Title Wise
The New Jersey Real Estate News You Can Use
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Greetings!
The industry experts continue to eye the commercial real estate market with some concern, as interest rates trend higher, and commercial rentals slide. The number of high-ticket spaces find fewer takers as more employees choose to work from home.
In addition to the ripples in the commercial market, real estate taxes continue to cost homeowners more and more.
Please feel free to email me at ralph@counsellorstitle.com if you have any questions or would like to follow up on any of this edition's articles.
Ralph Aponte
Founder & President
732.914.1400
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The Recalibration of Commercial Real Estate |
The commercial office sales market has been very slow, with investors purchasing only $10.7 billion worth of office property in Q1 2023, which is down 68% from Q1 2022.
The higher interest rates have also squeezed margins out of the commercial sector, making it much more difficult for landlords to refinance, fund building improvements and attract new tenants.
Commercial property owners, especially in states that have experienced population losses such as California, New York, and Illinois, are starting to unload office buildings at bargain-sale prices.
Black Eye for Blackstone
Recently, even Blackstone sold the Griffin Towers office complex in Santa Ana, California for $82 million, which was approximately 36% less than the firm paid in 2014, according to some sources.
Also a tower at 350 California in San Francisco, valued at $300 million in 2019, is expected to sell for about $60 million, or 80% below what it was valued at.
The commercial property market continues to retreat, as it had done during the pandemic.
The rise in the number of distressed sales in commercial real estate points to a more prolonged trend, according to industry experts, as billions of dollars’ worth of mortgages need to be refinanced.
Office inventory continues to grow as once hungry investors look for an exit, putting pressure on the office market in general.
In Q1 2023, 26 office buildings were taken over by creditors in foreclosure actions, compared with six in the first quarter of 2022, according to MSCI.
And delinquency rates of office loans that were converted into commercial mortgage-backed securities increased to 2.77% in April, the highest rate since August 2019.
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The Property Tax Crisis
The biggest economic enemy facing the American family in the years to come is high property taxes.
If you follow much of the financial news these days, especially within the real estate industry, you’ll hear comments being made about historic inventory shortages, unreasonably high mortgage rates, inflation, and even building supplies, supply chain disruptions and overall costs. But these are simply the initial barriers that any potential homeowner will be forced to face. The one enemy that continues to wage its unrelenting war on homeowners is the invisible siege of governmental property taxes.
Sure, consider that home prices have risen over 30% in the last 3 years, and even inflation running around 8% or 9% a year, there are other matters that are going to challenge homeowners moving forward, and these are the ridiculously high real estate taxes being levied upon individuals. The unseen factor that makes this so problematic is that when the home appreciates, the taxes increase, thus penalizing a homeowner even though they have never even realized the increase in homeowner equity. They’re still paying taxes on the appreciation for the entire time that they own their home, even though they haven’t even sold the home.
According to ATTOM, the data analytics firm, U.S. homeowners have paid nearly $440 billion in property taxes. This is 3.6% more than they paid in 2021.
The most egregious perpetrators of property taxes are primarily in the Northeast: New Jersey, Illinois, Connecticut, Vermont, Nebraska, Pennsylvania, New Hampshire, Ohio, and New York, respectively.
This presents that the top 6 out of 8 states exercising property taxes on homeowners are in the Northeast.
According to the April report published by ATTOM, the average single-family home estimated value increased 7.9% from 2021.
Let’s dig a little deeper into the actual numbers for New Jersey: in 2022 the effect of real estate tax for the state of New Jersey was 2.49%, which translated into annual taxes on a median priced home of $8,362. That translates into a total amount of taxes paid over 15 years presuming that the taxes don’t rise, of $125,430 for a $335,000 home. So in other words, the homeowner for the first 15 years that he owns his home, is having to pay 1/3 of its value back to governments, primarily state governments. This escalation of tax cost is ultimately going to undermine the true value of purchasing a home unless something is done.
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Existing Home Sales Trend Lower |
Inventory Also Falls
Existing home sales continued to fall for both March and April, with existing home sales falling 3.4% to a seasonally adjusted annual rate of 4.28 million on a year-over-year basis.
The decrease represents the impact of higher mortgage rates, inventory shortages and the continued rise in home prices overall.
April inventory of unsold existing homes stood at 1.04 million, up 7.2% from the month prior and reflecting a 2.9 months’ of supply based on current sales trajectories.
