After last year, we’re all looking forward to a new year.  The reason for optimism is seen in the inventory index.  Yes, the inventory of available homes is still high and this makes it harder for home sellers, but looking at two points on the graph brings the near future into focus.  First, the high blue line at the end of 2008 and high white line in early 2009 shows the effect of the financial crisis and Great Recession.  We came through that sometime about May and by September 2009 the inventory index was better than any year since 2005. 

By October both the inventory index and the number of homes under contract improved dramatically here in Hunterdon County NJ.  The anticipated expiration of the first-time home buyers’ tax credit (due to expire Nov. 30th, which meant homes had to be under contract in October) together with continued low mortgage rates and a slightly improved economic picture created a mini-surge of home sales.  The Christmas season brought both indicators back to the levels of other years.

Now, with a fragile but continued economic stability, and with the FED continuing its program to buy up mortgage-backed securities to keep rates low, and with the expansion of the tax credit to include not just $8,000 for first-time buyers, but also $6,500 for move-up buyers through April 30th, this Spring looks to be an excellent time to sell your home.   

To the appraiser Jeffrey Otteau, ”it appears certain that the recent surge in home sales together with it’s October crescendo will repeat itself during the 1st half of 2010 as the expanded home buyer tax credit nears expiration. And so, 2010 should bring the largest Spring surge in homes sales since the housing downturn began in 2005. As a result, homeprices should realize modest gains in the coming year.”

For a survey of recent home sales in your town, an analysis of your home’s current market value, and a dynamic marketing plan from the industry’s leader, RE/MAX, please call me, Don Sherblom at 908 797-9900 or by email.  

As the homes market slowly turns back toward balance, it makes sense to look at a long-term trend to better appreciate where we are now.  This graph of the Inventory Index over the past eight years supports the idea that the worst of this three-year decline in the homes market is behind us. 

Improving market conditions such an economy coming out of the worst recession since the Great Depression, the improved affordability (lower prices) of homes, currently low interest rates and significant pent-up demand all support the idea that this Spring 2010 market will be our first normal Spring market since 2006.

The graph above also shows how far we still have to go to get back to a strong sellers’ market such as we experienced prior to 2006.

The graph above compares year on year with 2005 being the last “normal” year; a relatively balanced market, neither a strong sellers’ market nor strong buyers’ market.  Again, the worst appears behind us, last Autumn (on the heels of the financial crisis) and the Spring of 2009.  Yet the inventory index (the number of months to sell every home on the market at last month’s sales pace) needs to drop below five months before home prices begin to move up again.  At this point, even with 12 months supply, we’re roughly even with November 2006, and ahead of November 2007, and 2008.

As the inventory continues to drop, previously frustrated sellers (expired, withdrawn, or not listed) will re-enter the market. Since the index is affected by the number of homes newly listed as well as the number placed under contract, increased buyer activity will be partially offset by new listings. This see-saw of buyer-seller activity will slow the return to a sellers’ market, frustrating anyone hoping for a quick return to 2005 prices.  But let’s not end on a sour note, since the worst is behind us.  Even at this early hour, you can see blue skies ahead.

For a survey of recent home sales in your town, an analysis of your home’s current market value, and a dynamic marketing plan from the industry’s leader, RE/MAX, please call me, Don Sherblom at 908 797-9900 or by email.  

Capitalizing on the success of the $8,000  home buyers’ tax credit, Congress expanded the credit in legislation signed by President Obama on Oct 6.  The new law raises the income ceiling to $125,000 for single people and $225,000 for married couples, with a phase out for incomes up to $245,000. The home must be priced below $800,000, under contract before April 30, 2010 and close before July 1, 2010.
 

This credit (if you owe less, you get a refund) has been claimed by 1.4 million people nationally, based on figures from the Internal Revenue Service (IRS). According to the NAR, about 350,000 of those would not have made their purchase without the tax credit. These home sales boosted the homes market and helped bring the larger economy back from the brink. For more information click here.

Here in Hunterdon County, and in New Jersey, real estate sales have been increasing and the inventory dropping.  While the inventory is still well above a balanved market, more homes went under contract last month than in any October since 2005.  

The inventory has slipped to 9.7 months to sell every home at today’s sales pace.

Home sales are far better in Hunterdon County, NJ than in any year since 2005!  With the extension of the tax credit, and the FED’s recent extension of a program to keep mortgage rates low, this is the start of something we haven’t seen in a long time – a return to a ‘normal’ real estate market.  

For a survey of recent home sales in your town, an analysis of your home’s current
market value, and a dynamic marketing plan from the industry’s leader, RE/MAX,
please call me, Don Sherblom at 908 797-9900 or by email.  

