OT: Why the real estate market is not in a bubble: Q1 2023 update video added to OP

[NotInRHouse]

I love work from anywhere.

I hope major employers eliminate it en masse.

Too many noobs overcrowding places better left uncrowded.

Nah, it's fun when you walk around Hoboken and JC midday and it's crawling with people, and none of them are dressed for work.

It's like life in a normal country, where actually living your life takes priority over being chained to a desk. It only took a pandemic to wake people up.

 

[NotInRHouse]

I’m following Lavallette. A beach block new construction just listed for 3.1mm. Think that’s record price for none ocean front.

The entire shore region (including places many miles in) is insane price wise. When I was growing up if you told people there'd be bidding wars for 600k homes nowhere near the water in Toms River or Brick they'd have fainted.

 

[RUAldo]

The house I mentioned earlier is under contract. Record price for none Ocean front and sold in 5 days.

So where are people pulling all this money from? You can’t tell me people are sitting on this much cash. People must be tapping investment accounts for these large purchase - no?

 

[RU848789]

Counterpoint. I assume your in office team was from +/- 60 minutes from the office. So your talent pool was limited to a +/- 60 mile radius from your office. If you had the ability to pick your team and your pool of talent to choose from was the entire country would you have been able to assemble a better/more productive group?

As I wrote above I do not know enough to opine whether WFH is "good or bad". (IMO) it is too soon and too new to have a formulated opinion. But, for every "con" in WFH there is a "pro" it seems.

Fair point for some jobs, but not ours. Since a decent amount of our work involved being in the lab and/or pilot plant, our employees had to be fairly local, such that even during the worst of the pandemic we had to have about 50-70% of our employees still coming in to work (with some restrictions), as one can't do that kind of work without actually being on site. However, the "local" thing has never been an issue, since Merck recruited regionally/nationally and had our pick of the best candidates, who would relocate (being the premier chem eng'g process development group in Pharma had some benefits).

I'm sure there are jobs where WFH could have benefits outweighing being on site, but most of ours weren't in that category. My son, though, loves having a remote job with only having to go into the NYC office every couple of weeks to touch base with the rest of the employees (small, 25-30 person startup). I would probably feel similarly if 95% of my work was on a computer, as his is, and the alternative was a shitty commute to NYC every day from NJ.

 

[fsg2]

Nah, it's fun when you walk around Hoboken and JC midday and it's crawling with people, and none of them are dressed for work.

It's like life in a normal country, where actually living your life takes priority over being chained to a desk. It only took a pandemic to wake people up.

I agree with your second paragraph entirely. It's why I've WFH and set my own schedule for over a decade. Didn't want to see so many people doing the same damn thing overnight, though, lol.

For me it's purely selfish, but it has created - exacerbated is more accurate - some real problems. Throngs of folks realized they didn't need to be in JC, NYC, LA, etc if they didn't want to be so they started swarming more naturally desirable areas that weren't ready for it. Resort towns always had a problem balancing the need to affordably house the local workforce necessary to maintain services with a real estate market attracting global investment. It's just getting worse, but instead of people buying 2nd homes, now they're living there full time and further stressing an already overburdened system.

 

[jtung230]

Hopefully they start converting offices into housing. Hotels too. There's just no need for so much office space anymore.

From personal experience. All of the younger staff want to come to the office. It’s more the middle tier (families) that want to WFH. They are self sufficient and can get stuff done on their own. The senior staff was always 4 days per week anyway.

 

[jtung230]

So where are people pulling all this money from? You can’t tell me people are sitting on this much cash. People must be tapping investment accounts for these large purchase - no?

Some people are moving to the shore as their primary. Hurricane Sandy is a distance memory now. I think those towns will see more year round residents now.

 

[newell138]

Some people are moving to the shore as their primary. Hurricane Sandy is a distance memory now. I think those towns will see more year round residents now.

