Somerset County July sales active with 481 homes sold
(Below is a market update on the real estate and property activity in Somerset County – including Branchburg, Bridgewater, Somerville and Hillsborough– as of the end of July of 2016. This information is provided by courtesy of Somerset County Realtor Joe Peters.)
In July of 2016, 419 properties went “under contract” in Somerset County, as compared to 481 reported as going “under contract” in the prior month. Also 474 properties were newly listed during the same period. As a result statistics show an overall current supply of about 5 months (4 to 6 months is a normal market) for Somerset County, with an average of 59 days on the market for the units that were sold.
Sales broke down as follows:
- 67 percent of sales were in houses under $500,000
- And, 28 percent of sales were in houses between $500,000 and $1 Million
- Leaving only 5 percent of sales were in houses more than $1 Million
Two areas in Somerset County reported no sales last month:
- Rocky Hill
At the same time, there are the usual hot spots:
- Bernards Township with 38 sales
- Bridgewater Township with 61 sales
- Franklin Township with 95 sales
- Hillsborough Township with 47 sales
These four areas combined for over 57% of total sales last month. The average new listing coming on the market last month was at nearly $539,114 while the average price of a unit going “under contract” was at nearly $459,026 or about 16% less.
Houses that are priced properly are selling. There is a current market for them with many active buyers. But more than ever, buyers and sellers need to be working with an experienced agent who has a strong grasp of the market conditions specific to your local area. I can share information on all of these statistics with you. Just call me at 908-238-0118. I can offer you knowledgeable and proven advice based upon my more than 20 years of experience, with a special emphasis on Somerset County. Meet Joe Peters (short video)
Other conditions impacting sales in our area are:
New Jersey Home Sales:
Home purchase demand increased in New Jersey during June, rising by 11,000+ home purchase contracts vs. one year ago or plus 10% , which marks the 22nd increase in a row and the largest increase in June since 2005.
For the year so far , sales rose be by 15% vs. the prior year. The increase has been most widely seen in the under $400,000 market where the millennial buyers are most active as they transition in to home ownership.
At the same time, the number of homes being offered for sale in New Jersey, has remained low, and has recently decreased. The supply has decreased in May by some 5,000+ homes in June or minus 9%. And, there are currently 21,000+ fewer (-29%) homes on the market in New Jersey than there were at our peak in NJ in 2011.
The current unsold inventory in New Jersey sits at just under 4.7 month vs. 5.7 month a year ago.
Current steady to slightly decreasing interest rates (combined with the fear of higher interest rates in the future) combined with the Fed’s slightly loosening lending standards seems to be driving the current market activity.
Interest rates have inched up and are at just below the 3.5% level for a 30 year conventional mortgage. A fifteen year conventional mortgages is at just under the 3% range. Five and seven year arms are in the 2.75% range.
The combination of the fear of rising rates and slowly rising home prices is driving the current market. And, we have seen several industry experts state that the economy could support a 6 to 7% interest rate making you wonder what is coming down the pike. And, the Fed has already instituted an initial increase in rates. Most industry experts are forecasting at laeast a 1% increase for this time next year (which would decrease buying power by about 9%).
New Jersey Job Front:
On the national level the US reached full recovery in May of 2014 and saw an increase of 2,700,000+ in 2015. After a slow start, only approximately 1,029,000 gave been reported so far year to date. If this pace continues, the 2016 number is forecasted to be 2,100,000 jobs as compared to last years increase this is a drop of 25%.
It should be noted, due to full-time and part-time jobs being counted equally by the BLS, these numbers are misleading. Actually, the US Economy still needs to create an additional 3+ Million jobs to achieve the same employment situation that existed prior to the start of the recession.
NJ job growth increase by 65,000+ jobs in 2015 (the best in 15 years). At that pace, NJ is on track to recover all of its jobs lost in the recession by the end 2016 (3 years later than the national level) and has recovered about 83% of those jobs to date.
However, NJ has shown an increase in jobs added June after showing fourth months of job declines (there were job declines in four of the first six months in 2016) showing a gain of 17,800+ jobs year to date which includes an addition of 20,300 jobs in June. NJ unemployment has increased for the fourth consecutive month to 5.1% which now surpasses the overall US rate of 4.9%.
Rental Market Trends:
Prior restrictive mortgage standards have forced younger age buyers (millennials) to postpone their transition to home ownership until later in life than was previously seen. For the most part, these potential have been living with mom and dad or sharing rentals with others in the same situation.
Yet, we are starting to see them now re-enter the rental and first time buyer markets.
The average age of our first time buyer is reported to have risen from 29 to 37 years over the past five years.
And, many older age households are selling their homes and moving into rentals to close their gap in underfunded retirement plans which were affected by the recent economic downturns.
The net result of these actions are continuing to cause rental prices to quickly rise in New Jersey (about 10% annually) and keeping rental inventory extremely low (we currently have a 3.4% vacancy rate in NJ with the average rental price topping $1,400).
NJ continues to face very high foreclosure rate filings while other states have begun to, or already have recovered.
This figure varies widely by local market. It is also impacted greatly in areas hit particularly hard by hurricane Sandy (which was just about three years ago).
The percentage of delinquent mortgage loans in NJ that are 90+ days past due has held at 6.7 percent (which is down from 11.4% four years earlier). This ranks NJ as number one in the country followed by NY and then FL, MI , ME, MD and RI. Nationally this number is just around 2.8%.
NJ is experiencing an increased rate in foreclosure filings while most states are seeing the reverse of this. In 2105 there was a 15% increase over the prior year and added an additional nearly 77,000 filings. For 2016 the foreclosure filing rate in NJ is forecasted to be just above 73,000, a very slight improvement. These foreclosures will continue to add pressure to home prices (especially in areas where they are concentrated).
The positive news is that in a market starved for inventory, these foreclosures are now only selling at a small discount.
2016 has not been a normal year from the upcoming elections viewpoint to the US and NJ economy viewpoint.
Yet, we have seen a surge in home sale in central NJ in 2016. Especially in the sub $400K market. We are still plagued my not having enough inventory in our more popular price points and these sales increases could be even better if we had more inventory. But, as inventory builds up as prices continue to rise (and people are no longer under water), this should have a positive effect on prices. Year to date we have only seen a 1% rise in prices in NJ. It is forecasted to be about 4%, but time will tell.
We are also starting to see people in their home over 10 years thinking about making a change. They were reluctant over the pas five or so years because of the poor economy.
We are seeing the most effect on prices in the under $400K markets where the first time buyers and millennials are shopping. The over $500K market is holding steady to diminishing slightly depending on location and price.
And, the foreclosures are to some extent helping to offset the fewer listings.
Net, net: As either a seller or buyer, the time could not be better to be in the market. We have the lowest interest rates in history, a pent up demand from both a buyer and seller viewpoint and a very active market with slightly increasing prices. Give me a call at 908-238-0118 to discuss your particular situation and let me put my expertise to work for you.
Note: The information presented is deemed accurate but not reliable or guaranteed. Reasonable precautions were taken in the preparation and presentation of this information to ensure accuracy, but the author assumed no liability for any actions taken based on this information. Some opinions expressed represent forecasts of economic conditions as the impact real estate values. All such information is solely conjecture and should be regarded as opinion only and not serve as the sole basis of any financial decision.
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