The median sales price of an existing home nationally fell compared to a year ago, according to the National Association of Realtors [NAR], dropping 1.7% to $388,800. This represents the third straight month of year-over-year sale price declines.
Median sales prices rose in the Northeast and Midwest and fell in the South and West.
Unfortunately, the multiple-offer environment has returned in the spring buying season, making it more difficult for first-time buyers once again.
Other Stats
- Distressed sales represented just 1% of all sales in April, which is the same as in March and a year prior.
- Regional existing home sales fell in all 4 regions month-over-month, as tracked by the NAR.
- All four regions also recorded decreases in the existing home sales pace, with the Midwest (annual rate of 1.02 million) falling 21.5%.
- The Southern region fell to an annual rate of 1.98 million, a 20.2% decrease.
- The Northeastern region fell to an annual rate of 510,000, or by 23.9%.
- The Western region fell by 31.3%, recording the largest year-over-year price change of 8.0% from the 2022 median sale price of $578,200.
- The Western region recorded the largest monthly drop of 6.1% to a sales pace of 770,000 homes.
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Counsellors Title is initiating this feature of Title Wise called Life Quotes.
Oftentimes we are so busy doing that we forget the reason(s) why. Life Quotes are those mental speed bumps that we will occasionally come across and insert, just to rehearse the important things in life.
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BEFORE GETTING TOO FAR INTO 2023...
Before you can go to where you want to be, it is prudent to consider where you have been. The first Perspectives by Counsellors Title Agency is just that - a compilation of the best of Ralph's Title Wise blogs posted during 2022.
The blogs include: Your Network Is Your Future, Professionalize Your Home Work Space, Decluttering Checklist, Historic Surge in Home Equity, and Marketing Chemistry.
Click the image of the eBook to download it. You can also pass it along to people who might need the information included in it. |
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A.S.A.P. Attorney Settlement Assistance Program
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Our real estate secretarial services are able to assist you in every aspect of the sale, purchase, refinance or loan closing process. We will directly communicate with all the parties involved in the transaction and coordinate and obtain all the items necessary to bring the matter to closing.
Our A.S.A.P. services can be individually customized to fit your needs. These services include:
- Documentation Preparation
- Disbursement of Funds
- Attendance at Closing
- HUD Preparation
- Post-Closing Matters
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Our Commitment to Excellence |
Counsellors Title Agency wants to thank you for the opportunity to work with you and your clients to grow your business. Please feel free to click the link above or here to leave us a review on Google. We appreciate your business. |
Sales: Leading NJ title insurance agency seeks experienced licensed salespersons to help expand its market share throughout the entire state. Benefits include health insurance, 401k with an employer match, flexible spending account, expense account, & marketing support. Send resumes by fax: 732-914-8898 or ralph@counsellorstitle.com
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Free Online Title Insurance Calculator |
Counsellors Title Agency announced its updated Title Calculator for New Jersey home purchases & refinances at: Title Calculator
Loan officers, real estate agents and home buyers can find out how much title insurance will cost for purchases made in New Jersey.
Easy-To-Use Functionality
This online tool includes many of the endorsements involved in calculating the cost of a title policy in New Jersey. CTA's Title Calculator is a great tool for real estate salespersons, loan officers, attorneys and those who are buying or refinancing their home.
It calculates the cost of title insurance based upon the purchase price of the home, the loan amount, and the various endorsements that can accompany the loan. The calculator provides the user the scalability of selecting the various endorsements involved in the transaction.
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Handy Guide to Real Estate Sources |
Here are some of the most widely used governmental websites for the real estate industry.
I look forward to being of service to you, providing you with outstanding real-time information and some humor to make doing business a pleasure.
Sincerely,
Ralph
Ralph Aponte
Counsellors Title
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Counsellors Title Agency, Inc. specializes in providing title insurance, title search services and loan closing services serving attorneys, Realtors, banks and various mortgage companies throughout the State of New Jersey. CTA offers full search and insurance capabilities within all 21 counties of New Jersey for commercial, residential and new construction purchases in our Toms River, Freehold, Chatham, and Union locations.
CTA is equipped with the latest digital technologies to ensure a complete and timely transaction.
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Mr. Ralph Aponte
Our Office: 504 Hooper Avenue,
Toms River, NJ 08753
Phone Number: (732) 914-1400
Fax: 732-914-8898
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