More like “Land of the Lost”

Posted on September 5, 2018 by grim

From ROI-NJ:

Murphy tells ROI: ‘We’re the land that time forgot here in terms of the development of this economy’

Following in the footsteps of the president under whom he served, Gov. Phil Murphy is trying to bring an innovation strategy to New Jersey in 2018 that is similar to the one President Barack Obama introduced to the country in 2009.

“We’re digging out of a hole,” Murphy said in a recent interview with ROI-NJ. “We’re the land that time forgot here in terms of the development of this economy.

“We used to be really good at it, we did it in our sleep — and then we stopped. So, we are pulling a lot of different levers right now.”

The economic strategy is one those in the technology industry understand well, and have seen growth from, in the last decade.
…
But, unlike the national-level support that Obama enjoyed in his first few years in office, Murphy has to focus on state resources to achieve any potential success.

“We can do a lot on our own, and we are,” he said.

Between free tuition for community college students and providing rent assistance to startups, Murphy is moving forward with many of the core areas of aid that he believes will lead to a stronger economy. He is supporting renewable energy sources and greater public-private partnerships, has revamped the research and development tax credit, and his administration has made an effort to put greater emphasis on incentivizing startups and angel investors.

Much of this has been either directly from his office or through the state Economic Development Authority. But Murphy made it clear it’s all hands on deck.

“I’m completely convinced you have to get at this in a variety of ways,” he said. “My hope, in the fullness of time, is that we’ll look back and say that we unleashed a lot of different levers in the innovation economy, and we’ll tweak it over time. My strong suspicion (is), like everybody, we all learn over time. What works best, what works less well.

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

Sky is the limit for NJ … taxes

Posted on September 4, 2018 by grim

From the Record:

Analysis: NJ economic growth won’t sustain Murphy’s agenda, adding pressure to raise taxes

Fresh off striking a budget deal that included $1.6 billion in new taxes, Gov. Phil Murphy said he was banking on strong economic growth going forward to raise the money he needs to fulfill a long list of progressive promises.

“We’re neither going to cut our way to salvation, nor are we going to tax our way to salvation,” Murphy, a Democrat, said in a July interview with NorthJersey.com and the USA TODAY NETWORK New Jersey. “The road that we’ve got to be absolutely laser focused on is grow our way to a better tomorrow.”

But economic growth alone is likely to leave Murphy at least $300 million short — and potentially much more — of what he needs next year to cover pledged funding for schools, public employee pensions and other priorities, according to an analysis by the Network.

That could force him to make politically painful decisions to cut programs or push to raise taxes further.

Murphy has said that with better policies in place under his predecessors, New Jersey could have added $2 billion to $3 billion a year in revenue from economic growth — a mark he says the state can achieve under his leadership.

As it is, however, New Jersey hasn’t added $2 billion in revenue at any point in the past decade.

All the while, New Jersey faces ballooning pension costs for public employees, growing outlays for health benefits and a broken NJ Transit system that could prove expensive to fix. And that’s in addition to Murphy’s other promises to increase funding for public schools, expand pre-K, provide tuition-free community college and enhance tax credits for low- and moderate-income working families.

Posted in Economics, New Jersey Real Estate, Politics | 37 Comments

Good thing the rich are rich

Posted on September 3, 2018 by grim

From CNBC:

The $1 billion price cut: Luxury real estate gets slashed

The most expensive real-estate in America just became a little less expensive — with $1 billion in price cuts among America’s top listings over the past few months, according to a CNBC analysis.

The high-end real-estate market has seen steep price cuts in recent months as foreign buyers dry up, new tax laws bite the wealthiest states and sellers realize the market peak of 2014-2015 isn’t coming back anytime soon, luxury brokers say.

According to RedFin, the real-estate brokerage and research firm, fully 12 percent of homes listed for $10 million or more saw a price drop in 2018 — double the levels of 2016 and 2015. Just over 500 listings in the U.S. had a combined price cut of $1 billion in the second quarter, according to RedFin.

