Hunterdon County NJ Real Estate Market Conditions October 2018

Hunterdon County NJ Real Estate Market Conditions October 2018

Hunterdon County NJ Real Estate Market Conditions October 2018

Hunterdon County's Real Estate Market Conditions

The Hunterdon County NJ Residential Real Estate Market Conditions October 2018 Report, compiled by Joe Peters, walks people through the economic and human behaviors that influence local markets. You will come away knowing what is happening and why and be better informed to make home buying and selling decisions.

What is happening?

  1. Clinton Township
  2. Flemington
  3. Raritan Township
  4. Readington Township
  5. Clinton

Based on the last full month’s contract sales, statistics show a supply of approximately six months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 72 days on the market. 149 properties went “under contract” in September, down from 173 in the prior month. Newly listed properties in the same period totaled 212.

Hunterdon County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Months Supply
Condos/Town Houses * 42 34 118 3
Over 55 Communities * 5 4 17 4
$000K to $199K 19 30 82 3
$200K to $299K 35 31 119 4
$300K to $399K 35 43 132 3
$400K to $499K 39 19 145 8
$500K to $599K 33 14 162 12
$600K to $699K 21 6 107 18
$700K to $799K 5 4 46 12
$800K to $899K 10 1 40 40
$900K to $999K 3 1 25 25
$1,000K and Up 12 0 67
Totals for September 212 149 925 6
Average Price $502,069 $351,814 -29.9%
Average DOM 72
* Included in $ breakdowns

Hunterdon County Sales Breakdown Overview:

  • 83% of sales in houses < $500,000
  • 17 % of sales in houses > $500,000
  • 04 % percent of total sales (or 6 in total) in houses >$700,000

Hunterdon County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Alexandria Twp. 45 11 4
Bethlehem Twp. 30 7 4
Bloomsbury Boro. 11 3 4
Califon Boro. 7 1 7
Clinton Town 8 6 1
Clinton Twp. 92 14 7
Delaware Twp. 45 3 15
East Amwell Twp. 30 4 8
Flemington Boro. 14 7 2
Franklin Twp. 26 4 7
Frenchtown Boro. 11 0
Glen Gardner Boro. 15 5 3
Hampton Boro 10 1 10
High Bridge Boro. 16 3 5
Holland twp. 34 5 7
Kingwood Twp. 30 7 4
Lambertville City 29 6 5
Lebanon Boro. 3 2 2
Lebanon Twp. 47 5 9
Milford Boro. 15 2 8
RaritanTwp. 151 20 8
Readington Twp. 94 15 6
Stockton Boro. 2 0
Tewksbury Twp. 103 5 21
Union Twp. 44 8 6
West Amwell Twp. 13 5 3
Totals 925 149 6
Two areas in Hunterdon County reported no sales reported in the past month:
  • Frenchtown
  • Stockton

Three areas reported one or 2 sales each last month:

  • Califon
  • Hampton
  • Lambertville

Hotspots:

  • Clinton/Clinton Township – 20 sales
  • Raritan Township – 20 sales
  • Readington Township – 15 sales

Hotspot areas equaled 37% of the sales last month. The average new listing coming on the market last month neared $502,069. The average price of a unit going “under contract” neared $351,814 (30% less).

Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Plus, we can now tell you where people are moving into your area from and market to that area directly.  Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.

Why is it happening?

New Jersey’s Economic Drivers:

New Jersey Home Sales:

For the first time in three years, we have seen an improvement in the inventory situation (but is still below what is needed).  Let’s hope that it is the beginning of a trend.

An increase of .8% in home sales in NJ in Year to Date. This increase is being held back by a lack of inventory (the shelves are empty at the entry levels).

Activity concentrates in the under $400,000 market where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all other price points showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high end in towns where rail service to Manhattan is available.

At the same time, the number of homes offered for sale in New Jersey remained low (and dropped by 2% last month). The supply decreased by ~ nearly 750 homes, compared to a year ago.  Currently, ~31,000 fewer homes are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with some having only three months.  No county presently has more than nine months of supply.  The average was at 4.1 months compared to 4.1 months a year ago.

