Somerset County's Real Estate Market Conditions July 2020

Somerset County’s Real Estate Market Conditions October 2020 – Bridgewater Edition

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Somerset County’s Real Estate Market Conditions October 2020 – Bridgewater Edition

Get ahead of the residential real estate market drivers in Somerset County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

What’s Happening in Somerset County’s Real Estate Market?

Based on the last full month’s contract sales, statistics show a low supply of inventory of just two months. Normal market conditions average four to six months in Somerset County. Units going under contract averaged 40 days on the market. Five hundred forty-seven units went “under contract” in September, up from 515 in the prior month. Newly listed properties in the same period totaled 412, down just a bit up from 417 in the preceding month. At this point, we have actually sold more houses YTD in 2020 than in 2019 in Somerset county.

Our total inventory number decreased from 1,392 (last year) to 954 units, nearly 31% less than last year. In contrast, sales were up by almost 65% in September, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers.

New Jersey Residential Real Estate Market Forecast

Because of pent up demand and well under 3% mortgage rates, we expect strong listings and sales bounce-back in the late summer and fall season.

Looking at consumer behavior, we expect to see fewer, yet slightly increasing listings and more sales compared to last year. Right now, we are still witnessing homeowners restricting the number of showings, and some are hesitant to list because they do not want people in their houses.

Some home sellers and home buyers feel safer with virtual showings. Everyone is taking time to understand and adjust to this new model of virtual selling and buying and the new methodical and safe open-houses. Time will tell if these new approaches have an impact. Thankfully, the listings that are coming on the market sell quickly due to more buyers than sellers.

Somerset County Real Estate Market Inventory Breakdown By Price For Last Month:

September September Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 152 199 326 2
Over 55 Communities* 18 18 49 3
$000K to $199K 13 22 25 1
$200K to $299K 62 105 102 1
$300K to $399K 71 124 153 1
$400K to $499K 63 87 114 1
$500K to $599K 53 48 116 2
$600K to $699K 41 51 97 2
$700K to $799K 20 30 68 2
$800K to $899K 13 20 48 2
$900K to $999K 15 23 44 2
$1,000K and Up 61 37 187 5
Totals for September 412 547 954 2
Average Price $691,203 $528,336 -23.6%
Average Days on Market 40
* Included in $ breakdowns
  • 62% of sales in houses < $500,000
  • 31% of sales in houses > $500,000
  • 07% percent of total sales (or 29 in total) in houses >$1,000,000

Somerset County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 67 32 2
Bernards Twp 99 58 2
Bernardsville 76 24 3
Bound Brook 12 10 1
Branchburg Twp 61 27 2
Bridgewater Twp 97 86 1
Far Hills Boro 16 2 8
Franklin Twp 129 91 1
Green Brook 34 20 2
Hillsborough 61 62 1
Manville Boro 17 26 1
Millstone Boro 0 0
Montgomery Twp 90 25 4
North Plainfield 24 26 1
Peapack Gladstone 17 1 17
Raritan Boro 10 4 3
Rocky Hill Boro 2 1 2
Somerville Boro 15 14 1
South Bound Brook 6 5 1
Warren Twp 83 24 3
Watchung Boro 38 9 4
Totals 954 547 2

Only one area had no sales last month:

  • Millstone

Three areas reported 1 or 2 sales each last month:

  • Far Hills
  • Peapack/Gladstone
  • Rocky Hill

Hotspots:

  • Bernards/Bernardsville – 82 sales
  • Branchburg – 27 sales
  • Bridgewater – 86 sales
  • Franklin – 91 sales
  • Hillsborough – 62 sales
  • Mongomery – 25 sales

Hotspot areas equaled 68% of the sales last month. The average new listing coming on the market last month neared $691,203. The average price of a unit going “under contract” neared $528,336 (24% less).

Bridgewater Township Statistics:

  • There are 97 homes for sale in Bridgewater Township as of this writing.
  • Of the 125 homes for sale, 27 are community properties (such as townhouses and condos) and one is in our 55+ communities
  • The average list price for all listings in Bridgewater Township is $569,342.
  • There were 41 new listings in Bridgewater Township last month with an average list price of $592,885.
  • There were also 78 homes that have gone under contract in the past 30 days with an average list price of $526,344 and 40 days on market.
  • Giving us a little about 1.25 months of inventory
  • Call for additional details

 

Note: To get a competitive price point on your property based on location and uniqueness, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will give you an advantage. I can show you the latest age and earnings breakdown for your particular area where people are moving into that area, and how I can market to those specific areas and demographics directly. The result is in you receiving the maximum selling price with a shorter time on the market.  Houses priced and marketed accurately sell faster, especially with a real estate industry veteran and local expert helping you navigate the process.

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

  • After record-setting increases in January and February, we saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, a considerable rebound started to take place, and it has continued in September, where Hunterdon County had 41% less inventory than last year and sold 70% more houses than last year for the same month.  In effect, clean housing coming on the market that is priced correctly is selling immediately.
  • We are already ahead of last year’s sales numbers in both Hunterdon and Somerset counties.
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current months supply of inventory in Hunterdon and Somerset County is now two months.  This is due to the quick sales as new inventory as it comes on the market.
  • Hunterdon and Somerset County have about 39% & 25% less inventory than we had a year ago, respectively.  This is a significant drop. And it is predicted to stay low ad sales outpace listings.
  • NJ has 25,000 units in inventory this yeas as compared to 39,500 a year prior (a 37% decline on a state-wide basis).
  • Decreases in inventory have occurred in all price points, with the under $400,000 market seeing the largest drop and the $400K to $600K the second largest.
  • And, we have seen increases in sales across all price points, with the under $400K range seeing the smallest gain of only 11% due to lack of inventory.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just over 2.9% for a 30-year conventional mortgage (we are seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just under the 2.4%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market, which may cause a drop in the number of available.
  • As said, rates in the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.

National Job Front:

  • On the national level, the US added over 2,100,000+ in 2019 v. 2,700,000 jobs in 2018.
  • US unemployment rate slowed in January, with just 225,000 jobs added.  An additional 325,000 were added in February, which put the US on pace to add 3 million + jobs in 2020.
  • Then COVID-19 appeared, and we saw nearly all of the jobs created in the past five years erased.
  • We have had nearly 41 million unemployment claims in the last 5+ months alone, pushing unemployment numbers to a peak of just under 15%.
  • The September end-of-month numbers continued to show improvement, with the unemployment rate dropping to 7.9%.
  • These numbers indicated that the recovery was indeed well underway, with about 50% of the unemployed now back in the workforce.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was robust going into this, but the effect is devastating and will be long term.

New Jersey Job Front:

  • In 2019 NJ added 39,000 jobs once again. NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.
  • The NJ unemployment numbers were at 3.5% just six months ago and now have followed the national numbers but are still higher at 10.8% for the last month reported, which was August.
  • Construction, food services, and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • These job losses will certainly have an impact on the buyers market in the balance of 2020.

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,700 per unit. Current vacancy rates in New Jersey have increased to around 4.4% in central NJ. & state-wide.
  • The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level resulted from the lax lending standards of the early 2000s and is considered to be at an acceptable level.  Households with no children stand at 65%, reflecting the decline in our school population.
  • One article states that the average homeowner who is 65+ has an average net wealth of over $318K, while the same for a renter is only just under $8K.  It also offers a stable place to live, an evident hedge against inflation, and a way to build wealth (a strong argument for homeownership).
  • However, the number of renters has increased by 7% over the past 25 years, with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  It makes one wonder where this all is heading.
  • The pace of new rental construction has increased by nearly fivefold to meet this demand.

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 5.8% (which is up significantly from a year earlier). Other states have begun to or have already recovered.  And, some sets like NY are still much higher with a 6.4% filing number. In a tight real estate market, these foreclosures sell at a discount.
  • The national baseline number sits at a little under 3.4% (which is up from 1.3% a year earlier).
  • The forbearance numbers will definitely affect foreclosures on that program comes to an end.  But, overall the foreclosure market is down 63% unit wise vs. 2019.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with just under 38,000 foreclosure filings (the weakest since 2012). With the first eight months in, NJ looks to be on track for a 16,000 foreclosure number in 2020, representing a 58% decline.  This could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic and how many bankruptcies we see in later 2020.