“Prices were growing too fast for what buyers were willing to pay,” said Taylor Marr, a senior economist at RedFin.

Even homes that see big price cuts are selling for less than their discounted prices. A 20,000 square-foot mansion in the Hamptons, once owned by fashion mogul Vince Camuto, was first listed in 2008 for $100 million. Its price got chopped to $72 million, and it sold this spring for around $50 million – half of its original listing price.

Even the Oracle of Omaha, Warren Buffett, has had to lower his asking price on his beach home in Laguna Beach. The home was listed in 2017 for $11 million, but he has slashed the price to $7.9 million. He’s still likely to make a big profit – he bought the home in the early 1970s for $150,000.

The reasons for the price drops are many. In some cases, the prices for the homes were fantasies. Sellers had irrational expectations or they were using the sky-high prices to attract attention to their properties. The luxury real-estate market has fallen since its peak in 2014 and 2015, and many sellers are finally adjusting to a different market.

Supply of homes at the high end is also high, especially for newer condos and spec homes in New York, Los Angeles and major metro areas.

“There could be an over-supply of these high-end homes,” Marr said.

Posted in Demographics, Economics, National Real Estate | 17 Comments

Price growth slows. Pause or Dip?

Posted on August 31, 2018 by grim

From CNBC:

Home price gains slow down in June: S&P Case-Shiller

Homebuyers are pulling back, and prices are finally following.

Home prices are still rising, but the gains are shrinking. In June, prices nationally rose 6.2 percent year over year, according to the S&P CoreLogic Case-Shiller Indices. That is down from the 6.4 percent annual gain in May.

Home prices in the nation’s 10 largest housing markets rose 6 percent annually, down from 6.2 percent in the previous month. In the 20 largest markets, prices were up 6.3 percent, down from 6.5 percent in May.

“Even as home prices keep climbing, we are seeing signs that growth is easing in the housing market,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a release. “Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets.”

Rising mortgage rates are also taking their toll. The rate on the popular 30-year fixed mortgage rose from around 4 percent at the start of the year to just more than 4.5 percent now. That directly affects housing affordability.

Prices are still higher because of the shortage of homes for sale in general and particularly at the entry level of the market.

The supply of homes for sale in July was unchanged from a year ago, according to the National Association of Realtors. While it wasn’t a gain, it was the first time it didn’t show a negative annual reading in a few years. Builders still are not producing enough new entry-level homes to meet demand, and potential sellers are holding back, concerned they won’t be able to find or afford a different home.

Home price gains are still quite strong in the West, where supplies are leanest, but those gains are shrinking as well. Las Vegas, Seattle and San Francisco continue to lead the pack in price rises. In June, Las Vegas led the way with a 13 percent year-over-year price increase, followed by Seattle with a 12.8 percent rise and San Francisco with a 10.7 percent increase. Six of the 20 cities reported greater price increases in the year ended in June 2018 versus the year ended in May 2018.

“Population and employment growth often drive homes prices,” Blitzer said. “Las Vegas is among the fastest-growing U.S. cities based on both employment and population, with its unemployment rate dropping below the national average in the last year.”

The Northeast and Midwest are seeing smaller home price increases, as prices there weren’t quite as hot to begin with, and more supply is coming on the market. Some markets in the Northeast are also being hit by new tax laws. Washington, Chicago and New York showed the three slowest annual price gains among the 20 cities covered by the report.

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 74 Comments

The Slump

Posted on August 30, 2018 by grim

From MarketWatch:

Pending home sales stumble as housing market momentum wanes

The numbers: Pending-home sales declined 0.7% in July, the National Association of Realtors said Wednesday.

What happened: NAR’s index, which tracks real-estate transactions in which a contract has been signed but the transaction hasn’t yet closed, fell to a reading of 106.2, missing the consensus forecast of a flat reading.

It was the seventh-straight month in which the index was lower on an annual basis — by 2.3% in July. In the first eight months of 2018, the index has charted monthly increases four times and monthly decreases four times. In July, the pending home sales index in the Northeast rose 1.0%, while the index in the Midwest inched up 0.3%. Pending home sales in the South fell 1.7%, while in the West, they were down 0.9%.

