NJ Unemployment falls to 4.4%

From NJ Biz:

N.J. added over 12k jobs in February, new report says

New Jersey added 12,600 total nonfarm jobs last month and saw its unemployment rate tick down slightly to 4.4 percent, according to a report released Thursday by the state Department of Labor and Workforce Development,

The report also presented revised numbers for January, increasing that month’s total nonfarm job growth by 1,300 positions, to a total of 15,900 jobs.

“The Garden State economy is steaming forward, with private-sector job growth well above 10,000 for the second month in a row,” said state Department of the Treasury chief economist James Wooster. “The unemployment rate dropped to 4.4 percent and is now well below the national rate of 4.7 percent. And, for yet another month, New Jersey’s private sector growth outpaced the national rate.”

In February, the vast majority of the added jobs came in the private sector, where industries such as manufacturing and construction saw the biggest gains.

Posted in Economics, Employment, New Jersey Real Estate | 10 Comments

Good way to kill mortgage lending in NJ

From the Observer:

Murphy Goes Anti-Wall Street With Foreclosure Proposal

The leading candidate in New Jersey’s gubernatorial race proposed having Wall Street banks pay for the conversion of foreclosed homes into affordable housing with millions of dollars in federal mortgage settlement funds Wednesday. Former Goldman Sachs executive and one-time U.S. Ambassador to Germany Phil Murphy said “Wall Street created the foreclosure crisis, they need to be held responsible for fixing it.”

The move could be an attempt to head off criticisms of his own Wall Street background, which has drawn harsh criticism from primary rival and progressive assemblyman John Wisniewski and unfavorable comparisons to former governor Jon Corzine in some New Jersey political circles.

“Making Wall Street pay with the billions they gave up for causing the housing crash would not only ensure fairness for New Jersey’s families, but be a measure of justice for their role in creating this crisis that has left our state pockmarked with empty homes,” Murphy said, adding that he is “mystified that Governor Christie had failed to fight for New Jersey’s share of the funds.”

Posted in Foreclosures, New Jersey Real Estate, Politics | 81 Comments

NJ’s Losers

From the Star Ledger:

The 20 fastest-shrinking towns in New Jersey

New Jersey is in the midst of a dramatic population shift, the inverse of the outward sprawl that has dominated the state for the last several decades.

The large population swings mean parts of the state are seeing decline not seen in more than 20 years. Today, we take a look at what towns are seeing the starkest losses.

With each passing year since the Great Recession, the population trend in New Jersey becomes more clear. During the last decade, counties like Sussex and Warren — once the fastest growing in New Jersey — are now shrinking. Conversely, the suburbs surrounding New York City are booming.

Top 10 by People Lost

10. Vernon
9. Margate City
8. Camden
7. Irvington
6. Brick
5. Brigantine
4. Ocean City
3. Willingboro
2. Washington (Gloucester)
1. Toms River

Top 10 by Percentage Lost
10. Alpine
9. Lavalette
8. Ocean City
7. Margate City
6. Brigantine
5. Surf City
4. Ship Bottom
3. Hampton
2. Sea Isle City
1. Beach Haven

Posted in Demographics, New Jersey Real Estate | 81 Comments

The year of the ‘burbs?

From the NYT:

Home Sales Brisk in New York City’s Suburbs

Real estate market temperatures in the commuter suburbs around New York City range from warm to sizzling, having never really cooled down for the winter.

As 2016 ended, prices remained stable, but most markets showed rising sales volume and a dwindling supply of homes for sale. Now, on the cusp of spring, any slack left over from the financial crisis is largely gone, with the exception of an oversupply of luxury homes at the very top.

In Westchester and Fairfield Counties, “I wouldn’t characterize anywhere as dead or nonactive,” said Jim Gricar, the general sales manager for Houlihan Lawrence. “Two years ago, I couldn’t have said that. But today, I feel confident saying it.”

On Long Island, in both Suffolk and Nassau Counties, the housing markets are moving at a “blistering pace,” and prices are accelerating, according to a fourth-quarter market report from Douglas Elliman Real Estate.

And in the inner-ring New Jersey suburbs closest to Manhattan, the markets are so brisk that many have less than three months’ worth of inventory, according to Jeffrey Otteau, the president of the Otteau Group, an appraisal and advisory firm. By way of comparison, in 2012, most of those markets had a four-to-eight-month supply, a more typical range.

