Renters Pay Less Than Owners

Just the Facts: Homeowners with a mortgage spend more money per month than renters on housing. That means that renters are saving money every month, statistically.

These figures are based upon data from the U.S. Census Bureau’s 2013-2017 American Community Survey five-year estimates, which tracks median housing costs across the country.

Unfortunately, for the New Jersey homeowner, the gap between the median monthly cost for renters and those with a mortgage is significant – more than $1,149. That’s $45 more than the median cost to rent in New York, where the median rent cost is $1,194.

The reason for this is that the costs for homeownership includes related costs such as maintenance, property taxes, repairs, insurance, and the monthly mortgage payments.

The monthly costs of buying and owning a home are up 14% year-over-year, which is more than the annual average rent increase nationally, which are up just 4 percent according to the National Association of Realtors.
At this point, it looks like most renters are saving money.

New Jersey
Median monthly cost for homeowners with a mortgage: $2,398
Median rent cost: $1,249
Difference between owning and renting: $1,149

Connecticut
Median monthly cost for homeowners with a mortgage: $2,065
Median rent cost: $1,123
Difference between owning and renting: $942

New York
Median monthly cost for homeowners with a mortgage: $2,064
Median rent cost: $1,194
Difference between owning and renting: $870

Pennsylvania
Median monthly cost for homeowners with a mortgage: $1,446
Median rent cost: $885
Difference between owning and renting: $561

New Hampshire
Median monthly cost for homeowners with a mortgage: $1,878
Median rent cost: $1,052
Difference between owning and renting: $826

Vermont
Median monthly cost for homeowners with a mortgage: $1,563
Median rent cost: $945
Difference between owning and renting: $618

Mortgage Apps Remain Steady

WASHINGTON, D.C.  – The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for January 2019 shows mortgage applications for new home purchases remained unchanged from a year ago. Compared to December 2018, applications increased by 43 percent. This change does not include any adjustment for typical seasonal patterns.

“After two lackluster months, new home sales surged almost 30 percent in January to the fastest pace since our survey began in 2013,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. ” The healthy job market, faster wage growth, moderating price gains and lower mortgage rates,  all helped home sales recover. Additionally, builders seem to be seeing improvement in their labor shortages, as government survey data showed increases in construction hiring and openings in December.”

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 713,000 units in January 2019, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for January is an increase of 29.2 percent from the December pace of 552,000 units. On an unadjusted basis, MBA estimates that there were 54,000 new home sales in January 2019, an increase of 45.9 percent from 37,000 new home sales in December.

By product type, conventional loans composed 68.7 percent of loan applications, FHA loans composed 18.6 percent, RHS/USDA loans composed 0.5 percent and VA loans composed 12.2 percent. The average loan size of new homes decreased from $334,944 in December to $334,532 in January.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level. This data also provides information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

Amazon Takes a Hike

Amazon has officially pulled the plug on its move to New York City, specifically to Long Island City.

What is amazing is that the internet behemoth retailer felt that its decision to move to the Big Apple would not be in its best interest, considering the public outcry against the company.

So now that Amazon has officially canceled plans to build a headquarters in New York, the quest is where will it go now. The reality that this huge deal could be hijacked by local politicians who were incensed by the tax breaks given to this company came at a time when Jeff Bezos didn’t have the stomach for the vitriol.

This decision comes after years of politicking and pitching the company, with plans coming from over 20 other potential sites. Obviously, such a massive project would impact people, no matter where they eventually ended up.

Now the bar is reset, and those cities back in competition for the 25,000+ jobs know that solidarity is going to play into the strategy for any plan.

Even though the company stated that it will not reopen a search for a new location, instead focusing on its plans to build a second headquarters in Arlington, Virginia, no doubt other cities will attempt to pitch a deal that is too good to turn away from. It will continue to operate its center in Nashville, as well as growing the 17 other offices and tech hubs it runs in the U.S. and Canada.

“While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City,” the company wrote in a statement posted to its website.

Amazon’s current 5,000 employees in Brooklyn, Manhattan and Staten Island will stay put, and the company expects to expand these teams. This rebuff from Amazon is clearly a big political black-eye for Governor Cuomo, who prides himself as a people’s governor.

“We are disappointed to have reached this conclusion – we love New York, its incomparable dynamism, people, and culture – and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents,” Amazon wrote.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

Home Love at First Sight?

The whole idea of buying a home is the American Dream – that is until you find out all the things you didn’t know or didn’t see when you first walked through the property.

Buying a home is a BIG DEAL! So make sure you set some guidelines.

Understand that the probability of you buying the first house you see is HIGHLY UNLIKELY! It’s like marrying the first person you date.

