2019 Real Estate Projections

Where is the real estate market going in 2019?

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Here are a few points I’ve boiled down and expanded upon (sourced from Realtor.com) that are likely to influence and illustrate the 2019 real estate market’s performance.

To see how this will affect you personally use the quick & complimentary home value estimator here – FIND YOUR HOME’S VALUE

  1. Home price growth will slow – perhaps down to 2%.  Many homes are still selling for a strong price, but receiving 8 or more offers as some did from 2014-2017 is becoming a much rarer occurrence.  For more info on local sales click this link – HOUSING MARKET TRENDS   for more specific HOUSING MARKET TRENDS
  2. Inventory will most likely remain moderate with only small increases, except for high-priced homes which will have significant inventory increases.  LOCAL INVENTORY INFO
  3. Millennials getting mortgages will slightly outpace GenerationX’ers and far outpace Boomers getting mortgages.
  4. The new tax law will be good for renters (keeping more income) and a mixed bag, but mostly negative for homeowners who may keep more income but will lose the SALT deductions.  The law no longer allows taxpayers the ability to deduct state and local taxes (SALT), so we’re being taxed twice on the same income. Those deductions on property taxes, along with a deduction on mortgage interest, used to provide a strong incentive for homeownership.  Maybe the new house representative class recently elected will stick up for the suburban voters who put them there and try to pass legislation to reverse or lessen the impact of the new laws, but I’m not holding my breath.
  5. Most experts are predicting that mortgage rates will most likely hit 5.5 percent by the end of the year. Some buyers will be motivated to purchase before the rates get too high and some may begin sitting on the sidelines waiting for the next dip. HOWEVER, after a recent meeting between China and the US about trade and tariffs, interest rates actually dropped. So ‘most experts’ may change their tune if the tariffs/trade wars keep putting a scare into the market.  For more about Mortgage-related questions – link instantly to expert MORTGAGE RATE, FINANCE INFO & PRE-APPROVALS  
  6. Most experts don’t see an obvious buyer’s market for awhile, because of moderate inventory and prices holding steady. Buyers will have to adapt their strategies to deal with higher rates and lower inventory.  Since higher end homes will have more inventory and more stagnant prices, there are more opportunities for buyers in the higher price ranges than in the entry level price ranges which have more buyer competition and less inventory.
  7. Despite remaining nominally a seller’s market, increasing competition from increased inventory will most likely bring down expectations for bidding wars, multiple offers  and getting whatever price a seller thinks he can get.. Sellers who price competitively should still be able to come away with a good amount of equity if they didn’t buy at the 2006 peak.
  8. The total number of home sales declined in 2018 compared to 2017 and is expected to decline further in 2019

link to full Realtor.com projections & article

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Market conditions – Affordability & Inventory

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The spring housing market has been similar to 2017, inventory is tight and housing prices are strong. Hesitancy over new tax laws and the deductibility of prepaid property taxes has caused some sellers to ‘wait-and-see’, limiting supply, and causing New Jersey home buyers to wonder whether there is any relief in sight.
Trends to know for 2018:
1. Recent tax changes are keeping some home sellers on the sidelines.  The Tax Cuts and Jobs Act may have far-reaching effects for the New Jersey real estate market. In 2018, homeowners will have their state and local tax (SALT) deductions capped at $10,000. A work-around has been approved by Gov Murphy but how the feds react to it is still to be determined.
2. When the new tax bill was announced, many New Jersey residents prepaid their first and second quarter 2018 property taxes in the hopes they could deduct those payments on their 2017 tax returns. As it turns out, the treatment of these payments may differ for Federal and State returns.
New Jersey home prices continue to rise – Reduced inventory is underpinning home prices in NJ. Early indications for the 2018 spring market show strong demand for homes, due in part to wage growth and a strong job market. Both have contributed to a very competitive housing market, and home prices continue to rise. The Home Buying Institute anticipates home prices could increase by 3-5% this year in the United States, and northern New Jersey is seeing strong markets particularly along the Midtown Direct train line in towns such as South Orange and Maplewood.
3.  Although mortgage rates are expected to rise in 2018, they remain historically low. Current 30-year fixed mortgage rates are hovering at about 4.5%, and many forecasters predict they will end the year higher. Low interest rates are keeping home buyers (especially families) active. Many want housing contracts in place before the start of the school year in the fall so children can take advantage of highly-rated school districts along the Midtown Direct.
4. Millennials are moving to the suburbs from New York City
Although New York City rents are softening, Millennials are still migrating to the suburbs where there’s more square footage for the price. While overall rent levels may be starting to drift down, according to StreetEasy; New York City rents are still increasing twice as fast as wages. Compounded by the fact that many Millennials are starting families, city dwellers are leaving New York City in search of nice neighborhoods, more space, and excellent schools. And with plenty of options to facilitate the daily commute into New York, New Jersey has become a go-to place to live. In addition to Maplewood & South Orange, towns such as Montclair, Summit, Chatham, and Westfield are just a few more that are top of the Millennial list due to their walkable & fun downtowns, entertainment, shopping, and trending restaurant scenes.
Are you considering a move to northern New Jersey? I would love to assist you.
With 9 years of experience buying and selling homes, I can help you take advantage of current housing trends and find the home of your dreams. Contact me at 201 600 8141 or ken@kenkrasnerhomes.com