The dynamics driving demand vary from suburb to suburb, but industry experts cited several overall reasons for the busy winter. First, many buyers had been holding off on making a purchase until after the presidential election, largely because of uncertainty about the outcome. That pent-up demand was unleashed after Nov. 8, and has been helped along by a mild winter.

“Anecdotally, the brokerage community said literally the day after the election there was a pop — activity jumped,” said Jonathan Miller, the president of the appraisal firm Miller Samuel, which prepares the Douglas Elliman market reports. “We saw the same thing after the 2012 election. When the numbers come in for the first quarter, I think we will see an uptick over a year ago.”

In New Jersey, price growth has been very modest across the state as a whole, even as sales volume grew by 12 percent last year. But appreciation is much more robust in the economically strong commuter suburbs closest to the city, such as Jersey City, Hoboken, Glen Ridge and Ridgewood, according to Mr. Otteau.

He noted that January brought an unusual statewide spike in sales of homes priced between $1 million and $2.5 million, a market segment that had slowed in recent years. While the 19 percent year-over-year surge might be an anomaly, Mr. Otteau said, it could also be a sign that high-income buyers are feeling extra confident, possibly because of the Trump administration’s talk of financial deregulation and tax reform.

“It’s completely opposite to what we’d been seeing previously,” he said.

Posted in Economics, New Jersey Real Estate, NYC | 87 Comments

Are suburbs the smart move?

From Inman:

Are the suburbs a better deal for millennials?

Much has been made of the millennial desire to live in cities; however, a couple of recent studies show that for families with kids, the suburbs might be the place to be.

The National Association of Realtors 2017 Home Buyer and Seller Generational Trends study found that more millennials are moving to the suburbs with their kids.

As millennials age, more of them have children. This year’s survey found that 49 percent of millennial buyers had at least one child.

Affordability is sending millennials to the suburbs. The survey showed that just 15 percent of millennial buyers bought in an urban area, down from 17 percent last year and 21 percent two years ago.

It’s not just housing affordability that is a factor in where millennials chose to settle. The Zillow and Care.com Cost of Living Report measured how much families could expect to spend on housing and child care in urban and suburban locations around the country and found that overall families spend $9,000 more a year to live in the city versus the suburbs.

Although the difference between city versus suburbs varies from city to city, it is most stark in New York, Chicago and Dallas.

In New York, a family would pay an additional $71,237 a year in order to live in the city.

Suburban living doesn’t always win out. In Philadelphia, a family would spend an additional $13,859 to live in the city as compared to the suburbs.

In most cities, high property taxes and rising home prices are usually the reasons why city living is more expensive; however, in some cities, the cost of child care is the issue.

Zillow’s 2016 Report on Consumer Housing Trends also found that millennials, the largest group of homebuyers, are making their way into the suburbs.

The Zillow data says that almost 50 percent of millennial homeowners live in the suburbs, while 33 percent live in an urban neighborhood and just 20 percent live in a rural area.

Of the millennial buyers who moved in the past year, 64 percent stayed in the same city and just 7 percent of them moved to a different state. Millennials pay a median price of $217,000 for a home that is about 1,800 square feet, similar in size to what older generations buy.

Like older generations, they prize shared community amenities and are considering townhouses at higher rates than other generations.

Because of the size of the generation, millennials, like baby boomers, create change with each new life stage they move into. Now that they are buying, and moving into suburbs, they are changing the way we consider what a suburb looks like.

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

10 years after the foreclosure crisis

From DS News:

The Foreclosure Crisis: A Retrospective

On Tuesday, CoreLogic released a report titled “United States Residential Foreclosure Crisis: Ten Years Later” to examine how the country has handled and recovered from the foreclosure crisis in the years since. The report also gives background from the early 2000s leading into the crisis.

The foreclosure crisis began in 2007, and peaked in September 2010. In that month alone, approximately 120,000 homes entered foreclosure. Economists tend to mark the bankruptcy of two Bear Stearns subprime funds in June 2007 as the beginning of the crisis, followed by a worsening crisis when Lehman Brothers declared bankruptcy in September 2008. In 2009, unemployment peaked as well, adding to the crisis.

“The country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.”