OC year rounders have definitely increased since Covid

Fair point for some jobs, but not ours. Since a decent amount of our work involved being in the lab and/or pilot plant, our employees had to be fairly local, such that even during the worst of the pandemic we had to have about 50-70% of our employees still coming in to work (with some restrictions), as one can't do that kind of work without actually being on site. However, the "local" thing has never been an issue, since Merck recruited regionally/nationally and had our pick of the best candidates, who would relocate (being the premier chem eng'g process development group in Pharma had some benefits).

I'm sure there are jobs where WFH could have benefits outweighing being on site, but most of ours weren't in that category. My son, though, loves having a remote job with only having to go into the NYC office every couple of weeks to touch base with the rest of the employees (small, 25-30 person startup). I would probably feel similarly if 95% of my work was on a computer, as his is, and the alternative was a shitty commute to NYC every day from NJ.

The site in Lansdale is the same, no problem recruiting engineers from all over the country. Its great experience and no shortage of career advancement opportunities at a site that big

 

[e5fdny]

So where are people pulling all this money from? You can’t tell me people are sitting on this much cash. People must be tapping investment accounts for these large purchase - no?

Some people are moving to the shore as their primary. Hurricane Sandy is a distance memory now. I think those towns will see more year round residents now.

OC year rounders have definitely increased since Covid

I’ve told this story before, maybe even in this thread, but having family and friends in the high end real estate markets of the Hamptons and certain areas of the Jersey Shore (Spring Lake, Sea Girt, Avon, Bay Head and Mantoloking) what @newell138 said is true.

When the client is asking about schools it’s not just a summer house.

Also, as @jtung230 mentioned there is the switch..summer is the main one now and sometimes the other, former main, has been downsized. People on my Wife’s side did that…downsized from the big Morris County house and now live in Spring Lake full time.

 

[RutgHoops]

So where are people pulling all this money from? You can’t tell me people are sitting on this much cash. People must be tapping investment accounts for these large purchase - no?

Americans went from saving about 5-7%/year to almost 25% for two full years. From 2020-2022 no one spent money on anything. Didn't travel, didn't eat out, no entertainment spending.....nothing. That is a lot of money sitting in folks accounts. And it is going to take more than a year for that cash to burn off.

 

[RU848789]

Americans went from saving about 5-7%/year to almost 25% for two full years. From 2020-2022 no one spent money on anything. Didn't travel, didn't eat out, no entertainment spending.....nothing. That is a lot of money sitting in folks accounts. And it is going to take more than a year for that cash to burn off.

Except for us, as we continued to eat takeout meals from local restaurants at a high rate even during the pandemic, including tipping as if we ate out. Just wanted to do our part to help keep these businesses open (and very few closed in Metuchen from 2020-2022). We should've been able to deduct all those meals as charitable contributions, lol.

 

[RUskoolie]

Hopefully they start converting offices into housing. Hotels too. There's just no need for so much office space anymore.

A client of mine who just closed on a small commercial building asked me about converting the top floor to apartments. I told him no brainer.

There simply is not enough housing for people in this country.

 

[Plum Street]

A client of mine who just closed on a small commercial building asked me about converting the top floor to apartments. I told him no brainer.

There simply is not enough housing for people in this country.

Not enough “affordable” housing . And the starter home is dead. New Jersey needs to rethink it’s affordable housing obligation BS and make towns build starter homes, and not crappy rentals.

 

[jtung230]

A client of mine who just closed on a small commercial building asked me about converting the top floor to apartments. I told him no brainer.

There simply is not enough housing for people in this country.

It’s not that easy. Very expensive to convert. is it a permitted use?

 

[RUAldo]

Americans went from saving about 5-7%/year to almost 25% for two full years. From 2020-2022 no one spent money on anything. Didn't travel, didn't eat out, no entertainment spending.....nothing. That is a lot of money sitting in folks accounts. And it is going to take more than a year for that cash to burn off.

That makes sense when it comes to goods, autos, etc. But, jump on Zillow and plug in a North Jersey or Ocean County town and you’ll see $5M+ homes that have been on the market a couple of days that have 100+ “saves”. Not that I think “saves” on Zillow mean anything but if nothing else there are more people than ever interested in breaking the bank on a house. I have to imagine mortgage balances are sky-high too.

