Probably because they learned their lesson … duh

From HousingWire:

Why aren’t more people tapping into their home equity?

As the housing market has continued its recovery, home prices have been climbing at a steady clip across the nation. And that means homeowners now have a nice stockpile of pent-up wealth in their homes.

In fact, as of the fourth quarter of last year, U.S. homeowners had a collective $5.7 trillion in tappable equity, according to Black Knight.

To break it down further, at the end of last year, homeowners amassed nearly $10,000 in equity in one year’s time, according to CoreLogic data.

But it seems fewer people are choosing to access this source of wealth.

Black Knight reported that just 1% of available equity tapped in the last quarter of 2018 –the lowest share since 2012.

That said, it is worth noting that cash-out refinances have seen some action in the last two years.

Freddie Mac data showed that the share of refinances that involved cash extraction climbed to 77% in the second quarter of 2018. But the amount of equity cashed out totaled $15.8 billion – well below the $75-$85 billion we saw in the years leading up to the crisis. 

Posted in Demographics, Economics, National Real Estate, Risky Lending | 22 Comments

US employment strong, NJ employment sucks, what gives?


Jobs report: Unemployment slightly increases on weak job growth

New Jersey’s employment rose modestly in March, increasing by 3,600 jobs to mark the fifth monthly increase in the last six months, according to preliminary estimates produced by the U.S. Bureau of Labor Statistics.

The state’s unemployment rate ticked higher by 0.1 percentage point in March to 4.1 percent.

All of the gains for the month occurred in the private sector of the state’s economy, which added 4,400 jobs. Public sector employment was lower by 800 jobs for the month, with all of the contraction occurring at the local government level.

“A growing workforce and more private sector jobs are both positives,” said Regina Egea, president of public policy think tank Garden State Initiative. “But the lack of consistent and substantial growth in either of those categories means that New Jersey is struggling to gain traction.”

Although the New Jersey labor force increased by 7,400 in March, it remains smaller than the average labor force size in 2006, before the last recession in 2008. While trending in the right direction, New Jersey will need to add tens of thousands of new individuals to the workforce in the next few months to catch up with the growth happening around us.

Of note, New Jersey’s financial activities and information sectors are still lagging behind the national trend. The financial activities sector was unchanged in March, but has lost 5,500 jobs year over year. The information sector reported a loss of 100 jobs last month, and a loss of 3,300 jobs year over year.

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

Sorry about your mansion

From the WSJ, hat tip Anuj:

Wealthy Greenwich Home Sellers Give In to Market Realities

After four years on the market, and three price cuts, a stately Colonial-style home on Greenwich, Conn.’s tony Round Hill Road is being sold in a way that was once unthinkable in one of the country’s most affluent communities: It is getting auctioned off. Once asking $3.795 million, the four-bedroom property will be sold May 18 with Paramount Realty USA for a reserve price of just $1.8 million.

Seller Isaac Hakim, a real-estate investor, said it is time to move on. “We are ready to sell and I don’t want it to drag on,” he said. After raising their children there, he and his wife moved to Florida several years ago.
While luxury home auctions are utilized in other parts of the country, they have rarely been seen in markets like Greenwich. Once a beacon for Wall Street’s top brass and still one of the richest towns in the U.S., Greenwich is facing a slew of issues.

Many wealthy New Yorkers are opting to live in the city, rather than in the suburbs. Some of the wealthiest, like Mr. Hakim, have decamped to Florida in search of more favorable tax rates. Banking executives who propped up the market with their yearly bonuses have also experienced cuts in compensation.

The seemingly never-ending slump is leading some sellers to accept less—sometimes a lot less. Owners who paid top dollar for their homes in the Fairfield County town in the mid- to late-2000s are routinely selling for less than they paid. Dramatic price cuts are the order of the day. There were 45 properties in Greenwich priced at more than $5 million that had their price reduced by 10% or more in the 12-month period between April, 2018, and March, 2019, according to is owned by Move, Inc., a subsidiary of Wall Street Journal parent News Corp .

