NJ nears $15

From the Star Ledger:

N.J. minimum wage to rise to $15 an hour as Murphy, top Dems strike deal

New Jersey’s Democratic governor and lawmakers have reached a highly anticipated agreement to raise New Jersey’s minimum wage to $15 an hour for most workers by 2024.

Under the deal, many workers will see their wages rise gradually to a $15 an hour, though some, including those employed by small businesses with five or fewer employees, will have to wait longer.

The deal had been held up by a disagreement over which workers should receive $15 an hour and when. Gov. Phil Murphy called for $15 for all, while legislative leaders said there must be exceptions made for some employers, including small businesses and farmers. This tension had stalled progress on one of the Democrats’ top priorities.

The breakthrough announced Thursday is a plan to raise the standard minimum wage to $10 an hour on July 1, $11 an hour in 2020, $12 an hour in 2021, $13 in 2022, $14 in 2023 and $15 in 2024.

“This is a big, big step forward for New Jersey. And particularly, it’s responsible,” Murphy said. “We are changing the lives of a million workers in this state. I can’t stress that enough.”

The impact of the deal is far reaching. New Jersey Policy Perspective, a liberal Trenton think tank, estimated more than 1 million workers will benefit from the wage hike. But about 10 percent of those employees will be put on a slower path.

Seasonal workers and small business employees won’t reach $15 an hour in 2026. Farm workers will hit $12.50 in 2024, after which it would be left up to state officials in the executive branch whether to keep going to $15 an hour by 2027.

A bill still must be passed by the state Senate and Assembly and signed into law by the governor. The Democratic-controlled Legislature hopes to vote on the bill by the end of the month, according to one legislative source.

The New Jersey Business and Industry Association, which represents 20,000 businesses, said he announcement is “another hit” to small businesses trying to absorb new rules, like paid sick leave, energy costs and higher personal and corporate state tax rates.

“Most small business owners pay what they can afford their workers. Now that it’s a mandate, it’s inevitable that some of those with the smallest profit margins will struggle, stagnate or simply fail,” NJBIA President Michele Siekerka said in a statement.

Posted in Economics, Employment, New Jersey Real Estate | 73 Comments

Need to raise the taxes

From the Star Ledger:

N.J.’s tax revenues are falling short of Murphy administration target

Midway through the fiscal year, New Jersey’s income tax collections have fallen off track, Gov. Phil Murphy’s administration reported on Monday.

Revenues for the fiscal year that began in July are expected to grow 7.5 percent over last year but slowed to 2.1 percent through December. The slowdown is driven largely by underperforming gross income tax collections that are budgeted to increase 5.4 percent — or $824 million — compared with last year. Treasury data shows they have fallen 6.5 percent below last year’s collections.

At 6.5 percent through November, all revenues had been just slightly lagging that 7.5 percent target. The income tax was beating its goal.

Last fiscal year, New Jersey collected $15.2 billion in income taxes, and the administration projects it will bring in $16 billion this year, thanks to a new “mega-millionaires tax” on income over $5 million. The gross income tax is the state’s largest single source of tax revenue.

Another major tax, the sales tax, remains behind the governor’s projections — growing by 1.2 percent compared with 6.2 percent. The Corporation Business Tax, which underwent a big update in this year’s budget, has grown 60.8 percent versus this time last year, where it is projected to grow 47.2 percent.

“Corporate tax revenues are expected to grow significantly due to substantial state and federal tax policy changes that influence the tax base and the timing of certain payments,” according to the Treasury Department.

Posted in Economics, New Jersey Real Estate, Politics | 128 Comments

And now we rent

From Forbes:

Renting Is More Affordable Than Buying In Most Major Housing Markets

Despite national rents clocking in at well over $1,400, in most of America’s largest housing markets renting is still more affordable than buying.

A new analysis from ATTOM Data Solutions shows that renting a three-bedroom property is more affordable than buying a median-priced home in 37 of the nation’s 40 biggest counties.

Taking into account average wages, home price appreciation and rent growth, even high-priced markets like Los Angeles, Seattle and New York City are more affordable for renters than homebuyers.