Big picture: Housing has stalled out. In July, total home sales — existing and new — sank below a key psychological benchmark to the lowest in two years. What had been a seller’s market across most of the U.S. hit a tipping point this year, as buyers decided the slim pickings on the market weren’t worth it.
…
What they’re saying: “It appears sales activity crested in late 2017,” said Freddie Mac Chief Economist Sam Khater earlier in August. “It is clear affordability constraints have cooled the housing market, especially in expensive coastal markets. Many metro areas desperately need more new and existing affordable inventory to break out of this slump.”

Posted in Economics, Housing Recovery, National Real Estate | 90 Comments

August Otteau Report

Posted on August 29, 2018 by grim

From Otteau Group:

MarketNEWS August 2018 Edition

The number of home purchase contracts in New Jersey increased by 4% during July compared to the same month last year. There has however been a noticeable change in the mood of the market in recent months as the pace of home sales has declined in about 1/3 of all markets on a year-to-date basis. As a result, the number of year-to-date purchase contracts (January-July) in New Jersey is up marginally by 1%, or roughly 800 contracts. While this is partially attributable to an under-supply of housing inventory, a growing affordability gap due to rising prices and interest rates is a significant factor.

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 have stagnated due to supply shortages, with unsold inventory having dropped by 9% year-to-date. Recording a 1% decline, are contract sales for homes priced between $1-Million to $2.5-Million (26 sales). This is somewhat misleading, however, given that this price range accounts for a much smaller share of sales. At the opposite end of the spectrum, contract activity for luxury priced homes over $2.5-Million has increased by an impressive 12% (208 in 2017 vs. 232 today).

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 725 (-2%) over the past year. This is also 41% less than the amount of homes (30,000 fewer) on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to just 4.1 months of sales (non-seasonally adjusted), which is lower than one year ago, when it was 4.3 months.

Currently, 95% 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 3.0 months of supply, followed by Essex, Passaic, Union, Somerset, Burlington, Hudson, Camden & Monmouth, which all have fewer than 4.0 months of supply. The counties with the largest amount of unsold inventory (6.5 months or greater) are concentrated in the southern portion of the state including Salem (6.5) and Cumberland (8.7).
…
Demand for rental apartments continues to expand in NJ with statewide occupancy rates being among the highest in the US. Statewide vacancy increased somewhat from the prior quarter, rising by 20 basis points to 3.8%. The rise in vacancy is attributable to the rapid growth in pipeline supply, which has increased from 7,600 apartments in 2008 to 32,000 today. Nationally, the average vacancy rate increased by 10 basis points to 4.8%. Still, statewide and national vacancy rates remain well below their 2010 peak having fallen by 140 bp and 320 bp, respectively.

Consistent with national trends, the homeownership rate in New Jersey declined precipitously with the onset of the Great Recession. The homeownership rate in NJ has declined from a peak of 71.3% in 2005.Q1 to 66% in 2018.Q2, which is 170 basis points higher than the national rate. This equates to a 7% drop in the homeownership rate, at both the state and national level. Because of this shift, there are approximately 208,000 additional renters in New Jersey.

Posted in Economics, New Jersey Real Estate | 49 Comments

Who does this?

Posted on August 28, 2018 by grim

From the Star Ledger:

‘My Lowe’s contractor doesn’t care, and Lowe’s doesn’t either,’ homeowner claims

When CherylAnne and Mike Amendola decided to expand and renovate the kitchen in their Lincoln Park home, they knew it would be a big job.

They decided to turn to Lowe’s.

“My family chose Lowe’s to complete our kitchen project mostly because of their safety guarantee,” CherylAnne Amendola said, noting she felt comfortable with Lowe’s taking on the responsibility of selecting the contractor for the job.

The Butler store said the kitchen, totaling $43,849 for labor and materials, should be completed in about eight weeks, documents show.

