Sorry, no homes for you

Posted on July 29, 2019 by grim

From HousingWire:

Millennials want to buy homes, but their wallets are saying no

As summertime heats up, it’s safe to say that spring has officially come to an end. But while its cooler days may be behind us, data says its uptick in home buying interest is here to stay.

According to a survey from Realtor.com, this spring was filled with home-buying interest, especially from the nation’s first-time buyers.

This group of homebuyers, who often tend to be Millennials, made up 42% of spring’s home-shoppers.

“Based on our user responses, just under half of all home shoppers this spring were searching for their first home, and many of them were aging Millennials likely driven by life events such as moving in with a partner, getting married or starting a family,” Realtor.com writes. “It may come as a surprise to some people that Millennials are looking to small towns or suburbs, but when it comes to buying a home, Millennials aren’t that different than other generations.”

And they really aren’t that different, as the company noted the vast majority of these young shoppers indicated housing affordability was their top concern when purchasing a new home.

In fact, 42% of first-time buyers said they haven’t closed on a home yet because they can’t find a good house within their budget range, according to the survey.

This isn’t really surprising as several reports have indicated that a lack of affordability has kept many first-time buyers from entering the market.

…

According to their findings, first-time homebuyers can afford only 20% of housing stock in some of the nation’s housing markets.

The survey confirms that the lack of entry-level supply is putting affordability pressures on too many buyers – especially those at the lower end of the market, where demand is the strongest,” NAR Chief Economist Lawrence Yun said. “This is why first-time buyers continue to struggle finding affordable properties to buy and are making up less than a third of home sales so far this year.”

Posted in Demographics, Economics, Employment, National Real Estate | 83 Comments

Ugly June

Posted on July 25, 2019 by grim

From CNBC:

US existing home sales fell 1.7% in June, vs 0.2% drop expected

U.S. home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain its footing since hitting a soft patch last year.

The National Association of Realtors said on Tuesday existing home sales dropped 1.7% to a seasonally adjusted annual rate of 5.27 million units last month. May’s sales pace was revised higher to 5.36 million units from the previously reported 5.34 million units.

Economists polled by Reuters had forecast existing home sales slipping 0.2% to a rate of 5.33 million units in June. Existing home sales, which make up about 90 percent of U.S. home sales, decreased 2.2% from a year ago. That was the 16th straight year-on-year decline in home sales.

The weakness in housing comes despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years.

Supply has continued to lag, especially in the lower-price segment of the housing market because of land and labor shortages, as well as expensive building materials. The government reported last week that permits for future home construction dropped to a two-year low in June.

The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve is expected to cut interest rates next week for the first time in a decade.

Last month, existing home sales rose in the Northeast and Midwest. They tumbled in the populous South and in the West.

Posted in Economics, National Real Estate | 56 Comments

To hell with local rule?

Posted on July 23, 2019 by grim

Important enough to make the main page, from Curbed:

Cory Booker and Elizabeth Warren want to force cities to adopt YIMBY policies. Can they?

The state of Oregon has effectively banned single-family zoning. Minneapolis upzoned nearly the entire city, 75 percent of which was zoned for single-family houses. California’s Senate Bill 50, up for a vote in 2020, would eliminate zoning restrictions around transit lines and job centers.

As affordable housing crisis has taken hold, state and local governments across the country have targeted low-density zoning laws for reform in hopes of spurring more housing developments in cities that are starved for more supply.

And with housing affordability becoming an issue on the 2020 campaign trail for the first time in recent memory, the Yes In My Back Yard (YIMBY) movement is going federal, as Democratic candidates for president Elizabeth Warren and Cory Booker have both released housing plans that attempt coerce local governments into zoning reform by offering or withholding money from federal housing and transportation funds.

But given zoning laws are administered at the city or county level, how effective would wielding the power of the purse be at inducing change in local zoning laws?

Warren and Booker’s plans take diverging approaches. Warren proposes a new $10 billion competitive grant program that communities could use on infrastructure, roads, parks, or schools. But local governments have to reform their land use laws to be eligible for the grants.

Conversely, Booker’s plan would withhold $16 billion in existing federal funding from a handful of housing and transportation funds if local governments don’t reform their zoning laws. Warren’s plan uses the proverbial carrot, while Booker uses the proverbial stick.

Posted in National Real Estate, New Development, Politics | 72 Comments

Pounding salt

Posted on July 20, 2019 by grim

From LoHud:

Housing market in Lower Hudson Valley slows as SALT impact weighs on high-end

The housing market in the Lower Hudson Valley region has shown a slight slowdown in the second quarter, and experts blame the decline on the new tax law that limits the total state and local tax deduction. 