It is said that the average homebuyer looks through at least 10 homes over an 8-week period before making their first offer.

As on many of the property shows where they film buyers reviewing at least 3 properties before settling on one, the same rule should hold for any buyer: you should compare at least 3 homes before making a decision to make an offer.

You will probably:
■ Find similar features in another home.
■ Learn about the comparables in the same neighborhood.
■ Recognize that if you buy the best home on the block or neighborhood, chances are that it won’t appreciate as quickly as the rest of the neighborhood.
■ Open every door – if any rooms are “unavailable” during the showing, make sure to see them at a later time with your home inspector to examine them.

Other Costs
■ Appraisal fees can run between $300 to $800.

■ Professional home inspection fees also range from $300 to $800.
■ If you’re buying in a subdivision, homeowner’s association fees.
■ Have an ample budget for repairs, renovations and upgrades. It can cost as much as 1% of the purchase price per year to maintain your home.

Housing Settling Down

The number of homes selling above list price is dropping, according to a recent Zillow report.

It seems that the current housing market is finally settling down. Not going down, just easing into a less frenetic pace. Yes, inventory shortages still plague the market, and interest rates are higher than they used to be, but houses are selling closer to their asking prices than they have in a while.

According to Zillow, during the last six months of 2018, the number of homes selling above list price has fallen.

For instance, in December, nationwide, only 19.4% of homes were sold above list price. This represented a three-year low.

New Jersey’s housing inventory has yet to see much relief. The total number of single family homes for sale in the month of December 2018 fell 10.6% year-over-year to just 29,954. The average sale price increased barely by 1% from $381,135 to $384,792.

In the cases of Monmouth County and Ocean County, inventory continued to crater by 18.6% to just 2,161 single family homes for sale  in Monmouth County, while Ocean County fell by 7.8% to 3,535 for December.

Notably, Zillow highlights not only did the share of homes that sold above list decline, but the average price above list dropped, too.

Those homes selling above list did so by an average premium of $5,800, according to the Zillow report.

According to the report: “So while the seller’s market appears to be waning, it’s certainly not over, and this is not a result of weak demand,” Zillow writes. “Homes are more likely to sell at the listed price as a result of convergence in the market expectations of buyers and sellers.”

Trends to Track – Home Prices and Equity Tick Higher

CoreLogic came out with its December report for home prices. They indicated that in December 2018, home prices climbed 4.7% from December 2017.

The CoreLogic HPI report projects that a future home price growth for 2019 is expected to be 4.6%; this rise comes despite the slowdown in the number of homes purchased and higher mortgage rates.

The ATTOM report was published, indicating that home equity for America’s 14.5 million properties increased significantly. The report showed that in the fourth quarter of 2018, 25.6% of all properties with a mortgage reviewed as equity rich.

The report also indicates that 834,000 more homes were considered to be equity rich, increased from the prior-year period.

The ATTOM Data Solutions report also reflected that 5 million U.S. properties were seriously underwater.

This designation is determined when the combined estimated balance of loan secured by the property is at least 25% higher than the property’s estimated market value. The total number of homes seriously underwater equaled 8.8% of all U.S. properties. The percentage of property seriously underwater has fallen from the fourth quarter of 2017, when 9.3% of all properties in the United States were seriously underwater.

As homeowners remain in their current homes longer, the homeowner equity is expected to continue to increase and appreciate. As those individuals who are seriously underwater or just underwater remain in their homes, they come closer to breaking even as the market continues to stabilize and strengthen from the crash of 2008.

The report showcases the percentage of homes with the highest share of home equity are on the West Coast, while those homeowners in the South and Midwest continue to claw their way back to even.

To gain a perspective on the appreciation of home values and those properties that are seriously underwater, we can look at the first quarter of 2012 when, according to the ATTOM report, 12,533,235 homes were seriously underwater. This represented 27.8% of all homes in the United States.

Within just two years that number of seriously underwater homes dropped to 9,065,741 or 17.5% of all homes.

The fourth quarter of 2018 measured just 5,001,482 homes that were seriously underwater and 14,566,363 that were equity rich, representing 25.6% of all homes.

“Among 7,590 U.S. zip codes with at least 2,500 properties with mortgages, there were 27 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Chicago, Cleveland, Saint Louis, Atlantic City, Detroit and Virginia Beach metropolitan statistical areas. The top five zip codes with the highest share of seriously underwater properties were 08611 in Trenton, New Jersey (70.3 percent seriously underwater); 63137 in Saint Louis, Missouri (64.8 percent); 60426 in Harvey, Illinois (62.3 percent); 38106 in Memphis, Tennessee (60.5 percent); and 61104 in Rockford, Illinois (59.6 percent),” reported ATTOM Data Solutions.