But now, more than four months later, the job remains unfinished.

The couple signed the contract on April 18. It included everything from plumbing and electrical to cabinets, flooring and appliances – the whole kitchen, soup to nuts.
…
There were delays from the start, the couple said.

A month after they entered into the contract, the couple learned from the town that the company hadn’t yet filed for permits.

The Amendolas said they asked Lowe’s for a timeline, but Lowe’s said it couldn’t get CJS to commit to a schedule, documents show.

“On May 24, CJS told our Lowe’s project manager that they had filed for the permit, but they did not, according to the town,” Amendola said. “After chasing after them for a permit, they finally filed for it on June 4, five days after they demoed our kitchen.”

On June 1, work stopped without reason, Amendola said, and no one returned to the house for more than a month – until July 6.

Frustrated and getting no answers from CJS, Gotay or Lowe’s, Amendola started posting videos on social media to document her experiences. She calls her series of videos, “My Lowe’s contractor doesn’t care, and Lowe’s doesn’t either.”

Posted in New Development, New Jersey Real Estate | 82 Comments

Someone is still investing in NJ

Posted on August 27, 2018 by grim

From ROI-NJ:

Angel investors put nearly $39M into N.J. economy in first half of 2018

The New Jersey Economic Development Authority has approved 60 Angel Investor Tax Credit program applications this year, helping to put nearly $39 million into 20 different technology and life science companies, the EDA announced late Friday.

The Angel Investor Tax Credit Program offers a 10 percent refundable tax credit against New Jersey corporation business or gross income tax for qualified investments in an emerging technology business with a physical presence in New Jersey and that conducts research, manufacturing or technology commercialization in the state. Applications must be submitted within six months of date of investment.

In the second quarter of 2018 alone, 36 investors pumped nearly $16.9 million through the program. The average investment size was $469,099.

“The fact that more people are supporting early-stage companies and the ground-breaking work they are doing reaffirms Gov. (Phil) Murphy’s vision for re-establishing New Jersey’s leadership position in the innovation economy,” EDA CEO Tim Sullivan said.

“These latest Angel Investor Tax Credit Program statistics illustrate how New Jersey’s expanding portfolio of support spurs innovation throughout the entire technology and life sciences sector.”

Sullivan noted that, in the second quarter of 2018, approvals included investments in three companies that were new to the program, totaling $2.7 million in combined private investment.

Posted in Economics, New Jersey Real Estate | 31 Comments

Taxes trump hometown

Posted on August 25, 2018 by grim

From the NY Times:

Minimizing the Pain of Trump’s Tax Law

Longtime New Yorkers Joanne and Vince Intrieri left their 3,100-square-foot three-bedroom near the United Nations earlier this year, trading it in for a sunny three-bedroom condominium in Downtown Miami.

Ms. Intrieri, who has a construction and design firm that she is moving to Miami, and Mr. Intrieri, who owns VDA Capital Management, were not ready to retire. But they decided to move to the Florida coast to escape exorbitant taxes that they knew would be exacerbated by the Trump administration’s new tax law.

“My husband and I have been in New York City for more than 20 years, but we aren’t tied to an office anymore and our kids are older,” said Ms. Intrieri, 59. “Between the state and city taxes, plus about $50,000 in property taxes, it is a lot of money going out the door. Why do it?”

The Tax Cuts and Jobs Act, as the legislation is known, was passed last year and will be applied to 2018 returns, which are due in April 2019. The law limits the deductions taxpayers can take on property taxes and state and local taxes (known as SALT deductions) up to $10,000 — a cap that many New Yorkers easily exceed. For the highest earners, New York state’s income tax rate is 8.82 percent and New York City’s rate is 3.876 percent. Nearly half of Manhattan’s taxpayers have taken SALT deductions in the past, and the average deduction has been over $60,000 a year.

Posted in Demographics | 15 Comments

Plenty of room to run?

Posted on August 24, 2018 by grim

From CNBC:

The housing recovery isn’t over, it just feels like it is

A slew of negative housing numbers for July are piling up on top of a slew of negative housing numbers from the last several months.

