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My Blog
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Have you heard some of the recent "GOOD NEWS" headlines?
"Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak." (National Association of Realtors®, 8/4/09)
"New homes sales jumped in June by the largest amount in more than 8 years." (MSN)
"3 year Descent in Home Prices Appears at End" (NYT)
..but here is "the rest of the story". Take the WSJ’s headline regarding the May price gain, for instance. "Home prices in major U.S. cities registered the first monthly gain in nearly three years (May ‘09), according to a new report that provided fresh evidence that the severe U.S. housing downturn could be easing....but year over year prices still declining....NY metro area down 12.2%" (WSJ, 7/29)/09
Or how about this overlooked story, "Housing is fast dividing into two markets: Sales of low- and moderately priced homes are picking up and values have stopped falling in some parts of the nation. But on the upper end, sales remain mired in a deep slump and price declines are expected to accelerate." (WSJ, 8/3/09)
I can attest that our local market has been in line with these national headlines. We ARE seeing an increase in activity in the lower and mid price points throughout northern NJ. And, prices were down 10 - 15% for closed sales in most communities earlier this summer as compared to 1 year ago.
So what is behind those trends? First off, the $8,000 first time home buyer credit set to expire in November and near historically low interest rates are still with us. That’s GREAT for folks coming out of rentals or just starting out. Thus, we are seeing more robust activity in our first time home buyer price range here than we did a few months back.
But upper end inventory in our once popular RELO market of $500,000 - $1M is still sitting. Where have all the RELO buyer’s gone? Their companies are controlling costs (and preserving earnings and bond ratings) by not offering the attractive packages that once lured corporate executives to jump from job to job. No guaranteed buy-out for the house they bought at the top of the market a few years back, and many of these people are dead in the water.
Furthermore, approximately half of the entry level home sales throughout the country are bank owned or short sale properties. Those folks are not credit worthy and can NOT buy a move-up home even when the home they are leaving sells. So the move-up price ranges aren’t being fueled by the turnover of those entry level homes as they would be in a normal market. That’s a hit for that same once popular RELO price range.
And, lender owned and short sale inventory is coming on the market now faster and more furious and continuing to put even more downward pressure on property values in the immediate neighborhoods around them. We are now seeing more of these distressed sales in higher end communities in northern New Jersey thus putting further downward pressure on neighboring home values in areas we are not accustomed to seeing this phenomenon.
But even as we see more bank owned sales, I’ve been told that banks are holding some of their properties off the market waiting until prices start rebounding a bit. What does that bode for northern NJ homeowners? A pro-longed period of downward pressure on prices 18 months to 2 years out even after the rest of the economy picks up, I suspect.
So where is the "light" again?
The light is that HOMES ARE SELLING. And IF you are serious about moving, we can help you. For those of you trading down, "present it well and it will sell". That means that you need to gear up for "a beauty contest" and "a price war". Yes, you will get less than you would have a few years ago. But have you heard that there are a lot of places in this country where prices are down substantially more than they are here? (California, Arizona, Las Vegas, Florida and some parts of the Carolina’s to name a few).
And IF you are a home owner looking to trade up locally, your move-up gap is at a minimum NOW!!! Current lending requirements are tighter than ever, so you will likely need to sell 1st in order to get a loan on your new home. But doing so makes your equity position known and having a firm buyer in hand will give you leverage when negotiating your purchase with a seller (and, in theory, a better price for you on the buy side).
Now last, but not least, IF you are a would-be 1st time buyer sitting on the sidelines waiting until the market "bottoms out", you probably should jump in quick and take advantage of the perfect storm of good inventory, low prices, great rates AND up to an $8,000 tax credit from the IRS. What a sweet deal--and the later expires on November 30th. We could have just gotten the 1st round of news that we HAVE seen the bottom of the market. But it will take 3 - 6 months until pending sales roll through the stats before anyone can call it with certainty. And by then demand will be up and that likely means that the really great deals will be gone.
So "yes", I do see the light at the end of the tunnel! Join me for the ride.
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The $8,000 first time home buyer tax credit is in effect for purchases that close before the end of November. And it applies to folks who have owned homes before but not in the last few years. It's not to late to begin a home search so that you can take advantage of this tax benefit. Here is a helpful link: http://www.realstorynj.com/8000-First-Time-Home-Buyer-Tax-Credit.html Or you can call me to get started!
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Primary 973-726-5700 x311