Attorney Frank J. Gilbride II said one of his clients recently sold his home for $11.18 million, after buying it for $14.7 million in 2007. “We’re finding that the larger back country homes have not been selling recently, because the new buyers don’t want to maintain 10 acres of grass,” Mr. Gilbride said. “A lot of sellers are taking hair cuts of $1 million or more just to move on.”

Some sellers have resorted to renting out their homes. Brian Amen, an agent at Houlihan Lawrence, said one of his clients tried to sell his roughly $3.65 million home for about a year and lowered the price, but recently decided to lease it out in hopes the market would improve in a year or two.

Several prominent owners have settled for significantly less. Earlier this month, music executive Tommy Mottola sold his Georgian-style estate for $14.875 million, or 25% off its original asking price. In December, hedge fund executive Ara D. Cohen, co-founder of Knighthead Capital Management, sold his sprawling 27-room property for $17.5 million—half of what he was seeking in 2015.

Posted in Economics, National Real Estate | 78 Comments

Slowing in LI, or still strong?

From Newsday:

LI home prices rise, but sales slow and inventory grows, report shows

Long Island home prices kept rising as the spring selling season got underway last month, but the pace of sales slowed and inventory is on the rise.

In Suffolk County, homes sold for a median price of $372,875 in March, up 5.9 percent from a year earlier, the Multiple Listing Service of Long Island reported Thursday. Nassau County’s median home price increased by 3.4 percent annually, to $517,000.

The number of closed home sales fell year-over-year by 5.8 percent in Suffolk and 8.8 percent in Nassau, the listing service reported. However, in a sign that the market could get stronger in the coming months, the number of contract signings jumped by more than 10 percent in Suffolk and ticked up by 1.4 percent in Nassau, compared with the previous March.

Demand is strong for homes in the $400,000 to $600,000 price range, said Russ Bonanno, a real estate agent with Bon Anno Real Estate in Massapequa who handles home sales from western Nassau through Dix Hills and Commack in Suffolk.

In that price range, he said, “it’s a very competitive environment out there for buyers. There’s a lot of very serious and very qualified buyers out there.” A home listed for $549,000 in North Bellmore recently went under contract four days after it was listed, with 17 competing offers, he said.

A strong economy, low unemployment and affordable mortgage rates are driving buyers’ enthusiasm, Bonanno said. The average mortgage rate was 4.12 percent this week, 0.3 percentage points lower than a year ago, mortgage giant Freddie Mac reported Thursday.

The market is less competitive for more expensive homes, Bonanno said: “As you go up in price, the buyer pool does shrink a bit.”

Asking prices hit a median $519,000 in Suffolk, 8 percent higher than the previous March, and $689,000 in Nassau, up 6 percent from a year earlier, listing service figures show.

The number of homes listed for sale grew year-over-year by 22 percent in Nassau and 7.2 percent in Suffolk, according to listing service figures. At the current pace of sales, it would take a little more than six months to sell all the homes listed for sale in Nassau and Suffolk. Brokers say a balanced market has a six- to eight-month supply of homes.

Posted in Demographics, Economics, National Real Estate | 141 Comments

89% of NJ households paid less taxes

From the Star Ledger:

Tax Day 2019 more taxing for 400K N.J. households, thanks to Trump law

If you saw your taxes go up under the Republican tax law that limited your property tax break, you weren’t alone.

In fact, 411,809 New Jersey households saw their taxes rise, the fifth highest number of any state, according to a report by the Center for American Progress, a progressive research group founded by John Podesta, who later chaired Hillary Clinton’s 2016 presidential campaign.

Only California, New York, Texas and Florida saw a greater number of households paying more in taxes, according to the report, based on data from the Institute on Taxation and Economic Policy.