The only three major counties where buying a home is the better option are Wayne County, Michigan (where the median home sale came in at just $89,000 last year); Philadelphia County, Pennsylvania; and Cuyahoga County, Ohio.

ome prices are also rising faster than rents in 70% of housing markets. The average across all 80 counties was a 6.7% uptick in home prices over the year, with just a 3.5% jump in average rents. According to ATTOM’s findings, home price growth is outpacing rent growth significantly in Cook County (Illinois), Harris County (Texas) and Maricopa County (Arizona) and Kings County (New York).

The analysis doesn’t even take into account mortgage rates—which rose more than 60 basis points across 2018 and are expected to rise as high as 5.8% this year. As ATTOM’s Jennifer von Pohlmann succinctly puts it, “Renting a home is clearly becoming the more attractive option in this volatile housing market.”

Posted in Economics, National Real Estate | 147 Comments

Keep Manhattan, just give me that countryside

From Forbes:

People First, Jobs Follow: Cause And Effect In Real Estate And Its Impact On Affordability

Earlier this year, the U.S. Census Bureau shared its latest data concerning suburban population demographics from 2016 to 2017, revealing a trend that many had long suspected: As more big cities become less affordable, people are moving back to the suburbs.

After several years of urban growth, America is once again seeing an urban flight to the suburbs. In 2017, New York City saw 143,000 people move out, making it the first time since 2007 that the city did not lead the country in population growth. For the New York metropolitan area, the suburban population growth of 2016-2017 exceeded the city population growth — as was the case in 36 of the 53 largest metropolitan areas in America.

This move away from major, dense urban environments is largely a result of the urbanization in the first half of the decade. From 2010 to 2014, cities saw the fastest growth they had seen in decades. In the span of four years, nine of America’s 25 largest cities saw growth rates of at least 1%, a significant increase from the average rate of 0.49% the decade before. Headlines such as “Decade of the City” and “Cities Thrive, Suburbs Sputter” were common in the media in 2013, and many were quick to show that city life was in the midst of a hot renaissance.

Five years later, much of that enthusiasm has been tempered. The May 2018 data suggests that the growth in cities was only a blip on a broader trend towards suburbanization. Extreme productivity in places like New York City and San Francisco led to skyrocketing housing prices and wage gaps. Cities have had a hard time keeping up with the demand for housing and keeping it affordable for residents. In May 2012, the average home price in Brooklyn, New York was $480,000. In May 2018, it was $786,000.

As affordable housing in cities became scarce, middle-income earners found solace in the housing options offered in suburban America, and the jobs seem to be following.

Since 2010, Bayonne, New Jersey, a city just across the Hudson River from Manhattan, experienced a population growth of 6.4%, while more than 6,000 apartments have either opened or are under construction. According to a New York Times article, “as apartments rise in Bayonne, new businesses are appearing on Broadway, a three-and-a-half-mile commercial strip lined with vintage bakeries, cigar shops and newsstands that often appear unchanged from the 1950s.” In addition, Costco and Starbucks are opening their first stores in Bayonne, and a ferry that will bring residents to Manhattan is set to open in January.

Posted in Demographics, Economics, Employment, National Real Estate | 48 Comments

Don’t believe the hype?

From MarketWatch:

Why the housing and mortgage crisis is far from over

With major data providers reporting that mortgage delinquencies continue to decline, Wall Street and the pundits are more convinced than ever that the mortgage crisis is dead and buried.

The enormous delinquency problem in the New York City metro area shows why I’m convinced that the U.S. housing and mortgage crisis is far from over, and reveals an ugly truth about mortgage deadbeats. Moreover, New York City is not the only city in this weakened position.

Here’s what’s happening in New York that is likely occurring in other major U.S. real estate markets. In 2009, the New York State legislature passed a statute requiring all mortgage servicers to send a pre-foreclosure notice to all delinquent owner-occupants in the state. The notice warned them that they were in danger of foreclosure and explained how they could get help. Servicers were required to regularly send statistics back to the state’s Department of Financial Services for all notices sent out. The department published two reports in 2010 with a compilation of these numbers. That was the last time these statistics were officially reported.

