HunterdonMarket.com

New Jersey home sales are trending in the right direction. According to Jeffrey Otteau, this “trend began all the way back in May when home sales rose for the first time in more than a year following the expiration of the home buyer tax credits in April 2010.”

Recent data shows “the trend is not weakening and is therefore likely to continue into 2012.” Since consumer confidence has improved and affordability (ratio of incomes to prices) remains over 100% “we may be seeing the start of a sustainable housing recovery – without tax credits – with staying power.”

New Jersey, which has lagged the nation in job creation, has gained jobs in 8 of the 10 months prior to December 2011.

Mortgage rates have been very low (below 4%) and will remain. In New Jersey, home sales were higher in six of the last seven months (below). Buyers seem primed for 2012.

Zooming to the local scene, my data on Hunterdon County home sales shows the impact of the April 2010 tax incentive. Except for those few months, 2011 home sales ran above the year before and ended on a slightly higher note than most recent years.

Given the trend in New Jersey as a whole, the local homes market could rival the better years seen in the graph above. Now, what about home sale prices?

While the pace of home sales will probably quicken significantly this spring, a still too-high inventory means buyers have too many choices. Typically home prices don’t get bid up until the inventory index (# sold last month/# homes for sale) drops well below 8 months of supply.

Until then, competitive pricing, staging to sell, aggressive marketing remain three essential keys to selling well in the very competitive Hunterdon homes market.

How will you know when the time is right to make a move?  Whether you’re selling a home or buying, it pays to watch home prices and mortgage rate trends, the two factors that make homes affordable.  The NJ affordability index is graphed below.  At the peak of the housing market, this index was 84%.  A median income family with a 20% downpayment could not qualify for the median-priced home.  Today, that index stands at 1.43% which means today’s median income family can easily afford today’s median-priced home. (We all know what changed was not income, not for the middle class at least, but the price of homes and mortgage rates.  But this is good news simply because affordability is crucial.
If affordability is no longer a show stopper, what’s holding buyers back (besides that 20% down-payment)?  Job loss or insecurity, a lack of confidence.  Let’s face it, home sales lagged significantly this past year compared to every year since 2006.  But Hunterdon home sales rose in October (20 more sales than the previous month) and the inventory

of homes for sale fell by almost the same number.  The dramatic increase in the pace of sales reduced the homes inventory index.  Since 2006, only in the tax-stimulated Fall of 2009 was the inventory index lower than it is now.

Home prices are not going to rise until the index gets a lot closer to where it was in March of 2006.  But if the overall economy continues improve, maybe even starts to create enought new jobs to match the need, the current affordability of New Jersey homes and a recent increase in local home buyer activity may mean that the reason to hold off buying or selling will not matter so much over the next several months.

From Labor Day to early December is typically the second-best home-buying season of the year.  Given how slow the Spring market was in Hunterdon, it seems likely this fall will be better than most. Some people are primed to take advantage of low prices and low interest rates:  For example, now’s a great time to sell and move-up. Yes, your home is worth less than a few years ago but the same percent decline in a higher-priced home equals a lot more dollars.  If the walls are closing in, this will be your season to find a new home.

And if you’re a first-time buyer, it’s a great time to buy, while home prices and interest rates are low. True, neither is rising soon, but there’s also no need to waste more money renting when neither is going much lower. RentVsBuyCalculator

What’s trending on the local market? When the tax credits expired in the spring of 2010, the recovery was not strong enough to counter the lost stimulus and home sales fell.

After April 2010, the number of  homes under contract fell below each of the past four summers, every one a strong buyers’ market.  This year, although I’ve done well in marketing and selling my listings, the local market has not taken off, at least until now. Recently, I’ve noticed more activity and more listings going under contract. The inventory index (the number for sale divided by last month’s sales) has stayed pretty level but now seems poised to cross the blue, red, and yellow lines in the months ahead (below). Home sales will probably rise again this fall as they typically do (above).  It’s possible that the time has come for you to make a move.  Let’s talk.  (908) 797-9900 (cell) or email me

Let me show you recent sales in your town and your home’s projected sales price. You’ll get a free price analysis from a trained residential appraiser but you’ll also get the benefit of my 15 years experience marketing homes.