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our most prolonged economic expansion period in our country’s history with 125+ months of positive job gains.
      • The GDP was still rising (although its rate of increase seems to be slowing a bit).
      • And, wages are up significantly at the same time.
      • Interest rates have decreased to just under 3.5%.
      • Foreclosures rates have almost normalized.

     

    • In April and May:
      • We have seen a sharp spike in unemployment
      • The GDP has been adversely affected
      • Wage growth is Affected.
      • Interest rates are bouncing around (but holding).
      • Inventory levels are down by 35+%. This is due to listings are being withheld.
      • Buying activity is also down about 35%
      • It was as if someone had hit the “pause” button on the real estate market.
      • The balance of 2020 real estate was under extreme pressure as a result.
      • Current Real estate values do not seem to be affected as to the lack of inventory.

     

    • From June in, we saw new listings come on the market at a faster pace, and sales picked up at an even higher rate. The total inventory dropped as a result, and we saw impressive sales numbers. A true seller’s market resulted.

     

    Changes in Lifestyle:

    • The average age at marriage is now in the mid to late 30s (up seven years from just a decade ago).
    • Families usually have only one to two children due to costs and the ability to choose.
      70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
    • As a result of job opportunities, buyers were gravitating to areas within 15 miles of NYC with sound mass transportation systems.
    • But, we are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot as well as social unrest.
    • This trend will surely continue.
    • 80% of consumers still perceive homeownership as part of the American Dream. It is just what they want to buy (or rent) that has changed.
    • Buyers are not looking for open floor plans as in the past and are gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference. Work, education, and exercise or play areas are now key.
    • Also, many late millennials have accelerated their home buying activities based on the last six months.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of how many workers will gravitate away from the city as they adapt to working from home and a modified live/work/play lifestyle.
    • The “Great American Move” is a term that we are starting to see for this new life-style.
    • 60% of all new housing starts in 2020 in NJ were in the rental sector, and, the 2020 numbers will surpass that.  This is contributing to the lack of new construction and inventory

    Market conditions:

    • What a difference 6+ months make!
    • Consumer confidence was put on pause (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
    • The recent civil unrest has further affected this.
    • The above items were affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
    • Beginning in June, we saw a total reversal on the sales side and supply and demand effect as the lack of inventory and high buyer demand keep prices at current levels.
    • Most consumers will still see homeownership as a sound investment.
    • And, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.
    • The total effect was helped by our having such a strong economy and real estate going into the pandemic.
    • The current seller’s market has resulted as we currently have more buyers than sellers.
    • People usually buy and sell homes based on life events. This will not change. Life events will go on.
    • And never before low seen interest rates have helped this situation to reverse.
    • We are hoping to see a continued substantial spike up as things are better understood, and people get back to a normal life.
    • The latest unemployment dips should surly have and effect on the market, and we are starting to see more listings coming on to the market.
    • It seems that the spring market starts to appear more late-summer and lasts until late in 2020.
    • Naturally, this all depends on not seeing a pronounced spike-up in the virus.

    Forecast:

    • The effect of the COVID-19 pandemic now seems to continue to correct itself (at least in our area).
    • The economy is continuing to recover from the recent drops in the unemployment numbers.
    • And this will affect the following:
      • Current and future real estate values (including any appreciation in the foreseeable future)
      • The amount of inventory available (hopefully we are starting to bottom out at -35%)
      • The ability for some buyers to get a mortgage
      • There could be more  possible foreclosures (this is way out)
    • Prime Interest rates have dropped several times in the past months plus additional quantitive easing to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
    • Inventory supply will hopefully start to increase over the next few months.
    • But, as we have a more substantial confidence level in having things under control, the housing market should have a strong continued bounce-back or upward spike due to:
      • The economy and housing market both being very strong going into the current COVID-19 issue.
      • Pent up demand and a spring market were pushed out till further in 2020.
      • Life events (as mentioned earlier) will still happen and will surely drive the pent up demand.
      • Lower than ever mortgage rates.
    • Due to the COVID-19 and recent unrest in NYC, we are starting to see more interest in living in more suburban counties such as Hunterdon and Somerset.
    • Also, people have found that working from home is a reality, and we will probably see less commuting in general as things start to open up once again.
    • What were once “bedroom” communities are changing to” live, work, play” communities bringing lots of change to our local economies.
    • Space and facility for home education is still a factor in most areas.
    • More attention is now given to horses with pools and less open areas which lend themselves to working and studying at home.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need to adapt to this.
    • Local property values are forecasted to see near flat to plus 5% appreciation, depending on their location and price points.

    Wow.  That is a lot to digest.  And it is changing daily, but seems to be heading in the right direction for now.  For clarity and understanding, I am always available if you want to talk and better understand how this might affect your particular situation.

     

    Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions in presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability. You can contact me at (908) 238-0118.

     

    You can ask me a question or request a monthly copy of this newsletter here.

 

Somerset County's Real Estate Market Conditions September 2020

Somerset County's Real Estate Market Conditions May 2020

Somerset County’s Real Estate Market Conditions October 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Somerset County’s Real Estate Market Conditions October 2020

Get ahead of the residential real estate market drivers in Somerset County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

What’s Happening in Somerset County’s Real Estate Market?

Based on the last full month’s contract sales, statistics show a low supply of inventory of just two months. Normal market conditions average four to six months in Somerset County. Units going under contract averaged 40 days on the market. Five hundred forty-seven units went “under contract” in September, up from 515 in the prior month. Newly listed properties in the same period totaled 412, down just a bit up from 417 in the preceding month. At this point, we have actually sold more houses YTD in 2020 than in 2019 in Somerset county.

Our total inventory number decreased from 1,392 (last year) to 954 units, nearly 31% less than last year. In contrast, sales were up by almost 65% in September, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers.

New Jersey Residential Real Estate Market Forecast

Because of pent up demand and well under 3% mortgage rates, we expect strong listings and sales bounce-back in the late summer and fall season.

Looking at consumer behavior, we expect to see fewer, yet slightly increasing listings and more sales compared to last year. Right now, we are still witnessing homeowners restricting the number of showings, and some are hesitant to list because they do not want people in their houses.

Some home sellers and home buyers feel safer with virtual showings. Everyone is taking time to understand and adjust to this new model of virtual selling and buying and the new methodical and safe open-houses. Time will tell if these new approaches have an impact. Thankfully, the listings that are coming on the market sell quickly due to more buyers than sellers.

Somerset County Real Estate Market Inventory Breakdown By Price For Last Month:

September September Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 152 199 326 2
Over 55 Communities* 18 18 49 3
$000K to $199K 13 22 25 1
$200K to $299K 62 105 102 1
$300K to $399K 71 124 153 1
$400K to $499K 63 87 114 1
$500K to $599K 53 48 116 2
$600K to $699K 41 51 97 2
$700K to $799K 20 30 68 2
$800K to $899K 13 20 48 2
$900K to $999K 15 23 44 2
$1,000K and Up 61 37 187 5
Totals for September 412 547 954 2
Average Price $691,203 $528,336 -23.6%
Average Days on Market 40
* Included in $ breakdowns
  • 62% of sales in houses < $500,000
  • 31% of sales in houses > $500,000
  • 07% percent of total sales (or 29 in total) in houses >$1,000,000

Somerset County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 67 32 2
Bernards Twp 99 58 2
Bernardsville 76 24 3
Bound Brook 12 10 1
Branchburg Twp 61 27 2
Bridgewater Twp 97 86 1
Far Hills Boro 16 2 8
Franklin Twp 129 91 1
Green Brook 34 20 2
Hillsborough 61 62 1
Manville Boro 17 26 1
Millstone Boro 0 0
Montgomery Twp 90 25 4
North Plainfield 24 26 1
Peapack Gladstone 17 1 17
Raritan Boro 10 4 3
Rocky Hill Boro 2 1 2
Somerville Boro 15 14 1
South Bound Brook 6 5 1
Warren Twp 83 24 3
Watchung Boro 38 9 4
Totals 954 547 2

Only one area had no sales last month:

  • Millstone

Three areas reported 1 or 2 sales each last month:

  • Far Hills
  • Peapack/Gladstone
  • Rocky Hill

Hotspots:

  • Bernards/Bernardsville – 82 sales
  • Branchburg – 27 sales
  • Bridgewater – 86 sales
  • Franklin – 91 sales
  • Hillsborough – 62 sales
  • Mongomery – 25 sales

Hotspot areas equaled 68% of the sales last month. The average new listing coming on the market last month neared $691,203. The average price of a unit going “under contract” neared $528,336 (24% less).

