The Bergen County Homes Blog

Very unfortunately the New Jersey Multiple Listing Service will not allow me to post their wonderful statistical reports but they will allow me to email them to you.  So if you want this information, just email me at barbara@bergencountyhomes.com   Meanwhile, here’s how we’re doing:

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.

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.

JP Morgan Chase announced this week that they will be hiring 1,200 new mortgage loan officers by the end of 2010.  This means that Chase will increase their loan officer numbers by 60% which is huge because the bank is one of the major players in mortgage loans in the US. 

JP Morgan Chase said that the bank sees early signs of stabilization in the US real estate market and believes that the housing market has bottomed out .  Expecting the real estate market to recover after next year, JP Morgan is hiring new loan officers to put themselves in the best competitive position by making sure it has the best market share coverage for home loans. 

CNN’s article on this is at  http://tinyurl.com/New-Chase-Loan-Officers

While national foreclosure rates rose 15% during the first half of 2009, in New Jersey foreclosures are dropping. In fact, NJ foreclosures are down by 30% for the first six months of 2009 compared to the same period in 2008 according to Realty Trac. In May, the New Jersey Judiciary announced foreclosure activity for the first 4 months of 2009 was down by 20%. These figures certainly point to an improving housing market in New Jersey.

A lot of credit is being given to the programs New Jersey brought out in January to help homeowners avoid foreclosure. A special foreclosure mediation website was put up just to help owners avoid foreclosure by the State with a toll free hotline. The Star Ledger reported that although the number of homeowners helped has been small, the public awareness brought about by these programs has had a significant impact. Many homeowners took stock of their situation and acted to avoid foreclosure.

Another aid has been historically low interest rates which allowed people to refinance their mortgage into a more affordable loan. Supporting this is the fact that the New Jersey housing market hasn’t depreciated as badly as elsehwere; our house values have performed better than national averages.

According to Jeff Otteau, the renowned analyst of the New Jersey real estate market, this makes quite a difference. “The reason that borrowers walk away and mail in the keys is because not only are they having a hard time making their payments, but their houses are worth less than their mortgage balance,” Otteau said.

Bergen County foreclosure rates, as reported in The Record on July 16th, are 1/206 while New Jersey is 1/146 and the US is 1/84. As usual, Bergen County outperforms the general real estate market.

While we can’t predict the future, it’s also true that a 30% drop in foreclosures will certainly stimulate consumer confidence in NJ housing and that is huge. For Bergen County homes, with it’s consistently superior performance, this is even more the case.

Bergen County homes have done better than most in the US real estate market but like elsewhere, our home values have depreciated over the past few years. For many homeowners this has created a horrible situation where they are facing a short sale or foreclosure.

For those who have seen their mortgage rates reset to a loan they can’t afford, the situation soon deteriorates to a short sale or foreclosure because their loss of equity makes it impossible to get the appraisal needed to refinance to today’s low interest rates. This is why the Federal Government stepped in to help.

On July 1st HUD Secretary Shaun Donovan announced that Fannie Mae and Freddie Mac will begin refinancing mortgages with loan-to-value ratios as much as 125%. This means you can be 25% negative in the value of your house and still refinance. The idea is to try to match the loss of equity so that homeowners who’ve been paying their mortgages and have good credit can stay in their homes.

While this is just part of the Bergen County housing market, it allows many people to keep their home and helps stabilize real estate values by avoiding foreclosures and short sale transactions.

If this works for you or someone you know, get in touch with a licensed mortgage banker. You need a top level loan officer’s help to qualify for this program; if you need a recommendation, just let me know.

Crunching numbers to analyze the real estate market has taught me a lot. Over the years, I’ve found that the relationship between the number of homes for sale and under contract is a great indicator of how the housing market is doing. When that ratio is 2:1, the housing market is strong.

Ok, I know, it’s 2009 and the sky is supposed to be falling but it sure isn’t in Dumont. Right now Dumont has 50 homes for sale and 31 under contract which is way better than 2:1. Plus the time it takes to sell a home has improved dramatically – 72 days for under contract and 93 days for the 25 sales we’ve had over the past 4 months. No matter how you look at it, Dumont homes are rocking! There are several reasons for this.

Dumont is affordable. Property sizes are not too big and not too small which results in a moderate sized house. Dumont typically has what most of us would call a normal sized yard with a normal sized house. This means Dumont real estate works for most of us.

Dumont's school district is very good with a lot of parent participation and a broad range of programs. The town has excellent community services as well. The Borough of Dumont's Official Website is worth a look – it has a lot of information and shows you the strong community spirit that’s here.

