New Jersey Gov. Phil Murphy has given lower-income tenants in the Garden State protection from eviction until the end of the year, as well as setting aside an additional $750 million in coronavirus emergency rent and utility-payment assistance.
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Q: Gerald, I’ve heard you talk about the importance of home zoning reform before. What do you think about the White House’s $5 billion housing proposal? Annabella, Union City, NJ A: There is certainly a big residential housing shortage in the US right now. The number of homes for sale now is less than half the number of homes available for sale 15 years ago. The White House is mulling a $5 Billion plan to ease the national housing shortage by pushing local governments to allow apartment buildings in neighborhoods that are currently restricted to single-family homes. The proposal provides financial incentives to local governments that change zoning laws restricting many neighborhoods to single-family homes. Zoning laws were rare in […]
continue reading Q: As a realtor, I look forward to the spring which is usually the strongest home buying season of the year. With Covid, do you think spring buying will be strong in 2021 like in most years? Gladys, Basking Ridge, NJ A: Great question, Gladys. The reason that Spring is traditionally the strongest home buying season of the year is because it normally takes a few months to close on a property after a purchase offer has been accepted and home buyers with kids ideally want to be in their new homes before the start of the fall school year. The pandemic has disrupted both work schedules and school schedules and likely has also disrupted the predictable seasonality of home […]
continue reading Q: When do you think home prices will fall? Scott, Edgewater, NJ A: Whenever home prices increase faster than incomes, a home price correction is inevitable. Home prices in NJ rose almost 12% in 2020—this huge increase was not the result of local real estate market fundamentals, but rather was caused by fear of coronavirus. Although incomes in general did surprisingly increase in 2020, incomes certainly did not increase as much as NJ home prices. Therefore, sometime in the next few years perhaps in 2023 there will be a downward home price correction as local real estate markets in NJ approach market equilibrium. Thanks for your question, Scott. Good luck. For more real estate tips and information visit my blog […]
continue reading Q: How will the coronavirus vaccine rollout affect housing? Curtis, Woodland Park, NJ A: As COVID-19 vaccines slowly roll out, people are wondering what the impact will be on local housing markets. The chief economist at realtor.com recently said that “we’re going to settle somewhere in between where we were before COVID and where we were during COVID.” She went on to say that “as the risk of serious illness declines because more people are vaccinated, we expect to see more sellers,” who may have chosen to delay selling their homes during the pandemic. Additional housing supply from previously skittish sellers is critical now after housing inventories hit an all-time low this past December. The expansion of telecommuting amid the […]
continue reading High-end, four-and five-star apartment buildings in urban areas have struggled to maintain rents, and in some cases struggled to retain residents, since the onset of the Coronavirus pandemic.
continue reading NJ’s new jobless claims hit low point amid pandemic rebound.
continue reading NJ Governor Murphy via The Small Landlord Emergency Grant Program will use $25 million in federal CARES Act funding to assist landlords who own properties of three to 10 units whose tenants have missed rental payments between April and July.
continue reading Q: I’m a realtor. Everyone is talking about whether schools will reopen fully this fall because of the Coronavirus shutdowns. Many of my buyers in the past have tried to time their closing so their kids don’t have to switch schools mid-year. Will the school re-openings affect home buying activity this fall? Christina, Summit, NJ A: COVID-19 has disrupted traditional home buying seasonality in a major way. Traditionally, the Spring has the highest home buyer demand as families as you pointed out often try to close on the homes they buy during the summer before the school year begins. The pandemic lockdown in the spring postponed the usually strong spring home buying market and the confusion around school reopenings may […]
continue reading Q: More and more people are filing for unemployment now. How will this impact real estate? Cameron, Essex Fells, NJ A: The job market serves is one of the most important factors that determine how many people will buy homes. In general high unemployment creates lower expected future income and lower demand for housing overall. People who have unfortunately lost their jobs are unlikely to buy homes in the near future. While wealthy buyers may be shielded from the economic downturn that the pandemic has caused, they may be hesitant to spend money on property as we face economic uncertainty. The effect of the coronavirus on the housing market is hard to forecast, a lot depends on how deep the […]
continue reading Q: How has real estate changed because of Covid-19? Gail, Hempstead, NY A: We are still in the early innings of the pandemic but so far the same basic rules of residential real estate still apply (not sure the same can be said about commercial real estate, but that’s another discussion). As was the case before the pandemic, supply and demand affect residential real estate more than any other factor. Here are 3 salient changes I’ve noticed since restrictions in my local market have been lifting: 1. There is pent up demand that is driving sales and even bidding wars 2. Housing supply is even lower than before the pandemic as some property owners have pulled listings off the market […]
continue reading Q: With unemployment so high now, do you think people who sell their homes now should lower their asking price? Kevin, Palisades Park, NJ A: Every local real estate market is different and has and will respond to the pandemic and the economic fallout that results from it in its own way. What I’ve seen so far during the pandemic in north jersey is after the initial lockdown in March and April a rebound in buying activity in May and June due in part because the virus is currently under control in our area. There was pent up home buyer demand and even lower housing inventory than before the pandemic which so far has made home prices in our area […]