Note: To get a competitive price point on your property based on location and uniqueness, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will give you an advantage. I can show you the latest age and earnings breakdown for your particular area where people are moving into that area, and how I can market to those specific areas and demographics directly. The result is in you receiving the maximum selling price with a shorter time on the market.  Houses priced and marketed accurately sell faster, especially with a real estate industry veteran and local expert helping you navigate the process.

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

  • After record-setting increases in January and February, we saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, a considerable rebound started to take place, and it has continued in September, where Hunterdon County had 41% less inventory than last year and sold 70% more houses than last year for the same month.  In effect, clean housing coming on the market that is priced correctly is selling immediately.
  • We are already ahead of last year’s sales numbers in both Hunterdon and Somerset counties.
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current months supply of inventory in Hunterdon and Somerset County is now two months.  This is due to the quick sales as new inventory as it comes on the market.
  • Hunterdon and Somerset County have about 39% & 25% less inventory than we had a year ago, respectively.  This is a significant drop. And it is predicted to stay low ad sales outpace listings.
  • NJ has 25,000 units in inventory this yeas as compared to 39,500 a year prior (a 37% decline on a state-wide basis).
  • Decreases in inventory have occurred in all price points, with the under $400,000 market seeing the largest drop and the $400K to $600K the second largest.
  • And, we have seen increases in sales across all price points, with the under $400K range seeing the smallest gain of only 11% due to lack of inventory.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just over 2.9% for a 30-year conventional mortgage (we are seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just under the 2.4%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market, which may cause a drop in the number of available.
  • As said, rates in the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.

National Job Front:

  • On the national level, the US added over 2,100,000+ in 2019 v. 2,700,000 jobs in 2018.
  • US unemployment rate slowed in January, with just 225,000 jobs added.  An additional 325,000 were added in February, which put the US on pace to add 3 million + jobs in 2020.
  • Then COVID-19 appeared, and we saw nearly all of the jobs created in the past five years erased.
  • We have had nearly 41 million unemployment claims in the last 5+ months alone, pushing unemployment numbers to a peak of just under 15%.
  • The September end-of-month numbers continued to show improvement, with the unemployment rate dropping to 7.9%.
  • These numbers indicated that the recovery was indeed well underway, with about 50% of the unemployed now back in the workforce.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was robust going into this, but the effect is devastating and will be long term.

New Jersey Job Front:

  • In 2019 NJ added 39,000 jobs once again. NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.
  • The NJ unemployment numbers were at 3.5% just six months ago and now have followed the national numbers but are still higher at 10.8% for the last month reported, which was August.
  • Construction, food services, and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • These job losses will certainly have an impact on the buyers market in the balance of 2020.

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,700 per unit. Current vacancy rates in New Jersey have increased to around 4.4% in central NJ. & state-wide.
  • The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level resulted from the lax lending standards of the early 2000s and is considered to be at an acceptable level.  Households with no children stand at 65%, reflecting the decline in our school population.
  • One article states that the average homeowner who is 65+ has an average net wealth of over $318K, while the same for a renter is only just under $8K.  It also offers a stable place to live, an evident hedge against inflation, and a way to build wealth (a strong argument for homeownership).
  • However, the number of renters has increased by 7% over the past 25 years, with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  It makes one wonder where this all is heading.
  • The pace of new rental construction has increased by nearly fivefold to meet this demand.

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 5.8% (which is up significantly from a year earlier). Other states have begun to or have already recovered.  And, some sets like NY are still much higher with a 6.4% filing number. In a tight real estate market, these foreclosures sell at a discount.
  • The national baseline number sits at a little under 3.4% (which is up from 1.3% a year earlier).
  • The forbearance numbers will definitely affect foreclosures on that program comes to an end.  But, overall the foreclosure market is down 63% unit wise vs. 2019.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with just under 38,000 foreclosure filings (the weakest since 2012). With the first eight months in, NJ looks to be on track for a 16,000 foreclosure number in 2020, representing a 58% decline.  This could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic and how many bankruptcies we see in later 2020.

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our most prolonged economic expansion period in our country’s history with 125+ months of positive job gains.
      • The GDP was still rising (although its rate of increase seems to be slowing a bit).
      • And, wages are up significantly at the same time.
      • Interest rates have decreased to just under 3.5%.
      • Foreclosures rates have almost normalized.

     

    • In April and May:
      • We have seen a sharp spike in unemployment
      • The GDP has been adversely affected
      • Wage growth is Affected.
      • Interest rates are bouncing around (but holding).
      • Inventory levels are down by 35+%. This is due to listings are being withheld.
      • Buying activity is also down about 35%
      • It was as if someone had hit the “pause” button on the real estate market.
      • The balance of 2020 real estate was under extreme pressure as a result.
      • Current Real estate values do not seem to be affected as to the lack of inventory.

     

    • From June in, we saw new listings come on the market at a faster pace, and sales picked up at an even higher rate. The total inventory dropped as a result, and we saw impressive sales numbers. A true seller’s market resulted.

     

    Changes in Lifestyle:

    • The average age at marriage is now in the mid to late 30s (up seven years from just a decade ago).
    • Families usually have only one to two children due to costs and the ability to choose.
      70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
    • As a result of job opportunities, buyers were gravitating to areas within 15 miles of NYC with sound mass transportation systems.
    • But, we are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot as well as social unrest.
    • This trend will surely continue.
    • 80% of consumers still perceive homeownership as part of the American Dream. It is just what they want to buy (or rent) that has changed.
    • Buyers are not looking for open floor plans as in the past and are gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference. Work, education, and exercise or play areas are now key.
    • Also, many late millennials have accelerated their home buying activities based on the last six months.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of how many workers will gravitate away from the city as they adapt to working from home and a modified live/work/play lifestyle.
    • The “Great American Move” is a term that we are starting to see for this new life-style.
    • 60% of all new housing starts in 2020 in NJ were in the rental sector, and, the 2020 numbers will surpass that.  This is contributing to the lack of new construction and inventory

    Market conditions:

    • What a difference 6+ months make!
    • Consumer confidence was put on pause (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
    • The recent civil unrest has further affected this.
    • The above items were affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
    • Beginning in June, we saw a total reversal on the sales side and supply and demand effect as the lack of inventory and high buyer demand keep prices at current levels.
    • Most consumers will still see homeownership as a sound investment.
    • And, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.
    • The total effect was helped by our having such a strong economy and real estate going into the pandemic.
    • The current seller’s market has resulted as we currently have more buyers than sellers.
    • People usually buy and sell homes based on life events. This will not change. Life events will go on.
    • And never before low seen interest rates have helped this situation to reverse.
    • We are hoping to see a continued substantial spike up as things are better understood, and people get back to a normal life.
    • The latest unemployment dips should surly have and effect on the market, and we are starting to see more listings coming on to the market.
    • It seems that the spring market starts to appear more late-summer and lasts until late in 2020.
    • Naturally, this all depends on not seeing a pronounced spike-up in the virus.