Right now buyer activity, especially among first-time buyers, is stronger than earlier this year. As spring turns the corner into summer, real estate traditionally slows, but this year, who knows? The spring has been so weak, traditional rules of thumb may not apply. Why so tentative? What’s the housing market waiting for? It’s the economy stoopid!

One factor is consumer confidence which is too low, another is interest rates which are great but can’t last. If the economy improves even slightly, these two factors will both move up. Greater confidence will spur home buyers but rising rates will spur them more. A 1% mortgage rate increase negates a 10% decline in prices, so when rates move, the smart buyers will too.

As the graph below shows, home sales have been down by as much as a third compared not just to last spring when the  tax credit gave us a bump, but to the average of the past 5 years, all buyers’ markets.

OTOH, the absorption rate has remained high but closer to the ‘norm’ of recent years.

So all in all, with the inventory index (the ratio of homes-to-buyers) not much worse than years past and with buyer activity much lower this spring than in the past, demand has been building, waiting for a spark.  We’re fueled – just waiting for the economy to bring greater confidence and higher mortgage rates to ignite home sales.

If you’re wondering about selling your home, I’d love to meet with you.  You’ll get more than a free consultation and price sale analysis; you’ll get the benefit of my 15 years marketing homes. Please call Don Sherblom the top selling agent in the Clinton RE/MAX office at (908) 797-9900 (cell)  RE/MAX Town & Country in Clinton, NJ
Or visit my site: ClintonRealEstate.com

Contact Don Sherblom by email

One indicator of climate change is weird weather, extreme highs and lows, uncertainty and wackiness.  Seems like we’ve got an economic climate change goin’ on.  The spring is usually the hot market for real estate.  Not so in Hunterdon County this year.  As the graph below shows, the number of homes under contract each month has been well below every year since the market went south in mid-2006.  The monthly inventory index (homes for sale/sales last month) has been just a little bit higher, (second graph) which shows sellers have held back as well. 

One explanation for the slower pace is that when banks slowed the foreclosure process to correct improprieties short sales, which take an extra 2-3 months to close, became a bigger percentage of the inventory of homes. That fits my recent experience as a listing agent and buyers’ agent. A stronger contributing factor is simply the slow pace of recovery from the deepest recession in six decades and the low level of consumer confidence. But every downside has an upside.

Since home ownership is in the genetic makeup of the American people, demand is deferred but then rebounds periodically. What goes down must go up. We will not reach the heights of 2008 and 2009 which saw peaks in June and July, but sales are more likely to go up in the next couple of months than stay stagnant or drop. Location within Hunterdon County will also make a difference, with a stronger market in towns closer to I-78 & Rte 22.   Also, as you can see below, inventory index is not that much above previous years.  It’s still high enough to be pushing prices lower but not far outside the range of years past. 

Nationwide, investors accounted for 1/4 of the sales in April, showing they believe prices are nearing bottom. For a national survey of trends Click Here.

If you’re considering selling your home, I offer a FREE consultation and price sale analysis.  Please call Don Sherblom the top selling agent in the Clinton RE/MAX office at (908) 797-9900 (cell)
RE/MAX Town & Country in Clinton, NJ  Or visit my site: ClintonRealEstate.com

Contact Don Sherblom by email

The cover story of the April’s Fortune Magazine is The Return of Real Estate.  The article explains that several market forces have created a more promising outlook for the industry.  The decline in new construction has limited the over-supply of homes.  A steep drop in prices and low interest rates have contributed to a “remarkable shift in home affordability” which bodes well for housing’s immediate future.  The author concludes it’s a great time to buy and offers simple advice for those on the fence: Beat the crowd.

