As we entered hurricane season in mid-September last year, a cyclone hit Wall Street which took down giants of the financial sector and caused books on the Great Depression to fly off shelves across the nation.  The ghost of Herbert Hoover found an unlikely re-incarnation in the mindless medium of Ann Coulter.  Choices ranged from a replay of Keynesian demand stimulus, which mitigated and finally ended the Great Depression as government money poured into war production in the 1940s, and the do-nothing ‘trickle-down’ policies of Hoover/Coulter.   The great waves of economic disaster that washed across this country last fall began years ago in the real estate sector.  But sales now plummeted like a stone from the low levels of  2006 - 2008.    

In the past two months, sales have rebounded some.  As a result of increased confidence (decreased fear) and the typical Spring cycle of home buying, the inventory of homes for sale has dropped from the incredible highs of late ‘08 and early ‘09 (late blue to purple below) to the dismally high level of the past three years.

 Another look at the inventory over the longer term is below.  This shows how far we’ve come from the hot seller’s market of 2001-2005, when the index ranged around 4-5 months to sell every home.  The current  index is about 11 months to sell every Hunterdon County home now on the market.  What does this mean for your potential home sale?

While a hot seller’s market is years in the future, a recovery of the homes market seems to have begun, quite simply because more homes are being purchased and there are fewer homes on the market. 

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Don Sherblom.  RE/MAX Town & Country
44 Leigh Street, Clintn, NJ 08809 
(908)  303-8130

Find your next home fast at  http://ClintonRealEstate.com

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See that plunging purple line?  That marks the sudden drop in available homes from an incredible height of over 20 months to sell every home on the market to an index of 19, then 14, now 11.5 months at the start of May here in Hunterdon County.

That’s a dramatic drop yet it only heralds a return to the levels we had prior to the onset of the Great Recession in mid-September when Wall Street kicked an ordinary recession into overdrive. 

[As a side note: this Great Recession has revived the ghosts of FDR and H. Hoover in a debate which J.M. Keynes won a half-century ago when the government spending he advocated, as with the New Deal then gearing up for WWII, finally lifted us from the Great Depression.]  

Was this recent drop in the inventory index due to homes being withdrawn from the market or to purchase contracts?  Mostly new contracts.  The graph below shows how anxiety over Wall Street and the onset of the Great Recession in September created a hole in home sales.  In the past two months, homes sales have increased to something closer to the new normal.

 The graph above shows five years of robust sales and the past three years of lower sales.  Even in the past three years, sales have been cyclical, with lows and relative highs.  It looks like we’re entering a period of increased home sales over the next few months.    For a closer look, see the graph below, which highlights the market since since April 2006.

What does this mean to you?   Call Don Sherblom 908 303-8130 or email me here.

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Don Sherblom.  RE/MAX Town & Country
44 Leigh Street, Clintn, NJ 08809 
(908)  303-8130

Find your next home fast at  http://ClintonRealEstate.com

Last fall’s swooning homes market has come around; the pulse of home sales has quickened,  the spring sales surge has begun.  As we anticipated, it’s later than usual and weaker than in March of years past (see below) but with extremely low sales after September’s financial sector meltdown, there’s a lot of pent-up demand and reason to think next month’s sales will be higher still, making the next two months the best time to sell with the next year.    

Buyers have responded to low home prices (in Hunterdon affordability is above 100% for the first time in years), but very low interest rates and the $8,000 credit for first time home buyers have been the key elements releasing that pent-up demand.  Increased sales cut into the inventory of homes for sale in March, which dropped to 14 months, as seen below.

 Find out what this means for your township and your potential home sale!  For a confidential no-cost home sale price analysis consultation, please call me at  908 303-8130  or contact me here.

Don Sherblom.  RE/MAX Town & Country
44 Leigh Street, Clintn, NJ 08809 
(908)  303-8130

Find your next home fast - Search the MLS at  http://ClintonRealEstate.com

The National Association of Realtors (NAR) released existing home sale figures yesterday that led to surprising headlines:  In the northest, sales jumped 14.6% in February over the month before. Was February a new high or were January sales unusually low?  You guessed it:  January’s 480,000 sales were down from December, when there were 570,000 home sales in the northeast.  February’s 550,000 sales were a major rebound from January’s low but not the harbinger of a spring market. 

We sort of knew that of course, since it is now almost the end of March here in Hunterdon County, New Jersey.  These national stat’s always lag behind the now. 

