A 'positive, but' outlook for N.J. economy, housing

I'm looking at economist Kevin Gillen's recent take on New Jersey's economy and housing outlook, and the first thing that comes to mind is the New Jersey Turnpike.

Are you as blown away as I am about how easy it is now to navigate the turnpike from Exit 8 to Exit 4, and vice versa, since they finished the reconstruction? It's just mind-boggling, not having to wait 45 minutes while a zillion cars, trucks, and buses from six lanes try to merge into three, or ease from three lanes into six.

I just wish the outlook for the economy and housing that Gillen recently presented to the Atlantic Builders' Conference was as positive.

New Jersey and the rest of the United States will experience "positive, but diminishing" job growth in 2016, with further reductions in unemployment unlikely, said Gillen, chief economist for Meyers Research and senior research fellow at Drexel University's Lindy Institute for Urban Innovation.

Nationwide, it has been a long housing bust since 2007, he said: Home prices in most areas of the country have recovered significantly from the post-bubble lows, but jobs related to housing still struggle.

Overall, jobs in construction and real estate have declined by 19 percent since the recession, Gillen said.

New Jersey home prices are still coming back, he said, and I have enough anecdotal evidence from real estate agents in Gloucester, Camden, and Burlington Counties to confirm that.

Median new-home prices are higher than in the United States as a whole, which is not surprising, and are close to or above the 2005–2006 peak. Homes are becoming less affordable and home-ownership rates are falling nationally and in the Garden State.

Overall home sales, whether of newly constructed or previously owned houses, are still struggling in New Jersey, Gillen said.

The state's housing inventory is well above the national average, and its foreclosure rate of 1 in every 675 houses, as reported by RealtyTrac, is the country's second-highest, after Maryland.

Multifamily construction is "robust," Gillen said. Overall, home building is concentrated along the Delaware River across from Philadelphia and along the Route 42 corridor from the Shore.

The most expensive housing ($250 a square foot) is concentrated in North Jersey and at the Shore, he said.

The state's home builders are upbeat, mirroring their national counterparts, Gillen said.

From now to 2032, population growth will slow, with Camden at 2.9 percent, Gloucester at 9 percent, and Burlington, 6.1 percent, he said. The 65-plus age group will grow the fastest. Demographic shifts will find people aging in place in existing homes, and there will be more elderly friendly construction.

New Jersey has among the nation's highest construction costs, and has some of the most extensive land-use regulations in the United States, Gillen said.

"It is the most built-out state," with 95 percent of the population classified as living in an urban area, he said. Only 17 percent of land in New Jersey is either farmland or preserved green space. Land is not only increasingly expensive, but assemblage opportunities are becoming increasingly rare.

The state already had the highest average property tax burden in the country, with the average increase 2.4 percent in 2015 - the typical bill rose by $193, Gillen said.

Expect more of the same economic conditions in 2016, he said; the outlook starts to become more pessimistic into 2017.

The turnpike looks even more inviting, doesn't it?

aheavens@phillynews.com

215-854-2472 @alheavens

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