Making Money

Posted on December 9, 2023 by grim

From CBS News:

The U.S. states where homeowners gained — and lost — equity in 2023

For the millions of Americans who own their homes, their properties are typically their biggest source of wealth. The good news? Those assets have grown in value over the past year thanks to rising home prices. 

The typical American homeowner saw their home equity rise by $20,000, or 6.8%, through the end of the third quarter compared with a year earlier, according to a new analysis from real estate data firm CoreLogic. 

Despite a fierce headwind in the form of the highest mortgage rates in two decades, average home prices have jumped about 9% this year, according to the National Association of Realtors. That has boosted the value of homeowners’ equity, or the difference between how much a home is worth and the remaining amount due on a mortgage. 

Posted in Housing Bubble, National Real Estate, New Jersey Real Estate | 71 Comments

Don’t let the money leave

Posted on December 8, 2023 by grim

From ROINJ:

Murphy appoints new task force designed to cut property bills in half for New Jersey seniors

A new task force charged with cutting property tax bills in half for New Jersey seniors has been created, according to a Monday announcement from the Governor’s Office.

Designed to offer recommendations to implement the new StayNJ property tax relief program, six of New Jersey’s highly regarded public servants have been assigned to review all of the state’s existing property tax relief programs and present a report to Gov. Phil Murphy and the Legislature no later than May 30, 2024.
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“StayNJ will be transformative for all families planning for the future, with historic property tax relief for seniors,” Coughlin said. “We need to ensure this program launches smoothly, with a seamless application process and system for benefit distribution. That’s why I am pleased to appoint Mayor McCormac to the StayNJ Task Force. His depth of experience will be invaluable. His service as state treasurer and his 17 years as mayor — particularly his innovative initiatives for Woodbridge seniors — make him uniquely qualified for this role. Mayor Mapp, the joint legislative appointment, brings even more expertise to the table with his decades of experience in local government, public finance and his training as a Certified Public Accountant.”

Under StayNJ, eligible seniors with a gross income under $500,000 will receive a credit of 50% on the annual property tax bill for their principal residence, up to $6,500.

Posted in New Jersey Real Estate, Politics, Property Taxes | 146 Comments

Riskiest Markets

Posted on December 7, 2023 by grim

From Atom:

Housing Markets Facing Greater Risk Of Downturns Clustered In California, New Jersey And Illinois

ATTOM, a leading curator of land, property, and real estate data, today released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, foreclosures, underwater mortgages and other measures in the third quarter of 2023. The report shows that California, New Jersey and Illinois have the highest concentrations of the most-at-risk markets in the country, with the biggest clusters in the New York City and Chicago areas, as well as central California. Less-vulnerable markets are spread mainly throughout the South, Midwest and Northeast.

The third-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that California, New Jersey and Illinois had 33 of the 50 counties considered most vulnerable to potential drop-offs. Those concentrations dwarfed other parts of the country at a time of mixed market trends when home prices and homeowner equity improved but home affordability and foreclosure activity worsened.
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The metropolitan areas around Chicago, IL, and New York, NY, as well as central California, had 21 of the 50 U.S. counties considered most vulnerable in the third quarter of 2023 to housing market troubles (from among 578 counties with enough data to analyze).

The 50 most at-risk counties included three in New York City (Kings and Richmond counties, which cover Brooklyn and Staten Island, and Bronx County), six in the New York City suburbs (Bergen, Essex, Ocean, Passaic, Sussex and Union counties, all in New Jersey) and seven in the Chicago metropolitan area (Cook, De Kalb, Kane, Lake, McHenry and Will counties in Illinois, and Lake County in Indiana).

The five in central California were Fresno County, Madera County (outside Fresno), Merced County (outside Fresno); San Joaquin County (Stockton) and Stanislas County (Modesto).

Elsewhere, the top-50 list included three each in northern California, southern California and the Philadelphia, PA, metro area. They were Butte County (outside Sacramento), El Dorado County (outside Sacramento) and Humboldt County (Eureka) in northern California and Kern County (Bakersfield), Riverside County and San Bernardino County in southern California. Those in the Philadelphia area were Philadelphia County, Gloucester County, NJ, and Camden County, NJ.