Far more New Jerseyans — 3.5 million — saw their taxes reduced. But Seth Hanlon, a senior fellow with the center, said a law that increased the federal deficit by $1.9 trillion over 10 years shouldn’t have raised anybody’s taxes. Nationally, 10 million Americans got a tax hike.

“What really rubs people the wrong way is there are 10 million people getting a tax increase when the very wealthy and corporate America are getting an enormous windfall,” Hanlon said. “If you were going to design a tax cut that would increase the deficit by almost $2 trillion, it’s easy to design a tax cut that would go to middle class people where no one comes out worse off.”

California, New York and New Jersey were among the states disproportionately affected by the legislation’s $10,000 cap on the federal deduction for state and local taxes. New Jersey and New York also send billions of dollars more to Washington than they receive in services.

Posted in New Jersey Real Estate, Politics, Property Taxes | 58 Comments

Paid less taxes, nobody cared

From the NYT:

If you’re an American taxpayer, you probably got a tax cut last year. And there’s a good chance you don’t believe it.

Ever since President Trump signed the Republican-sponsored tax bill in December 2017, independent analyses have consistently found that a large majority of Americans would owe less because of the law. Preliminary data based on tax filings has shown the same.

Yet as the first tax filing season under the new law wraps up on Monday, taxpayers are skeptical. A survey conducted in early April for The New York Times by the online research platform SurveyMonkey found that just 40 percent of Americans believed they had received a tax cut under the law. Just 20 percent were certain they had done so. That’s consistent with previous polls finding that most Americans felt they hadn’t gotten a tax cut, and that a large minority thought their taxes had risen — though not even one in 10 households actually got a tax increase.

Experts are divided on whether the tax law was a good idea. But there is little disagreement on this core point: Most people got a tax cut. 

The Tax Policy Center estimates that 65 percent of people paid less under the law and that just 6 percent paid more. (The rest saw little change to their taxes.) 

Other analyses reached similar conclusions. The Joint Committee on Taxation — Congress’s nonpartisan team of tax analysts — found that every income group would see a tax cut on average. So did the Institute on Taxation and Economic Policy, a left-leaning think tank that was sharply critical of the law. In fact, that group went even further: In a December 2017 analysis, it found that every income group in every state would pay less on average under the law in 2019.

So far, tax season seems to be playing out more or less as the experts predicted. H&R Block, the tax-preparation giant, said last week that two-thirds of returning customers had paid less tax this year than last (excluding people who owed no tax in either year). Taxes were down, on average, in every state.

“The vast majority of people did get a tax cut,” said Nathan Rigney, an analyst at H&R Block’s Tax Institute. That’s been clear all along, he added, “just now we have real data to back that up.”

The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center. 

Most Americans would probably welcome a $780 windfall. But in contrast to 2001, when President George W. Bush’s Treasury Department mailed rebate checks to taxpayers, last year’s tax cuts showed up mostly in the form of lower withholding from workers’ paychecks. A few extra dollars in a biweekly paycheck proved easy to miss. Moreover, as taxpayers filed their returns, many found they were due smaller refunds than in the past, which may have further skewed perceptions of the law.

Posted in Economics, Politics, Unrest | 29 Comments

Movement of jah people!

From NJ Spotlight:


Cindy Myers, the president of a moving company based in Mahwah, said she’s seen a big uptick in out-of-state moves in the past three years.

Her customers air a common complaint. “It’s taxes,” she said, “it’s ‘I can’t afford to live here.’” 

Myers shared her story yesterday at a news conference organized by U.S. Rep. Josh Gottheimer (D-5th), who wants to bring attention to the real-world impact of SALT, a new cap on federal income-tax deductions for state and local taxes. 

The $10,000 SALT cap was enacted by President Donald Trump in 2017 as part of a broader overhaul of the tax code. But many taxpayers are just feeling its pinch for the first time this month, as they file federal returns under the new rules, only to learn that the new limit means they owe the feds more money.