Over 1 million foreclosures occurred in in 2010 when the crisis peaked. Following this peak, foreclosures began to steadily decline year by year, dropping by 100,000 per year through 2016. By state, Florida experienced the highest number of foreclosures during the crisis, with 12.5 percent of homes in the foreclosure process in June 2011.

In addition to foreclosures, CoreLogic reported the number of mortgages in serious delinquency, or more than 30 days past due, during the housing crisis. At the end of 2016, 1 million mortgages, 2.6 percent of homes with a mortgage, were in serious delinquency. Serious delinquency had previously peaked in January 2010 at 3.7 million, 8.6 percent, of homes with a mortgage in delinquency.

Currently, 385,748 completed foreclosures are in effect, below the 2010 peak of 1,178,234, and the number is expected to continue to fall. In 2013, as the market began its repair, then CEO and President of CoreLogic Anand Nallathambi stated, “The housing market is clearly on the mend, but we expect the ultimate conclusion of the present housing cycle to be another several years away . . .”

Posted in Foreclosures, National Real Estate | 61 Comments

NJ Comeback?

From the Record:

N.J. job growth last year best since 2000

New Jersey added nearly 61,000 jobs last year, the best year for private-sector growth since 2000, according to the U.S. Bureau of Labor Statistics.

The gains continued into the new year, with 12,600 jobs added in January, bringing the unemployment rate to 4.6 percent, the state Department of Labor and Workforce Development said.

But the monthly jobs report relies on surveys and is considered preliminary. The annual employment data comes from the labor bureau’s benchmarking process examining records, making it the authoritative source.

Gov. Chris Christie, who has come under criticism for his fiscal stewardship of the state’s economy, celebrated the jobs figures Monday during a visit to LG Electronics in Englewood Cliffs. During his seven years as governor the state has added 313,100 private-sector jobs as it recovered from the Great Recession, he said. Christie pointed to the employment figures as validation of his conservative policies of rejecting tax increases while offering generous business tax breaks.

“What you’re seeing here is the effect of seven years of policies now going into effect,” Christie said.

The job growth, coupled with a high labor participation rate, means New Jersey is “winning on both sides,” he said.

Christie took office in 2010, a year after the recession technically ended, and inherited a 9.8 percent unemployment rate. The current rate of 4.6 percent is just below the national average of 4.7 percent. That, along with New Jersey’s job growth last year, should put an end to reporting that the state has lagged in the economic recovery, Christie said.

“I think we should stop the continuing drumbeat that somehow New Jersey has underperformed from a jobs perspective,” he said. “New Jersey is outperforming the nation in 2016 in job growth and outperforming the nation in terms of unemployment rate as well.”

Posted in Economics, New Jersey Real Estate | 29 Comments

Rent or Buy – Too Simple?

From NJ101.5:

Should you buy or rent? A county-by-county list for NJ

To make that decision a bit easier, real estate database ATTOM Data Solutions has released a report that breaks down the math in New Jersey’s housing markets and determines whether it’s more affordable to rent a three-bedroom home or buy one in each of them.

The report analyzed nearly all of New Jersey’s counties — all but Salem — using 2017 fair market rent data from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and 2016 public record sales deed data.

Based on monthly payments alone, ATTOM found it’s more affordable to rent than buy in 55 percent of New Jersey’s markets, or 11 counties: Bergen, Essex, Hudson, Monmouth, Union, Morris, Burlington, Somerset, Hunterdon, Warren and Cape May.

Monthly rent in Union County was calculated at about $1,700, for example, compared to a mortgage payment of more than $2,300, including property taxes and interest.

In the other nine counties, mortgage payments were found to be cheaper than monthly rent. In Cumberland County, owning a home was calculated at just $870 per month, compared to $1,570 monthly to rent.

Posted in Economics, New Jersey Real Estate | 49 Comments

7.4% of NJ households are millionaires

From the Star Ledger:

The number of N.J. millionaires growing, study finds

New Jersey leaped over Hawaii last year to become the U.S. state with the third-highest number of millionaires.

The Garden State’s wealth and incomes are among the highest in the country. And last year, nearly 7.4 percent of households here had assets that classify them as millionaires, according to Phoenix Marketing International’s Wealth & Affluent Monitor report.