Posted in Demographics, Economics, Housing Bubble, New Jersey Real Estate | 80 Comments

Ringwood is prime

Posted on December 6, 2023 by grim

From the NYT:

Ringwood, N.J.: A Rural Lifestyle 40 Miles From New York City

154 CUPSAW DRIVE | A four-bedroom, one-bath house, built in 1939 on 0.31 acres, listed for $640,000. Credit Laura Moss for The New York Times

With its wooded hills, winding roads and shimmering lakes and reservoirs, Ringwood, N.J., feels more like the Catskills than like a New Jersey suburb. That rural charm was what attracted Linda and James Pentifallo when they decided to leave their longtime home in River Edge, in Bergen County.

“My wife really wanted to be on a lake, but I thought, ‘We’re not going to be able to afford that,’” said Mr. Pentifallo, 64, the owner of the Ridgefield Hobby store in Ridgefield, N.J.

Earlier this year, however, they bought a three-bedroom log cabin on Cupsaw Lake — one of several lakes in Ringwood — for $599,000. Their new home reminds Ms. Pentifallo, 65, a retired office manager, of the lakefront cabin her family owned in the Adirondacks.

“We go out on the deck and have a cocktail and enjoy the view,” Mr. Pentifallo said. “What’s great about Ringwood is its location: You’re in the country, and yet you’re not far from the city.”

Orly Steinberg, an agent with Keller Williams Village Square Realty in Ridgewood, said that many buyers start out searching in pricier northern New Jersey towns, only to realize that “they can afford a nice house and get more bang for their buck” in Ringwood. Others, she said, discover the borough during weekend outdoor adventures.

“During the pandemic, 30 percent of our clients came out of the city,” said Ms. Steinberg, a longtime Ringwood resident. “Everybody was hiking the trails. That brought people up, and a lot of them bought permanent homes, and some weekend homes.”

Posted in General | 62 Comments

Inventory falls in Bergen, Morris, and Passaic

Posted on December 5, 2023 by grim

From NorthJersey.com:

Market update: Three North Jersey counties saw an increase in home listings in November

North Jersey’s real estate market saw a decrease in both new home listings and median listing prices during the month of November.

Similarly, national mortgage rates have experienced a decrease over the past month or so, but still remain high. Nationally, the average mortgage rate for a 30-year fixed mortgage is 7.48%, according to Bankrate, down from the more than 8% interest rates we saw in September.

According to housing data from Realtor.com for November, some of New Jersey’s 21 counties experienced a decrease in new home listings compared with November 2022, while others actually saw an increase.

The North Jersey counties of Bergen, Passaic and Morris continue to see a decline in new home listings. In November, Bergen and Morris saw a decline of 7.08% and 7.56%, respectively, while Passaic saw a decline of 3.54%.

While these areas continue to see fewer new listings than in the year prior, it is not by as significant of a margin than in previous months. In September, Bergen, Passaic and Morris had declines of 25.82%, 24.18% and 11.46%, respectively.

In contrast, Essex, Sussex and Hudson counties all saw an increase in new home listings compared to 2022. Hudson County saw the highest increase at 9.6%, while Essex and Sussex saw increases of 7.98% and 6.74%, respectively.

Posted in New Jersey Real Estate | 80 Comments

Maybe in 2025?

Posted on December 4, 2023 by grim

From Fast Company:

U.S. home prices to hold firm in 2024 even if a mild recession hits, Fannie Mae says

Fannie Mae economists expect U.S. economic growth to decelerate, leading to a mild recession in 2024, according to the latest forecast released this week by Fannie Mae.

“The economy is now slowing from the otherwise robust first estimate of third quarter growth,” wrote Doug Duncan, Fannie Mae’s chief economist. “The slowdown in employment gains has continued, and stress is growing on consumers’ ability to sustain their high levels of spending—unsurprising results that we attribute to the often-lagged economic effect of monetary policy tightening.”

But here’s the thing: While Fannie Mae expects the U.S. economy is likely to slip into a mild recession next year, it doesn’t project that national home prices will fall in 2024.

