The Bergen County Homes Blog

My projection for Bergen County real estate is right on target - our housing market is improving.  New Jersey MLS data, bank appraisers and housing reports all say the same thing:  We have clearly bottomed out and are in a period of stabilization.

Today’s ratio of homes for sale to under contract is 4 to 1; early in the year it was in double digits.  Last spring Bergen County was classified by the mortgage industry as an “area in decline” meaning that values were falling.  Appraisers were deducting 1% per month of value; if a home appraised at $200,000 and was closing 2 months later, the appraisal was fixed at  $196,000.  Bergen County’s housing market is no longer classified as “in decline” and a Valley National Bank appraiser on Monday told me that price depreciation has ended.

Jeff Otteau in his latest real estate newsletter termed the NJ real estate market’s performance “remarkable” and forecast continued improvement.  The monthly Credit Suisse agent survey said that for the first time in a long time a majority of agents reported positive home buyer traffic and houses selling quicker.

With all time low interest rates, prices no longer dropping and falling inventory levels, there should be no surprise to find stability in the Bergen County real estate market.

When people decide to buy a home they naturally start to look at the real estate market, do some number crunching and find statistics which explain the market trends. Lately, a statistic on homes that’s been quite popular is the absorption rate.

Absorption rates simply put tell you how long it will take to sell off the existing inventory of homes. This shows you how properties are selling; it’s measured in months as in how many months it will take to sell all the homes for sale. Understanding market activity is important but I think that looking at absorption rates this early in the year can be misleading.

No matter the economy, the housing market has a unique rhythm of it’s own. Most homes for sale go on the market during the early part of the year and are sold during the summer so statistics for the first few months of the year that track the relationship between sales and available inventory can be tilted in the wrong direction. In fact, absorption rates at this point can be very confusing if you look at the report appraisers use when they do an appraisal on a house. This is the 1004MC Report.

Let’s look at Tenafly, NJ. If you go back 12 months from today, the Tenafly real estate market for homes really looks weird. For example, take a look at the number of Active Listings – it looks terrible doesn’t it? Well, what would you expect for this time of year? It’s always larger now because more houses are on the market between March and June. At the same time, how long a home is on the market for sale is currently half what it was previously. That is extremely important. In truth, Tenafly houses are selling very well. Tenafly homes are always in strong demand. The New Jersey MLS 1004MC Appraisal Report for Tenafly can be found at tenafly-1004mc-report

The figures are in and the real estate market in Bergen County is doing OK.  It’s still a buyer’s market for homes but you can see some signs of improvement.

In January I had written that the real estate market in Bergen County would shift during the 4th quarter of 2009 and stabilize.  From then on for a few years we would be working in a narrow range before turning upward again.  This time it would take longer than it did in the early 90′s to rebound fully but being stable is good.  So far my projection is still on target.

Most of the reports at that time were for this to happen once we were solidly in 2010 – well, the media reports are singing a different song because things have changed.  And so has the market.

If you look at the number of homes coming onto the market and going under contract, what you’ll find is very interesting.  For the homes becoming active in the New Jersey MLS, there’s been an 11% drop during the first quarter of 2009 but the pace of homes going under contract is the same this year as it was last year.  Do I hear the word stable anywhere?  Yes, this is indeed a sign of stabilization and that’s, to quote Martha Stewart, a good thing.

For the first quarter in both 2008 and 2009 the Active to Under Contract ratio is 3.9 to 1 in the New Jersey MLS data.  This means that the pace of home sales is maintaining itself and it’s also quite respectable – the ratio of a strong seller’s market is 2 to 1.

Looking closer to see what happened we find that in 2008 the rate at which homes became active was pretty normal – a gradual progression as you moved more into the year.  But in 2009, January and February were anemic and then we had a 32% explosion upward in March.  Do you think that the spring real esate market is back in Bergen County?  I sure do.

Home buying activity has really picked up since March 1st and home sellers have correspondingly jumped into the real estate market.  Why would they wait until now to put their home on the market for sale?  Because the atmosphere was so negative at the end of 2008 that it made many homeowners hold off.  What’s changed?  Well, just to mention a few items – the $8,000 tax credit, liberalization of FHA mortgages, even lower mortage rates, home prices not seen in nearly 8 years and the natural spring rhythm of home buying.

While home values are still going down – another 5% for the rest of this year – I still feel that the market will be stabilized by the 4th quarter.  What we’ve seen so far this year in maintaining the pace of sales and in the recent surge in home buying activity certainly point to this and also to a good spring market for Bergen County homes.  In fact, I won’t be surprised to learn that the bottom of the real estate market in Bergen County was the end of 2008 and the very beginning of 2009.  2009 will be a year of change.