I have obtained the unpublished figures from a person involved with compiling the pre-foreclosure notice filings for the department. The latest update shows cumulative figures through the third quarter of 2018, covering New York City as well as Nassau and Suffolk counties on Long Island. Totals for the entire state are also included.

Here is a brief summary of what the data show. Since February 2010, mortgage servicers have sent out a total of 1,242,490 pre-foreclosure notices to delinquent owner-occupants in New York City and Long Island. This does not include delinquent investor-owners because that was not required under the 2009 law. About 85% of these notices were for delinquent first liens and the remainder were for second liens.

From the data and my contact, it’s likely that roughly 40% of these were second or third notices sent to the same property. Why? The servicers have been sending repeat notices to owners who have not taken action to cure their delinquency for more than a year, and have not yet been foreclosed. My contact recently informed me that close to 20% of the total are duplicates sent out mistakenly by the servicers.

That most of these delinquent owners have not paid for years is confirmed by related figures published monthly in theLong Island Real Estate Report. Since early 2016, almost half of the formal notices of default filed in Suffolk County have been repeat notices. Why? In New York State, a default notice (known as a lis pendens) is only active for three years after which it expires. Hence lenders have had to file a new default notice for borrowers whose default notice has been active for three years.

Some may contend that pre-foreclosure notice numbers don’t reveal much because many of these delinquencies must have been either (1) foreclosed by the servicing bank or (2) brought current by the borrower.

Let’s tackle these objections one at a time. Concerning foreclosures, I have reliable figures from Property Shark that an average of 1,548 properties were foreclosed annually in New York City between 2012 and 2016. Furthermore, their latest data show that just 1,312 foreclosed properties are now owned by the banks (REOs) and a mere 630 were scheduled for foreclosure auction as of November 2018.

The Furman Center for Real Estate at New York University publishes an annual State of New York City’s Housing and Neighborhoods Report. Its 2015 report shows that an average of only 300 properties were foreclosed and re-possessed each year in New York City by the lender from 2011 to 2014. This in a city where 635,359 pre-foreclosure notices have been sent to deadbeats since early 2010. Its latest report for 2017 showed that the annual number of default notices filed in NYC has been declining every year since 2013 to just 10,000 in 2017.

The inescapable truth is that for eight years, mortgage servicers have foreclosed on exceptionally few long-term delinquent homeowners in New York City and Long Island.

What about the claim that many of these delinquent property owners have probably brought their loans current after receiving a pre-foreclosure notice? Remember that roughly 40% of these pre-foreclosure notices are second- or third notices sent to borrowers because they have not paid the arrears owed.

Does this have implications for the delinquency situation of other major metro areas? Clearly. Because of New York State’s pre-foreclosure notice requirement, the New York City metro data provide the most comprehensive and reliable delinquency statistics in the nation. Unfortunately, to a great extent we are in the dark when it comes to the two dozen other major metros where the housing collapse of a decade ago was centered.

The trouble is that all data providers which claim to have delinquency figures are dependent on the numbers they obtain from the mortgage servicers — which are their clients. Seven years of digging for reliable data have taught me that numbers from the servicers are extremely inaccurate and often incomplete.

It is evident that in early 2016, 10 major metros that had deadbeat problems with their non-agency securitized loans all had serious delinquency rates of 23% or higher. I am confident that the delinquency rate for those major metros that suffered significant housing collapses is almost certainly much higher than widely believed.

Posted in Foreclosures, National Real Estate, NYC | 64 Comments

Maybe the infrastructure isn’t all junk?

From the Star Ledger:

Andrew Cuomo shows Phil Murphy the light at the end of the tunnel

Our governor was off on an African safari for the holidays. Meanwhile New York Gov. Andrew Cuomo was doing some pretty impressive legwork in the area of transportation.

“His panel of experts had been working for weeks behind the scenes, even on Christmas and New Year’s Day,” the New York Times reported.

That was in an article last week reporting that Andrew Cuomo shocked the entire “transportation-industrial complex” by doing something unheard of in this part of the world: He chose a practical solution over an expensive one that promised what New Yorkers were calling the “L-pocalypse.”