    Forecast:

    • The effect of the COVID-19 pandemic now seems to continue to correct itself (at least in our area).
    • The economy is continuing to recover from the recent drops in the unemployment numbers.
    • And this will affect the following:
      • Current and future real estate values (including any appreciation in the foreseeable future)
      • The amount of inventory available (hopefully we are starting to bottom out at -35%)
      • The ability for some buyers to get a mortgage
      • There could be more  possible foreclosures (this is way out)
    • Prime Interest rates have dropped several times in the past months plus additional quantitive easing to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
    • Inventory supply will hopefully start to increase over the next few months.
    • But, as we have a more substantial confidence level in having things under control, the housing market should have a strong continued bounce-back or upward spike due to:
      • The economy and housing market both being very strong going into the current COVID-19 issue.
      • Pent up demand and a spring market were pushed out till further in 2020.
      • Life events (as mentioned earlier) will still happen and will surely drive the pent up demand.
      • Lower than ever mortgage rates.
    • Due to the COVID-19 and recent unrest in NYC, we are starting to see more interest in living in more suburban counties such as Hunterdon and Somerset.
    • Also, people have found that working from home is a reality, and we will probably see less commuting in general as things start to open up once again.
    • What were once “bedroom” communities are changing to” live, work, play” communities bringing lots of change to our local economies.
    • Space and facility for home education is still a factor in most areas.
    • More attention is now given to horses with pools and less open areas which lend themselves to working and studying at home.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need to adapt to this.
    • Local property values are forecasted to see near flat to plus 5% appreciation, depending on their location and price points.

    Wow.  That is a lot to digest.  And it is changing daily, but seems to be heading in the right direction for now.  For clarity and understanding, I am always available if you want to talk and better understand how this might affect your particular situation.

     

    Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions in presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability. You can contact me at (908) 238-0118.

     

    You can ask me a question or request a monthly copy of this newsletter here.

 

Somerset County's Real Estate Market Conditions September 2020

Hunterdon County’s Real Estate Market Conditions October 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Hunterdon County’s Real Estate Market Conditions October 2020

Get ahead of the residential real estate market drivers in Hunterdon County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

What’s Happening in Hunterdon County’s Real Estate Market?

Based on the last full month’s contract sales, statistics show a low supply of inventory of just two months. Normal market conditions average four to six months in Hunterdon County. Units going under contract averaged 48 days on the market. Two hundred forty-seven units went “under contract” in September, down from 258 in the prior month. Newly listed properties in the same period totaled 232, up from 189 in the preceding month.

Our total inventory number decreased from 913 (last year) to 540 units, nearly 41% less than last year. In contrast, sales were up by almost 70% in September, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers. At this point, we have actually sold more houses YTD in 2020 than in 2019 in Hunterdon county by 17%.

New Jersey Residential Real Estate Market Forecast

Because of pent up demand and well under 3% mortgage rates, we expect strong listings and sales bounce-back in the late summer and fall season.

Looking at consumer behavior, we expect to see fewer, yet slightly increasing listings and more sales compared to last year. Right now, we are still witnessing many homeowners restricting the number of showings, and some are hesitant to list because they do not want people in their houses.

Some home sellers and home buyers feel safer with virtual showings. Everyone is taking time to understand and adjust to this new model of virtual selling and buying and the new methodical and safe open-houses. Time will tell if these new approaches have an impact. Thankfully, the listings that are coming on the market sell quickly due to more buyers than sellers.

Hunterdon County Real Estate Market Inventory Breakdown By Price For Last Month:

September September Total
Hunterdon County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 46 48 94 2
Over 55 Communities * 3 6 15 3
$000K to $199K 23 22 41 2
$200K to $299K 32 28 64 2
$300K to $399K 43 52 85 2
$400K to $499K 36 43 73 2
$500K to $599K 28 43 66 2
$600K to $699K 18 22 53 2
$700K to $799K 14 11 38 3
$800K to $899K 19 14 34 2
$900K to $999K 4 5 20 4
$1,000K and Up 15 7 66 9
Totals for September 232 247 540 2
Average Price $538,797 $490,775 -8.9%
Average DOM 48
* Included in $ breakdowns

 

  • 59% of sales in houses < $500,000
  • 41% of sales in houses > $500,000
  • 11% percent of total sales (or 31 in total) in houses >$1,000,000

Hunterdon County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Hunterdon County Active Listings Under Contract Last Month Months’ Supply
Alexandria Twp. 28 12 2
Bethlehem Twp. 12 3 4
Bloomsbury Boro. 3 1 3
Califon Boro. 3 3 1
Clinton Town 7 3 2
Clinton Twp. 44 24 2
Delaware Twp. 32 9 4
East Amwell Twp. 16 4 4
Flemington Boro. 9 5 2
Franklin Twp. 20 4 5
Frenchtown Boro. 11 4 3
Glen Gardner Boro. 11 6 2
Hampton Boro 8 2 4
High Bridge Boro. 15 4 4
Holland twp. 23 12 2
Kingwood Twp. 16 8 2
Lambertville City 17 6 3
Lebanon Boro. 5 4 1
Lebanon Twp. 20 15 1
Milford Boro. 5 2 3
RaritanTwp. 55 51 1
Readington Twp. 81 32 3
Stockton Boro. 0 1 0
Tewksbury Twp. 69 18 4
Union Twp. 23 11 2
West Amwell Twp. 7 3 2
Totals 540 247 2

No areas had no sales last month:

Four areas reported 1 or 2 sales each last month:

  • Bloomsbury
  • Hampton
  • Stockton
  • Milford

Hotspots:

  • Clinton/Clinton Twp. – 27 Sales
  • Raritan – 51 Sales
  • Readington – 32 Sales
  • Tewksbury – 18 Sales

Hotspot areas equaled 52% of the sales last month. The average new listing coming on the market last month neared $538,797. The average price of a unit going “under contract” neared $490,775 (9% less).

Note: To get a competitive price point on your property based on location and uniqueness, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will give you an advantage. I can show you the latest age and earnings breakdown for your particular area where people are moving into that area, and how I can market to those specific areas and demographics directly. The result is in you receiving the maximum selling price with a shorter time on the market.  Houses priced and marketed accurately sell faster, especially with a real estate industry veteran and local expert helping you navigate the process.

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

  • After record-setting increases in January and February, we saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, a considerable rebound started to take place, and it has continued in September, where Hunterdon County had 41% less inventory than last year and sold 70% more houses than last year for the same month.  In effect, clean housing coming on the market that is priced correctly is selling immediately.
  • We are already ahead of last year’s sales numbers in both Hunterdon and Somerset counties.
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current months supply of inventory in Hunterdon and Somerset County is now two months.  This is due to the quick sales as new inventory as it comes on the market.
  • Hunterdon and Somerset County have about 39% & 25% less inventory than we had a year ago, respectively.  This is a significant drop. And it is predicted to stay low ad sales outpace listings.
  • NJ has 25,000 units in inventory this yeas as compared to 39,500 a year prior (a 37% decline on a state-wide basis).
  • Decreases in inventory have occurred in all price points, with the under $400,000 market seeing the largest drop and the $400K to $600K the second largest.
  • And, we have seen increases in sales across all price points, with the under $400K range seeing the smallest gain of only 11% due to lack of inventory.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just over 2.9% for a 30-year conventional mortgage (we are seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just under the 2.4%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market, which may cause a drop in the number of available.
  • As said, rates in the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.

National Job Front:

  • On the national level, the US added over 2,100,000+ in 2019 v. 2,700,000 jobs in 2018.
  • US unemployment rate slowed in January, with just 225,000 jobs added.  An additional 325,000 were added in February, which put the US on pace to add 3 million + jobs in 2020.
  • Then COVID-19 appeared, and we saw nearly all of the jobs created in the past five years erased.
  • We have had nearly 41 million unemployment claims in the last 5+ months alone, pushing unemployment numbers to a peak of just under 15%.
  • The September end-of-month numbers continued to show improvement, with the unemployment rate dropping to 7.9%.
  • These numbers indicated that the recovery was indeed well underway, with about 50% of the unemployed now back in the workforce.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was robust going into this, but the effect is devastating and will be long term.