Sales of new and existing homes are falling, construction of single-family homes is basically flat for the year, mortgage rates are rising and affordability is weakening. It certainly feels like the housing recovery that really took off in the last four years has come to a grinding halt, but it hasn’t.

Is the ultra-hot and competitive housing market cooling off? Absolutely. Home prices rose too far, too fast, and the market is now hitting a price wall. We know that because the price gains are finally starting to shrink, according to a report this week from the National Association of Realtors. Anecdotally, real estate agents across the country are saying that their sellers are beginning to come back down to earth.

“I don’t think the recovery is over,” said Sam Khater, chief economist at Freddie Mac. “Economic growth is still very strong and essentially running at capacity. However, the consistent decline in housing affordability means there are fewer consumers who can afford to purchase a home.”

The reason the housing recovery isn’t over is because demand is very solid, and the price gains are starting to ease. As with all things real estate, however, location is key in this recovery.

“While the decline in home sales and deceleration in home price growth has been broad-based, the slowdown is more intense in the hot coastal markets — which is a natural reaction to rapidly escalating home prices and higher rates versus a year ago,” added Khater.
…
Foreclosure starts hit a 17-year low in June, according to Black Knight Inc., and mortgage delinquencies are at their lowest level in more than a decade. That includes a slight bump in troubled loans from states hit hard by last year’s hurricanes.

The vast majority of homeowners are paying their mortgages on time, and an increasing number of homeowners are putting a lot of money into their houses, raising the value and adding to the remodeling economy of materials and retailers.
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The housing shortage has been the one glaring villain holding back a more robust housing recovery. Demand is strong, thanks to basic demographics, an improving economy and a stronger labor market. The trouble is that most of that demand is on the low end of the market, where supply is leanest.

“Builders need to manage rising construction costs to keep their homes competitively priced for the newcomers to the housing market,” said Danushka Nanayakkara-Skillington, senior economist at the National Association of Home Builders. “While affordability conditions remain positive and the labor market sees low unemployment, prospective homebuyers face increased uncertainties as interest rates trend higher and trade war concerns grow.”
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The housing recovery may have peaked, but it isn’t over. As more supply hits the market, sales will grow again. Consumer credit scores are still strengthening, a huge generation is aging into its homebuying years, and another huge generation is downsizing into active adult communities and urban condominium developments. While there is a new affinity for renting, that demand can fuel home construction and the overall housing economy as well.

Posted in Demographics, Economics, Employment, Foreclosures, Housing Recovery, National Real Estate | 50 Comments

Good month for jobs in NJ

Posted on August 22, 2018 by grim

From the APP:

NJ job market surges in July; here are 3 places hiring

It’s a good time to go job hunting in the Garden State.

The New Jersey economy added thousands of jobs in July, and the state’s unemployment rate dipped to its lowest level in more than a decade, the state Department of Labor and Workforce Development said Thursday.

The results should give workers latitude to search for a new job or ask for a raise. And they are a sign that life is more difficult for employers who need top-notch help.

“We’re doing the best we can with what we’ve got,” said Angela Blasi, the fresh food manager at Dean’s Natural Food Market in Shrewsbury, which is hiring after two of its juice bar workers left their summer jobs and returned to college.

The monthly unemployment report is made up of a survey of employers to measure the number of jobs and a survey of households to measure the unemployment rate.

It provides a preliminary snapshot of the New Jersey economy and will be revised next month. But for July, at least, it showed a state that performed far better than the nation.

The state gained 13,000 jobs last month. (The U.S. added 157,000 jobs last month. New Jersey’s fair share would have been about 4,700).

It added 7,500 jobs in June, more than what was first reported. And its unemployment rate ticked from 4.3 percent to 4.2 percent, its lowest level since July 2007.

“The numbers on the surface look like the economy is going gangbusters,” Rutgers University economist James W. Hughes said. With total employment, “it’s probably going to be the best year since before the Great Recession.”