We still have an acute shortage of inventory in both Hunterdon and Somerset county in our more popular price points and locations which is the under $400k market.

Hunterdon and Somerset County have 1% more and 1% less inventory respectively than a year ago.  And, those counties have about 9 and 12% less inventory respectively than two years ago.

And, we have seen some initial gentle  “pull back” in 2018 as a reaction to what is considered “price sensitivity” towards some of the existing inventory.

Also, we are now seeing some millennials coming back into our local markets and buying homes (good news).

 

Interest Rates:

Interest rates are rising as a result of our strong economy.

The economy is strengthening, and Interest rates at the end of July rose slightly to around 4.65% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 4% mark. Five-year arms are just under the 3.925% range.

Consumer fears of steadily rising interest rates and slowly rising home prices are driving the current market demand. The Fed already instituted several initial increases in rates and are talking about additional ones. Industry analysts forecast to be nearly 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power and have already lost 6% with rate increases over the past few months.

The fear of increasing interest rates coupled with steadily increases in prices is current market activity.

 

National Job Front:

US unemployment rate has recently dropped to 3.7%, the lowest it has been in forty-nine years (since 1969)! And, there are forecasts that it will drop further.  This trend is expected to continue as a result of the recent tax and jobs reform.

On the national level, the US added nearly 1,650,000+ jobs in January thru August of 2018 and is trending towards 2.4 million added jobs by year-end (a nine percent increase over the prior year)

At the end of July, there were 6.9+ Million openings compared to nearly 6.2 Million unemployed persons, with unemployment being the lowest since December of 2000.

And the GDP is now more than 4% and predicted to keep expanding.

Consumer confidence is the highest since 2004.

Great news for the housing industry!

 

New Jersey Job Front:

The NJ unemployment rate stayed steady to 4.2%, bolstering consumer confidence in NJ as well.  In effect, NJ is rising with the national tide of nearly full employment.

NJ added 1,600 jobs in August, and 49,000+ jobs have been added in NJ year to date 2018 as compared to 31,000 for the same period in 2017, and if it continues, NJ could add over 70,000 jobs by year-end.

The level of jobs created was at a much higher level than in the past several years (a silver lining as these additions can afford to buy houses eventually?).

It also should be noted that these jobs are mostly in the northern half of the state.

 

Rental Market Trends:

We still have an extremely tight rental market!

Prior restrictive mortgage standards nudged Millennials to postpone home ownership in life later than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from the late 20’s to the mid 30’s over the past five years.  Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.

Rental prices in New Jersey rose ~ 5% in 2017, averaging nearly $1,500 per unit. Current vacancy rates in New Jersey rose to 2.7% with the in northern and southern NY and Philadelphia at 4+%.

We have seen a 2Q2018 rise in rental prices in Central NJ of 2.8% alone. With the demand being what it is, we see new construction in this sector rise almost 400%.

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 was a result of the loose lending standards of the early 2000’s and is actually at a good level.  Households with no children stand at 65%, reflecting the decline in our school population.

One article states that the average homeowner has a net wealth of over $230K while the same for a renter is only around $5K.  It also offers a stable place to live, an evident hedge against inflation and way to build wealth (a strong argument for home ownership).

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 to their discretionary income (including savings).  Makes one wonder where this all is heading…

 

New Jersey Foreclosures:

New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note:  Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #3 in the country at 2.8%, led by FL with 4.3% (mostly hurricane-related) & NY and followed by LA, MS, ME, DE, and PA.  The national baseline number sits at ~ 1.7%.

2017 foreclosure filings decreased slightly to 70,150+ or -5%, putting pressure on home prices in concentrated areas.  Base on the year to date results for 2018 could fall another 7% to around 65,000 filings.

 

Tax cuts and Jobs Act effect:

Three specific areas had appeared were concerns:

  1. State and Local Taxes (SALT) are now limited to a $10,000 deduction going forward.
  2. Mortgage and Interest Deductions (MID) are now limited to a maximum principal balance of $750,000.
  3. Home Equity Line of Credit (HELOC) Loan interest deductions is for the most part eliminated

The SALT fears were offset by the lower tax brackets.  It would appear that this was an unwarranted fear.