2018 – The Year of the Multi-Family Dwelling

2018 was the year of the multi-family dwelling.

The new report from CBRE for 2018 reflects that the net absorption rate was 286,600 units. This exceeded the 2017 total by approximately 10,000 units, making it the highest total since the year 2000.

Construction
In 2018, the level of construction activity was very strong, with 267,900 units completed, in just slightly less than the 274,000 reported for 2017. The numbers for 2018 though reflected the second highest total since the 80s. Most likely, the difference could have been attributed to two factors: a shortage of buildable lots and a shortage of skilled labor.

Multifamily Acquisitions
According to the CBRE report, a total of $173 billion was spent in 2018 on multifamily acquisitions. This represents the highest level in 19 years, CBRE’s report stated, up 12.1% from 2017.
■ Multifamily investment totaled $50.9 billion in the fourth quarter of 2018, which translates into the highest amount in the last 12 quarters.
■ CBRE noted that significant increases were registered in multifamily investment in both the fourth quarter and the year
■ The report indicates the overall vacancy rate was 4.5% in the fourth quarter – down 20 basis points from the prior year period.
■ The reported fourth quarter vacancy rate for 2018 was the lowest in any fourth quarter since 2000.
■ CBRE projects that the strong investments of 2018 are expected continue in 2019.
■ CBRE also cautions that total investment is possible to decline slightly in 2019.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

CoreLogic Reports Home Prices Climb 4.7% in 2018

In a press release, CoreLogic reported home prices increased by 4.7% year-over-year in December.

Headlines:

Twelve-month home-price growth rate was slowest since August 2012

Annual average price growth in 2018 was 5.8%, with annual average price growth forecast to slow in 2019 to 3.4%

After peaking in March, December marked the ninth consecutive month of decelerating annual HPI growth in the United States

CoreLogic Home Price Index (HPI™) and HPI Forecast™ for December 2018, which shows home prices rose both year over year and month over month. Home prices increased nationally by 4.7% year over year from December 2017. On a month-over-month basis, prices increased by 0.1% in December 2018.

The CoreLogic HPI Forecast indicates home prices will increase by 4.6% on a year-over-year basis from December 2018 to December 2019. Comparing the annual average HPI and HPI forecast for 2018 and 2019, average price growth is forecasted to slow from 5.8% to 3.4%. On a month-over-month basis, home prices are expected to decrease by 1% from December 2018 to January 2019. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

When looking at only the top 50 markets based on housing stock, 40% were overvalued, 18% were undervalued and 42% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10 percent above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level.

NJ Employment Dips

New Jersey as reported a slight loss in the number of employed within the state by approximately 12,000 year-over-year for the month of December 2018.

The state’s unemployment rate has remained steady from November 2018 to December 2018, but the year-over-year comparison for unemployment has fallen significantly from 4.7% to 4.0%.

Year-over-year, the private sector of the state has gained 61,900 jobs from December 2017.

The bulk of those jobs appear to be coming in the manufacturing section, which gained 9,200 jobs year-over-year.

The hourly earnings for manufacturing has increased by nearly $2 an hour from $21.60 to $23.14.

Since 2008, the state has employed of a 4.5 million people consistently. That number has ranged between 4,540,000 to 4,588,000. The state over the last 11 years has never dropped below that and has never had as many individuals working in its labor force.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

NJ Real Estate – Inventory Shortage

In retrospect, back in 2011, there were 8,300 single-family homes listed for sale by NJ Realtor. Looking at the inventory for December 2018, the number of single-family homes has fallen to just 5,458 homes on the market.

Well, so we can look at the days on market for an average home before it’s sold, and that has dropped by nearly 7% over the last year. Currently the month supply of inventory on the market is 4.3 months.

Still the price of a single-family home, townhouse and senior adult home have all increased between 3%, 1%, and 5%, respectively.

What is more important in this market stage is the strength of the economy. Friday’s unemployment figures reported 304,000 new jobs were created with an unemployment rate of 4%. Experts were projecting between 170,000 and 180, 000 new jobs being created for the month of January.

Projections for home appreciation are being estimated to be between 3- 4% for 2019. Also new construction will still not be able to catch up with the demand for new housing as the shortage of homes on the market will continue for at least another 18 months.

With the Great Recession, New Jersey real estate took a huge hit and has been clawing its way back ever since. Back in September of 2011 there were 57,000 homes for sale on the market; that number in December 2018 is almost 30,000 homes. This represents almost a 50% decrease in the number of homes for sale.

Demand is still there, it’s just not breathing as heavy.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

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