Link to Forbes article and more details

 

Live, Relax & Entertain (repeat)

I have an inspiring new home on the market. The absolutely beautiful head-to-toe renovations were curated by a prominent advertising exec with excellent taste.   Get a look at some beautiful images and vibes in the link below and in the MLS link too.

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Yin Yang
What happens when you balance a high-powered job in the city with the opportunity to exhale … nightly? Well, that’s now on the market at 497 Prospect Street in Maplewood (NJ). The proximity facilitates a job in the city. The suburbs allow for four spacious floors, two wet bars, a designer kitchen and a heated, saltwater pool in a backyard oasis. Check out this home’s vibe at www.MaplewoodYall.com.

MLS link

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Ex-Brooklyners Find Style and Substance In Maplewood
It’s dubbed “Brooklyn West.” Maplewood (NJ) has become home to many from the NYC’s mammoth borough. Some say Maplewood is about 75% Brooklyn refugees. Naturally, the town is getting some high-style upgrades that adhere to its contented lifestyles. A good example: 497 Prospect Street on the market now. Its vibe and restoration are captured here: www.MaplewoodYall.com. We would be much obliged if you share this with your friends.
KITCHEN_view
Lifestyle meet Functionality
Maplewood (NJ) has become the darling of families and couples looking to “nest” in an environment that’s diversity-minded, up-tempo, near to the city … and good value. Few places offer all four … and that’s because the Township is a bastion of Brooklyn refugees. They’ve brought their verve, their unconventional lifestyles and their good taste to this NYC suburb. That’s all evidenced at 497 Prospect Street which is on the market now (MLS link). This space is ideal for the couple or family that appreciates the thoughtfulness of design, the attention to detail and the emphasis on entertaining. The home’s vibe is captured here: www.MaplewoodYall.com.
KITCHEN_eatin
An Entertaining Mecca
The one-bedroom Brooklyn flat may have been close to your friends but how many of them could you invite at the same time to that space? What if you had four floors, two wet bars, a designer kitchen and a heated saltwater pool in a backyard oasis? Well, your friends would bring their friends. Just 30 minutes from the city is Maplewood (NJ) and a home that’s ready for your guest list. Check out the vibe of 497 Prospect Street  which is on the market now: www.MaplewoodYall.com.

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Preparing in advance for a buyer’s inspection

inspection 

Most home buyers are paying an inspector to find issues in the house they are buying and expect to at least have the seller respond positively to the important items on their inspection list.  Of course, how much the seller offers to address depends on a number of issues beyond the actual ‘imperfections’ that the inspection has uncovered.

While a seller often gets a much bigger return on investment by improving kitchens and bathrooms, it is advisable to keep up with routine maintenance to address minor problems before they escalate into major inspection issues.
Here are some of the most common issues.
1) Furnace, Hot Water Heater.
2) Masonry around front steps and walkways
3) Recaulk around exterior doors and windows
4) Fireplace and chimney cleaned and checked by a pro
5) Make sure gutters and leaders are working & depositing water far away from the foundation of the home.
6) Address any leaking pipes
7) Knob & Tube electric needs to be addressed
8) And the most important, remove buried oil tank from the ground

Home

At the top of the hill in Maplewood sits a really beautiful home I just listed with lots of conveniences, fine details, a view and a history.  Check out the link below for more details.

Front View

http://7981collinwoodrds.thebestlisting.com/

 

 

The New Tax Bill and NJ real estate. Moody’s vs Otteau

Among those of us who live in Northern NJ, there seems to be a general view that the new tax law will negatively impact our individual finances (as shown in the map using Moody’s analytics) .  While it is understandable to feel that way, there is a more optimistic (or resilient) view of the new tax law’s effect on NJ real estate, which will be covered here by real estate guru, Jeffrey Otteau.