The study found that nationwide there are nearly 6.8 million households with at least $1 million in investable assets, such as retirement accounts, stocks, bonds, mutual funds, ETFs, cash accounts and annuities. That’s about 5.5 percent of all households.

Despite New Jersey’s new top three ranking, the broader population continues to suffer from stagnant economic growth.

While the household median income in 2015 increased by 5.2 percent nationally, the household median income in New Jersey went from $71,994 in 2014 to $72,222 in 2015.

That 0.3 percent change in New Jersey was dead last among U.S. states. In fact, the New Jersey median income hasn’t increased or decreased in a statistically significant way since 2011.

Posted in Economics, New Jersey Real Estate | 25 Comments

Millennials happy about housing

From CNBC:

Millennials drive housing confidence higher, despite red-hot prices

Both buyers and sellers alike are feeling very good about the housing market this spring, even as home values hit new highs and mortgage rates move up.

A monthly sentiment index from Fannie Mae rose to the highest level since 2011, when the survey began, thanks to a surprising surge from millennials.

“Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

Millennials are moving out of their parents’ basements and forming new households at a faster rate, according to Fannie Mae research, but they are still overwhelmingly forced to rent.

“Continued slow supply growth implies continued strong price appreciation and affordability constraints facing millennials and first-time buyers in many markets,” Duncan added.

The leading edge of the millennial generation is, however, entering the housing market in larger numbers today, with some venturing out of their desired urban cores to more affordable suburbs. Millennials delayed both marriage and parenthood, but that is now changing.

Nearly half of millennial buyers had at least one child, according to the 2017 Home Buyer and Seller Generational report just released by the National Association of Realtors. That is up from 45 percent last year and 43 percent two years ago. Children are the primary driver of homeownership, which is now sitting near a record low. Just 15 percent of millennial buyers chose an urban area, which is down from 17 percent last year and 21 percent two years ago.

Posted in Demographics, National Real Estate | 76 Comments

Home prices up and continuing to go up -CoreLogic

From HousingWire:

CoreLogic: Spring home buying season looks to be strongest in recent memory

Home prices increased in January and will even continue this rise into January 2018 due to a mixture of low housing supply and a progressive economic recovery, according to CoreLogic, a property information, analytics and data-enabled solutions provider.

CoreLogic released its Home Price Index and its HPI Forecast for January, which showed that home prices increased 6.9% from January 2016 and 0.7% from December.

“With lean for-sale inventories and low rental vacancy rates, many markets have seen housing prices outpace inflation,” CoreLogic Chief Economist Frank Nothaft said. “Over the 12 months through January of this year, the CoreLogic Home Price Index recorded a 6.9% rise in home prices nationally and the CoreLogic Single-Family Rental Index was up 2.7%–both rising faster than inflation.”

The HPI Forecast indicates this growth won’t be stopping anytime soon. The forecast predicts home prices will increase 4.8% annually in January 2018 and 0.1% from January to February this year.

“Home prices continue to climb across the nation, and the spring home buying season is shaping up to be one of the strongest in recent memory,” CoreLogic President and CEO Frank Martell said.

“A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future,” Martell said. “We expect the CoreLogic Home Price Index to rise 4.8% nationally over the next 12 months, buoyed by lack of supply and continued high demand.”

Posted in Demographics, Economics, National Real Estate | 64 Comments

NJ downtown at stake?

Admittedly more commercial real estate than residential – but absolutely linked to NJ’s broader real estate market. Thoughts?

From the Star Ledger:

Liquor lobby’s on the rocks: Bill would let restaurants serve alcohol

On a recent weekday night, my friend Zeke and I were driving down Route 35 through Monmouth County.

“Look at this,” Zeke said. “There’s no one else on the road.”

He was right. Even though it was only 11 p.m., there were few other cars to be seen – other than the police cruisers lurking at every town line looking for speeders and drunks.

I suspect that explained why all the bars had empty parking lots – even that most sainted of Shore institutions, the go-go bar.

What we were witnessing was the result of an abject failure of New Jersey’s alcoholic beverage licensing system.

First the state tightly controlled the number of licenses so that the only way to make a profit was to locate the bars on major highways.

Then, after having made it impossible to reach a bar by any means other than the automobile, they decided to crack down on drunken driving.