“There was a slight decrease in activity and sales for the first time in quite a while,” said Ron Garafalo, president of the Hudson Gateway Association of Realtors, as he looked at the region’s second-quarter market reports issued recently by the Hudson Gateway Multiple Listing Service. “We’ve seen a larger level of decrease in the very high-end market.” 

In Westchester, the number of single-family homes sold in the second quarter was 1,500, down by 3.9% compared to a year ago.

To compare, 1,643 single-family homes were sold in Westchester in the second quarter of 2016, the highest second quarter in recent years. The number of sales has gradually declined since, and experts have said the lack of inventory was to be blamed. The inventory of lower-to-mid priced properties is recovering, but it’s still lower than where it should be, experts said. 

The median price of single-family homes in Westchester was $705,000 in the second quarter, down slightly by 0.7% from a year ago when the median was $710,000. 

Rockland’s single-family home sales followed the similar pattern: The number of sales in the second quarter was 459, down by 2.3% from a year ago when the figure was 470. 

The median price of single-family homes was $450,000, down by 4% from 2018 when the figure was $468,750. 

…

“What irritates homeowners and buyers in Westchester and Bergen, and the other high-priced counties in the region, is that the tax reform was supposed to dramatically help them,” Rand said. “And instead of helping them, it’s done really nothing for them because what they’ve got in the lower (federal income tax) rate, they lost it in the SALT cap.” 

Posted in Economics, New Jersey Real Estate, NYC, Property Taxes | 49 Comments

NJ bounces back

Posted on July 19, 2019 by grim

From the APP:

NJ jobs: Unemployment rate drops to record low 3.5%, leaving employers in a pinch

While help-wanted signs abound, employers say they are scrambling to fill jobs in an exercise that could get more difficult as the giant Baby Boomer generation continues to reach retirement age.

“We’re very busy, and some people retired out,” said Mark Curcio, president of Encur, a Keyport manufacturer that has struggled to keep up with some of its shipping commitments.

The monthly jobs report released Thursday showed New Jersey added 10,200 jobs, bouncing back from May, when it lost 7,000 jobs. It helped the jobless rate reach a milestone, dropping below its previous low of 3.6% in June 2000.

New Jersey’s economy had struggled since then, through the Great Recession, superstorm Sandy and millennials moving to the cities. But it has shown resilience in recent years.

From May 2018 to May 2019, the state ranked 24th in job growth nationwide. And its economy is expected to remain stronger than its neighbors during the next six months, a report by the Philadelphia Federal Reserve Bank said. 

The improved labor market is tipping the balance of power in favor of workers, namely, millennials and Generation Z that were raised in the digital age and are putting their stamps on the economy, according to a new report by Rutgers University economists James W. Hughes and Joseph J. Seneca.

It leaves New Jersey on the cusp of a new era that is changing the state’s landscape from one that was largely suburban to one that looks more like a city: high-density housing; vibrant downtowns; and restaurants and bars that are in walking distance, they said.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 31 Comments

Median price hits new high (but not everywhere)

Posted on July 18, 2019 by grim

From HousingWire:

Median home price climbs to all-time high

The median price of single-family homes in the U.S. has climbed to a record high, reaching $266,000 in the second quarter.

That’s up 10.8% from the previous quarter and up 6.4% from a year ago, according to the latest report from ATTOM Data Solutions.

Median home prices in 89% of the 149 metros analyzed in the report saw price appreciation gains in Q2, the report showed.

Those with the greatest increases were Atlantic City, New Jersey (up 16%); Boise City, Idaho (up 14%); Chattanooga, Tennessee (up 13.9%); Mobile, Alabama (up 11.2%); and Madison, Wisconsin (up 10.8%).

Moreover, 74% of the metros analyzed saw median home prices climb above their pre-recession peak.

“As warmer weather brings a rush of house hunters to the market, the latest spike in median home prices marked the largest quarterly increase since the second quarter of 2015 and the third biggest increase since the market started climbing out of the Great Recession in 2012,” said Todd Teta, ATTOM’s chief product officer.

But Teta said he expects prices to slow down in the second half of the year.

“In looking at historical trends, the second quarter of every year has always shown a quarterly increase, going as far back as 2005,” Teta noted. “So, with mortgage rates dipping to new lows, it’s no surprise that people were wanting to buy a home, even if prices were at their peak. We expect to see milder home prices in the coming quarters.”

Posted in Economics, National Real Estate | 46 Comments

Most stable market in…forever?