That’s the name that was given to the planned 18-month closure of two Sandy-damaged tunnels used by subway riders from Brooklyn to get to their jobs in Manhattan.

Cuomo canceled the closure after he did something that our governor ought to do when it comes to the two tunnels under the Hudson River that send our commuters to Manhattan:

He took a tour of the problem areas with some experts who don’t have their palms out looking for pork.

Those experts were from the engineering schools at Columbia and Cornell universities. When they looked at the damage caused to those two tunnels by Hurricane Sandy, they concluded that there was a more efficient way to address the two problem areas than shutting the tunnels down.

One problem was the wiring, which is at the bottom of the tube and got soaked in sections. Instead of repairing it in place, they suggested running new wiring at the top of the tunnels. Problem solved.

The other was damage to the “bench walls,” the concrete paths running alongside the train. The prior plan had been to replace the entire bench wall. The profs suggested fixing only the problem areas, which are relatively small.

Cuomo took their advice and on Friday he announced that the shutdown will be canceled. Those repairs can be done on weekends and at night.

This being New York, there was a lot of grumbling from various entrenched interests. But a headline from a real-estate news website cited the consensus among those who would have been directly affected: “Real estate community and hipsters rejoice over canceled L Train shutdown.”

Cuomo’s plan will save them all a lot of grief. And according to one former transit executive, it would also work for those tunnels under the Hudson that are central to the proposed Gateway Development Project that includes representatives from both states as well as Amtrak.

Former Long Island Rail Road executive Joe Clift said the damage caused by Sandy to those subway tunnels was actually much worse than the damage to the tunnels that carry NJ Transit and Amtrak.

“If you can do it for the tunnel with the most damage, you can do it for the tunnel with the least damage,” Clift said.

Posted in NYC, Politics, Unrest | 48 Comments

Prices up, Rate up, Mortgages up

From HousingWire:

CoreLogic: Home prices will rise in 2019

In 2018, the principal-and-interest mortgage payment on the median-priced home climbed by more than 16%, according to the latest data from CoreLogic.

CoreLogic reports that although the median home price rose by less than 6% over the past year, prospective buyers are in for a rude awakening come 2019.

According to the company’s forecast, American home prices will rise by almost 5% year over year in September 2019. In fact, it claims that some mortgage rate forecasts point to mortgage payments climbing to more than 11%.

“A consensus forecast suggests mortgage rates will rise by about half of a percentage point between September 2018 and September 2019,” CoreLogic writes. “The CoreLogic HPI Forecast suggests the median sale price will rise 2.7% in real, or inflation-adjusted, terms over that same time period.”

CoreLogic says based on these projections, the real typical monthly mortgage payment would rise from $912 in September 2018 to $994 by September 2019. This is an 8.9% year-over-year gain, which equates to a nominal year-over-year gain of 11.3% in 2019.

That being said, the latest CoreLogic Case-Shiller report indicated that although home prices were slowly increasing, most cities across the country saw a boost from the prior year.

“The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house. Fixed rate 30-year mortgages are currently 4.75%, up from 4% one year earlier,” S&P Dow Jones Indices Managing Director and Chairman of the Index Committee David Blitzer said. “Home prices are up 54%, or 40% excluding inflation, since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single-family homes.”

Posted in Demographics, Economics, Employment, National Real Estate | 120 Comments

Maybe they’ll just stay in Manhattan?

From Bloomberg:

Manhattan home prices fall under $1 million as sellers cut deals

Manhattan home prices fell in the fourth quarter, with the median slipping to less than $1 million for the first time in three years. Ample inventory continued to allow buyers to demand sweeter deals.

Condo and co-op prices declined to $999,000 in the three months through December, a drop of 5.8% from a year earlier, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report Thursday. Many apartments were sold for less than sellers originally sought, with an average discount of 6.2% from the last list price. That’s up from price cuts of 5.4% a year earlier.

It was the first time the median was less than $1 million since the third quarter of 2015, when it was $998,000.

The price decline is largely the result of shoppers having options. The inventory of existing homes on the market was up 17% from a year earlier. That’s given buyers greater negotiating power, and left sellers with no choice but to cut overly optimistic listing prices if they want to move properties.