continue reading Q: How Will A 2nd Coronavirus Wave Affect Real Estate? Hector, Elizabeth, NJ A: In the US, we are unfortunately still dealing with the 1st wave of the Coronavirus because our preparation and response thus far has been so bad compared to the rest of the developed world. Any spike in Coronavirus will reduce mobility which will ultimately have a negative effect at least in the short term on real estate. If and when there is a 2nd wave of Covid-19, the effect will depend on what time of the year a second wave occurs in each local real estate market. If a second wave occurs during the holidays when real estate activity tends to slow anyway it will have […]
continue reading Q: Is it true that suburban homes are more valuable now than properties in cities because of what’s happening with coronavirus? Stan, Morris Plains, NJ A: So far, in the markets I operate in in North Jersey, there seems to have been a shift in buyer demand–higher demand for vacant homes, homes with backyards, homes with home office space and pools. However, the initial perceived changes in demand caused by the pandemic may or may not continue in their current trajectory. Although many people have already predicted a flight from cities to suburbs and more rural areas due to the initial impact of the virus on cities, right now most of the covid-19 hot spots tend to be in more […]
continue reading Q: Real estate sales have slowed a lot during the virus lockdown. Do you think real estate sales will continue to be slow for the rest of this year? Duncan, Greenwich, CT A: Residential real estate buying is typically seasonal with the strongest sales usually occurring in the Spring. Since most of the US was in Covid-19 lockdown for most of the Spring, it is likely that the Spring homebuying spree will shift to later in the year. This shift in demand may in fact occur this summer in places like NJ where I operate that have effectively contained the virus-at least for now. Coronavirus mitigation will have an inordinate effect on the economy and real estate for the foreseeable […]
continue reading Q: I noticed many big institutional buyers of property are holding back now during the pandemic. How much of an equity cushion do you need when you buy investment property now? Jimmy, Franklin Lakes, NJ A: With respect to residential property, more uncertainty requires more of an equity cushion when you buy to mitigate your risk. Take a note from the actions of hard money lenders (HMLs) recently who are lending at lower LTVs thereby requiring higher down payments from investor borrowers and are also requiring borrowers show much higher reserves from investors. The less certain you are about the true value of a property, the less you should pay for it–as a rule, investors should discount their purchase offer […]
continue reading Q: When do you think it makes sense to take money from retirement if you’ve been struggling financially during the Coronavirus pandemic? Carlos, Paterson, NJ A: You should always make financial decisions based on your specific financial and personal situation not based on generic advice you hear from others. Under the legislation Congress passed in March, you can withdraw up to $100,000 from retirement savings without triggering the 10% early withdrawal penalty that normally comes with it however, it’s prudent to liquidate retirement money only as a last resort–meaning, after all other possible avenues to get money fail. If you find yourself in a financial hole, the first thing you want to do is stop digging, so if you’ve lost […]
continue reading Newly listed homes dropped 44.1% in April.
continue reading Lawrence Yun, The chief economist of the National Association of Realtors, said “home sales activity could be down 30% or even 40% in the next months.”
continue reading Q: Do you think the Covid-19 pandemic will cause more home foreclosures? Victor, Bronx, NY A: In the short term, lenders will be eager to at least try to rework or modify mortgage loans particularly with the foreclosure moratorium that currently exists–this will stave off an increase in foreclosures for the time being. However, the mortgage forbearance that banks are currently offering is not debt forgiveness and at some point later this year or next year, those mortgage payments will be due–if borrowers are still unemployed or underemployed and have burned through their savings, there will be an expected increase in foreclosure actions with income or lack thereof as is normally the case being the biggest driver. Thanks for your […]
continue reading More households paid their rent on time in the first week of May than was expected (80.2% vs. 78% in the 1st week of April).
continue reading Q: How will Covid-19 affect rents? Hailey, Hoboken, NJ A: Every local real estate rental market is different with it’s own unique set of characteristics and laws so the effect of the Coronavirus like any exogenous factor will vary from place to place. It may be useful to think of how rents will be affected by Coronavirus in terms of the short term impact vs. medium and long time impact. In the short term, given that many places have instituted eviction moratoriums, landlords have no choice but to be patient. Smart landlords will be flexible, offer options to affected tenants while being clear and consistent–other landlords won’t and will ultimately suffer as a result. Regarding airbnb and similar short term […]
continue reading Retail store closures in the US are expected to explode because of the Coronavirus.
continue reading Q: Is now a good time to buy a home? Meredith, Clifton, NJ A: A recent gallup poll revealed that a record low percentage of Americans (both among homeowners and renters) thought that now was a good time to buy a home? This pessimism shows that the coronavirus blues have set in in many places understandably. Any big purchase like a home should be made with a focus on your individual financial goals and personal financial situation. Putting aside investment property for a moment, mortgage rates are at all time lows which makes now one of the best times to buy or refinance an owner-occupied home at a fixed interest rate. Every 1 point drop in interest rates increases your […]
continue reading The surge in unemployment claims filed since mid-March resulting from the mitigation efforts to slow the spread of the coronavirus (COVID-19) are straining household budgets and leading to more requests for mortgage forbearance.