Posted on July 15, 2019 by grim

From CNBC:

Housing-market distress is at its lowest in at least 20 years — can it hold? 

In the aftermath of the housing crisis, lenders and regulators clamped down hard to make sure we’d never have another bubble like the one that inflated in the middle of the last decade. 

That’s led to a borrowing environment that many housing-market observers describe as too pristine, one absent normal fluctuations. And many have warned that with delinquencies and other housing distress at long-time lows, it can only get worse from here.

Or can it?

In May, the “foreclosure inventory rate,” or the percentage of homes currently in any stage of the foreclosure process, was at its lowest in over 20 years — for the sixth month in a row. 
…

Overall delinquencies are also at the lowest since 1999, CoreLogic said, citing “a 50-year low in unemployment, rising home prices and responsible underwriting.”

Notably, that long-time low in all delinquencies comes alongside small local spikes in what’s called the “serious delinquency” rate, or loans that are more than 90 days past due. For example, one year past the massive California Camp Fire, serious delinquencies in the Chico, Calif., metro area jumped 21%.

That’s a small reminder of the housing market as it existed before the bubble inflated and then burst. All real estate is local, in part because natural disasters, microeconomies and municipal policies are particular to a region.

Posted in Demographics, Economics, Employment, Foreclosures, National Real Estate | 98 Comments

Industrial is hot in NJ

Posted on July 14, 2019 by grim

From GlobeSt:

NJ’s Industrial Market Continues to be a Record-Breaker

The industrial real estate market in New Jersey continues to see strong demand, higher rents and low availabilities.

Commercial brokerage firm CBRE in its latest market report on the industrial sector in the Garden State, states that the market continues to see a rise in rents, with transactions approaching $13.00-per-square-foot in Northern New Jersey and $10.50-per-square-foot in Central New Jersey, well above average asking rates.

The second quarter saw average asking lease rates hit record highs, reaching $7.39-per-square-foot. This was an approximately 2% increase above the first quarter and marked the fifth quarter in the last six in which the rate indicated quarter- over-quarter growth, CBRE reports.

The report also noted that in the Northern New Jersey portion of the market, the average asking lease rate broke the $8.00 per-square-foot barrier for the first time, increasing $0.10 per-square-foot over the prior quarter to an average of $8.01 per-square-foot. Central New Jersey also bested its previous high, jumping $0.24-per-square-foot to $6.66 per-square-foot.

CBRE notes that those asking rates are misleading since the majority of newer product is offered without a published asking rent. With that in mind, CBRE believes the spread between average asking rents and actual taking rents will continue to expand.

The overall market experienced a 20-basis-points drop quarter-over-quarter in its availability rate to 6.2%—the lowest rate seen in the New Jersey industrial market since the first quarter of 2005.

Leasing activity of 6.7 million square feet, while robust and the highest ever recorded for a second quarter since CBRE began tracking the New Jersey industrial market in 2001, was slightly lower than the 6.9 million square feet posted in the first quarter of 2019. Net absorption was also lower than the first quarter at 3.6 million square feet, which was more than 900,000 square feet than three months earlier. However, the second quarter total marked the 10th consecutive quarter with a positive result.

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 19 Comments

Maybe we should have chosen another option?

Posted on July 10, 2019 by grim

From the Press of Atlantic City:

NJ wage support complicated, less effective than stronger economy

New Jersey lawmakers have hobbled the state economy with the worst business tax and regulatory climate in America. That costs residents a lot of prosperity and quality of life.

Rather than address the government actions that keep New Jersey lagging behind the national economy, they choose more spending, more debt and making a show of trying to help some. Raising the state’s minimum wage eventually to $15 is one of these attempts to provide symptomatic relief instead of working toward a cure.

This month marks the start of the complex multiyear process, with the minimum for nearly a quarter million workers rising to $10 an hour from $8.85. Even they won’t see $15 an hour until 2024. And the burdens of paying the higher wages will begin later for many, including taxpayers, as lawmakers try to avoid or delay harms to the state’s economy.

…

Since the wage boost is expected to eliminate jobs for young and inexperienced workers, a bill in the state Senate would give employers of teenagers as much as $10 million in tax credits to offset their higher wages and payroll taxes. That would mean a loss of some corporate and gross business income taxes, which presumably would be made up by other taxpayers since state spending only increases.

Under the just-enacted state budget, taxpayers are already paying $65 million to cover the increased costs of some employers, including nursing homes, home health and personal care firms, providers of child care to Work First New Jersey recipients, and providers of services to the disabled.

Taxpayers actually will pay twice, since one of the ways businesses will adjust to state-mandated higher wages is by raising prices. Another will be to cut employees.

