The Bergen County Homes Blog

Whether it’s  Tenafly homes, Englewood homes, River Vale homes, Westwood homes or anywhere else in Bergen County, what’s happening in the housing market is important and always of interest.  USA Today has great interactive graphs from Moody\’s  that track 5 critical measurements of the real estate market.  What these interactive charts show is solid improvement across the board beginning with the 4th quarter of 2009!

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As incredible as it may seem, Tenafly homes are selling in greater numbers this year than they did in 2008.  As of tonight, 125 Tenafly homes have closed so far this year.   In 2008, 117 Tenafly homes sold so we’re 8 sales ahead of last year with more to come.  Currently there are 23 Tenafly homes under contract so it’s reasonable to expect 132 Tenafly home sales in 2009.  This would represent a stunning 13% increase at a time when most other towns in Bergen County are having fewer sales.

The New Jersey MLS data shows that Bergen County has experienced a 13% price depreciation this year; Tenafly homes have depreciated along with the County but at far less – only 6%.   So here too, Tenafly homes have performed much better than Bergen County’s real estate market in general.

Take a look at this New Jersey MLS chart of Tenafly homes that sold in 2008 and so far in 2009.  The picture it paints is simple – demand for Tenafly homes has increased substantially this year:

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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.

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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

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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.

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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.

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