Posted in Economics, Employment, New Jersey Real Estate | 115 Comments

Urbanization, but only at the right price

Posted on August 21, 2018 by grim

From USA Today:

Home prices: Even midsize cities are getting pricey, leading some buyers to smaller markets

A couple of years ago, freshly-minted college graduates Jon and Samantha Reidy crisscrossed North Carolina in search of a place to settle and buy a house.

After hitting seven cities – including bustling millennial enclaves such as Charlotte, Durham and Raleigh – they decided that nearly all of those housing markets had gotten too expensive. So they picked under-the-radar Winston-Salem.

Last year, they bought a house there for $106,000, including repairs, and plan to stay in the area for decades. Jon is even hoping to convince his parents to move down from Agawam, Mass.

“We have no intention of leaving,” says the 24-year-old athletic trainer. Besides its mix of urban amenities and laid-back pace, “Winston was a place we could afford.”

The 50 percent runup in U.S. home prices since 2011 is reshuffling the pecking order of hot housing markets. While many midsize metro areas that had been affordable, up-and-coming alternatives – such as Kansas City, Missouri; Nashville, Tennessee; Raleigh; and Salt Lake City – are still coveted by buyers, their sales are declining or increasing more slowly amid sharply rising prices and shrinking supplies.

Meanwhile, many smaller, more affordable markets – such as Boise, Idaho; Dayton, Ohio; Greenville, South Carolina; and Winston-Salem – are benefiting from an influx of new residents and home sales that continue to climb.

“Even the second-tier markets are getting a little too pricey for a lot of residents,” economist Adam Kamins of Moody’s Analytics says. “Home prices are not rising as rapidly in the (third-tier) markets … and if you can get a good job there you may find a better quality of life.”
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By contrast, many smaller cities have a healthier balance of supply and demand, as well as lower prices. In third-tier markets, ranked 51 to 100 by population, prices rose 6.4 percent to $246,000 in the first quarter from a year earlier – below the U.S. median of $264,000 – and sales were up about 1 percent, in line with the national average.
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Now, however, some third-tier metro areas are getting pricier as they draw more residents. In Boise, a tech hub that has fast become a hip, more affordable alternative to larger cities such as Seattle and Portland, Oregon, the median house price was up 18.4 percent early this year at $255,000. In Aida County, which includes, Boise, the median was $324,000.

Yet home sales were up 23 percent in 2017 and 2 percent the first half of this year despite historically low supplies, according to Moodys and Boise Regional Realtors.

Posted in Demographics, Economics, National Real Estate | 45 Comments

Rise of Gen Z

Posted on August 20, 2018 by grim

From Bloomberg:

Gen Z Is Set to Outnumber Millennials Within a Year

Millennials are about to be surpassed by Generation Z.

Gen Z will comprise 32 percent of the global population of 7.7 billion in 2019, nudging ahead of millennials, who will account for a 31.5 percent share, based on Bloomberg analysis of United Nations data, and using 2000/2001 as the generational split.

People born in 2001 will turn 18 next year, meaning many will enter university, be eligible to vote and, depending on their citizenship, smoke or drink alcohol without breaking the law. Gen Zers have never known a non-digital world and have grown up amid events such as the “war on terror” and Global Recession.

“The key factor that differentiated these two groups, other than their age, was an element of self-awareness versus self-centeredness,” according to “Rise of Gen Z: New Challenge for Retailers,” a report by Marcie Merriman, an executive director at Ernst & Young LLP. Millennials were “more focused on what was in it for them. They also looked to others, such as the companies they did business with, for solutions, whereas the younger people naturally sought to create their own solutions.”
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The demographic handover is good news for delivery services, gadget makers and the so-called gig economy. Meanwhile, it presents new challenges to educators, event planners, luxury brands and even golfers — a game where the average age of U.S. participants now exceeds 50.