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My political tendencies may be showing here but, Paul Ryan and Donald Trump basically admitted to trying to penalize high tax states like CA, NJ and IL  (para 5,6,7 of this link  Ryan’s blue state comments  ), even though those states contribute more to the federal coffers than they receive.  Among those being rewarded by the law, MS, KY, AL and many other red states generally receive more than they contribute – New Mexico is the main state that doesn’t fit the pattern. – state contributions
So if you’re worried the new Republican tax law will crush home prices in New Jersey and you’re listening to the media coverage coming out of Washington, then you’re looking to assess impact and take appropriate action.  According to Moody’s, the tax plan will most likely hit NJ and other suburban areas of the bigger, mostly coastal cities harder than it will hit rural, southern, Rocky and Great Plains areas.
But here’s real estate guru Jeffrey Otteau’s optimistic take on the recent changes to the tax code earlier this week.  “There’s no reason to panic here,” said Otteau, president of The Otteau Group. “I heard some bold predictions about Armageddon, about house prices collapsing and losing 10 to 15 percent in value.  There’s NO basis for that.” 
Otteau believes overall NJ home prices will continue to climb in 2018, but at a slower rate than previously predicted, as would-be new homebuyers step back to assess the new law’s impact on their pocketbooks with their accountants.  From my personal view of the market, January has already begun strongly with multiple bids on a few good area listings.
Otteau has a few other reasons for (short term) optimism:

1 – The lower tax brackets will somewhat offset the elimination of deductions

2 – People buy homes for lots of reasons – schools, proximity to work, the freedom and pride home ownership provides, the vibe and culture of an area. Taxes rank lower on the ladder of reasons

3 – The economy has continued to improve (since the lows of 2009) – jobs up and unemployment still low

4 – Interest rates are forecast to rise this year and that will compel buyers to act before they rise higher.

5 – And finally Otteau believes the reduction in the corporate rate will compel more hiring.  I’m yet to be convinced of this one as I believe most of this money will end up with management and in company stocks.

Finally, and said long before Otteau was born, Owning is usually a far better long term financial strategy than renting.

Many locals and their municipalities have already begun taking measures to lessen the impact of this new bill.   South Orange and Maplewood among other towns have made pre-paying property taxes early simpler, but there are more ways to lessen the impact.  Below are six additional suggestions (see link – prep for new tax law – for more explanation of each measure).  Prep for the new tax law
1- increase charitable deductions
2- expenses, which include travel, professional dues, education costs, conference fees, cars and electronic equipment, can be deducted to the extent they exceed 2 percent of adjusted gross income.
3-medical
4-delay income
5-moving for work do it sooner
6-alimony

A tale of two parklets

 

millburn_avenue_parklet     parklet

 

 

 

 

 


 

Millburn will receive a Complete Streets Excellence award at Rutgers on October 24 for the changes made in Downtown Millburn,   The $8.2 million Complete Streets program was developed with traffic calming & improvements that include road-diets, curb bump-outs, bicycle parking, widened sidewalks and corners, high-visibility crosswalks, pedestrian lighting, signage and more.

According to town officials, positive changes have resulted. Speeds have decreased in the reconfigured areas of Millburn Avenue (average motorist now travels at 29 mph). Compared to the three years preceding construction, the Main Street intersections of both Millburn Ave. & Essex St. have experienced a 23% decrease in motor vehicle and pedestrian accidents.

A new app called mPay2Park makes paying for parking simpler allowing for mobile payments with no transaction fees. Zone C along Millburn Avenue now offers free 15 minute parking at the pay stations for those that just want to run a quick errand.  However, some residents have expressed concern about traffic during peak hours.

The parklet in downtown South Orange is also getting recognition. SO Environmental Commission receiving ANJEC award.  The scope and the budget of the project was a fraction of Millburn’s

Its the work of the S.O. Environmental Commission, Neil Chambers of Chambers Design, South Orange Village Center Alliance’s Bob Zuckerman, Matt Glass, Steve Pedigo, town trustee Walter Clarke, Village President Sheena Collum, South Orange Parking Authority, Essex County and donations from Tito’s Burritos, Yoni Kreger, Eventage and others.

According to Sheena, “A parklet is an emerging trend in public space design that encourages towns and cities to rethink auto-oriented concrete spaces into public, passerby-friendly ‘hotspots.’ So yeah, we gave up a couple parking spots temporarily from carbon producing automobiles (we’re promoting more sustainability in this town, remember? #ParisAgreement) and instead, created a new mini destination for all our residents, businesses and guests to use. This is called ‘tactical urbanism’ – and is very popular in the planning field.”