…

These efforts to mitigate the negative effects of government-mandated higher wages raise a couple of questions. Might it have been easier, more direct and more effective to provide a suitable earned-income tax credit (or increase for those already getting that) to heads of households in minimum wage jobs?

Better still, New Jersey could reduce its tax and regulatory burden, unleashing years of strong economic growth that would create more jobs and compel employers to pay more to fill them. That would put more low-wage workers on the path to the middle class.

Instead, starting-wage jobs will pay better but be scarcer, hurting some of the people lawmakers are trying to help. State officials should at least take another NJBIA suggestion and study the impact of their wage-mandate regime. In its complexity and conflicting effects, it may be more of a drag on New Jersey’s economy and residents than they realize.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 114 Comments

NJ’s glimmer of hope

Posted on July 6, 2019 by grim

From the Star Ledger:

Wages up, unemployment down in N.J.’s largest counties as economic recovery continues

Wages in Mercer County rose by 7.1 percent last year, the largest increase in New Jersey and one of the biggest in the country, according to a report released Friday.

The U.S. Bureau of Labor Statistics released its numbers for the state’s 15 largest counties, defined as those with at least 75,000 workers on average. The report came out on the same day that the bureau said that 224,000 new jobs were created nationwide last month.

…

Wages increased in 14 of the 15 large counties, and employment rose in 12 of the 15, continuing an economic trend that began under President Barack Obama and kept going under his successor, President Trump. The 15 counties account for 91 percent of the state’s jobs.

The increase in wages in Mercer County in the fourth quarter of 2018 compared with the same period a year ago was the 13th biggest boost among the 349 largest counties nationwide.

The average percentage increase in employment in New Jersey in December 2018 compared with December 2017 was 0.8 percent and the average boost in wages was 2.7 percent. That trailed the national averages of 1.5 percent and 3.2 percent respectively.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 72 Comments

Home prices pick up speed

Posted on July 3, 2019 by grim

From HousingWire:

Annual home-price growth reverses course, finally rises

After 14 months of slowing home-price gains, the pace of growth finally picked up speed in May, increasing by 3.6% on an annual basis, according to the latest from CoreLogic.

And, it seems things may pick up steam, with CoreLogic’s forecast predicting home prices will rise 5.6% by May next year.

On a month-over-month basis, home prices rose 0.9% in May, with the forecast predicting a 0.8% increase in June. That would bring single-family home prices to an all-time high, CoreLogic said.

…

“Interest rates on fixed-rate mortgages fell by nearly one percentage point between November 2018 and this May,” said Dr. Frank Nothaft, chief economist at CoreLogic. “This has been a shot-in-the-arm for home sales. Sales gained momentum in May and annual home-price growth accelerated for the first time since March 2018.”

 A recent CoreLogic survey revealed the dual nature of rising home prices, as it can be both a benefit and a drawback.

According to the homeowners surveyed, 28% said they were concerned they would be unable to afford the purchase of a new home. And, 40% of homeowners who are thinking of selling said they’d have to move outside of their current market to afford another home.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 32 Comments

NJ – $10 minimum wage today

Posted on July 1, 2019 by grim

From NJ Spotlight:

NJ’S MINIMUM WAGES RISES TO $10 TODAY IN FIRST STEP TOWARD $15

Today more than 200,000 New Jerseyans are getting a raise to $10 an hour, the first in the state’s multi-year move toward a $15-an-hour minimum wage.

The Democratic-controlled Legislature passed and Gov. Phil Murphy signed the new wage into law five months ago as a way to provide all workers with a living wage in one of the highest-cost states in the nation. Last year’s ALICE report from the United Way of Northern New Jersey found that close to 40 percent of all households in the state, or 1.2 million, were either living in poverty or working poor and unable to afford such basic needs as food, clothing and shelter, with ALICE defined as Asset Limited, Income Constrained, Employed.

The minimum wage for most hourly employees will reach $15 by 2024, making New Jersey one of only five states plus the District of Columbia to have enacted a $15 minimum. DC will be the first to reach that mark, next July 1, followed by California in 2022.

Progressive groups fought hard for the higher wage and it was one of Murphy’s campaign promises. Business organizations opposed it. Neither side has changed its mind, with businesses saying it is going to lead to higher costs for consumers and could force some shops to close their doors, while supporters say it will both make it a little easier for workers to make ends meet and boost the economy as people have more money to spend.