New Jersey Job Front:

  • In 2019 NJ added 39,000 jobs once again. NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.
  • The NJ unemployment numbers were at 3.5% just six months ago and now have followed the national numbers but are still higher at 10.8% for the last month reported, which was August.
  • Construction, food services, and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • These job losses will certainly have an impact on the buyers market in the balance of 2020.

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,700 per unit. Current vacancy rates in New Jersey have increased to around 4.4% in central NJ. & state-wide.
  • The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level resulted from the lax lending standards of the early 2000s and is considered to be at an acceptable level.  Households with no children stand at 65%, reflecting the decline in our school population.
  • One article states that the average homeowner who is 65+ has an average net wealth of over $318K, while the same for a renter is only just under $8K.  It also offers a stable place to live, an evident hedge against inflation, and a way to build wealth (a strong argument for homeownership).
  • However, the number of renters has increased by 7% over the past 25 years, with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  It makes one wonder where this all is heading.
  • The pace of new rental construction has increased by nearly fivefold to meet this demand.

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 5.8% (which is up significantly from a year earlier). Other states have begun to or have already recovered.  And, some sets like NY are still much higher with a 6.4% filing number. In a tight real estate market, these foreclosures sell at a discount.
  • The national baseline number sits at a little under 3.4% (which is up from 1.3% a year earlier).
  • The forbearance numbers will definitely affect foreclosures on that program comes to an end.  But, overall the foreclosure market is down 63% unit wise vs. 2019.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with just under 38,000 foreclosure filings (the weakest since 2012). With the first eight months in, NJ looks to be on track for a 16,000 foreclosure number in 2020, representing a 58% decline.  This could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic and how many bankruptcies we see in later 2020.

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our most prolonged economic expansion period in our country’s history with 125+ months of positive job gains.
      • The GDP was still rising (although its rate of increase seems to be slowing a bit).
      • And, wages are up significantly at the same time.
      • Interest rates have decreased to just under 3.5%.
      • Foreclosures rates have almost normalized.

     

    • In April and May:
      • We have seen a sharp spike in unemployment
      • The GDP has been adversely affected
      • Wage growth is Affected.
      • Interest rates are bouncing around (but holding).
      • Inventory levels are down by 35+%. This is due to listings are being withheld.
      • Buying activity is also down about 35%
      • It was as if someone had hit the “pause” button on the real estate market.
      • The balance of 2020 real estate was under extreme pressure as a result.
      • Current Real estate values do not seem to be affected as to the lack of inventory.

     

    • From June in, we saw new listings come on the market at a faster pace, and sales picked up at an even higher rate. The total inventory dropped as a result, and we saw impressive sales numbers. A true seller’s market resulted.

     

    Changes in Lifestyle:

    • The average age at marriage is now in the mid to late 30s (up seven years from just a decade ago).
    • Families usually have only one to two children due to costs and the ability to choose.
      70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
    • As a result of job opportunities, buyers were gravitating to areas within 15 miles of NYC with sound mass transportation systems.
    • But, we are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot as well as social unrest.
    • This trend will surely continue.
    • 80% of consumers still perceive homeownership as part of the American Dream. It is just what they want to buy (or rent) that has changed.
    • Buyers are not looking for open floor plans as in the past and are gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference. Work, education, and exercise or play areas are now key.
    • Also, many late millennials have accelerated their home buying activities based on the last six months.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of how many workers will gravitate away from the city as they adapt to working from home and a modified live/work/play lifestyle.
    • The “Great American Move” is a term that we are starting to see for this new life-style.
    • 60% of all new housing starts in 2020 in NJ were in the rental sector, and, the 2020 numbers will surpass that.  This is contributing to the lack of new construction and inventory

    Market conditions:

    • What a difference 6+ months make!
    • Consumer confidence was put on pause (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
    • The recent civil unrest has further affected this.
    • The above items were affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
    • Beginning in June, we saw a total reversal on the sales side and supply and demand effect as the lack of inventory and high buyer demand keep prices at current levels.
    • Most consumers will still see homeownership as a sound investment.
    • And, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.
    • The total effect was helped by our having such a strong economy and real estate going into the pandemic.
    • The current seller’s market has resulted as we currently have more buyers than sellers.
    • People usually buy and sell homes based on life events. This will not change. Life events will go on.
    • And never before low seen interest rates have helped this situation to reverse.
    • We are hoping to see a continued substantial spike up as things are better understood, and people get back to a normal life.
    • The latest unemployment dips should surly have and effect on the market, and we are starting to see more listings coming on to the market.
    • It seems that the spring market starts to appear more late-summer and lasts until late in 2020.
    • Naturally, this all depends on not seeing a pronounced spike-up in the virus.

    Forecast:

    • The effect of the COVID-19 pandemic now seems to continue to correct itself (at least in our area).
    • The economy is continuing to recover from the recent drops in the unemployment numbers.
    • And this will affect the following:
      • Current and future real estate values (including any appreciation in the foreseeable future)
      • The amount of inventory available (hopefully we are starting to bottom out at -35%)
      • The ability for some buyers to get a mortgage
      • There could be more  possible foreclosures (this is way out)
    • Prime Interest rates have dropped several times in the past months plus additional quantitive easing to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
    • Inventory supply will hopefully start to increase over the next few months.
    • But, as we have a more substantial confidence level in having things under control, the housing market should have a strong continued bounce-back or upward spike due to:
      • The economy and housing market both being very strong going into the current COVID-19 issue.
      • Pent up demand and a spring market were pushed out till further in 2020.
      • Life events (as mentioned earlier) will still happen and will surely drive the pent up demand.
      • Lower than ever mortgage rates.
    • Due to the COVID-19 and recent unrest in NYC, we are starting to see more interest in living in more suburban counties such as Hunterdon and Somerset.
    • Also, people have found that working from home is a reality, and we will probably see less commuting in general as things start to open up once again.
    • What were once “bedroom” communities are changing to” live, work, play” communities bringing lots of change to our local economies.
    • Space and facility for home education is still a factor in most areas.
    • More attention is now given to horses with pools and less open areas which lend themselves to working and studying at home.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need to adapt to this.
    • Local property values are forecasted to see near flat to plus 5% appreciation, depending on their location and price points.

    Wow.  That is a lot to digest.  And it is changing daily, but seems to be heading in the right direction for now.  For clarity and understanding, I am always available if you want to talk and better understand how this might affect your particular situation.

    Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions in presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability. You can contact me at (908) 238-0118.

     

    You can ask me a question or request a monthly copy of this newsletter here.

 

Somerset County's Real Estate Market Conditions September 2020

Hunterdon County’s Real Estate Market Conditions September 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Hunterdon County’s Real Estate Market Conditions September 2020

Get ahead of the residential real estate market drivers in Hunterdon County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

What’s Happening in Hunterdon County’s Real Estate Market?

Based on the last full month’s contract sales, statistics show a low supply of inventory of just two months. Normal market conditions average four to six months in Hunterdon County. Units going under contract averaged 53 days on the market. Two hundred fifty-eight units went “under contract” in August, down from 280 in the prior month. Newly listed properties in the same period totaled 189, down from 234 in the preceding month.

Our total inventory number decreased from 877 (last year) to 521 units, nearly 39% less than last year. In contrast, sales were up by almost 28% in August, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers.

New Jersey Residential Real Estate Market Forecast

Because of pent up demand and well under 3% mortgage rates, we expect strong listings and sales bounce-back in the late summer and fall season.

Looking at consumer behavior, we expect to see fewer, yet slightly increasing listings and more sales compared to last year. Right now, we are still witnessing homeowners restricting the number of showings, and some are hesitant to list because they do not want people in their houses.

Some home sellers and home buyers feel safer with virtual showings. Everyone is taking time to understand and adjust to this new model of virtual selling and buying and the new methodical and safe open-houses. Time will tell if these new approaches have an impact. Thankfully, the listings that are coming on the market sell quickly due to more buyers than sellers.