continue reading Q: Gerald, when will we finally get past the Coronavirus epidemic? Dale, Orlando, Fl A: Contrary to popular belief, weather forecasts are reliably accurate. If there is a 30% chance of rain, it rains 30% of the time. The problem is that most people are looking for something that the weatherman and most health experts in the middle of the COV-19 crisis can’t provide: certainty. Expecting certainty is unrealistic and potentially dangerous because it gives people a false sense of security as they wait for things to magically play out the way they expect. People seem to naturally desire things they can’t have. The world we live in is a complex system with multiple variables that affect it that are […]
continue reading The average rents on apartments are already dropping, as the U.S. economy grinds to a halt and millions of workers have lost their jobs, been furloughed or have been asked to stay home.
continue reading Q: Do mortgage forbearances that banks are offering apply to condo and homeowner association dues? Alice, Cresskill, NJ A: At the end of March, NJ Governor Murphy announced that Citigroup, JP Morgan Chase, US Bank, Wells Fargo and Bank of America agreed to a 90 day grace period due to the COVID-19 epidemic, where borrowers can lower or delay monthly mortgage payments. Many federal & state-chartered banks and credit unions also agreed to the mortgage forbearance period. Borrowers should reach out to your mortgage lender directly however to confirm that they agreed to the temporary forbearance grace period because it will vary from company to company. Unless the board of the condo or homeowner’s association has decided to allow for […]
continue reading Q: Gerald, I am a new wholesaler, how will the Coronavirus affect rehabbing? Derrick, Westfield, NJ A: During the Coronavirus crisis, private money is likely to be king at least for a while as hard money lender money sources dry up, this will certainly affect you at least indirectly as a wholesaler. Private lenders are typically individuals seeking additional income by passively investing in real estate. It’s a good idea to develop relationships with private lenders regardless of where your real estate market is–it takes time to build a relationship with a private lender–they’ll need to get comfortable with and trust you before they’ll lend their money to you–you can assuage private investors’ fears by being totally honest and upfront […]
continue reading Increased demand for warehouse space and labor created by COVID-19 Could Be A Long-Term Trend.
continue reading Q: How will coronavirus affect home prices? Ed, Cranford, NJ A: Ed, coronavirus will cause a correction in the real estate market. Since real estate is a local phenomenon the impact on home prices will differ from place to place based on supply, demand, personal income and employment in each local real estate market. In NJ, after an almost 5% increase in home prices in 2019, the real estate valuations expert I follow predicts a 5-12% decrease in NJ home prices due to the coronavirus crisis. The good news is that record low mortgage interest rates and trillions of dollars of government stimulus will likely trigger a big rebound in home sales and home prices after the coronavirus is in […]
continue reading New Jersey unveiled a 90-Day mortgage grace period in the wake of the COVID-19 pandemic.
continue reading Q: How will the Coronavirus crisis affect mortgages? Diane, Scotch Plains, NJ A: The Director of FHFA said that Fannie Mae & Freddie Mac which guarantee almost half of US mortgages said they have resources to last through a quarantine lockdown of 12 weeks–he said that a lockdown longer than 2-3 months would be a real stress to the mortgage market like what we saw during the great recession. One big potential problem in the mortgage market lies with mortgage servicers who collect mortgage payments from borrowers and pass them onto investors. Mortgage servicers are required to pay mortgages even when borrowers are granted forbearance–Fannie & Freddie aren’t required to repay servicers for 6 months which may create liquidity problems […]
continue reading Construction is set to continue in New Jersey after being deemed an essential business during the Coronavirus crisis.
continue reading Q: How will the coronavirus affect the economy and real estate? Carl, Scotch Plains, NJ. A: It’s too early to tell the full extent of the effect on the economy and residential real estate but all signs point to a severe recession as bad or worse than the recession around the global financial crisis of 2008-2009. Mohamed El-Erian, who was CEO of the world’s biggest bond fund said recently that a global depression is possible. The problem is that there is no economic solution to this crisis–as long as millions of people are worrying about getting sick, you can’t fix the economy because there has been a breakdown of the mechanism of exchange upon which an economy depends. The key […]
continue reading Q: Gerald, I’m a realtor. I keep seeing businesses shut down because of Coronavirus–should realtors stop working? Karen, Bloomfield, NJ. A: Thanks for asking such an important question, Karen. To start things off, let’s set priorities: Keeping yourself, your family and your community safe and flattening the curve which means slowing down the spread of the coronavirus should be paramount to everyone–you, me and everyone else. The precautions that you are seeing more and more of (i.e. business closings etc.) serve that purpose–to slow the spread of the virus and we should all do our part to adhere to those precautions. To answer your question, here’s a hypothetical question that you and everyone else should ask themselves: Can you do […]
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