 

[DanRU]

From personal experience. All of the younger staff want to come to the office. It’s more the middle tier (families) that want to WFH. They are self sufficient and can get stuff done on their own. The senior staff was always 4 days per week anyway.

A guy I know who manages a Morgan Stanley office pretty much said the same thing. The employees who have been around a long time know their job and can easily deal with clients via phone and computer. The newer employees understand they need to be in the office to learn their job and get known by their managers if they want to advance.

 

[Zak57]

Not enough “affordable” housing . And the starter home is dead. New Jersey needs to rethink it’s affordable housing obligation BS and make towns build starter homes, and not crappy rentals.

What monetary range would you consider a starter home in NJ? The $350K-$500K or less?

 

[pmvon]

From personal experience. All of the younger staff want to come to the office. It’s more the middle tier (families) that want to WFH. They are self sufficient and can get stuff done on their own. The senior staff was always 4 days per week anyway.

Which will mean over time people, not all, will move back to the office as the competition returns. Those who are in the office will get the promotion. Animal spirits will return. IT, accounting not as important but still part of creating an overall culture.

 

[Plum Street]

What monetary range would you consider a starter home in NJ? The $350K-$500K or less?

There are very little starter homes in jersey.
Even a 300k home , 20 percent down is 60k. In a middle class neigborhood in New Jersey , what the heck are you getting for 300k today?? Probably not something that is move in ready without some upgrades just to live in it.
I define middle class town in New Jersey, not by median income, but as having a public school district that is an option to send kids too (not the most politically correct, but let’s be real here). And in those towns there ain’t much around 300k

So way to fix it, have towns require starter homes as part of their affordable housing obligations for moderate income people. Instead of apartments with set asides.

 

[RUBlackout7]

A guy I know who manages a Morgan Stanley office pretty much said the same thing. The employees who have been around a long time know their job and can easily deal with clients via phone and computer. The newer employees understand they need to be in the office to learn their job and get known by their managers if they want to advance.

Depends on the area in MS. For home office type roles, no young person wants to come in more than 2-3 days.

 

[anon_0k9zlfz6lz9oy]

Not enough “affordable” housing . And the starter home is dead. New Jersey needs to rethink it’s affordable housing obligation BS and make towns build starter homes, and not crappy rentals.

Best way to create affordable house is the ban gov mandated affordable housing and then loosen zoning

 

[Plum Street]

Best way to create affordable house is the ban gov mandated affordable housing and then loosen zoning

If you do that, you’re gonna get more high rise rental apartments . You need small, detached single family homes to create ownership and build equity . Like was done in the 1950s

 

[anon_0k9zlfz6lz9oy]

What monetary range would you consider a starter home in NJ? The $350K-$500K or less?

I have to find the data bit but the $300K and under home is dead in the US. Theyre not being built. Down to something crazy like 8% of total new construction

 

[anon_0k9zlfz6lz9oy]

If you do that, you’re gonna get more high rise rental apartments . You need small, detached single family homes to create ownership and build equity . Like was done in the 1950s

Youll get more of everthing. Detached, adu’s

 

[Plum Street]

I have to find the data bit but the $300K and under home is dead in the US. Theyre not being built. Down to something crazy like 8% of total new construction

Yeah and you need to get that built for starter home purposes . Developers won’t do it without government incentives.

 

[Plum Street]

Youll get more of everthing. Detached, adu’s

No you won’t . Developers are gonna try to cram as many units into as small a space as possible. That’s their business model

 

[anon_0k9zlfz6lz9oy]

No you won’t . Developers are gonna try to cram as many units into as small a space as possible. That’s their business model

Correct and then they run out of space there and build on open land. This has been proven, it’s not an opinion of mine, rather a fact.

Not really controversial just basic economics.