“Our phones in our office, my phone is ringing off the hook with people saying, ‘Wait a second, what is going (on) here?” said Gottheimer, who’s introduced legislation seeking to rescind the cap.

The deduction was worth as much as $24,783 on average for those who took it in Bergen County, where Myers’ moving company is located. But even though she says out-of-state moves have tripled in recent years, it’s too soon to determine how the SALT cap is affecting the broader New Jersey landscape. 

Ilene Horowitz, president of New Jersey Realtors, also spoke at the news conference yesterday, saying that 2018 was a strong year for the state’s real-estate market, although she did raise concerns about the potential impact of the cap. 

“Professionally speaking, for 2019, I think it’s too soon to see the effects of SALT,” Horowitz said.

Posted in Demographics, Economics, New Jersey Real Estate, Unrest | 75 Comments

Neighborhood makes a difference? Get real.

From the APP:

Middle class in NJ: Where you grow up determines if you will be rich or poor

The chartered bus from Long Branch and Asbury Park made good time to New York City, dropping eighth graders at Samsung to see the latest smart phones, tablets and television sets that look like paintings.

The students played the online game Fortnite. They viewed a prototype for an automated apartment. And when they returned to their schools, set in some of the lowest-income neighborhoods at the Jersey Shore, they were in awe.

“It’s a once-in-a-lifetime experience,” said David Carpio, 12, a student at Our Lady of Mt. Carmel School in an Asbury Park neighborhood whose residents have grown up to have an average household income of just $29,000 a year.

Carpio and his classmates are part of an attempt to reverse a troubling trend. The generation of Americans now in their 30s is less likely than the overwhelming majority of the Baby Boomer generation to do better than their parents, a new study by Harvard University finds.

And the financial outcome of children raised in the ’80s and ’90s is tied to the neighborhood where they grew up.

Harvard calls it “The Opportunity Atlas.” Instead of looking at poverty or wealth, researchers for the first time have gathered data that track Americans’ upward economic mobility, crunched the numbers and produced a map of the American dream, or, in some cases, nightmare.

Harvard partnered with the Asbury Park Press and the USA TODAY NETWORK New Jersey to look at the chances people in the Garden State will grow up to do better than their parents.  

The economic detour, experts say, was set in motion by a shift in the economy from manufacturing to information, putting a premium on highly skilled, highly educated workers.

It has put more pressure on a patchwork of New Jersey organizations trying to tackle what Harvard has identified as keys to upward mobility: stable families; a strong social network; good schools; and low poverty rates.

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 51 Comments

I dip, you dip, we dip

From the APP:

NJ double dippers: At least 64 public employees make more than Murphy

It’s common for people to have a side hustle to make some extra cash. Then there are those who have many extra jobs.

Working for the public. 

Making salaries — paid for with your tax dollars — that in some cases add up to more than twice that of the New Jersey governor. 

More than 1,000 employees worked more than one public job in New Jersey, according to a USA TODAY NETWORK New Jersey analysis of New Jersey pension data for 2018, the latest available data.

The median New Jersey double dipper worked four jobs and took home a salary of more than $93,000, the analysis shows.

Of those, 64 people took home multiple public salaries that combined earned them more than Gov. Phil Murphy.

At least two dozen people hold five or more public jobs, including one person – a tax assessor in North Jersey – who has nine.

Posted in New Jersey Real Estate, Politics, Unrest | 161 Comments

Jobs Day

From CNBC:

Friday’s jobs report could eliminate market’s recession fears

Companies seem to have done a lot of hiring in March, and if Friday’s jobs report is as strong as expected, it could go a long way towards reducing speculation that a recession is coming and that the Fed will have to cut interest rates to stop it.

Like every jobs report, this one is important, but economists say even more so, after the stunningly weak February report, with just 20,000 jobs created. That data added to growing concerns this winter that the economy could tip into a recession sometime in the next year. But economists believe that report was an anomaly, and the real pace of job growth is closer to the consensus forecast for March of 180,000 payrolls.

