The Bergen County Homes Blog

If you are a home buyer and you qualify for the first time home buyer tax credit, time is running out for you to find a home.  You must buy a home by November 30th and because getting a mortgage these days often takes 45 days, many buyers feel pressured to make a decision now.  As a result, a first time home buyer who qualifies for the $8000 Tax Credit may find himself scrambling to get into contract this week.  However, I’m wondering if some of you aren’t making a mistake.

$8000 is nothing to sneeze at but a buyer may be missing out on a home value that far exceeds the $8000 credit – short sale opportunities are still available.  There are many homes for sale with steep discounts because they are a short sale and you may find a house that is a better “fit” for you in a short sale than trying to buy a home that you really don’t love just because of the tax credit.

In the New Jersey MLS this morning, searching for short sale homes shows that of the 3,796 single family homes for sale, 352 are a short sale.  There are also many that are described as potential short sales.  For our purposes, let’s say that a bit more than 10% of the Bergen County housing market is a short sale.   This figure has been pretty constant this year.  The bottom line is that there are other opportunities out there.

Even if you can’t find a home that works in time for the tax credit, you shouldn’t go into contract on something that isn’t the right home for you and your family.  Opportunities come in many ways.

Buying a home should always include a home inspection. Even if the home is new construction, it’s best to have the guidance of a professional home inspector. In New Jersey, home inspectors are licensed by the State but there’s also another resource for you – the American Society of Home Inspectors known as ASHI.

ASHI was started in 1976 by a group of home inspectors who wanted to set standards of practice and create a learning center for inspectors, buyers, sellers and real estate professionals. Every member of ASHI must take a Standards and Practices training module and agree to abide by their Code of Ethics. Today ASHI is the largest trade organization of home inspectors in the US. I consider ASHI to be a wonderful organization and only recommend home inspectors who are both licensed in New Jersey to perform home inspectors and members of ASHI.

BTW, when you’re on the ASHI website, be sure to check out the Virtual Home Inspection

You should always attend your home inspection. It’s one of the most important parts of buying a house plus you’ll learn a lot about your new home. The average inspection takes around 3 hours but this varies on the size and condition of a home. Be sure to bring a pen and pad so that you can take notes during the inspection. The inspector will tell you about the home’s condition and teach you how to maintain various aspects of it.

If you are selling, it’s a good idea to inspect your home before it’s for sale. An inspection can uncover problems you never knew existed and gives you an idea of what a buyer will hear.

The New Jersey MLS is the primary multiple listing service for all of Bergen County and they do a simply outstanding job in so many ways. Not only do they have comprehensive information on homes for sale in Bergen County but they also have statistics on all aspects of the real estate market from the sales in their system.

What their data shows us is an improving market for homes in Bergen County. The number of days it takes to sell a home has been decreasing since March. If you take a look at the NJMLS Average Days on the Market Graph you’ll see this very clearly. While it’s still taking more than 100 days to get a home sold, we’re closing in on this number and I’ll bet we’ll be under 100 days to get a home sold very shortly.

You should also take a look at the Average Sold Prices Graph which again shows a definite move up although this time it begins in April. However, this makes sense because almost all first quarter sales come from contracts written during the prior year. What this graph shows it that we’re moving toward an average home sale of $500,000 and that’s positive.

I’m not saying that house prices are going up – prices for homes are not going up. In fact they will continue to go down for a while yet but you can only get a rise in the average sales price for a home when more expensive homes are selling. That happens when the real estate market is getting better throughout all price ranges.

First time home buyers have been kept in the market by such things as the First Time Home Buyer $8,000 Tax Credit which, one week ago, was added to FHA backed loans and low mortgage rates. As everyone knows, it takes the first time home buyer to get things moving and it sure looks like this is happening. At least that’s what the New Jersey MLS data shows.

Since the beginning of March the housing market for homes in Bergen County has really picked up and as we are now nearly through April, I thought that I would take a look at the MLS data to see if what I’ve been seeing is really happening. After all, most real estate agents are a pretty optimistic bunch so I just wanted to go into the New Jersey MLS and check.