Today – Thursday, November 5th –Congress extended and expanded the homebuyer tax credit.  The bill will be sent to President Obama for his signature.  First-time buyers (those who have not had a principle residence for three years) are still eligible, and the maximum amount remains the same – $8,000 for married couples, $4,000 for those filing separately.  When President Obama signs the bill, which he is espected to do quickly, the expiration date for the credit will move to April 30, 2010 for a binding contract that closes before July 1, 2010.

Current homeowners who have used the home as their primary residence for five of the last eight years are also eligible. However, the maximum amount for those homeowners is lower: $6,500 for married couples and $3,200 for those filing separately. The tax credit may not used to purchase a home for more than $800,000. All buyers who want to get the credit must include documentation of the purchase on their tax returns.

For a survey of Hunterdon County sales, an analysis of your home’s current
market value and a marketing plan from the industry’s leaders, RE/MAX,
please call me, Don Sherblom at 908 797-9900 or by email.

Washington, October 23, 2009, the National Association of Realtors:

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate¹ of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy.

. . . Regionally, existing-home sales in the Northeast increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price in the Northeast was $234,700, down 7.0 percent from a year ago.

For a survey of Hunterdon County sales, an analysis of your home’s current market value and a marketing plan from the industry’s leading homes marketing company, RE/MAX, please call me, Don Sherblom at 908 797-9900 or by email.

Three major forces are shaping the Hunterdon County, NJ homes market.  

• Interest rates on mortgages  - The FED has been buying mortgage-backed securities to keep rates artificially low.  (They were below 5% last week.)  That program was to expire but the FED has extended it until March 2010, through the early Spring market.
• Affordability of homes – Homes are 100% affordable when a median income household can purchase a median priced home.  In 2006, the affordability of Hunterdon homes was only 81%.  Today, the median income household earns 109% of what they need to buy a median priced home.  That’s primarily the result of falling home prices and low rates.  Affordability is key to any market.
• Greater confidence about the economy - The sheer terror at another Great depression has been replaced with relative calm and a few small signs of economic recovery. For one, there was a very small increase on private sector jobs in New Jersey over the summer.

 The inventory index is now better than anytime since the great real estate slump began in 2006, as you can see in the graph:

 The Hunterdon inventory index shows the absorption rate for homes.  It answers the question:  At last month’s sales pace, how many months before every home was sold?   The inventory is still too high for buyers to bid up home prices but it’s the lowest it’s been since 2005!

It’s not surprising that sales are slightly above previous Septembers, apart from 2005.

The noted, often quoted, appraiser Jeffrey Otteau’s current projection for when New Jersey home prices will reach bottom is shown in the graph below.  He expects prices to be flat next year as we continue to work off inventory and to rise but very slowly in 2011 and the years ahead.  

It seems that whether you’re buying or selling, the wait is over. 

Seize the moment:  Call for a curent price analysis on your  home! 

Don Sherblom   Personal Service, Professional Results!
908 797-9900     email me here     ClintonRealEstate.com

_______________________________________

~Find Your Next Home ~
www.ClintonRealEstate.com      
 
The New Jersey housing market appears to be stabilizing.  The inventory of available homes is dropping slowly.  As this map from the Otteau appraisal group shows, the inventory is lower just west of New York City and along 287. 

   According to the appraiser Jeffrey Otteau, “The New Jersey housing market continued to strengthen in July as the number of home sales increased for the 7th consecutive month, a run last seen in 2003.”  He also says there’s “good news to report on Unsold-Inventory, the number of homes being offered for sale, which has now declined for the past 3 months and stands at its lowest July level since 2005.”

Hunterdon County’s sales pace and inventory of available homes have not improved quite like other parts of New Jersey.  It’s not that we missed the boat; the real estate recovery hasn’t arrived yet.  It’s just over the horizon, headed west.  Hunterdon home prices have fallen by 20-25% bringing the affordability index above 100% – families with the median income can  now afford the median-priced home in Hunterdon County. 

Housing demand typically spreads west along the I-78 corridor and farther from the highway as buyers seek more house for the money.  The graphs below show that Hunterdon home sales and the inventory index have both remained steady in both July and August, in fact, sales were down slightly from June and inventory slightly higher after June. 

Given that New Jersey’s housing market is improving, I expect stronger demand in Hunterdon County this fall, a time that is traditionally the second best time to sell your home.  For a free consultation on the local homes market and your home’s most likely sale price, please email me or call Don Sherblom at (908) 797-9900.

There are signs the market is stabilizing, the rate of declining prices slowing.   After months of increased home sales, real estate news has been pretty upbeat lately.  June’s figures showed signs that we’re finally climbing out of the crater of last fall’s financial crisis. 

