hikes before it reaches the desired neutral level.

Posted in Economics, Mortgages, National Real Estate | 124 Comments