But here’s a Current and Local trend you can count on:  Showings of homes, loan aplications, and even purchase contracts have begun to increase signifcantly in just the past week or two and there’s plenty of pent up demand from the past six months to fuel the Spring Market that is just now begining.  The current and as yet undocumented trend in Hunterdon real estate activity, especially in the first time buyer range, will no doubt appear as a sizable blip on the graphs on these pages in the coming month or two.  Stay tuned.  Watch for the coming surge in local home sales.  Better yet, if you’ve been planning to sell, don’t stand on the shore, paddle out and catch that wave!

Traditionally, in the four weeks after March roars in like a lion as it did this week, before it exits as a lamb, the Spring housing market shakes off winter and comes alive.  Those tied to the school year like to settle into their new home before mid-summer.   The “Spring” market can come sooner, especially if sales were low during the previous autumn.  But not in 2009, it seems.  Despite unprecedented low sales in the last quarter of 2008, home buyers have not yet come alive, as seen below.   

Sales: Feb. 2006 = 110 | Feb. 2007 = 98 | Feb. 2008 = 99 | Feb. 2009 = 58

Last month, sales were a little more than half the previous three years.  In comparison, Feb 2005 saw 160 sales.  

Last week, the National Association of Reators issued sales numbers through January.  The numbers for the Northeast are graphed below. 

As you can see, Hunterdon County sales soared higher and dropped lower that the northeast in general.  The financial crisis centered on Wall Street kept home buyers on the sidelines in unprecedented numbers, and that malaise has continued through February 2009.

We’re at a crossroads.  There are several reasons to expect a modest Spring Market bump in the next 4-6 weeks:

1. The traditional Spring buying season, driven by milder weather and the end of the school year, is about to begin.
2. Pent-up demand:  Last quarter 2008 bench-warmers are still out there, as I said in last month’s Market Pulse, awaiting a sign. 
3. Interest rates:  They’re low and going lower still as the Fed buys up mortgage backed securities with the goal of driving rates below 5%.
4. Price:  The affordability index, which stood at just 83% in 2006, has returned to 108% in 2008, mostly due to price decreases, as seen below.  (A 100% rating means a family with a median income can afford a median priced home with tradional financing.)  So it seems the market may have slightly over-corrected.

Like the stock market, which dives to lows not seen in decades one day, only to rebound the next as low prices stimulate buyers, the housing market, although it operates on a much slower time frame, will rebound as buyers realize the great values out there. 

We don’t expect prices to rise, as the inventory is still way too high for prices to be bid up.   But the number of sales will increase significantly.  Your home could be among those to go under contract in the coming Spring Market ‘bump’.  Call me at 908 303-8130 for a free consultation.

Speaking of inventory, here’s this month’s Inventory Index:

Free home sale price analysis and marketing consultation, please call me at  908 303-8130
or contact me here.

Don Sherblom.  RE/MAX Town & Country
44 Leigh Street, Clintn, NJ 08809 
(908)  303-8130

Find your next home fast - Search the MLS at  http://ClintonRealEstate.com

Housing is key to an economic recovery, which is why the $787 billion package to be signed by President Obama on President’s Day includes a tax credit for first time home buyers that they do not have to repay and may in fact entitle them to a tax refund!  Every home bought by a first-time buyer stimulates two sales upstream in families moving to larger homes and empty-nesters moving to smaller homes.   

A summary of the new Home Buyer Credit from the Senate Finance Committee:  

“Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $6.638 billion over 10 years.”

In other words, the Economic Stimulus bill provides first-time home buyers with a refundable tax credit (one which, if it reduces your taxes below zero, entitles you to a refund) of up to $8,000 for purchases made before December 1 2009.  This credit phases out for single taxpayers with adjusted gross incomes that exceed $75,000 or $150,000 for married couples filing jointly.  The buyer will forfeit the credit if he or she sells the house within three years.

That’s $8,000 towards your Hunterdon Home:
                                                           

(Note: Dave Liniger is the founder of RE/MAX)Senator and House web sites to locate the email and phone number of your legislators.

If you have been watching the news this week, you may have noticed that the debate in Washington has finally turned toward real stimulus for the housing industry. As a result, I believe that we could be on the brink of a substantial turn around in the real estate market. Now, it’s critical that we all join together and deliver a powerful message to our legislators that we support this stimulus.

Last night, the Lieberman/Isakson Amendment was included in the senate version of the Economic Stimulus Bill by a unanimous voice vote. Read the rest of this entry »

There was an exceptional lack of home sales in Hunterdon County in the last quarter of 2008  (see January post) which might suggest a tremendous pentup demand:  Potential home buyers are waiting on a “buy” sign.  Will that signal come as the Fed drives mortgage interest rates down even farther?  Will it require more improved economic conditions, or more hopeful perceptions of economic conditions? 