Fannie Mae’s forecast model expects U.S. home prices to finish 2023 up 6.7% followed by a 2.8% gain in 2024. Then in 2025, Fannie Mae expects a slight 0.4% dip.

Earlier this year, when Fannie Mae revised its 2023 home price forecast from negative to positive appreciation, it pointed to a lack of supply that has shielded national home prices from declining. That suggests a belief that a mild recession wouldn’t materially change that dynamic.

While Fannie Mae doesn’t expect a significant mortgage rate drop next year, it anticipates that rates will continue to drift down, reaching 7.1% by the end of 2024 and 6.8% by the end of 2025.

“Housing has been and continues to be under serious affordability pressure, resulting in recessionary-level home sales activity. While many current owners with low mortgage rates will likely continue to be discouraged from listing their homes, we expect mortgage rates to trend modestly downward in 2024, which should help kickstart a gradual recovery in home sales into 2025,” wrote Duncan.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 95 Comments

Uh Oh

Posted on December 1, 2023 by grim

From CNBC:

Pending home sales drop to a record low, even worse than during the financial crisis

Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in October from September.

They hit the lowest level since the National Association of Realtors began tracking this metric in 2001, meaning it’s even worse than readings during the financial crisis more than a decade ago. Sales were down 8.5% from October of last year.

Because the index measures signed contracts, it is the most recent indicator of housing demand. It reflects the buyers who were out shopping in October, which was when the popular 30-year fixed mortgage rate briefly shot higher than 8%.

Rates have since pulled back to around 7.3%, according to Mortgage News Daily. The realtors continue to say it’s not just high rates but still very low supply of homes for sale that is deflating activity.

“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, chief economist for the NAR, said in a release. “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”

Pending sales fell in all regions month to month except in the Northeast. They fell most steeply in the West, which is where homes are most expensive. Sales were down everywhere compared with a year ago.

Tight supply and still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.

The Realtors noted that sales of homes priced above $750,000 have been increasing simply because there is more supply on the high end of the market.

Posted in Crisis, Economics, Housing Bubble, Mortgages, National Real Estate | 111 Comments

NYC Metro sees strong price increase in September

Posted on November 30, 2023 by grim

From MarketWatch:

Home prices continued ascent in September despite soaring mortgage rates: Case-Shiller

Home prices showed no signs of slowing in September despite the record-high mortgage rates that rendered housing unaffordable for many Americans, according to the latest S&P CoreLogic Case-Shiller Indices report.

Nationwide, home prices rose by 0.3% in September and now stand 3.9% above its year-ago level. The 10-city composite gained 4.8% and the 20-city composite increased 3.9% – the indices measure home prices in major metros across the country. Both indices posted a 0.7% month-over-month increase in September.

Home prices now stand 6.6% above where they started the year despite rising mortgage rates. The September Case-Shiller tracks July, August and September when mortgage rates climbed steadily from 6.8% at the beginning of July to 7.3% by the end of September. At the same time, housing inventory has remained low. Existing home sales dropped 2% in September to a 13-year low, according to research from Realtor.com.

“Speeding up of annual home price growth reflects much of the pent-up demand that exists in the housing market amid very low inventories,” CoreLogic Chief Economist Dr. Selma Hepp said in a statement. “Nevertheless, home prices are feeling the weight of high mortgage rates, which will slow the rate of price growth in the coming months. Still, despite the dramatic increase in the cost of homeownership, home prices have risen 6.4% this year – meaningfully beyond expectations given the rise in borrowing costs.”
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Detroit, San Diego and New York led the way for the fastest-growing cities in the U.S. Detroit reported the highest year-over-year growth, with an annual increase of 6.7%. San Diego and New York followed with gains of 6.5% and 6.3%, respectively.

September’s worst-performing cities were Las Vegas, Phoenix and Portland. Las Vegas saw the most significant year-over-year decline, with prices dipping 1.9%. Phoenix and Portland followed with a decrease in growth of 1.2% and 0.7%, respectively. 

