In almost every location, the luxury home market has improved dramatically and this is especially true east of Route 17 which are closer to New York City.  While I’ve never seen any data to explain this, I have felt that being on top of the George Washington Bridge is a major factor for high end home buyers who are in positions where they may not stay for extended periods of time such as Fortune 500 CEO’s, senior level diplomats, celebrities and athletes and who must be within 15 minutes of the George Washington Bridge.

Let’s take a look at our luxury home market in Bergen County beginning with Alpine New Jersey.   Alpine made tremendous progress in 2011.  Alpine homes nearly tripled the number of sales in 2011 going from 4 to 11.  Smart home buyers looked at Alpine homes as a tremendous opportunity.  I remember one buyer saying to me that he never thought he could buy a good home in Alpine at $2-2.5 million.

Saddle River  had a solid performance this year with one more sale going from 19 to 20 closings.  Saddle River homes certainly appear to have stabilized and the average sales price of a Saddle River home is up by 10%.  Alpine and Saddle River are the 2 most exclusive Bergen County luxury home markets.

Franklin Lakes is still having a tough time though; Franklin Lakes homes went from 50 to 38 sales and average pricing is down by 3% but there’s good news here too for Franklin Lakes homes – home buyers paid a higher percentage of the asking price in 2011 and the time it took to sell a Franklin Lakes home dropped dramatically from 126 to 92 days.  I bet you’ll see a great improvement in Franklin Lakes homes by year’s end and certainly in 2012.

Tenafly homes at the luxury home level more than tripled the number of sales going from 2 to 7.  While the average sales price was lower, this does not tell the reality of the Tenafly luxury home market.  The 2 sales in 2010 were new construction; the 7 sales in 2011 were from a broad palette of new and resale Tenafly homes.  Tenafly real estate at the high end did extremely well so far in 2011.

The bottom line on all of this is that the real estate market for Bergen County luxury homes is either stabilized or doing very well indeed and that’s good news for all of us.

If you consider that a mortgage is the biggest cost of owning property, then it’s easy to see how the combination of low interest rates and low prices have made multi family homes very popular.  Investors for multi family homes are coming out in large numbers.  Owner occupiers are no longer limiting themselves to two family homes as they are now purchasing 3 and 4 family homes as well.  In the past, it was rare to see an owner occupier buyer look at anything but a two family property. 

Other factors creating this increased demand are the law of supply and demand and the rate of return on multi family homes.  With new construction being so soft, few multi family homes are being built at a time when demand is rising.  More demand with the same supply equals higher rents.  Multi families also give better rates of return often than what you can get in a money market fund of CD.

All of this adds up to an increasing demand for Bergen County multi families.  Long term I can’t think of a better investment.

Through April comparing this year to last year  for single family homes, there are 8% fewer closings, barely 1% less in the average sales price and  only 9  more days of marketing time.  While the number of closings were up  in February, March and April had less but it’s not like we fell off a cliff - down 19% in March and 16% in April. 

OK, why isn’t this troubling?  Because last year to take advantage of the tax credit you had to be in contract by April 30th and closed out by June 30th.  One would think that the artificially high number of closings from the Homebuyer Tax Credit (which overheated the market for the first 4 months last year) would result in much worse 2011 figures. 

Let’s see how things look at the end of May.  I’ll be back to you on this then but for now it sure doesn’t look like the market has jumped off any cliffs this year.

Surprisingly Bergen County homes did better than anyone would expect. 

New Jersey MLS data shows that 10% fewer homes went under contract this January than last year and February seems to be following the same pattern.  However in 2010 the Home Buyer Tax Credit significantly fueled the housing market from January through April.  When you consider this, being down only 10% while losing weeks of time due to snow storms isn’t bad at all.

As we move into March and warmer weather, the Bergen County real estate market will stay on track and we’ll end the year with more transactions than we had in 2010.  Home buyers are active – we’re getting more people at our open houses, more calls and many more internet inquiries.  The signs are definitely here for a stronger market.  Despite having to climb over snow banks, the Bergen County real estate market now looks pretty good.

The Credit Suisse  “Monthly Survey of Real Estate Agents”  for the New York – Northern New Jersey area is really quite accurate. It found that January had an inventory build up which put pressure on pricing.  No doubt the 7 major snow storms we had then caused many buyers to stay home.  However, concerns over jobs and year end bonuses that were less than in the past also had an effect.  The sum total was pressure on pricing and homes on the market longer. 

At the same time, agents were seeing signs of pent up demand, frustration with renting and fear of higher interest rates.  56% thought the activity level was more than expected, 31% saw it as what they expected and only 13% saw activity as less than expected.   

Near term prices will soften a bit more but as the weather changes, so will the mood of many buyers.  Halfway through February, I can report that activity has definitely increased.  If you look at the activity ratios of a few towns, you’ll see they’re under or just over 5 to 1 which is great:

Tenafly is 4.3 to 1, Cresskill is 4.2 to1, Teaneck is 6 to 1,  Dumont is 4.3 to 1, Englewood is 4.8 to 1 , River Edge is 2.9 to 1 and Oradell is 3 to 1.

