The oft-quoted New Jersey appraiser, Jeffrey Otteau’s advice for both home buyers and sellers is that your best time to make a move is the next two months.   For buyers, March is optimum, for sellers March and April will be the most opportune times to sell anytime this year.  Since hindsight is 20/20 it helps to know this prediction is based on evidence from October 2009.  This was the last month a buyer could put a house under contract and qualify for $8,000 in tax credits. A quick look at Hunterdon home sales shows a bump up by about a 25% in October, largely attributable to the tax incentive. 

The Inventory Index (months’ supply of  homes at last month’s sales pace) showed a temporary drop in the number of Hunterdon County homes for sale that same month.  

The tax credit was subsequently extended and expanded to include $6,500 for current home owners.  To qualify now, buyers need to be under contract by April 30th (they have another two months to have a title closing).  

Another factor, Mortgage interest rates, indicates March is the better month for buyers to make their move.  Rates are currently low, in part to the FED program of Buying mortgage backed securities until the end of this month. 

In April, rates will probably go higher, a move that initially prompts buyers to jump in.  The approaching tax credit deadline will further increase buyer activity.  All this will happen not in a season which typically sees declining sales, but at the most active time of year.   So the house that’s been sitting through a snowy February without showings will get showings and maybe even an offer.  Bargaining power will start to evaporate as the snow recedes, especially as we approach mid-April.  

For home sellers, pricing it realistically and getting it on the market before the crest in buying activity will be important, especially since no body knows where the real estate market will be after the Spring.  In short, now may be the best time this year – right now for buyers (before mortgage rates go up and the competition increases) and for home sellers, sometime these two months, as the normal seasonal trend is lifted further by low rates and tax credits, will be optimum.

Please call (908) 797-9900 for an analysis of your home’s current market value Don Sherblom at 908 797-9900 or email me here    

The Spring homes market usually picks up as winter goes out, some say like a lamb.  But there are already stirrings in this year’s Spring market.  I’ve even had a couple of multiple offer situations recently.  What has finally awakened the beast of deferred home buyer demand? 

• Rates: The Fed. has been buying mortgage-backed securities to keep interest rates low.  That’s an incentive to buy now.  That program ends on March 31, 2010.  Mortgage rates will go up, and that will first spur late deciders to decide, then chill the market when monthly payments get too high.  
• Prices: Home prices haven’t been this low in 7 years!  Most analysts agree our local homes market has reached bottom.  Demand is stronger but the inventory of available homes remains high so there’s lots of choices.
• Cash: OK, low prices, low rates, lots of choices, and there’s one more incentive, which expires on April 30:  A refund of up to $8,000.  (If you don’t owe that much, the IRS cuts you a check.)  You must be under contract by April 30th to qualify.

The graph below compares the homes inventory index for the past five Januarys. 

While still high, the inventory is where it was two years ago, and it goes down each Spring.  The worst period for home sellers, when sales stalled during the financial crisis of mid-September through April 2009, is behind us.  The second half of 2009 was even better than the last half of 2006 or 2007 .

The same information in a diferent format better shows the absorption of inventory over the past five years in Hunterdon County.  While the index now is where it was in 2008, above 2006 or 2007, the basket of incentives listed above should rapidly increase sales, causing the index to drop far faster, more like 2006 and 2007 than 2008 when the economy was in recession.     

Going forward, the economy could still have a few wild cards.  Last year’s bank bailout to stave off depression obviously worked.  (Today, Bankers seem to be the only ones not depressed.)  But the subsequent economic stimulus may not have been big enough to get the jobs machine back online.  That clouds the real estate market.  But overwise, we’re looking forward to a pretty robust Spring market – one that comes on like a lion’s pride looking for red meat.

Call me for a survey of recent home sales in your town, and analysis of your home’s current market value, please call me, Don Sherblom at 908 797-9900 or by email.    

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.