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

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