When preparing a price analysis for home sellers, professional Realtors like me have had to calculate a one-percent drop in prices per month from the financial panic of mid-September 2008 to sometime about April 2009.  But in the past couple of months, the rate of price decline has slowed as  the number of home sales increased.  In the months of May, June and July the inventory index finally returned to the range of previous years.  

Although paved by government stimulus spending, the road back is bumpy, as seen by the rise in inventory last month.  But there’s reason to believe sales will increase this Fall, bringing the inventory index even lower.  That would be good news for sellers.

 Why do I expect the inventory to drop on rising sales again this Autumn?  The $8,000 tax credit for first-time buyers, which expires December 1st, incentivizes first-time buyers and frees move-up buyers in the process.  Early faint indices of an economic recovery have increased buyer confidence.   And typically, until the past three years, the Fall has been the second best time to sell your home.  With summer vacations over people get serious about life again after Labor Day. 

It’s the past three years that have been unusual, the exception to the rule that Fall is the second-best time to sell your home.  In the fall of 2006 (yellow) we were in the first year of a depressed housing market.  August 2007 (red) saw the sub-prime mortgage meltdown and in September 2008 (blue), Wall Street dragged us all over the cliff.  These were all exceptional drags on home sales.  But as a few signs of  economic recovery now appear on the horizon, 2009 may be the first return to a “normal” fall season since 2005.

A quick look at median home price trends (from Otteau Appraisal) supports this view:

As home prices have dropped, affordability has improved.  The affordability index is 100% when the median family can afford the median-priced home.  In Hunterdon County, this index was at 84% in 2006; prices were too high.  With lower prices last year, home affiordability returned to over 100%.  In short, an end to the financial panic, more optimism about the economy, policy incentives, and affordability combine to make this Fall a moment of opportunity.  Don’t miss the moment.

Call me for a free home sale price analysis and marketing plan for your Hunterdon home! 

Don Sherblom   Personal Service, Professional Results!
       908 303-8130 or email me here.

              ClintonRealEstate.com

NJBiz.com  (8/6/09)
Report: New Jersey Housing Market on Faster Road to Recovery

After four months of increased homes sales, people are asking:  Has the market stabilized?   In other words, have home prices stopped their downward slide?  The amazing thing about this question is that it follows so closely the question everyone was asking a few months ago:  Are we headed off a cliff?  The answer to both questions seems to be “not quite.”

First, the cliff hanger in the financial sector was rescued, not without great cost.  (Guess we won’t buy that old snake oil of completely self-regulated markets again anytime soon.)  Second, the real estate sector is rebounding from an artificialy low point in this three-year ‘down’ market.  That recent steep decline and rebound stand out in the graph below:

Notice the 5-month hiatus in homes going under contract from October 2008 through February 2009; far lower sales than previous winters.  Yet by June 2009, the rebound reached slightly above last spring.  Four months of gains in home sales is a very good thing but what does this indicate for the future? 

The best gauge of the Hunterdon Market is the inventory index (the number of homes for sale divided by the number placed under contract the previous month).  This index tells us how many months it would take to sell every home on the market at last month’s sales rate.

In June 2009, the inventory index finally crossed the line!  It was lower than last year at this time, lower than 2007, and hit June 2006 levels, just under 10 months.  We’re headed towards the levels of 2005, the last hot seller’s market, but the inventory is still twice as high as in 2005.  The ‘hidden’ inventory of discouraged sellers and would-have-been home sellers probably equals another few months’ supply which will come on as the market improves in the next few months.  This will dampen any quick return to 2005 market conditions.    
            

So what does this mean for your home sale?  Homes market activity varies by price range and by township.  The $8,000 refundable tax credit for first-time buyers has sparked more activity in the lower prices ranges.  First-time buyers provide the home sale closing which enables move-up buyers to move-up, so the credit’s effect ripples through the market.  With a December 2009 expiration, I expect this credit will help make the Fall 2009 season, which starts just after Labor Day, the best home selling environment of the past few years.

We will probably see home prices level off in the coming months or early next year.  We will definitely not see a rise in prices until the current index line reaches that green line, which I don’t expect to happen anytime within the next year.  Only when we get to the levels of 2005 will we see buyers bidding up homes prices.  But we will see a better sales pace this fall and next spring than anytime in recent months and years.  With inventory moving down, things are looking up!    

Please call me (908 303-8130) for a free consultation specific to your home and local market.  See homes offered for sale, all the local listings, at ClintonRealEstate.com and see pictures of recent sales at ClintonJustSold.com 

Don Sherblom, Personal Service, Profesional Results!
RE/MAX Town & Country, 44 Leigh St. in Clinton (908) 303-8130!  

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Thanks, Don Sherblom