The graph below shows the Inventory Index since January 2001.  Compared to anytime prior to 2005, the inventory of available homes is very high.  That’s not surprising, but the graph of sales activity (second below) over the same period may surprise you.

The graph above shows a dramatic rise in inventory.  The graph below shows a far-less dramatic drop in sales during this same period.  Although inventory has acumulated, home sales have continued over the past three years.

And while sales have been lower in the past three years, the Spring and Summer seasons have been much better than Winter lows of the earlier ‘hot’ years.  The level of continued sales reflects the fact that Hunterdon is a very attractive place to live and, as prices have fallen, the affordability of homes has increased their appeal. 

Pent-up demand gives us good reason to expect this year’s buying cycle to be even better than last year’s, once the economy, finance, and the weather start to thaw as we come into the Spring market.

News Flash: The National Association of Realtors reported a rise in homes placed under contract in December - Read the press release here. 

Let me put a “buy” sign on your home.  Please call me (908) 303-8130 for a free consultation or Contact me here.

I look forward to hearing from you and to marketing your home to get it Sold!
Don Sherblom, RE/MAX Town & Country (908) 303-8130
                     Personal Service, Professional Results!

Click above to search all home listings - Fast Local Search!

I’m still thinking of the winter solstice.  When has there been a deeper economic winter here in Hunterdon County?  Most economists don’t expect the economy to percolate again until the summer solstice at the earliest.  But in housing, we can reasonably expect an early spring.  The housing market led us into these dark woods, by more than several months, and it will lead the economy on the way out.

Home buyer remedy:  Mix interest rates below 5% with pent-up demand from last quarter, stir in a large supply of affordable homes (over 20% price decline since 2006) and watch homes go under contract.  That removes the expectation of home prices falling much further.  The market bottoms and begins to recover slightly.  While the Fed brews that up, let’s see where we’ve been. 

In perspective:

The Inventory Index compares each month’s home sales to the total homes for sale.  It’s the best market measure since it pegs the supply of homes to demand, either a drop in demand or a rise in listings can send the index higher.  A “hot” sellers’ market would register 3-5 months on this index.  Not until we return to that level will home prices begin to rise again.  

The graph below of just the last four years shows 2005 was the last good year  in Hunterdon home sales, with a relatively low inventory of homes for sale.

See that bump up in the last quarter of 2008?  That’s the pent-up demand in our home buyers remedy recipe posted above.  

Here’s another look at the last quarter of 2008:

Compare homes under contract in October, November, and December 2008 to either of the past two years and you get a sense of the exceptional chill that went through home buyers after September, as the Wall Street meltdown brought fears of another Great Depression.  This scare happened just as 2008 was beginning to look promising (the September 2008 Inventory Index was below September 2007).  Then the Wall Street mess, and buyers waited on the sidelines, too scared to make a move. 

But their need to move didn’t usually go anywhere either.  Demographic change generates a  demand for almost two million homes a year.  Now the Federal Reserve intends to restart the housing market by buying mortgage-backed securities and, in doing so, lowering the rate on 30-year mortgages to less than 5 percent.   

OK, all bad news and good expectations - Let’s see the Fed lower rates to under 5%, and let’s see a greater number of the homes on the market get priced to the market, and let’s see sales pick up, then we’ll see the effects of this home buyer remedy.  Yes and then we will have missed the best action and, like all those other home sellers, move into the market just a little too late.

What about your home sale?  Please call me (908) 303-8130 for a free consultation or Contact me here.

I look forward to hearing from you and to marketing your home to get it Sold!
Don Sherblom, RE/MAX Town & Country (908) 303-8130
                     Personal Service, Professional Results!

All sales that closed in Clinton and Clinton Twp. from September 14 through December 1, 2008 are now posted on my specialty web site ClintonJustSold.com

Overall, it seems the local market is still moving, perhaps encouraged by the Fed’s recent action to drive mortgage rates even lower.  Last week, an NAR index of sale contracts on previously owned homes showed gains of 7.8% in the South and 0.6% here in the Northeast. 

Lawrence Yun, NAR chief economist, said that despite the “turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range.”  ”We did see a spike in August when mortgage conditions temporarily improved, which underscores two things - there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”

 Click below to visit ClintonJustSold.com

 
Whether you’re thinking of buying or selling a home, I’m happy to consult with you on your best course of action based on hard data I collect on every Hunterdon town and the work of independent real estate appraiser Jeffrey Otteau.  Please click here to schedule a short no-pressure consultation on your home’s value and how to prepare for marketing it. 

Or, if you’d rather, just give me a call at (908) 303-8130 or email

Don Sherblom, Personal Service, Professional Results!
        (908) 303-8130
RE/MAX Town & Country
44 Leigh Street
Clinton, NJ 08809