Although it is still too early to tell how these areas will impact total 2018 real estate values in New Jersey, they are sure to have some impact. New Jersey is one of the highest taxed states in the union, and our home values are also some of the highest. How this affects each of us on an individual basis needs to be better understood as there is some trade-off such as higher deductions and overall lower income brackets.

The higher income luxury market is probably most at risk.  It appears that you have to earn $400K and own $1 million property. And, there are some people in NJ that do, and they will be affected.  But, how it affects the overall incentive to own a home is still unfolding.

There were several proposals on the new tax code, and most consumers are not up to date on what passed.  It will take time for this information to be digested.

It also is evident that the out-migration from New Jersey to other more affordable states has continued.

In a nutshell, these changes appear to be having little impact to date, but there will be some very high-end people affected, and that will, in turn, affect that market…

That effect might slow the price growth in higher priced homes NJ and even turn into a deficit in some most affluent areas.

 

Real Estate Market Recap 

 

Economic conditions:

  • 2017 was the seventh straight year of 2 million + job gains.
  • Although improving in 2018, the NJ job situation had been declining for the past two years.
  • At 4.2% unemployment, NJ is almost 12% above the national average which is currently 3.7% (and forecasted to go down further).
  • The best paying and most attractive jobs are in NYC attracting the millennials in that direction.
  • Interest rates have already risen .75% since the first of the year are forecasted to rise another .25 to .5% by year’s end, taking almost 10% away from buyers buying power.
  • And, house prices are rising 6+ % in the popular housing price points further exasperating the situation.
  • Baby boomers are choosing to “stay put’ and update rather than “move up” to their dream house as it is no longer considered a sound investment (and a lot of times is simply not available) which is causing most of the housing shortage.
  • And there is no entry level construction going on in our area.  Just larger homes and new rentals.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage (as stated earlier, the shelves are empty in our starter housing price points).
  • Foreclosures are on the decline and to some extent are helping to offset fewer listings.
  • Also, there is confidence that the new tax and jobs act will further stimulate the economy with more jobs as the economy remains robust.
  • The new tax rules appear only to affect our very higher-end buyers.

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up seven years from just a decade ago).
  • Families usually have only one to two children due to costs and the ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than one person in them.
  • Demand for larger houses has diminished not only in NJ but everywhere.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 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.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work (truly a mismatch).
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

  • We are starting to see some warnings of an economic slowdown starting in late 2020 as the fed raises interest rates to curb inflation.
  • The effect on housing will probably be limited to curtailing the growth in appreciation and no loss in value.
  • But, in general, homeowners are sitting with more equity than ever (NJ reports 92% with positive equity) and are no longer using their homes as an ATM.  So, the effect of any slowdown on housing should be minimal (if at all).
  • Consumer confidence remains extremely high nation-wide based on the job and stock market increases.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with lack of inventory, there are fewer houses for sale.
  • Affordability will never be in this good of shape as interest and price increases start to eat into what you can afford.
  • Millennials make up 24% of our current homeowners with much more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales but price increases only in houses clustered in < $500,000 market where the first-time buyers and Millennials are focused.
  • The >$600K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.). The extreme high-end market has also seen some appreciation in 2018 so far.
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow and steady price growth at an annual average of 3 to 4%.  This is higher in the under $400K market.
  • There is an acute shortage of inventory in both Hunterdon and Somerset County. In our more popular price points and locations, this holds back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • If we had more inventory, we could sell more houses.  It is simple.  And, we have started to see inventory increase over the past two months. As a result, 2019 can be a boom for resales.
  • In 2017 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2018 promises to be even stronger and closer to 5 %(without factoring in any tax impact).
  • Mortgage delinquency is normalizing.