I saw the results of that misguided policy at a hearing in Trenton last week. At issue was a bill that would finally free up the liquor-licensing system that had been turned into a monopoly in 1946 during the governorship of Wally Edge – whose name would later live in infamy when Bridgegate mastermind David Wildstein employed it as his nom de plume.

The first Wally Edge was a do-gooder. I suspect his effort to limit the issuance of new liquor licenses might have seemed like a good idea at the time, when the cities had bars on literally every corner.

The flaw in the system didn’t reveal itself until the mass migration to the suburbs began. The cities got to keep their licenses, but the booming suburbs were limited to one for every 3,000 new residents.

As a result, Hoboken has 140 licenses, or 140 per square mile. Meanwhile my old home town Toms River has a mere 45 licenses in 44 square miles, or about one per square mile. All but a few are in strip malls.

The obvious solution is home rule. Let the residents of each town decide for themselves how many licenses to issue.

Assemblyman John Burzichelli is trying to do just that. The Gloucester County Democrat’s bill that would create a new license that would permit only table service at restaurants. Shot-and-beer joints need not apply.

Why has it taken 70 years to propose such an obvious reform? Because the people who control the current licenses also control the Legislature. At the slightest hint of competition they show up en masse to inveigh against the free market.

They did so on at a committee hearing Monday on the bill, making the absurd argument that there are at present both too many and too few licenses.

The lobbyists argued that the proof there are too many licenses is that the number of bars has dropped from a one-time high of 15,000 to the current number of 7,500.

Therefore there’s no demand for new licenses.

Fair enough. But they then went on to argue that if the towns could start issuing new licenses, restaurant owners would immediately buy them up these licenses no one wants by the thousands.

That makes no sense, Rutgers Professor Morris Davis told the committee members. Davis, an economist who specializes in real estate, argues that development in New Jersey has been hamstrung by the state’s archaic liquor laws.

“If we’re going to encourage the revitalization of our communities, this seems like a key component,” said Davis. “Restaurants need liquor licenses to survive.”

The old model of locating bars in strip malls out on the highway is a proven failure, he said, not just because of DWI laws but also because strip malls themselves are failing.

Which is the free country? In Cuba you can buy a beer from a vending machine; in Jersey you can’t even buy one in a restaurant. Rick Shaftan
“We’re in a situation where we’re basically out of developable land,” he said. “The revitalization of downtowns has to be where we have growth.”

Posted in New Development, New Jersey Real Estate, Politics | 43 Comments

Ruining your Friday

From NJ Spotlight:

OP-ED: JIM HUGHES PREDICTS NJ’S POSTSUBURBAN ECONOMY, AND IT ISN’T PRETTY

New Jersey is known for many things, not all of them wonderful. Since World War II, with apologies to Bruce Springsteen and Tony Soprano, it is best known as being the most suburban state in the country.

The United States suburbanized rapidly after the war and nowhere was that more true than in New Jersey. It produced rapid development and became haven to millions of white-collar residents and their families, making New Jersey the wealthiest of the 50 states.

That’s quickly changing for the worse; and without a smart policy approach from our state that to date is missing, New Jersey’s homeowners will soon be facing a fiscal cliff. That’s why the most recent book by Jim Hughes, dean at Rutgers University Bloustein School, must be a clarion call for our next governor, the legislature, and suburban mayors.

Written with his Rutgers colleague Joseph Seneca, Hughes is totally on the mark in the book titled “New Jersey’s Postsuburban Economy.” They write about how New Jersey successfully evolved from an urban manufacturing-based economy to one that made the state an economic success story based on suburbanized information and research-driven employment.

They see the future and are clear that without adapting New Jersey faces a grim future. “The baby boom will soon be yesterday’s workforce. Tomorrow’s workforce will be dominated by a new, expansive generation…such young creatives…currently do not find the car-culture suburbs in which they grew up an attractive place to live, work and play.”

They go on to write, “Suddenly, New Jersey’s greatest core advantage in the late twentieth century — a suburban-dominated, automobile dependent economy and lifestyle — is regarded as a disadvantage.”

Hughes and Seneca are challenging our next governor when they write: “New Jersey will have to adapt and reinvent itself yet again — this time to a postsuburban digital economy that is being shaped by increasingly sophisticated mobile technology and the workforce that employs it.”