Hunterdon County Real Estate Market Inventory Breakdown By Price For Last Month:

August August Total
Hunterdon County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 37 55 88 2
Over 55 Communities * 3 7 16 2
$000K to $199K 17 23 39 2
$200K to $299K 21 38 53 1
$300K to $399K 37 49 85 2
$400K to $499K 29 56 75 1
$500K to $599K 23 36 74 2
$600K to $699K 20 25 52 2
$700K to $799K 11 15 33 2
$800K to $899K 9 5 35 7
$900K to $999K 8 5 23 5
$1,000K and Up 14 6 62 10
Totals for August 189 258 531 2
Average Price $554,842 $473,458 -14.7%
Average DOM 53
* Included in $ breakdowns
  • 64% of sales in houses < $500,000
  • 36% of sales in houses > $500,000
  • 06% percent of total sales (or 31 in total) in houses >$1,000,000

Hunterdon County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Hunterdon County Active Listings Under Contract Last Month Months’ Supply
Alexandria Twp. 30 7 4
Bethlehem Twp. 11 5 2
Bloomsbury Boro. 4 3 1
Califon Boro. 6 2 3
Clinton Town 7 6 1
Clinton Twp. 44 25 2
Delaware Twp. 30 12 3
East Amwell Twp. 13 7 2
Flemington Boro. 7 5 1
Franklin Twp. 18 11 2
Frenchtown Boro. 12 3 4
Glen Gardner Boro. 7 7 1
Hampton Boro 6 4 2
High Bridge Boro. 11 11 1
Holland twp. 20 8 3
Kingwood Twp. 21 4 5
Lambertville City 15 11 1
Lebanon Boro. 7 2 4
Lebanon Twp. 23 9 3
Milford Boro. 6 2 3
RaritanTwp. 66 45 1
Readington Twp. 70 39 2
Stockton Boro. 2 0
Tewksbury Twp. 60 17 4
Union Twp. 28 10 3
West Amwell Twp. 7 3 2
Totals 531 258 2

Only one area had no sales last month:

  • Stockton

Three areas reported 1 or 2 sales each last month:

  • Califon
  • Lebanon
  • Milford

Hotspots:

  • Clinton/Clinton Twp. – 31 Sales
  • Raritan – 45 Sales
  • Readington – 39 Sales
  • Tewksbury – 12 Sales

Hotspot areas equaled 49% of the sales last month. The average new listing coming on the market last month neared $554,842. The average price of a unit going “under contract” neared $473,458 (11% less).

Note: To get a competitive price point on your property based on location and uniqueness, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will give you an advantage. I can show you the latest age and earnings breakdown for your particular area where people are moving into that area, and how I can market to those specific areas and demographics directly. The result is in you receiving the maximum selling price with a shorter time on the market.  Houses priced and marketed accurately sell faster, especially with a real estate industry veteran and local expert helping you navigate the process.

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

  • After record-setting increases in January and February, we saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, July and July, a considerable rebound started to take place, and it has continued in August, where Hunterdon County had 25% less inventory than last year and sold 19% more houses than last year for the same month.
  • It looks like the rebound, which started in June, will help us to top the year over year numbers for 2020 if this trend keeps up.
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current months supply of inventory in Hunterdon and Somerset County is now two months.  This is due to the quick sales as new inventory as it comes on the market.
  • Hunterdon and Somerset County have about 39% & 25% less inventory than we had a year ago, respectively.  This is a significant drop. And it is predicted to stay low ad sales outpace listings.
  • NJ has 24,750 units in inventory this yeas as compared to 40,000 a year prior (a 39% decline on a state-wide basis).
  • Decreases in inventory have occurred in all price points, with the under $400,000 market seeing the largest drop and the $400K to $600K the second largest.
  • And, we have seen increases in sales across all price points, with the under $400K range seeing the smallest gain of only 11%.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just over 2.9% for a 30-year conventional mortgage (we are seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just under the 2.5%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market, which may cause a drop in the number of available.
  • As said, rates in the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.

National Job Front:

  • On the national level, the US added over 2,100,000+ in 2019 v. 2,700,000 jobs in 2018.
  • US unemployment rate slowed in January, with just 225,000 jobs added.  An additional 325,000 were added in February, which put the US on pace to add 3 million + jobs in 2020.
  • Then COVID-19 appeared, and we saw nearly all of the jobs created in the past five years erased.
  • We have had nearly 41 million unemployment claims in the last 4+ months alone, pushing unemployment numbers to a peak of just under 15%.
  • The August end-of-month numbers continued to show improvement, with the unemployment rate dropping to 8.4%.
  • These numbers indicated that the recovery was indeed well underway, with nearly 50% of the unemployed now back in the workforce.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was robust going into this, but the effect is devastating and will be long term.

New Jersey Job Front:

  • In 2019 NJ added 39,000 jobs once again. NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.
  • The NJ unemployment numbers were at 3.5% just five months ago and now have followed the national numbers but are still higher at 13.8% for the last month reported, which was July.
  • Construction, food services, and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • These job losses will certainly have an impact on the buyers market in the balance of 2020.

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,700 per unit. Current vacancy rates in New Jersey have increased to around 4.4% in central NJ. & state-wide.
  • The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level resulted from the lax lending standards of the early 2000s and is considered to be at an acceptable level.  Households with no children stand at 65%, reflecting the decline in our school population.
  • One article states that the average homeowner who is 65+ has an average net wealth of over $318K, while the same for a renter is only just under $8K.  It also offers a stable place to live, an evident hedge against inflation, and a way to build wealth (a strong argument for homeownership).
  • However, the number of renters has increased by 7% over the past 25 years, with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  It makes one wonder where this all is heading.
  • The pace of new rental construction has increased by nearly five fold to meet this demand.

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 2.3% (which is up from 12.% a year earlier). Other states have begun to or have already recovered.  And, some sets like NY are still much higher with a 2.9% filing number. In a tight real estate market, these foreclosures sell at a discount.
  • The national baseline number sits at a little under 1.5% (which is up from 1.3% a year earlier).
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with just under 38,000 foreclosure filings (the weakest since 2012). With the first eight months in, NJ looks to be on track for a 16,000 foreclosure number in 2020, representing a 58% decline.  This could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic and how many bankruptcies we see in later 2020.

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our most prolonged economic expansion period in our country’s history with 125+ months of positive job gains.
      • The GDP was still rising (although its rate of increase seems to be slowing a bit).
      • And, wages are up significantly at the same time.
      • Interest rates have decreased to just under 3.5%.
      • Foreclosures rates have almost normalized.

     

    • In April and May:
      • We have seen a sharp spike in unemployment
      • The GDP has been adversely affected
      • Wage growth is Affected.
      • Interest rates are bouncing around (but holding).
      • Inventory levels are down by 35+%. This is due to listings are being withheld.
      • Buying activity is also down about 35%
      • It was as if someone had hit the “pause” button on the real estate market.
      • The balance of 2020 real estate was under extreme pressure as a result.
      • Current Real estate values do not seem to be affected as to the lack of inventory.

     

    • In June, July, and August, we saw new listings come on the market at a faster pace, and ales picked up at an even higher rate. The total inventory dropped as a result, and we saw impressive sales numbers. A true seller’s market resulted.