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 24 + months.  And, there most likely will be only an impact on the rate of price appreciation if this happens.
  • Interest rates will Climb to about 5% by year-end further decreasing buying power.
  • Home prices will rise by an average of another 3% during that same period (this will depend on your price point and location) further decreasing buying power.
  • Supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs seem to be resulting from the Tax and Jobs act (look at the help wanted signs).
  • For the first time in memory, the US is reporting 6.8+ million open jobs and only 6 million unemployed.
  • We now need to match the skills of the unemployed to the job openings to prosper further as many four year degrees currently being obtained, are not useful in the current job market. It may also open up the need for inward migration of workers to out the economy.
  • The affordability index shows that there is room for much more sales, we need the increase in inventory.  The most affordable time to buy is now!
  • Some decrease in moderate prices home ownership could result in the raising of the standard deduction.
  • Some high-end fall-out could result in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market will flourish as a result of creating more buying demand.
  • Mid-term elections effect is a total unknown at this point.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

 

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for 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.

 


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Hunterdon County NJ Real Estate Market

Hunterdon County’s Real Estate Market Conditions | September 2018

Hunterdon County, NJ

 Real Estate Market Conditions | September 2018

Hunterdon County's Real Estate Market Conditions

Get ahead of the Hunterdon County NJ real estate market with Coldwell Banker Residential Broker sales associate, Joe Peters.

This Market Update will not only show you what is happening in your local market area, but it will also explain why it is happening and what is contributing to these results.

“What” is happening

 

Hunterdon County New Jersey Real Estate Market Conditions (including):

  1. Clinton Township
  2. Flemington
  3. Raritan Township
  4. Readington Township
  5. Clinton

Based on the last full month’s contract sales, statistics show a supply of approximately five months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 65 days on the market. 173 properties went “under contract” in August, up from 156 in the prior month. Newly listed properties in the same period totaled 212.

Hunterdon County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings
Condos/Town Houses * 45 44 120
Over 55 Communities * 4 2 20
$000K to $199K 23 31 100
$200K to $299K 26 31 106
$300K to $399K 48 35 152
$400K to $499K 34 25 134
$500K to $599K 30 26 152
$600K to $699K 24 15 115
$700K to $799K 8 5 50
$800K to $899K 7 1 36
$900K to $999K 6 1 26
$1,000K and Up 6 3 63
Totals for August 212 173 934
Average Price $477,250 $402,470 -15.7%
Average DOM 65
* Included in $ breakdowns

Hunterdon County Sales Breakdown Overview:

  • 71% of sales in houses < $500,000
  • 29 % of sales in houses > $500,000
  • 06 % percent of total sales (or 10 in total) in houses >$700,000

Hunterdon County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Alexandria Twp. 52 9 6
Bethlehem Twp. 32 7 5
Bloomsbury Boro. 11 4 3
Califon Boro. 6 0
Clinton Town 14 5 3
Clinton Twp. 94 21 4
Delaware Twp. 37 2 19
East Amwell Twp. 31 3 10
Flemington Boro. 14 3 5
Franklin Twp. 24 1 24
Frenchtown Boro. 9 0
Glen Gardner Boro. 13 4 3
Hampton Boro 13 0
High Bridge Boro. 18 5 4
Holland twp. 30 7 4
Kingwood Twp. 33 3 11
Lambertville City 27 7 4
Lebanon Boro. 4 1 4
Lebanon Twp. 45 9 5
Milford Boro. 14 1 14
RaritanTwp. 149 35 4
Readington Twp. 97 25 4
Stockton Boro. 3 1
Tewksbury Twp. 99 6 17
Union Twp. 48 10 5
West Amwell Twp. 17 4 4
Totals 934 173 5

Three areas in Hunterdon County reported no sales reported in the past month:

  • Califon
  • Frenchtown
  • Hampton

Four areas reported one or 2 sales each last month:

  • Delaware
  • Lebanon Boro.
  • Milford
  • Stockton

Hotspots:

  • Clinton/Clinton Township – 26 sales
  • Raritan Township – 35 sales
  • Readington Township – 25 sales

Hotspot areas equaled 55% of the sales last month. The average new listing coming on the market last month neared $477,250. The average price of a unit going “under contract” neared $402,470 (16% less).

Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Plus, we can now tell you where people are moving into your area from and market to that area directly.  Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.

 

The initial section of this Market Report reported on “What” is happening.

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

For the first time in three years, we have seen an improvement in the inventory situation (but is still below what is needed).  Let’s hope that it is the beginning of a trend.

An increase of 1% in home sales in NJ in Year to Date. This is being held back somewhat by a lack of inventory.

Activity concentrates in the under $400,000 market where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all other price points showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high end in towns where rail service to Manhattan is available.

At the same time, the number of homes offered for sale in New Jersey remained low (but has been improving). The supply decreased by ~ nearly 1,000 homes, compared to a year ago.  Currently, ~30,000 fewer homes are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with some having only three months.  No county presently has more than nine months of supply.  The average was at 4.1 months compared to 4.3 months a year ago.

We still have an acute shortage of inventory in both Hunterdon and Somerset county in our more popular price points and locations which is the under $400k market.

Hunterdon and Somerset County have 1% more and 5% less inventory respectively than a year ago.  And, those counties have about 9 and 15% less inventory respectively than two years ago.

The fear of increasing interest rates based on future increases and the Fed’s slightly loosening lending standards are driving the current market activity.

 

Interest Rates:

Interest rates are holding.

The economy is strengthening, and Interest rates at the end of July fall slightly to around 4.5% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 4% mark. Five-year arms are just under the 3.825% range.

Consumer fears of steadily rising interest rates and slowly rising home prices are driving the current market demand. The Fed already instituted several initial increases in rates and are talking about additional ones. Industry analysts forecast to be nearly 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power and have already lost 6% with rate increases over the past few months.

Combine this with the steadily increasing prices and consumer confidence, and you have what is driving our current market activity

 

National Job Front:

US unemployment rate has risen a bit to 3.9%, the lowest it has been in eighteen years! This trend is expected to continue as a result of the recent tax and jobs reform.

On the national level, the US added nearly 1,500,000+ jobs in January thru July of 2018 and is trending towards 2.5 million added jobs by year-end (a sixteen percent increase over the prior year)

At the end of June, there were 6.7+ Million openings compared to nearly 6.6 Million unemployed persons, with unemployment being the lowest since December of 2000.

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004.

Great news for the housing industry!

 

New Jersey Job Front:

The NJ unemployment rate fell slightly to 4.2%, bolstering consumer confidence in NJ as well.

NJ added 3,000 jobs in July, and 33,700+ jobs have been added in NJ year to date 2018 as compared to 21,700 for the same period in 2017, and if it continues, NJ could add over 100,000 jobs by year-end.

The level of jobs created was at a much higher level than in the past several years (a silver lining?).

It also should be noted that these jobs are concentrated in the northern half of the state.

 

Rental Market Trends:

We still have an extremely tight rental market!

Prior restrictive mortgage standards nudged Millennials to postpone home ownership in life later than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from the late 20’s to the mid 30’s over the past five years.  Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.

Rental prices in New Jersey rose ~ 5% in 2017, averaging nearly $1,500 per unit. Current vacancy rates in New Jersey rose to 3.8% with the in northern and southern NY and Philadelphia at 4+%.

We have seen a 2Q2018 rise in rental prices in Central NJ of 2.8% alone. With the demand being what it is, we see new construction in this sector rise almost 400%.

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.  Households with no children stand at 65%, reflecting the decline in our school population.

One article states that the average homeowner has a net wealth of over $230K while the same for a renter is only around $5K.  It also offers a stable place to live, an evident hedge against inflation and way to build wealth (a strong argument for home ownership).

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 to their discretionary income (including savings).  Makes one wonder where this all is heading…

 

New Jersey Foreclosures:

New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note:  Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #4 in the country at 2.8%, led by FL with 4.3% (mostly hurricane-related) & NY, LA, MS and followed by, ME, DE, and PA.  The national baseline number sits at ~ 1.7%.

2017 foreclosure filings decreased slightly to 70,150+ or -5%, putting pressure on home prices in concentrated areas.  Base on the year to date results for 2018 could fall another 7% to around 65,000 filings.