“Each generation comes with a unique set of behaviors and presents a unique set of challenges for those looking to reach them,” according to a report by research firm Nielsen Holdings Plc. “Gen Z are bombarded with messages and are a generation that can quickly detect whether or not something is relevant to them.”
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Millennials will continue to represent the bigger proportion in the world’s four largest economies: U.S., China, Japan and Germany. The combined population just shy of 2 billion in those four countries will have a ratio of 100 millennials for every 73 in Gen Z next year.

Posted in Demographics, Economics, National Real Estate | 65 Comments

Price Reduced!

Posted on August 18, 2018 by grim

From HousingWire:

Is housing becoming a buyer’s market?

Home sellers have begun cutting back their listing price, especially at the high end of the housing market, leaving open the possibility that it is now beginning to shift to a buyer’s market.

About 14.2% of all homes listed for sale on Zillow saw a price cut in June, up from a recent low of 11.7% at the end of 2016, according to new data released by the company. This is also up from 13.4% in June 2017.

From the beginning of this year, the share of listings with a price cut increased by 1.2 percentage points, the greatest January-to-June increase ever reported and more than double the increase from the same period last year, according to the report.

And in some markets, the numbers were even higher. For example, in San Diego, 20% of listings had a price cut in June, up from 12% last year.

Seattle also saw an increase in its number of homes with a price cut to 12% of total listings in June. This represents the city’s greatest share since October 2014.

While home prices continue to rise across the U.S., that growth is beginning to slow. Zillow’s data shows home values rose 8.3% over the past year to $217,300, but the company forecasts that growth will slow to about 6.6% over the next year.

But this increase is coming from the top end of the market, rather than starter homes, where real relief is needed. The data shows that for homes priced in the top one-third of all homes listed for sale, those with a price cut increased 0.9% to 16.2% annually in June.

But over that same time, the share homes with a price cut in the bottom one-third of all those listed for sale actually fell 0.1 percentage points annually to 11.2% in June.
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“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early signs that the winds may be starting to shift ever-so-slightly,” Zillow said in its report. “It’s far too soon to call this a buyer’s market, but these data indicate the frenetic pace of the housing market over the past few years may be starting to return toward a more normal trend.”

What’s more, it seems housing inventory is finally starting to bring some relief to homebuyers at the lower end of the market, providing more affordable housing inventory for first-time buyers.

Posted in Economics, National Real Estate, Price Reduced | 44 Comments

The new “rate lock”

Posted on August 17, 2018 by grim

From HousingWire:

Goodbye refi: Rising interest rates all but erase refinance demand

While mortgage interest rates dipped ever so slightly in the last week, they’ve been trending up for the majority of this year. In fact, the interest rate on a 30-year, fixed-rate mortgage is now more than half a percentage point higher than it was back in January.

And it appears that the consistent rise in interest rates this year has all but dried up refinance demand.

Is it time to say goodbye to refis for a while? It certainly looks that way.

A new report from Ellie Mae shows that purchase loans are now approaching 75% of all mortgages, with refis hovering around historic lows.

Ellie Mae’s latest Origination Insight Report shows that the 71% of all loans closed in July were purchase loans, while only 29% of the closed loans were refinances.

That’s the second month in a row that refis have been that low (and purchases that high).

Those figures also represent the lowest percentage of refis (or highest percentage of purchases, depending on how you look at it) since Ellie Mae began tracking this data in 2011.

To put it another way, refis haven’t been this small of a percentage of overall originations in seven years.

And the trend doesn’t appear to be going away anytime soon.
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There was a little bit of good news on the refi front in this week’s Mortgage Bankers Association’s Weekly Mortgage Applications Survey, which showed that the refinance share of mortgage application activity increased from last week’s 36.6% to 37.6%.

But that may just be a blip on the radar as interest rates are expected to continue climbing this year.

And while today’s interest rates are still low by historic standards, they’re still higher than many younger homeowners have seen in their adult lives. Those borrowers aren’t going to refi their 3.95% mortgage into a 4.75% right now, and they certainly won’t do it if rates keep going up, no matter how much their home is worth now.

Welcome to the new normal.

Posted in Housing Recovery, Mortgages, National Real Estate | 53 Comments