Economists also expect an average hourly wage increase of 0.3 percent and an unchanged unemployment rate at 3.8 percent, when the report is released at 8:30 a.m. ET Friday, according to Refinitiv.

Posted in Economics, Employment, National Real Estate | 91 Comments

Geographic Sorting and Spacial Inequality

From Citylab:

How the 1 Percent Is Pulling America’s Cities and Regions Apart

The two gravest challenges facing America today, economic inequality and geographic divides, are increasingly intertwined. Economic inequality has surged with nearly all the growth being captured by the 1 percent, and the economic fortunes of coastal superstar cities and the rest of the nation have dramatically diverged.

These two trends are fundamental to a new studyby Robert Manduca, a PhD candidate in Sociology and Social Policy at Harvard University. The study uses census microdata culled from 1980 to 2013, and finds that America’s growing regional divide is largely a product of national economic inequality, in particular the outsized economic gains that have been captured by the 1 percent.

Up until now, most researchers have believed America’s rising geographic divides to be a consequence of the way people sort themselves by education, occupation, and income. In Bill Bishop’s influential book, The Big Sort, the basic idea is that more skilled, affluent, and educated Americans move to the booming parts of the country—superstar cities like New York and Los Angeles and tech hubs like San Francisco, Seattle, and Boston—leaving the rest stuck in less-advantaged parts of the country.

To some, this is simply the effect of the clustering of talent and skill. For others, it is the result of the preferences of advantaged groups for amenities and other lifestyle factors. Some also say it is the consequence of land-use restrictions, which limit the development of economically successful places, or other barriers to growth.

This growing pattern of spatial inequality can be clearly seen in the maps below. In 1980, there were only two U.S. city-regions, Washington, D.C., and the New Jersey suburbs of New York City (in dark blue on the map), where mean family income was more than 20 percent higher than the national average. Most of the rest of the map is shaded in gray (indicating mean family income ranges between 10 percent higher or lower than the national average) or light red, with some pockets of dark red.

Manduca does not deny that these kinds of geographic sorting forces are in play. Instead, he finds that the staggering growth in the economic divide helps to magnify such spatial division. The rich and the poor occupy different places to begin with, so as income inequality rises, the geographic discrepancies also rise as a consequence, with rich places getting richer and poor places falling further behind. Or as he puts it: national inequality acts like a powerful wave that “washes over an uneven landscape, leaving behind deep pools in some areas and shallow puddles in others.” The rise in economic inequality, even though not inherently spatial, does in fact have spatial consequences.

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

Refi window opens again

From Housingwire:

Here’s how many borrowers should refinance after the recent drop in mortgage rates

Mortgage rates fell 22 basis points last week to 4.06%, an event that will likely be a gamechanger for the refinance market.

According to the latest report from Black Knight, 4.9 million homeowners with a mortgage can now reduce their interest rate by at least 0.75% by refinancing after the recent drop in mortgage rates.

The latest rate change brings refinance incentive to 1.6 million more homeowners than before – a near 50% jump in refi incentive in a single week’s time.

This is welcome news for lenders who have seen their profitability take a hit as the refi market spiraled downward in recent months, hitting a 10-year low just four months ago.

But now, the population of refinanceable borrowers is nearing a two-year high, Black Knight said, noting that if rates hold steady, the mortgage market could see major refi activity very soon.

Posted in Economics, Mortgages, National Real Estate | 102 Comments

Pending Sales Dip

From CNBC:

Pending sales fall in February

Pending home sales drop 1% in February, despite lower mortgage rates

Homebuyers signed 1 percent fewer contracts to buy existing homes in February compared with January, according to the National Association of Realtors’ pending home sales index.

These contracts are a harbinger of closed sales one to two months later. Pending contracts were 4.9 percent lower tha a year earlier.

“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” said Lawrence Yun, chief economist for the Realtors. “As a whole, these numbers indicate that a cyclical low in sales is in the past, but activity is not matching the frenzied pace of last spring.”