Two other major factors affect the real estate market. The first is the state of the economy, especially the local jobs picture, which in New Jerse lags behind the slowly growing national economy.  The second is interest rates, which can go no lower and will rise.  Since counter-cyclical spending was pre-maturely reined in, the FED’s second “quantitative easing” (QE2) is the sole remaining economic stimulus.  But QE2 has a limited effect on long-term rates simply because they’re aleady as low as expected future inflation.  At the first sign of a stronger market, mortgage rates will climb.  Small rate increases will offset any lingering concerns buyers may have about home prices having reached bottom.  Buyers will realize now’s the time to buy.

Here’s how things stand in Hunterdon County.  The inventory index is moderate, having dropped from the January high of 16.5 months to 11.5 months at the beginning of April.  We’re still in a strong buyers market.  But we can expect home  sales to rise as

has been the trend every year, (below) sometimes a little sooner, sometimes a

bit later.  With greater affordability, lower prices and interest rates, and (hopefully) continued improvement in the economy, we should be in for a good Spring selling season over the next two months.

For a FREE price analysis and consultation on your home sale, please call me,
Don Sherblom, top selling RE/MAX agent in the Clinton office
at (908) 797-9900
RE/MAX Town & Country in Clinton, NJ ClintonRealEstate.com

Contact Don Sherblom by email

Like the tender green of crocus shoots, the local homes market is showing signs of life.  Heavy snow seems a distant dream, spring just around the corner.  Remember though, that’s how March sets you up for a major slam.  Something like that could still happen to the local real estate market.  The effects of a Federal government shutdown, an extreme hike in gas prices, a terrorist attack are among the possibilities that could freeze the green shoots of an economic recovery and slightly improved real estate market.  So far though, sales were up in February (brown line).  If March shows the same rise, we’ll be off to an early Spring market, as sharp as last year, when a tax credit fueled sales. 

With sharply increased sales, the inventory of available homes dropped significantly in Hunterdon County.  The number of months to sell every home still needs to fall below 10 months before prices level off.  But with increased activity in the next few months, this will be the best time to put your home on the market since a slight downward pressure on prices will continue through 2011, until the absorption rate reaches about 8 months.  

If you thinking about selling, you can find the asking price of all similar homes for sale at ClintonRealEstate.com  and sales within the past year at ClintonHouseValues.com

Call on a professional to help you plan your home sale. For a FREE price analysis and consultation on your home sale, please call me, Don Sherblom, the top-selling resale agent in the Clinton Office at (908) 797-9900  Contact Don Sherblom by email
RE/MAX Town & Country in Clinton, NJ  ClintonRealEstate.com

Recommendations from past clients, click above.

About five years ago, the real estate bubble burst and started to drag the economy into what became the deepest recession this side of the Great Depression, (which was also caused by de-regulation and “supply side” policies).  Over a year ago, the economy stopped shrinking. The recovery has not been robust but there are a few green shoots, early tentative signs of growth. The National Association of Realtors’ (NAR) just released Existing Home Sales data.  You may have just heard a negative story about home sales. That was new home sales. The sales of existing homes (the majority of home sales) rose in January 2011 compared to January 2010. This was the third consecutive month of gains compared to last year.  (13 month graph below.)

Lawrence Yun, NAR chief economist, said in a press release:  “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence. The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

A NAR practitioner survey shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place. Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.

Locally, real estate prices have probably reached bottom and, barring a government shutdown or terrorist attack, we can expect good buying activity this spring and summer. I’ll be back early in March with info. on the local trends with January and February numbers. I will make it early in March, because this years spring market is about to begin.   

For a FREE price analysis and consultation on your home sale, please call me,
Don Sherblom, top selling RE/MAX agent in the Clinton office at (908) 797-9900
RE/MAX Town & Country in Clinton, NJ  ClintonRealEstate.com

Contact Don Sherblom by email.

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