Posted in Demographics, Economics, NYC, Price Reduced | 104 Comments

The $150k Club

From the Census ACS Community Survey released a few weeks ago.

Town – Median Household Income:
Millburn, Essex County $202,862
Essex Fells, Essex County $200,875
Glen Ridge, Essex County $196,821
North Caldwell, Essex County $187,470
Mendham Township, Morris County $185,882
Harding Township, Morris County $183,587
Montgomery Township, Somerset County $180,660
Upper Saddle River, Bergen County $176,674
Ho-Ho-Kus, Bergen County $176,518
Chatham Township, Morris County $176,364
West Windsor Township, Mercer County $175,684
Mountain Lakes, Morris County $175,556
Saddle River, Bergen County $173,333
Haworth, Bergen County $170,417
Colts Neck Township, Monmouth County $167,480
Chatham, Morris County $163,026
Glen Rock, Bergen County $162,443
Ridgewood Village, Bergen County $162,011
Tewksbury Township, Hunterdon County $161,477
Woodcliff Lake, Bergen County $161,250
Westfield, Union County $159,923
Rockleigh, Bergen County $158,594
Fair Haven, Monmouth County $158,264
Rumson, Monmouth County $158,229
Millstone Township, Monmouth County $156,891
Holmdel Township, Monmouth County $155,842
Franklin Lakes, Bergen County $155,458
Warren Township, Somerset County $154,647
Tenafly, Bergen County $153,906
Livingston Township, Essex County $153,381
Chester Township, Morris County $153,056
Allendale, Bergen County $151,875
Bernardsville, Somerset County $150,635

Posted in Economics, New Jersey Real Estate | 69 Comments

Housing to get more expensive in 2019

From HousingWire:

CoreLogic: Home prices will rise in 2019

In 2018, the principal-and-interest mortgage payment on the median-priced home climbed by more than 16%, according to the latest data from CoreLogic.

CoreLogic reports that although the median home price rose by less than 6% over the past year, prospective buyers are in for a rude awakening come 2019.

According to the company’s forecast, American home prices will rise by almost 5% year over year in September 2019. In fact, it claims that some mortgage rate forecasts point to mortgage payments climbing to more than 11%.

“A consensus forecast suggests mortgage rates will rise by about half of a percentage point between September 2018 and September 2019,” CoreLogic writes. “The CoreLogic HPI Forecast suggests the median sale price will rise 2.7% in real, or inflation-adjusted, terms over that same time period.”

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

Predictions 2019!

This is becoming a tradition around here, so here we go again! You know how this works, break out the crystal balls and prognosticate.

Ground Rules

Predictions provided should either be for June 30th, 2019 or December 31st, 2019, please specify.

Provide justification for your forecast, where applicable (unless you are just making it up, if so, state that).

You may provide any caveats and/or assumptions that your forecast is based on.

You need not provide a forecast for all categories below.

Where applicable, forecasts are judged against the surveys/reports listed.

Real Estate
National
Existing Home Sales – NAR
Existing Home Price – S&P Case Shiller HPI
Existing Home Price – Other
National New Home Sales – NAHB
Median New Home Price – NAHB

New Jersey
Existing Home Sales – NAR/NJAR
Existing Home Price – S&P Case Shiller HPI
Existing Home Price – Other

Commodities
Energy (Oil, NatGas)
Metals (Gold, Silver, Copper)

Equities
United States
International Developed Markets
Emerging Markets

Mortgage Financing
30-Year Fixed – Freddie Mac PMMS
15-Year Fixed – Freddie Mac PMMS

Foreclosures
Delinquency Rate
Foreclosure Rate

Cybercurrencies
Date of crash
Total % decline during crash
Suicides as result of the crash

Macroeconomic
10y Treasury
Fed Funds Rate
National Unemployment Rate
New Jersey Unemployment Rate

Oddball
Anything else you’d like to make a prediction about.