     

    Changes in Lifestyle:

    • The average age at marriage is now in the mid to late 30s (up seven years from just a decade ago).
    • Families usually have only one to two children due to costs and the ability to choose.
      70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
    • As a result of job opportunities, buyers were gravitating to areas within 15 miles of NYC with sound mass transportation systems.
    • But, we are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot as well as social unrest.
    • 80% of consumers still perceive homeownership as part of the American Dream. It is just what they want to buy (or rent) that has changed.
    • Buyers are not looking for open floor plans as in the past and are gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference. Work, education, and exercise or play areas are now key.
    • Also, many late millennials have accelerated their home buying activities based on the last six months.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of how many workers will gravitate away from the city as they adapt to working from home and a modified lifestyle.
    • The “Great American Move” is a term that we are starting to see for this new life-style.
    • 60% of all new housing starts in 2020 in NJ were in the rental sector, and, the 2020 numbers will surpass that.  This is contributing to the lack of new construction and inventory

    Market conditions:

    • What a difference 5+ months make!
    • Consumer confidence was put on pause (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
    • The recent civil unrest has further affected this.
    • The above items were affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
    • In June, July, and August, we saw a total reversal on the sales side and supply and demand effect as the lack of inventory and high buyer demand keep prices at current levels.
    • Most consumers will still see homeownership as a sound investment.
    • And, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.
    • The total effect was helped by our having such a strong economy and real estate going into the pandemic.
    • The current seller’s market has resulted as we currently have more buyers than sellers.
    • People usually buy and sell homes based on life events. This will not change. Life events will go on.
    • And never before low seen interest rates have helped this situation to reverse.
    • We are hoping to see a continued substantial spike up as things are better understood, and people get back to a normal life.
    • The latest unemployment dips should surly have and effect on the market in June, and we are starting to see more listings coming on to the market.
    • It seems that the spring market starts to appear more late-summer and lasts until late in 2020.
    • Naturally, this all depends on not seeing a pronounced spike-up in the virus.

    Forecast:

    • The effect of the COVID-19 pandemic now seems to continue to correct itself (at least in our area).
    • The economy is continuing to recover from the recent drops in the unemployment numbers.
    • And this will affect the following:
      • Current and future real estate values (including any appreciation in the foreseeable future)
      • The amount of inventory available (hopefully we are starting to bottom out at -35%)
      • The ability for some buyers to get a mortgage
      • There could be more  possible foreclosures (this is way out)
    • Prime Interest rates have dropped several times in the past months plus additional quantitive easing to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
    • Inventory supply will hopefully start to increase over the next few months.
    • But, as we have a more substantial confidence level in having things under control, the housing market should have a strong continued bounce-back or upward spike due to:
      • The economy and housing market both being very strong going into the current COVID-19 issue.
      • Pent up demand and a spring market were pushed out till further in 2020.
      • Life events (as mentioned earlier) will still happen and will surely drive the pent up demand.
      • Lower than ever mortgage rates.
    • Due to the COVID-19 and recent unrest in NYC, we are starting to see more interest in living in more suburban counties such as Hunterdon and Somerset.
    • Also, people have found that working from home is a reality, and we will probably see less commuting as things start to open up once again.
    • What were once “bedroom” communities are changing to” live, work, play” communities bringing lots of change to our local economies.
    • More attention is now given to horses with pools and less open areas which lend themselves to working and studying at home.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need to adapt to this.
    • Local property values are forecasted to see near flat to plus 5% appreciation, depending on their location and price points.

    Wow.  That is a lot to digest.  And it is changing daily, but seems to be heading in the right direction for now.  For clarity and understanding, I am always available if you want to talk and better understand how this might affect your particular situation.

     

    Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions in presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability. You can contact me at (908) 238-0118.

     

    You can ask me a question or request a monthly copy of this newsletter here.

 

Somerset County's Real Estate Market Conditions September 2020

Somerset County's Real Estate Market Conditions July 2020

Somerset County’s Real Estate Market Conditions September 2020 – Bridgewater Edition

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Somerset County’s Real Estate Market Conditions September 2020 – Bridgewater Edition

Get ahead of the residential real estate market drivers in Somerset County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

What’s Happening in Somerset County’s Real Estate Market?

Based on the last full month’s contract sales, statistics show a low supply of inventory of just two months. Normal market conditions average four to six months in Somerset County. Units going under contract averaged 42 days on the market. Five hundred fifteen units went “under contract” in August, down from 581 in the prior month. Newly listed properties in the same period totaled 437, up just a bit up from 417 in the preceding month.

Our total inventory number decreased from 1,356 (last year) to 1,011 units, nearly 25% less than last year. In contrast, sales were up by almost 19% in August, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers.

New Jersey Residential Real Estate Market Forecast

Because of pent up demand and well under 3% mortgage rates, we expect strong listings and sales bounce-back in the late summer and fall season.

Looking at consumer behavior, we expect to see fewer, yet slightly increasing listings and more sales compared to last year. Right now, we are still witnessing homeowners restricting the number of showings, and some are hesitant to list because they do not want people in their houses.

Some home sellers and home buyers feel safer with virtual showings. Everyone is taking time to understand and adjust to this new model of virtual selling and buying and the new methodical and safe open-houses. Time will tell if these new approaches have an impact. Thankfully, the listings that are coming on the market sell quickly due to more buyers than sellers.

Somerset County Real Estate Market Inventory Breakdown By Price For Last Month:

August August Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 149 198 332 2
Over 55 Communities* 18 24 47 2
$000K to $199K 12 21 28 1
$200K to $299K 71 100 120 1
$300K to $399K 96 122 158 1
$400K to $499K 52 74 118 2
$500K to $599K 48 63 103 2
$600K to $699K 39 33 101 3
$700K to $799K 32 36 76 2
$800K to $899K 16 26 68 3
$900K to $999K 19 11 54 5
$1,000K and Up 52 29 185 6
Totals for August 437 515 1011 2
Average Price $620,185 $513,636 -17.2%
Average Days on Market 42
* Included in $ breakdowns
  • 62% of sales in houses < $500,000
  • 33% of sales in houses > $500,000
  • 05% percent of total sales (or 29 in total) in houses >$1,000,000

Somerset County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 66 33 2
Bernards Twp 102 53 2
Bernardsville 87 20 4
Bound Brook 15 5 3
Branchburg Twp 56 18 3
Bridgewater Twp 126 80 2
Far Hills Boro 14 4 4
Franklin Twp 120 101 1
Green Brook 39 9 4
Hillsborough 78 64 1
Manville Boro 21 11 2
Millstone Boro 0 2
Montgomery Twp 94 33 3
North Plainfield 27 26 1
Peapack Gladstone 13 3 4
Raritan Boro 9 8 1
Rocky Hill Boro 3 1 3
Somerville Boro 16 16 1
South Bound Brook 7 3 2
Warren Twp 82 22 4
Watchung Boro 36 3 12
Totals 1011 515 2

Only one area had no sales last month:

  • Millstone

One area reported 1 or 2 sales each last month:

  • Rocky Hill

Hotspots:

  • Bernards/Bernardsville – 73 sales
  • Branchburg – 18 sales
  • Bridgewater – 80 sales
  • Franklin – 101 sales
  • Hillsborough – 64 sales
  • Mongomery – 33 sales

Hotspot areas equaled 71% of the sales last month. The average new listing coming on the market last month neared $620,185. The average price of a unit going “under contract” neared $513,636 (17% less).

Bridgewater Township Statistics:

  • There are 126 homes for sale in Bridgewater Township as of this writing.
  • Of the 126 homes for sale, 46 are community properties (such as townhouses and condos), and four are in our 55+ communities
  • The average list price for all listings in Bridgewater Township is $556,270.
  • There were 66 new listings in Bridgewater Township last month, with an average list price of $512,147.
  • 77 homes have gone under contract in the past 30 days with an average list price of $500,781 and 40 days on the market.
  • Giving us a little about 1.6 months of inventory
  • Call for additional details

Note: To get a competitive price point on your property based on location and uniqueness, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will give you an advantage. I can show you the latest age and earnings breakdown for your particular area where people are moving into that area, and how I can market to those specific areas and demographics directly. The result is in you receiving the maximum selling price with a shorter time on the market.  Houses priced and marketed accurately sell faster, especially with a real estate industry veteran and local expert helping you navigate the process.