Posted in Economics, Housing Bubble, National Real Estate | 37 Comments

$75k or $525k?

Posted on November 28, 2023 by grim

Ohhhhh, Millennials… From the Messenger:

Millennials Say Over $500K Would Buy Them Happiness: Report

Each generation has a different idea of the cost of happiness. For millennials, more than $500,000 annually would be the key.

In a survey conducted by The Harris Poll, 2,034 Americans ages 18 and older were asked about the secrets to financial happiness. Financial services company Empower released the results Monday, which determined the average person believes having $1.2 million is needed to attain financial happiness.

The average person would need a salary of about $284,164 every year to be happy, according to the survey, but the results did vary by generation.

Boomers said they needed the least amount of money, asking for an annual salary of $124,000 and a net worth of $999,945. They were followed by Gen Z, who sought a $128,000 salary and a net worth of $487,711.

Gen X respondents said they wanted a $130,000 salary and a net worth of $1,213,759, per the survey. Millennials said they needed the most, asking for $525,000 annually and a net worth of $1,699,571.

Women reported needing less than half of what men said they would need, asking for an annual salary of $183,000 compared to $381,000 for men.

Some researchers say millennials are not wrong. Nobel Prize recipient Daniel Kahneman co-authored a 2023 study that found that earning up to $500,000 a year can improve a person’s happiness.

But others disagree. Nobel Prize recipient Angus Deaton found in a 2010 studythat happiness can only be improved by money up to a $75,000 salary. After that point, he said that money had little impact on happiness.

Posted in Crisis, Demographics, Economics, Humor | 138 Comments

Three’s Company is cool again

Posted on November 27, 2023 by grim

From CNBC:

Gen Z, millennials are ‘house hacking’ to become homeowners in a tough market. How the strategy can help

Gen Z and millennials are “hacking” the housing market as high prices and interest rates make affordability difficult.

The term “house hacking” refers to the practice of renting out a portion of your home or an entire property for an additional stream of income.

Almost 4 in 10, 39%, of recent homebuyers say the practice represents a “very” or “extremely” important opportunity, according to a new report by housing market site Zillow. That share is up eight percentage points in the past two years.

Younger generations are especially keen on the idea. In Zillow’s survey, more than half of millennial, 55%, and Gen Z home buyers, 51%, expressed positive views on house hacking.

Zillow polled more than 6,500 recent homebuyers between April 2023 and July 2023. Respondents were adults who moved to a new primary residence they purchased in the past two years.

The additional income from house hacking can “help make those dreams of homeownership penciled into reality, given that there’s so many affordability constraints on the current market,” said Manny Garcia, senior population scientist at Zillow. 

Posted in Crisis, Demographics, Housing Bubble, National Real Estate | 30 Comments

Return to normal in the spring?

Posted on November 26, 2023 by grim

From HousingWire:

What will lower mortgage rates do to spring housing inventory?

Lower mortgage rates tend to take housing supply off the market and demand has been picking up lately as rates have fallen. However, the recent drop in housing inventory has more to do with seasonality factors than lower mortgage rates. 

Higher mortgage rates did push inventory higher during the seasonal period when it would normally be declining. However, seasonality tends to rule the day eventually. The question now is what will inventory look like in the spring if mortgage rates keep falling?

Now that mortgage rates have fallen from a bit over 8% toward 7.32%, we can see the immediate impact as purchase application data was positive for the third straight week. Last week, it was up 4%, making the year-to-date count 21 positive prints versus 23 negative prints and one flat week.

The rule of thumb is that it’s a material difference if we get 12-14 weeks of a positive trend. Last year, we had three months of a positive data run as rates fell from 7.37% to 5.99%. So for now, three weeks of positive purchase applications is a small but important step in the right direction.

The 10-year yield ended the week roughly flat. Mortgage rates started the week at 7.38% and ended at 7.32%; it was a light holiday trading week, so we shouldn’t make too much of it. Instead, let’s look at the future: If the 10-year yield can break under 4.34% with some kick from bond buyers, we have an excellent shot at getting under 7%. 
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As we head toward the end of the year and start the countdown to Christmas, it looks certain that I will not have even one week of the kind of inventory growth I was hoping for when mortgage rates got above 7.25%. I was looking for at least a few weeks of inventory growth between 11,000-17,000, and it has yet to happen — even when mortgage rates got to 8%. 