Posted in Demographics, Economics, Employment, Foreclosures | 94 Comments

Pending sales fall again, 11th consecutive month

From CNBC:

Pending home sales fall unexpectedly in November

Contracts to buy previously owned homes fell unexpectedly in November, the National Association of Realtors said on Friday, the latest sign of weakness in the U.S. housing market.

The NAR’s pending home sales index decreased 0.7 percent from the prior month to 101.4. October’s index was unrevised.

Economists polled by Reuters had forecast pending home sales to rise 0.7 percent last month.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

Compared to one year ago, pending sales were down 7.7 percent in November, the eleventh straight year-over-year drop.

Groundbreaking for new homes also rebounded in November, but completions on single-family homes fell for a third straight month to their lowest level in more than a year.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 27 Comments

Gains continue to moderate

From MarketWatch:

U.S. home-price gains keep slowing as higher rates scare off buyers, Case-Shiller shows

The S&P/Case-Shiller 20-city index rose a seasonally adjusted 0.4% in October but in a clear sign of the housing market’s recent struggles the increase in prices over the past 12 months slipped to the lowest level in two years.

The year-over-year advance in prices fell to 5% from a revised 5.2%.

The Econoday consensus was for a 0.4% monthly increase for the 20-city index and a 5% yearly increase.

What happened: Home prices are still rising faster than the incomes of prospective home buyers, but not nearly as fast as they were a few years ago. Sales and construction have also slowed.

How come? Higher interest rates are the chief reason. The rate on a 30-year fixed mortgage climbed to as high as 4.94% last month from less than 3.5% at the start of 2017.

Rates have fallen sharply in the past few weeks amid a stock-market selloff and growing worries about the economy, but they are still more than a full percentage higher compared to two years ago.

Big picture: The housing market is unlikely to regain momentum anytime soon despite some softening in mortgage rates.

What they’re saying: “The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 51 Comments

Flippers pulling out

From the Washington Post:

Home flipping takes a hit

In yet another sign of a slowdown in the national housing market, the number of homes that were flipped — sold within one year of purchase — declined by 12 percent during the third quarter of 2018, compared with the third quarter of 2017, according to a new report by ATTOM Data Solutions, an Irvine, Calif.-based property database. The U.S. Home Flipping Report shows that 45,901 single-family homes and condos that sold during the third quarter were flips, which is the lowest level since the first quarter of 2015.

The number of sales that were considered flips during the quarter represent 5 percent of all sales, down slightly from 5.1 percent during the third quarter of 2017.

ATTOM’s quarterly reports have now recorded three consecutive quarters with a decline in flips, which hasn’t happened since 2014, according to Daren Blomquist, ATTOM’s senior vice president, which followed a jump in mortgage rates during the second half of 2013. In the years leading up to the housing crash, 11 consecutive quarters (from the second quarter of 2006 to the fourth quarter of 2008) had declines in flipping activity.

The combination of high home prices, low inventory and higher mortgage rates are contributors to the slowdown in home flipping. In addition, the average returns on home flipping dropped to a 6.5-year low during the third quarter of 2018, at an average of 42.6 percent, down from 48.1 percent during the third quarter of 2017.

Posted in Economics, Housing Recovery, National Real Estate | 38 Comments

What middle class?

From the New York Post:

New York City’s endangered middle class in exodus, analysts say

New York City’s shrinking middle class is now in full retreat, as masses of our most endangered population depart the city in numbers not seen since the Depression, according to analysts.

After decades of sharp income erosion in the face of relentless taxes, escalating living costs and wage reductions through technological changes, the full extent of this shocking exodus is laid bare in the latest US Census data.

That shows the city is losing 100 residents each day — with departures exceeding new arrivals.

New York City’s middle class comprises 48 percent of city residents, with median annual incomes between $30,000 and $60,000.

Thirty-one percent make lower incomes, and the ranks of the rich account for 21 percent of New York City residents.

By contrast, in the early 1970s, about 61 percent of New Yorkers were ensconced in the middle class; today, fewer than half are.

For example, of the estimated 175,000 net new private-sector jobs that have been created in New York City since 2017, fewer than 20 percent are paying middle- class salaries, Earle notes.

Posted in Demographics, Economics, Employment, NYC | 24 Comments