Yun pointed to some sales growth in the West, although the region’s current sales are well below the sales activity from 2018.

“There is a lack of inventory in the West and prices have risen too fast. Job creation in the West is solid, but there is still a desperate need for more home construction,” he added.

The drop came despite buyers having the benefit of lower mortgage rates. The average rate on the 30-year fixed was just over 5 percent in November but began falling in December. They started January just above 4.6 percent but fell at the start of February to around 4.5 percent, according to Mortgage News Daily. Rates then sat there throughout the month, when these sales contracts would have been signed.

Posted in Economics, Housing Recovery, National Real Estate | 88 Comments

Spriiiiiiiiing Market!

From CNBC:

Want to sell your home? Hurry up and list it next week

Timing is everything, especially in a housing market that has been less than dependable lately. So if you want to get the best price for your home in the shortest amount of time, you’d better list it next week, at least according to

Homes listed in the first week of April get 14 percent more online views on average and are likely to sell six days faster than the average during the rest of the year.

Homes sold in April are also priced 6 percent higher than those in January. According to the most recent pricing data, that could mean an additional $17,000 for sellers listing the typical home prices around $306,000. One caveat is that is looking at average prices and does not take into account the type of homes for sale at different times of year. Larger, more expensive homes tend to be listed in the spring because families like to move over the summer, during school vacations.

“Given the time it takes from listing to close, putting a home on the market in early April positions sellers to attract buyers seeking to close and move before the beginning of school year,” said Danielle Hale, chief economist for

The number of buyers jumps dramatically in April, but the number of listings doesn’t peak until a little later, so there is less seller competition. The average list price in June is higher than April, again as larger family homes are being listed during school vacations, but there are fewer buyers, which increases the chance for a price reduction, although not by much. Homes listed in June are 1 percent more likely to see a price reduction and garner 2 percent fewer online views on average than the rest of the year.

If next week was already a great week to list, the steep drop in mortgage rates that started last week is only making it better. Buyers now have a little bit more purchasing power. The average rate on the 30-year fixed mortgage has fallen more than a quarter of a percentage point in the last week and is nearly a full point lower than the recent peak last November. Every quarter-point drop knocks about $50 off the monthly payment on a $300,000 mortgage.

Posted in National Real Estate | 99 Comments

FHA getting a bit too risky

From HousingWire:

FHA says as many as 50,000 mortgages will be affected by new lending rules

Two weeks ago, the Federal Housing Administration took steps to mitigate risks to its single-family portfolio, announcing updates to its TOTAL Mortgage Scorecard that will flag some loans for manual underwriting.

The move upset a number of lenders who feared that some of their borrowers would be shut out of FHA financing and that borrowers who began the process but no longer qualified under new guidelines would be angry.

Turns out, their fears have some merit.

An FHA official told The Wall Street Journal that approximately 40,000 to 50,000 loans a year will likely be affected, which amounts to about 4-5% to all the mortgages the FHA insures on an annual basis.

“We have continued to endorse loans with more and more credit risk,” said FHA’s Chief Risk Officer Keith Becker. “We felt that it was appropriate to take some steps to mitigate the risks we’re seeing.”

The WSJ points out that the move is a complete reversal of the agency’s 2016 decision to loosen underwriting standards, nixing an old rule that required manual underwriting for loans with credit scores below 620 and a debt-to-income ratio above 43%.

But the agency’s annual report to Congress released in November revealed risk trends that threatened to drain the program, among them a significant increase in cash-out refinances, a drop in average borrower credit score, and a jump in borrowers with high DTIs.

Requiring manual underwriting for riskier loans is intended to curb these risks, and there’s a good chance a number of borrowers will no longer qualify.

According to Becker, it’s likely that many of the loans flagged for manual underwriting won’t end up passing muster.

Posted in Economics, Mortgages, National Real Estate, Risky Lending | 99 Comments