Here’s what I found – things truly are picking up. Real estate is improving most definitely; it’s not dramatic but haven’t we had enough drama over the past 9 months? It’s steady and that’s good. Take a look at the figures below and you’ll see what I’m talking about. More buyers are coming out to look at homes and more homes are taking offers. Here are homes that came on the market for sale and which went under contract so far this year:

Jan – 1,232 Active/286 UC = 4.3 to 1 ratio
Feb -1,255 Active/335 UC = 3.8 to 1 ratio
Mar -1,693 Active/443 UC = 3.8 to 1 ratio
Apr -1,311 Active/413 UC = 3.2 to 1 ratio

The April figures are through today, April 23rd, and they certainly indicate continued improvement for Bergen County homes. What hasn’t been so clear are the Days on the Market figures but you really can’t get a sense of where that’s going until we’re further into the year because almost all sales in January and February originate from the previous year. But in March it took 110.64 days to sell a home and so far in April it’s been taking 103.59 days to sell a home which is a positive change.

The real estate market is always more active during the spring and early summer months and the pattern that is developing is quite normal which is excellent. For a home buyer, this is really a great time to buy a home and it seems that increasing numbers of people are sensing this and acting.

What Can We Expect in 2009?

I can answer this with one word – improvement. I had projected 10% depreciation but that was before the stunning sub prime mess was revealed. While we have “Monday Morning Quarterbacks,” the truth is virtually no one knew of this growing menace. The Tenafly market for homes in 2008 ended with 25% fewer sales and 18% depreciation.

Yet Tenafly homes did better than most; our market is more resilient than you’d think. Selling a home took less time in 2008 and first quarter figures indicate we’ll do even better this year.

Appraisers are still deducting 1% per month but say this will end later in the year; Jeff Otteau, the renowned analyst of New Jersey’s housing market, announced in mid March that 2009 will end with 9% depreciation statewide. This dovetails with a second half recovery; homes in Tenafly will see it during the fourth quarter.

By recovery I do not mean that prices will go up; they won’t. They will stop going down and the market will stabilize. We’ll stay there for another year or two before any upward swing bringing us to 2012 or later.

Although unemployment will continue to increase over the next several months, it should level off by year’s end. Unfortunately unemployment will not improve quickly. For now we can only estimate how this will affect our market; its impact takes a while to be felt.

But Washington funded the FHA to continue lending and increased the tax credit to $8,000 with no payback required. This enabled first time buyers to get in the market. With the lion’s share of price depreciation done and mortgage rates so low most of us have never seen this, home buyers are back in the market. Activity has really picked up since March 1st with no signs of slowing down.

What is certain is that Tenafly real estate remains one of the most in demand markets in the NYC metropolitan area. This will not change. While we can’t escape the storms of life, the truth is that Tenafly weathers them better than most in Bergen County and the New York City area.

There has been a noticeable increase in the number of people looking at homes over the past two weeks.  We’re seeing more buyers coming out on Sundays to our open houses, more calls into our offices and more web responses to our internet postings.   The Bergen County real estate market has been very very busy.

At the same time, the real estate inventory is growing daily as more and more people are putting their homes on the market for sale now that we’re safely past the snow season.  Most homehomes owners do not want to sell their home during the winter weather so having the number of homes for sale grow significantly at winter’s end is quite normal.

The reason for home buyer activity is improved market conditions.  Prices are down substantially from 2004 (by 20 to 25% in most areas), mortgage rates tumbled over the past 2 weeks and one of the most respected analysts of New Jersey real estate,  Jeffrey Otteau, announced last week that New Jersey real estate will depreciate another 9% in 2009 and then stay at that level in 2010 as the real estate market stabilizes.  For many home buyers, this combination of factors made buying a home now a great idea. 

It will be interesting to see if this pick up in activity continues and for how long.  I have a funny feeling that the “smart money” is buying a home now.  Only a lucky person picks the market bottom but I must say that we’ve got to be pretty close to it now.