Somerset County’s Real Estate Market Conditions – for February of 2016

 Somerset County January sales active with 234 homes sold 

market update

 

(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 January of 2016. This information is provided by courtesy of Somerset County Realtor Joe Peters.)

In January of 2016, 234 properties went “under contract” in Somerset County, the same number as  “under contract” properties in the prior month. Also 376 properties were newly listed during the same period.  As a result statistics show an overall current supply of about 6 months (4 to 6 months is a normal market) for Somerset County, with an average of 92 days on the market for the units that were sold.     Sales broke down as follows:

 

recap

  • 74 percent of sales were in houses under $500,000
  • And, 22 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

By town

One area in Somerset County reported no sales last month:

  • Rocky Hill

And only five areas in Somerset County reported 2 sales or less at all last month:

  • Far Hills
  • Millstone
  • Peapack/Gladstone
  • South Bound Brook
  • Watchung Boro

At the same time, there are the usual hot spots:

  • Bernards Township with 24 sales
  • Bridgewater Township with 35 sales
  • Franklin Township with 51 sales
  • Hillsborough Township with 27 sales

These four areas combined for over 58% of total sales last month.  The average new listing coming on the market last month was at nearly $676,351 while the average price of a unit going “under contract” was at nearly $418,384 or about 38% 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 December, rising by 6,000+ home purchase contracts vs. one year ago or plus 28% , which marks the 15th increase in a row and the largest increase in November since 2005.  For the year, sales rose be by 17% vs. the prior year.

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 December by some 500+ homes vs. one year ago or minus 1%.  And, there are currently 29,000+ fewer (-40%) 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 6.9 month vs. 8.9 month a year ago.

Current steady to slightly increasing 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. This gave NJ home prices a 3 to 4% rise in 2015 vs. about 1.5% in 2014.

Interest Rates:

Interest rates are holding steady and are at just under the 4% level for a 30 year conventional mortgage. A fifteen year conventional mortgages is in the low 3% range. Five and seven year arms are in the very upper 2% range.

The combination 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 an upper 4% number 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 is on pace to increase 2,600,000+ non-farm jobs this year.

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). 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.

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 reenter 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 2.4% vacancy rate in NJ).

Foreclosures:

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 has declined slightly to just under eight percent (which is down from 11.4% three 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 3.3%.

NJ is experiencing an increased rate in foreclosure filing while most states are seeing the reverse of this. In 2105 there was a 14% increase over the prior year and added an additional nearly 77,000 filings.  These foreclosures will 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.

Recap:

We still have fewer listings, an a very very active buyer market for early 2016, stable to increasing prices in some of the most popular price points and increasing interest + slightly loosening lending standards.  The result is a mixed market based on location and price point, but very active for this time of the year.  The foreclosures are to some extent helping to offset the fewer listings.  As a result, prices have continued to rise.

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.

Meet Joe Peters

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