So what does all this mean? Simply that the huge suburban office parks that make up millions of square feet in New Jersey are rapidly becoming white elephants that will be subsidized by homeowners in the towns these complexes are located, unless they are repurposed into uses that match the changing economy described by Hughes and Seneca.

As we know, the new generation workforce wants to live, work, and play nearby without needing a car. What’s more, space demands are smaller than they were 20 years ago, and many of New Jersey’s suburban office buildings are technologically antiquated. These office parks must be reimagined to include fine restaurants, supermarkets, shopping, and living — while also providing workspaces and educational opportunities. But with change come concerns and a desire to maintain the status quo. Unfortunately, not evolving is not an answer.

The result will be carcass office buildings whose owners will easily win tax appeals, which effectively raises taxes on all homeowners. Worse, these buildings in a sea of asphalt will become a reputational lag for the towns in which they are located. The office parks — along with our aging malls — are the grayfields of New Jersey that are going to drag our economy and already property-tax-expensive state in the wrong direction.

In their conclusion, Hughes and Seneca ask five important questions our next governor must answer. Among them are what to do with this vast inventory, what are acceptable models to maximize environmental benefits with effective reuse, and what is the best way to keep this new workforce in New Jersey to propel our economy forward?

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 149 Comments

NJ’s real estate market off to a good start in 2017

From the Otteau Group:

NJ Home Sales Remain Strong in 2017

In January, the number of contract purchases by home buyers exceeded the same month in the prior year for the 29th consecutive month, reflecting a 14% increase over January 2016. Considering the 15% increase (y-o-y) in January of 2016, home sales have increased by 31% over the past 2 years. This latest gain was the highest number of purchase contracts recorded in the month of January since 2005.

A closer look at the distribution of home sales in New Jersey shows continuing strength in those priced below $400,000, which recorded a 16% increase in January compared to one year ago. This price range is primarily represented by younger-age ‘Millennials’ who are beginning to transition from rentership to homeownership. Also noteworthy is a 19% increase in the number of home sales priced between $1.0-2.5-Million, which has been sluggish in recent years. While it’s still too early in the year to declare this a trend, one possible explanation is increased optimism among higher income households given the Trump administration’s plans for lowering taxes and deregulating businesses. This trend bears close watching in the months ahead.

Shifting to the supply side of the equation, the supply of homes being offered for sale remains constricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has declined by nearly 5,400 (-12%) compared to one year ago. This is also about 34,000 (-47%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.4 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 7.0 months.

Currently, the majority (81%) of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson County is presently experiencing the strongest market conditions in the state with just 2.9 months of supply, followed by Essex, Union, Morris, Middlesex, Bergen and Passaic Counties, which all have fewer than 5 months of supply. All of the counties with an unsold inventory level equivalent to a supply of 8 months or greater are concentrated in the southern portion of the state including Cumberland (8.4), Cape May (8.6), Atlantic (9.7) and Salem (14.0).

Posted in Economics, New Jersey Real Estate | 246 Comments

Pending home sales starting to show cracks?

From CNBC:

Pending home sales drop unexpectedly to lowest in a year, down 2.8% in January

Higher mortgage rates and near record low supply resulted in disappointing home sales to start the year.

House hunters signed 2.8 percent fewer contracts to buy existing homes in January compared with December, although December’s read was revised slightly higher, according to the National Association of Realtors. The group’s so-called pending home sales index is now just 0.4 percent higher than January 2016, and this is the lowest reading since then. Pending home sales are an indicator of closed sales in February and March.

“The significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay,” said Lawrence Yun, chief economist of the NAR. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it’s not uncommon to see a home come off the market within a month.”

“January’s accelerated price appreciation is concerning because it’s over double the pace of income growth and mortgage rates are up considerably from six months ago,” said Yun. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location.”

Regionally, pending home sales in the Northeast rose 2.3 percent month to month and were 3.6 percent above a year ago. In the Midwest sales fell 5.0 percent for the month and were 3.8 percent lower than January 2016. Pending home sales in the South gained only barely, up 0.4 percent for the month and up 2 percent for the year. The biggest drop was in the West where sales plunged 9.8 percent for the month and were 0.4 percent lower compared with a year ago.

Posted in Demographics, Economics, Employment, National Real Estate | 87 Comments