 

[NotInRHouse]

From personal experience. All of the younger staff want to come to the office. It’s more the middle tier (families) that want to WFH. They are self sufficient and can get stuff done on their own. The senior staff was always 4 days per week anyway.

I think it depends on what you do. Some young people can do their job remotely as well. The Gen Zs I work with are not in a rush to get in. Millennials definitely not.

 

[NotInRHouse]

Not enough “affordable” housing . And the starter home is dead. New Jersey needs to rethink it’s affordable housing obligation BS and make towns build starter homes, and not crappy rentals.

Mount Laurel obligations absolutely can be met- and often are- with homes for sale, not rent.

The thing is that typically such homes will be max 20% of a new development. Here in JC I think we have a few up to 30s because of political pressure but you definitely don't see that in suburban areas.

And here is what happens with those 20%:

- Locals get in quickly
- Municipalities/counties keep lists and offer to those folks first
- There are often other restrictions (age or workforce- so say local teachers, cops etc)

There are absolutely starter homes in the range you're talking about...the problem is inventory. I pulled up my hometown and right now the cheapest townhome is in the 500s, but it has 4 bedrooms, 2 car garage and a basement. The next town has smaller places in the 300s range. The only way to fix it is to allow more building overall which a lot of NJ towns are reticent to do. A program proposed in NY to require suburbs to increase their housing inventory died after the towns freaked out.

 

[T2Kplus20]

Fair point for some jobs, but not ours. Since a decent amount of our work involved being in the lab and/or pilot plant, our employees had to be fairly local, such that even during the worst of the pandemic we had to have about 50-70% of our employees still coming in to work (with some restrictions), as one can't do that kind of work without actually being on site. However, the "local" thing has never been an issue, since Merck recruited regionally/nationally and had our pick of the best candidates, who would relocate (being the premier chem eng'g process development group in Pharma had some benefits).

I'm sure there are jobs where WFH could have benefits outweighing being on site, but most of ours weren't in that category. My son, though, loves having a remote job with only having to go into the NYC office every couple of weeks to touch base with the rest of the employees (small, 25-30 person startup). I would probably feel similarly if 95% of my work was on a computer, as his is, and the alternative was a shitty commute to NYC every day from NJ.

1. There is nothing premier about the Penn State of pharma. They might as well cut R&D and just keep buying other companies.
2. We seem to be getting a nice balance of WFH now. We have been asking employees to come in at least 2 days a week (unless you are over an hour away from either office, then it is as needed). Many pharma/biotechs are doing the same for non-lab jobs.

 

[RUskoolie]

Not enough “affordable” housing . And the starter home is dead. New Jersey needs to rethink it’s affordable housing obligation BS and make towns build starter homes, and not crappy rentals.

Almost impossible. Land is too expensive. Cost to build is too expensive. They would need to pay me as a builder basically. I would need the land for free. Who is going to do that? That's why any affordable rental options have massive tax credits. You'd lose your ass as the developer.

 

[RUskoolie]

It’s not that easy. Very expensive to convert. is it a permitted use?

I do a lot of construction in New Brunswick. He'll be okay, just depends on what he wants to do, there are limits.

 

[RUskoolie]

No you won’t . Developers are gonna try to cram as many units into as small a space as possible. That’s their business model

That's the business model because government makes it impossible.

You guys can't be pro Democrat and wonder why rent/housing is not affordable when built new. Not trying to get political (although someone ITT will get butthurt about it) but it's just the truth. There are protections and then there is insanity. That's where we are at now in NJ.

Literally impossible.

I just spent nearly $60,000 between architect fees, permit fees, attorney fees, site fees, cops to block off streets, engineering fees etc to build a new 2 family in New Brunswick. Now it's the nicest in town because of the effort I put in as the builder but even if I wanted to build a cheap 2 family shitbox like they build all over Elizabeth and Newark (not my words, my supplier) I would still need to pay something like that because of all the red tape to get the approval.

That's one big reason why affordable housing is DOA.

 

[T2Kplus20]

That's the business model because government makes it impossible.