Buyers are snapping up the bargains that are now out there and are locking in interest rates as soon as they can.  Without snow and ice to slow things down, the real estate market will be very active this spring.

The truth is that real estate here pretty much stabilized and is poised to move forward in 2011.  Let’s check out a few towns to see how we’re doing on a local level:

Tenafly did very well.  Sales units in Tenafly were down by 8% but the average sold price rose 4%.  Teaneck also turned in a strong performance – units were down 14% and average sales prices were up 8%.  On paper Dumont didn’t do as well with 6% less sales and a 6% drop in the average sales price but a good number of short sales were to blame.  Cresskill has a large inventory of luxury homes so I kept it to $1 million sales.  Through $1 million, Cresskill had 19% fewer units at only 1% less in the average sales price. 

Bergen County beat the ”prevailing wisdom” because of our proximity to Manhattan, excellent schools, good commuting and diverse economy.  While Wall Street and the financial markets do employ many of us, there’s more to the Bergen County job picture than stocks, bonds and trades.  We have 4 major hospital centers in Englewood, Hackensack, Ridgewood and Teaneck employing large staffs of doctors, nurses and all sorts of support systems.  Bergen County is the most populous county in New Jersey and one of the largest in the US with over 900,000 residents. 

With all these advantages, it’s no wonder that things are better here.

For Bergen County in the NJMS Through November, comparing 2009 to 2010 -

79 fewer sales so far this year (6,614 as oppose to 6,693).  We were ahead from January through June and since then we’ve been down every month.  My feeling is that this is due to the tax credit pre-buying and the uncertainty caused by this year’s election. Still it’s only a 1% difference.

Dollar volume is up 2% and the average price is up 4% which is positive.  Although many towns see their bottom pricing at lower levels than in 2009, more upper tier homes are selling which raised the average sales price.  When a market recovers at both ends, it is truly recovering.

Homes are selling quicker too - marketing time is down 5% from 94 to 89.4 days.  This is significant because new regulations in 2010 made mortgage processing take much longer.  What does this mean?  People who are coming out to shop for a home are motivated.  They’re not window shopping as much as they were in 2009.

I’ve said it before and I’ll say it again – all signs point to a better year for real estate in 2011.  Although the number of sales is not increasing, higher dollar volume and average sales prices mean that real estate is improving. 

Here’s something else to think about – mortgage bankers are warning me that interest rates are about to go up.  If mortgage rates start to rise, that will certainly motivate people to take action.  We’ll have to wait and see what happens on that score.

What she found is very interesting and positive.  Comparing the real estate market from August 2009 to August 2010, she found that prices rose 10.2% in Bergen County but “the number of sales dropped about 24%”.  Ms. Lynn’s bottom line on the housing market is that while prices got a kick from the home buyer tax credit, activity fell off once the program ended.  Frankly this was no surprise; many home buyers bought houses earlier than they would have to take advantage of the tax credit.  Just ask a mortgage banker how busy he was processing home loans in May and June.

I find this report to be positive simply because the comparison showing prices are up is for the month of August. 

To qualify for the tax credit, you had to close on your home by June 30th.  Yes, there was an extension but it wasn’t authorized by Congress until late at night on June 30th after almost every tax credit home buyer had bought their new house.  The extension really helped people who were delayed by banks on short sales and REO transactions.  August closings had nothing to do with the tax credit push and in spite of 24% fewer transactions prices still rose by 10.2% from the year before.  That’s positive!

On a personal note, I have always found Kathleen Lynn’s articles to be excellent.  I have a tremendous respect for how carefully she researches and analyzes the market.  You can read her entire article at http://tinyurl.com/KLynnHomePrices  If you want good information on the Bergen County housing market I encourage you to read the Real Estate Section in the Sunday edition of the The Record and to look for more articles by Kathleen Lynn.  You can get The Record online by going to www.NorthJersey.com

The rarified world of luxury properties has suffered.  On top of the economic collapse, financing for these estates became extremely demanding with down payment requirements of 45-55%.  This recently adjusted to a realistic 20-25%.  For most of us the picture is different. 

The product mix moved higher this year.  Fewer homes should close under $350,000 and more at $350-450,000.  Homes are selling much faster – how about a 33% improvement in the $400-900,000 price range?  This is huge; today a mortgage requires more time due to new regulations.  This shows demand is up for Cresskill plus pricing is even. 

For most of us, Cresskill real estate is past the bottom and has stabilized.  Luxury real estate remains problematic; there is simply too much inventory and so much over pricing to get through.  For the heart of the Cresskill market, however, 2011 will be positive.  Stability should continue over the next few years; I don’t believe we’ll see any real upward movement before 2013.

What about interest rates?  At some point they will have to move higher but are still excellent at around 4.5%  On mortgages, the higher loan limits for Fannie, Freddie and FHA are being extended through September 2011 which helps us tremendously.

For the average Cresskill house 2011 will be better as we emerge from the most challenging housing market since the 1930′s.

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