The business district is very active with a good mix of retail stores, services and offices. Major retailers have invested in Dumont such as a CVS drug store, Wachovia Bank and Stop N Shop supermarket.

NYC transportation is great – there are plenty of express buses at rush hour and you don’t have to make any changes. Just grab a seat and read the newspaper on the way to work.

Dumont has everything that most people want, is affordable for first time buyers, can handle the more affluent move up market and is a great place to live. No wonder the real estate market is doing well. This does not, however, mean that prices are going up. They aren’t but they’re not sliding down either. If you’re thinking of making a move into Dumont, as a home buyer you’d be smart to do it sooner than later. Things here have turned positive.

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.

On January 27, 2009, a home at 221 Churchill Road was listed for sale at $1,590,000. This was an extremely well kept original D’Agostino ranch home on a gorgeous acre lot. It was listed twice – as a single family home and as a building lot. On the Tenafly East Hill, original homes are sought after on their acre properties so that they can be removed and a new luxury home constructed.

A short while after being listed, the price was reduced to $1,425,000. Only 2 weeks later, on February 23rd, an offer was accepted and the home went into the Attorney Review process. Those of us who watched the market took note of this transaction because it demonstrated the strength of the demand for new luxury homes in Tenafly.

What happened next is even more intriguing as an indicator of the real estate market for homes in Tenafly.

On May 22nd the home came back on the market for sale. I called the listing agent who happens to be a very nice person and she told me that the owners were purchasing a short sale property out of the area and that their buyer had become frustrated with the long time it was taking and wanted to close on a home within the near future so the contract fell apart. Short sale transactions can take many many months – sometimes as much as one year. If you are buying a short sale and your buyer is not prepared to wait 6-9 months, it’s not going to work in most cases.

The home went back on the market on May 22nd at the start of the Memorial Day Weekend which, I am sure you will agree, is not the best time to start marketing a house. After all, a lot of your market is on it’s way out of town. The house had multiple offers and it was in Attorney Review again in 5 days.

What this tells you is that the market for luxury homes in Tenafly is still strong and that the market is stronger now than it was at the end of February. But wait, you say, if things are so fine and dandy on the Tenafly East Hill, why are there so many homes for sale? Because they are not marketed correctly. It really IS as simple as that. It is true that upper tier properties are having a hard time in this market but it is not true that you cannot be successful. However, you have to put yourself in front of your buyer and the homes that are for sale there are marketed using traditional methods which no longer work. That is the long and short of it.

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

Fannie Mae and Freddie Mac buy mortgages which means that they guarantee them. Without the backing of Fannie and Freddie, mortgage lenders have to find other investors to sell their mortgage loans to and those investors charge more so interest rates are higher. Fannie and Freddie backed mortgages are called conforming; the others are called jumbo. The limit on a conforming mortgage is $417,000 but that is about to change.

There’s also an intermediate level which is a special allowance for higher cost areas like Bergen County. Such mortage loans are at $417,000 – $625,000 with moderately higher interest rates than conforming loans. This is a super conforming loan but marketing folks have coined the phrases Jumbo and Super Jumbo. You’ll see a Jumbo Mortgage at $417-625,000 and Super Jumbo above $625,000.

OK, now you should have a good basic idea of how things work. Here’s where it gets interesting:

Fannie and Freddie are increasing the conforming mortgage loan limits to $729,750 on May 4th. This came about due to the economic stimulus package which was signed into law on February 17th. Wells Fargo will start taking applications for these loans on Monday, April 27th and I’m sure other banks will begin before May 4th too.

New Jersey MLS data shows that the 2008 average sales price for a single family home in Bergen County was $570,217. Even with a 20% down payment, this put a buyer into jumbo loan territory. In several towns it was often impossible for many buyers to qualify and is part of the reason that upper mid range homes have had such a hard time.

In the upper mid range market, it’s really been tough due to the restrictions on conforming loans. Loosening up lending for these homes creates more buyers for sellers. For real estate in Bergen County this is huge. Bergen County is the 18th most affluent county in the US; many of our towns have been severely impacted by the $417,000 limit and even $625,000 didn’t quite work.

For example, Tenafly had an average sales price last year of $915,581, Old Tappan was $1,147,159 and Woodcliff Lake was $838,309 plus many other Bergen County towns have scores of homes that will benefit. If you are a home buyer who’s looking at $850,000 homes, think of how this will help you! You won’t have to pay a point and your interest rate just dropped.

Think of the impact this will have on real estate in Bergen County and across the United States. Buying a home is never an isolated transaction. Real estate is a chain of events – there are homes sold above and below your own transaction so anything that happens in one price range affects it all. This is going to have quite an impact.