You guys can't be pro Democrat and wonder why rent/housing is not affordable when built new. Not trying to get political (although someone ITT will get butthurt about it) but it's just the truth. There are protections and then there is insanity. That's where we are at now in NJ.

Literally impossible.

I just spent nearly $60,000 between architect fees, permit fees, attorney fees, site fees, cops to block off streets, engineering fees etc to build a new 2 family in New Brunswick. Now it's the nicest in town because of the effort I put in as the builder but even if I wanted to build a cheap 2 family shitbox like they build all over Elizabeth and Newark (not my words, my supplier) I would still need to pay something like that because of all the red tape to get the approval.

That's one big reason why affordable housing is DOA.

^^^^^ TRUTH!
And this is why NJ's stupid low income housing mandate comes with a 4:1 market rate unit kicker on affordable units. It's a payoff to developers to make up for all the unfunded government created costs.

 

[Plum Street]

Almost impossible. Land is too expensive. Cost to build is too expensive. They would need to pay me as a builder basically. I would need the land for free. Who is going to do that? That's why any affordable rental options have massive tax credits. You'd lose your ass as the developer.

But developers did at one point build starter homes.
That’s why you need government intervention. But the government doesn’t do much right.

 

[Plum Street]

That's the business model because government makes it impossible.

You guys can't be pro Democrat and wonder why rent/housing is not affordable when built new. Not trying to get political (although someone ITT will get butthurt about it) but it's just the truth. There are protections and then there is insanity. That's where we are at now in NJ.

Literally impossible.

I just spent nearly $60,000 between architect fees, permit fees, attorney fees, site fees, cops to block off streets, engineering fees etc to build a new 2 family in New Brunswick. Now it's the nicest in town because of the effort I put in as the builder but even if I wanted to build a cheap 2 family shitbox like they build all over Elizabeth and Newark (not my words, my supplier) I would still need to pay something like that because of all the red tape to get the approval.

That's one big reason why affordable housing is DOA.

I agree.

 

[kupuna133]

Looks like certain residential areas have entered a bear market!

 

[RU205]

But developers did at one point build starter homes.
That’s why you need government intervention. But the government doesn’t do much right.

I grew up in Edison. In the 50/60/70 builders did build small ranch starter homes on 1/4 or 1/2 acre lots. Those homes are now being sold for $500k+ to builders who are knocking them down and building new houses and selling for $1M+.
There is no new land to build on. The town is full so it’s only knock downs from here on out. There is no starter home. Any home cheap enough to be considered a starter home is basically run down and will have a builder buy it for the land. There is nothing that the government can do about that nor should there be.
But I also agree with the other posters that the government restrictions aren’t helpful to the housing market.
I’m not sure where is NJ there is enough open space to build starter home from a government program???

 

[T2Kplus20]

I grew up in Edison. In the 50/60/70 builders did build small ranch starter homes on 1/4 or 1/2 acre lots. Those homes are now being sold for $500k+ to builders who are knocking them down and building new houses and selling for $1M+.
There is no new land to build on. The town is full so it’s only knock downs from here on out. There is no starter home. Any home cheap enough to be considered a starter home is basically run down and will have a builder buy it for the land. There is nothing that the government can do about that nor should there be.
But I also agree with the other posters that the government restrictions aren’t helpful to the housing market.
I’m not sure where is NJ there is enough open space to build starter home from a government program???

Edison is the definition of suburban ghetto. Sadly, my old hometown of EB has followed suit. Awful planning and consideration for the future. Very NJ.

 

[anon_0k9zlfz6lz9oy]

But developers did at one point build starter homes.
That’s why you need government intervention. But the government doesn’t do much right.

They built starter homes because it was feasible to do so.

Labor was less expensive
Materials were less expensive
Land was less expensive

And #1 BY FAR, there was less red tape. Soft costs before you even stick a shovel in the ground due to the government have gotten absurd. So its the complete opposite of what you say. If you wanna make building less expensive to creat more starter homes, limit government bs, dont fvcking expand it