“People have been pushed behind in this economy for far too long,” said Brandon McKoy, president of the progressive-leaning New Jersey Policy Perspective. “We are finally starting to get on the road to get to the true value of the work they are doing. It will help them better be able to take care of their families. And there will be gains in the local economies as they are able to afford to buy more things.”

…

“Generally and not surprisingly, we’re seeing many of the same concerns we had noted while advocating for a phased in and limited increase — that they’ll need to raise costs or cut expenses to accommodate the higher rate,” said Michele Siekerka, NJBIA’s president and CEO. “Obviously, smaller businesses will be more impacted by this increase to $10 an hour. Whether that includes a small increase for the cost of a burger, as an example, will probably depend on the business.”

…

Most workers can be paid no less than $10 per hour starting today, an increase of $1.15 over the current minimum. A second increase to $11 is scheduled for January 1, 2020. 

Posted in Demographics, Economics, Employment | 63 Comments

The first cracks?

Posted on June 29, 2019 by grim

From Curbed:

SF home prices drop, still unaffordable for all

On Thursday, Orange County-based data firm Core Logic reported that the median home price in San Francisco is down year over year, dropping four percent in May.

Earlier this year, the firm recorded the first drop in the Bay Area’s median price year over year since 2012, diminishing an almost comically small yet still significant 0.1 percent for March. However, the price of a home in SF rose more than five percent within that period.

Now the firm’s most recent San Francisco Bay Area home sales report once again found prices down across the Bay Area, showing a decline of 1.7 percent across in all nine counties, including a four percent depreciation in SF.

Across 637 homes, the SF price (as calculated via MLS sales) declined from $1.38 million this time last year down to $1.32 million now. 

Other resources have also shown small but significant dips in SF’s median year over year, but this is the first time Core Logic’s data has agreed. Last time the firm recorded a year over year decline in SF was in April 2017—at the time, a much larger decline of 7.3 percent.

…

The problem with these monthly figures is the uncertainty as to which ones are blips and which ones might be part of or the beginning of real trends. 

For example, the 7.3 percent SF price drop in April 2017 was big but didn’t last, with median rices soaring for the rest of the that year. 

“San Francisco is a relatively small market compared with some of the larger counties, and the median sale price tends to be a bit more volatile,” a Core Logic spokesperson tells Curbed SF.

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

May contracts tick higher

Posted on June 28, 2019 by grim

From MarketWatch:

Pending home sales roar higher, but the housing market is still in low gear

Pending home sales jumped by a seasonally adjusted 1.1% in May but were 0.7% lower than a year ago, the National Association of Realtors said Thursday. The May increase beat the consensus forecast for a 0.6% rise.

NAR’s index, which tracks home-contract signings, has seesawed up and down every month this year, but through the noise, it’s clear that the housing market is shuffling. May marked the 17th straight month of annual declines.

Contract signings precede closings by about 45-60 days, so the index is a leading indicator for upcoming existing-home sales reports.

In May, pending sales in the Northeast were 3.5% higher, and in the Midwest, they were 3.6% higher. In the West, they dropped 1.8%. In the South, they edged up 0.1%, but were slightly higher than year-ago levels, the only region in which that was the case in May. 

Posted in Economics, National Real Estate | 30 Comments

Blame the Boomers

Posted on June 25, 2019 by grim

From The Atlantic:

The Boomers Ruined Everything

The Baby Boomers ruined America. That sounds like a hyperbolic claim, but it’s one way to state what I found as I tried to solve a riddle. American society is going through a strange set of shifts: Even as cultural values are in rapid flux, political institutions seem frozen in time. The average U.S. state constitution is more than 100 years old. We are in the third-longest period without a constitutional amendment in American history: The longest such period ended in the Civil War. So what’s to blame for this institutional aging?

One possibility is simply that Americans got older. The average American was 32 years old in 2000, and 37 in 2018. The retiree share of the population is booming, while birth rates are plummeting. When a society gets older, its politics change. Older voters have different interests than younger voters: Cuts to retiree-focused benefits are scarier, while long-term problems such as excessive student debt, climate change, and low birth rates are more easily ignored.

But it’s not just aging. In a variety of different areas, the Baby Boom generation created, advanced, or preserved policies that made American institutions less dynamic. In a recent report for the American Enterprise Institute, I looked at issues including housing, work rules, higher education, law enforcement, and public budgeting, and found a consistent pattern: The political ascendancy of the Boomers brought with it tightening control and stricter regulation, making it harder to succeed in America. This lack of dynamism largely hasn’t hurt Boomers, but the mistakes of the past are fast becoming a crisis for younger Americans.

Posted in Demographics, Economics, Employment, National Real Estate | 140 Comments