The Bergen County Homes Blog

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.

“How’s real estate and what should I do?” I am receiving so many calls and messages like this that I thought I should post some answers. It seems that real estate is on everyone’s mind lately.

Here’s something to consider: A primary motivating factor for most people is simply because it was the right time. So ask yourself this question – Is this the right time for you?

The right time to move can be due to many reasons such as getting your kids out of the city and into a backyard, you’ve outgrown your home and need more space, you’ve had it with renting and want your own place, you’re ready to move to your dream retirement, everyone’s moved to California and you’re still in Bergen County etc.

If you’re wondering how to manage things based on how the real estate market is doing in Bergen County, here are some answers to help you:

Are you thinking of buying a home? Do it now – we’re at or near the bottom with mortgage rates at historic lows; inflation, with its high interest rates, is projected for the future.

Want to move up to a larger home? Move up now – the cost of upgrading is always the cheapest when you’re around a market’s bottom which is where we are today.

Own a home and not moving? Check your mortgage rate immediately. No matter when you purchased or if you did refinance recently, do this for your own benefit.

Thinking of selling your home? Get your home on the market now – you stand to lose another 5% this year so waiting will hurt you.

Not sure if this is the right time to move? Then don’t. If you’re not sure, its always best to stay put. However, it’s also best to investigate your options fully; I suggest you do this bi-annually.

Let me know if you have any other questions about how to handle the housing market in Bergen County.

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.

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.

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.

The New Jersey Association of Realtors publishes a report every year on the characteristics of people who buy and sell homes in New Jersey.  The National Association of Realtors has it’s own buyer and seller profile but naturally that’s on a national scale.

There are some very interesting facts in this report and you might just be surprised by a few.  Here are some highlights from the New Jersey Association of Realtors profile of home buyers:

• The median age of New Jersey home buyers is 36
• First time home buyers had a median age of 30
• 56% were married couples
• 21% were single females
• 10% were single males
• 49% of home buyers were first time buyers
• 64% had no children under 18 living with them
• The #1 reason to buy a home – a desire to own your own home
• The #1 reason for deciding when to do it – it was the right time in their life
• Top reason to choose the location – quality of the neighborhood
• 2nd reason to choose the location – convient to their job
• 68% of all purchases were detached single family homes
• 89% used a fixed rate mortgage
• 72% used the internet frequently to search for a home; 17% occasionally

There are two key items here ito note - 49% of all buyers in 2008 were first time home buyers and they decided to buy a home because the time was right for them.

First time home buyers are crucial to keep a market moving – without them, a real estate market will collapse because they are the first cog in the wheel that drives the real estate engine forward.  It’s also interesting to see that no matter the external factors at work (economy, interest rates, etc), it still comes down to when it’s the right time for me.  If you want a copy of the full report, just email me.