Posted in Economics, Housing Bubble, National Real Estate | 10 Comments

Will real estate end 2024 lower?

Posted on November 25, 2023 by grim

From Business Insider:

Home prices are poised to drop as the frozen housing market thaws, 2 top experts say

House prices may be headed lower, dealing a blow to sellers but providing relief to buyers, two experts say.

“The only way out of the box, the only way to get sales back up is mortgage rates have to come down, incomes have to continue to improve, we have to avoid a recession, and I suspect we’ll have to see some house price declines at some point here,” Moody’s chief economist, Mark Zandi, told Yahoo Finance this week.

Redfin CEO Glenn Kelman made a similar call in a Fox News interview this week. Asked about Morgan Stanley’s latest forecast of a 3% drop in home prices next year, he replied that a decline “seems not just possible, but likely.”

The housing market ground to a halt this year, as the Federal Reserve’s inflation-fighting hikes to interest rates have boosted mortgage rates to two-decade highs.

Homeowners who locked in much cheaper rates have balked at selling up and paying heftier monthly payments for their next place. Meanwhile, prospective buyers have been priced out, and many are waiting for rates to fall instead of settling for a worse home than they wanted.

“Housing’s taken it on the chin, particularly demand,” Zandi said. He pointed to new data showing annualized sales of previously owned homes fell below 3.8 million units in October, the lowest figure in 13 years. “You have to go back to the teeth of the financial crisis to find sales that low,” he said.

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

Tippy Top?

Posted on November 22, 2023 by grim

From CNBC:

Home sales fell to a 13-year low in October as prices rose

Sales of previously owned homes were 4.1% lower in October compared with September, running at a seasonally adjusted annualized rate of 3.79 million units, according to the National Association of Realtors.

It was the slowest sales pace since August 2010. Analysts were expecting a smaller drop, to 3.9 million units. Sales were down 14.6% year over year.

The October sales count is based on closings from contracts likely signed in August and September. The average rate on the 30-year fixed mortgage had dropped to near 7% at the end of August, but then began rising sharply, jumping over 8% by mid-October. Rates have since retreated somewhat.

“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, NAR’s chief economist. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”

At the end of October there were 1.15 million homes for sale, down 5.7% from a year earlier. This is about half as many homes as were available for sale pre-Covid. At the current sales pace, that represents a 3.6-month supply. a six-month supply is considered a balanced market between buyer and seller.

Tight supply kept pressure under prices. The median price of an existing home sold in October was $391,800, an increase of 3.4% from a year ago ($378,800). Prices rose in all regions of the country. These annual price increases have been getting larger for four straight months. Roughly 28% of homes sold above list price.

“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”

Posted in Economics, Housing Bubble, Mortgages, National Real Estate | 79 Comments

Industrial is hot hot hot

Posted on November 21, 2023 by grim

From the Daily Record:

Large East Hanover industrial park sells for whopping $217.5 million

In what is being touted as New Jersey’s biggest industrial real estate deal of the year, 1.2 million square feet of light industrial space in East Hanover was sold earlier this month to a real estate investment fund for nearly $218 million. 

JLL Capital Markets announced that it represented owner Urban Edge Properties in the $217.5 million sale of the seven-building portfolio to an investment fund managed by Morgan Stanley Real Estate Investing, and its operator and manager, New Jersey-based Saxum Real Estate.

The property is fully occupied by 13 tenants, according to JLL’s sale announcement.

“This was a remarkable transaction for both the seller and the buyer,” said JLL sales team member Jose Cruz. “The experience and financial wherewithal, collectively, was instrumental to getting a deal of this size done in the current environment.”

Posted in Economics, New Jersey Real Estate | 76 Comments

Where NJ makes it’s money

Posted on November 20, 2023 by grim

From Statista:

Real value added to the gross domestic product of New Jersey in the United States in 2022, by industry 

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 71 Comments