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

  • After record-setting increases in January and February, we saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, July and July, a considerable rebound started to take place, and it has continued in August, where Somerset County had 25% less inventory than last year and sold 19% more houses than last year for the same month.
  • It looks like the rebound, which started in June, will help us to top the year over year numbers for 2020 if this trend keeps up.
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current months supply of inventory in Hunterdon and Somerset County is now two months.  This is due to the quick sales as new inventory as it comes on the market.
  • Hunterdon and Somerset County have about 39% & 25% less inventory than we had a year ago, respectively.  This is a significant drop. And it is predicted to stay low ad sales outpace listings.
  • NJ has 24,750 units in inventory this yeas as compared to 40,000 a year prior (a 39% decline on a state-wide basis).
  • Decreases in inventory have occurred in all price points, with the under $400,000 market seeing the largest drop and the $400K to $600K the second largest.
  • And, we have seen increases in sales across all price points, with the under $400K range seeing the smallest gain of only 11%.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just over 2.9% for a 30-year conventional mortgage (we are seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just under the 2.5%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market, which may cause a drop in the number of available.
  • As said, rates in the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.

National Job Front:

  • On the national level, the US added over 2,100,000+ in 2019 v. 2,700,000 jobs in 2018.
  • US unemployment rate slowed in January, with just 225,000 jobs added.  An additional 325,000 were added in February, which put the US on pace to add 3 million + jobs in 2020.
  • Then COVID-19 appeared, and we saw nearly all of the jobs created in the past five years erased.
  • We have had nearly 41 million unemployment claims in the last 4+ months alone, pushing unemployment numbers to a peak of just under 15%.
  • The August end-of-month numbers continued to show improvement, with the unemployment rate dropping to 8.4%.
  • These numbers indicated that the recovery was indeed well underway, with nearly 50% of the unemployed now back in the workforce.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was robust going into this, but the effect is devastating and will be long term.

New Jersey Job Front:

  • In 2019 NJ added 39,000 jobs once again. NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.
  • The NJ unemployment numbers were at 3.5% just five months ago and now have followed the national numbers but are still higher at 13.8% for the last month reported, which was July.
  • Construction, food services, and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • These job losses will certainly have an impact on the buyers market in the balance of 2020.

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,700 per unit. Current vacancy rates in New Jersey have increased to around 4.4% in central NJ. & state-wide.
  • The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level resulted from the lax lending standards of the early 2000s and is considered to be at an acceptable level.  Households with no children stand at 65%, reflecting the decline in our school population.
  • One article states that the average homeowner who is 65+ has an average net wealth of over $318K, while the same for a renter is only just under $8K.  It also offers a stable place to live, an evident hedge against inflation, and a way to build wealth (a strong argument for homeownership).
  • However, the number of renters has increased by 7% over the past 25 years, with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  It makes one wonder where this all is heading.
  • The pace of new rental construction has increased by nearly five fold to meet this demand.

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 2.3% (which is up from 12.% a year earlier). Other states have begun to or have already recovered.  And, some sets like NY are still much higher with a 2.9% filing number. In a tight real estate market, these foreclosures sell at a discount.
  • The national baseline number sits at a little under 1.5% (which is up from 1.3% a year earlier).
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with just under 38,000 foreclosure filings (the weakest since 2012). With the first eight months in, NJ looks to be on track for a 16,000 foreclosure number in 2020, representing a 58% decline.  This could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic and how many bankruptcies we see in later 2020.

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our most prolonged economic expansion period in our country’s history with 125+ months of positive job gains.
      • The GDP was still rising (although its rate of increase seems to be slowing a bit).
      • And, wages are up significantly at the same time.
      • Interest rates have decreased to just under 3.5%.
      • Foreclosures rates have almost normalized.

     

    • In April and May:
      • We have seen a sharp spike in unemployment
      • The GDP has been adversely affected
      • Wage growth is Affected.
      • Interest rates are bouncing around (but holding).
      • Inventory levels are down by 35+%. This is due to listings are being withheld.
      • Buying activity is also down about 35%
      • It was as if someone had hit the “pause” button on the real estate market.
      • The balance of 2020 real estate was under extreme pressure as a result.
      • Current Real estate values do not seem to be affected as to the lack of inventory.

     

    • In June, July, and August, we saw new listings come on the market at a faster pace, and ales picked up at an even higher rate. The total inventory dropped as a result, and we saw impressive sales numbers. A true seller’s market resulted.

     

    Changes in Lifestyle:

    • The average age at marriage is now in the mid to late 30s (up seven years from just a decade ago).
    • Families usually have only one to two children due to costs and the ability to choose.
      70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
    • As a result of job opportunities, buyers were gravitating to areas within 15 miles of NYC with sound mass transportation systems.
    • But, we are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot as well as social unrest.
    • 80% of consumers still perceive homeownership as part of the American Dream. It is just what they want to buy (or rent) that has changed.
    • Buyers are not looking for open floor plans as in the past and are gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference. Work, education, and exercise or play areas are now key.
    • Also, many late millennials have accelerated their home buying activities based on the last six months.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of how many workers will gravitate away from the city as they adapt to working from home and a modified lifestyle.
    • The “Great American Move” is a term that we are starting to see for this new life-style.
    • 60% of all new housing starts in 2020 in NJ were in the rental sector, and, the 2020 numbers will surpass that.  This is contributing to the lack of new construction and inventory

    Market conditions:

    • What a difference 5+ months make!
    • Consumer confidence was put on pause (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
    • The recent civil unrest has further affected this.
    • The above items were affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
    • In June, July, and August, we saw a total reversal on the sales side and supply and demand effect as the lack of inventory and high buyer demand keep prices at current levels.
    • Most consumers will still see homeownership as a sound investment.
    • And, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.
    • The total effect was helped by our having such a strong economy and real estate going into the pandemic.
    • The current seller’s market has resulted as we currently have more buyers than sellers.
    • People usually buy and sell homes based on life events. This will not change. Life events will go on.
    • And never before low seen interest rates have helped this situation to reverse.
    • We are hoping to see a continued substantial spike up as things are better understood, and people get back to a normal life.
    • The latest unemployment dips should surly have and effect on the market in June, and we are starting to see more listings coming on to the market.
    • It seems that the spring market starts to appear more late-summer and lasts until late in 2020.
    • Naturally, this all depends on not seeing a pronounced spike-up in the virus.

    Forecast:

    • The effect of the COVID-19 pandemic now seems to continue to correct itself (at least in our area).
    • The economy is continuing to recover from the recent drops in the unemployment numbers.
    • And this will affect the following:
      • Current and future real estate values (including any appreciation in the foreseeable future)
      • The amount of inventory available (hopefully we are starting to bottom out at -35%)
      • The ability for some buyers to get a mortgage
      • There could be more  possible foreclosures (this is way out)
    • Prime Interest rates have dropped several times in the past months plus additional quantitive easing to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
    • Inventory supply will hopefully start to increase over the next few months.
    • But, as we have a more substantial confidence level in having things under control, the housing market should have a strong continued bounce-back or upward spike due to:
      • The economy and housing market both being very strong going into the current COVID-19 issue.
      • Pent up demand and a spring market were pushed out till further in 2020.
      • Life events (as mentioned earlier) will still happen and will surely drive the pent up demand.
      • Lower than ever mortgage rates.
    • Due to the COVID-19 and recent unrest in NYC, we are starting to see more interest in living in more suburban counties such as Hunterdon and Somerset.
    • Also, people have found that working from home is a reality, and we will probably see less commuting as things start to open up once again.
    • What were once “bedroom” communities are changing to” live, work, play” communities bringing lots of change to our local economies.
    • More attention is now given to horses with pools and less open areas which lend themselves to working and studying at home.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need to adapt to this.
    • Local property values are forecasted to see near flat to plus 5% appreciation, depending on their location and price points.

    Wow.  That is a lot to digest.  And it is changing daily, but seems to be heading in the right direction for now.  For clarity and understanding, I am always available if you want to talk and better understand how this might affect your particular situation.

     

    Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions in presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability. You can contact me at (908) 238-0118.

     

    You can ask me a question or request a monthly copy of this newsletter here.

 

Somerset County's Real Estate Market Conditions September 2020