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

  1. State and Local Taxes (SALT) are now limited to a $10,000 deduction going forward.
  2. Mortgage and Interest Deductions (MID) are now limited to a maximum principal balance of $750,000.
  3. Home Equity Line of Credit (HELOC) Loan interest deductions is for the most part eliminated

Although it is still too early to tell how these areas will impact total 2018 real estate values in New Jersey, they are sure to have some impact. New Jersey is one of the highest taxed states in the union, and our home values are also some of the highest. How this affects each of us on an individual basis needs to be better understood as there is some trade-off such as higher deductions and overall lower income brackets.

The higher income luxury market is probably most at risk.  But how it affects the overall incentive to own a home is still unfolding.

There were several proposals on the new tax code, and most consumers are not up to date on what passed.  It will take time for this information to be digested.

It also is evident that the out-migration from New Jersey to other more affordable states has continued.

In a nutshell, these changes appear to be having little impact to date, but there will be some very high-end people affected, and that will, in turn, affect that market…

That effect might slow the price growth in higher priced homes NJ and even turn into a deficit in some most affluent areas.

 

Real Estate Market Recap 

 

Economic conditions:

  • 2017 was the seventh straight year of 2 million + job gains.
  • Although improving in 2018, the NJ job situation had been declining for the past two years.
  • At 4.2% unemployment, NJ is almost 8% above the national average which is currently 3.9%.
  • The best paying and most attractive jobs are in NYC attracting the millennials in that direction.
  • Interest rates have already risen .5% since the first of the year are forecasted to rise another .25 to .5% by year’s end, taking almost 10% away from buyers buying power.
  • And, house prices are rising 6+ % in the popular housing price points further exasperating the situation.
  • Baby boomers are choosing to “stay put’ and update rather than “move up” to their dream house as it is no longer considered a sound investment (and a lot of times is simply not available) which is causing most of the housing shortage.
  • And there is no entry level construction going on in our area.  Just larger homes and new rentals.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage.
  • Foreclosures are on the decline and to some extent are helping to offset fewer listings.
  • Also, there is confidence that the new tax and jobs act will further stimulate the economy with more jobs as the economy remains robust.
  • The new tax rules appear only to affect our very higher-end buyers.

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up 7 years from just a decade ago).
  • Families usually have only one to two children due to costs and ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 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.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

  • We are starting to see some warnings of an economic slowdown in late 2020 as the fed raises interest rates to curb inflation, and this needs to be monitored.
  • But, in general, homeowners are sitting with more equity than ever and are no longer using their homes as an ATM.  So, the effect of any slowdown on housing should be minimal (if at all).
  • Consumer confidence remains extremely high nation-wide based on the job and stock market increases.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with lack of inventory, there are fewer houses for sale.
  • Millennials make up 24% of our current homeowners with more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales but price increases only in houses clustered in < $500,000 market where the first-time buyers and Millennials are focused.
  • The >$600K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.). The extreme high-end market has also seen some appreciation in 2018 so far.
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow and steady price growth at an annual 3 to 4%.  This is higher in the under $400K market.
  • There is an acute shortage of inventory in both Hunterdon and Somerset County. In our more popular price points and locations, this holds back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • In 2017 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2018 promises to be even stronger (without factoring in any tax impact).
  • Mortgage delinquency is normalizing.

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 18 + months.
  • Interest rates will Climb to about 5% by year-end further decreasing buying power.
  • Home prices will rise by an average of another 3% during that same period (this will depend on your price point and location).
  • Supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs seem to be resulting from the Tax and Jobs act.
  • For the first time in memory, the US is reporting 6+ million open jobs and only 6 million unemployed.
  • We now need to match the skills of the unemployed to the job openings to prosper further.
  • The affordability index shows that there is room for much more sales, we just need the increase in inventory.
  • Some decrease in moderate prices home ownership could result in the raising of the standard deduction.
  • Some high-end fall-out could result in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market will flourish as a result.
  • Mid-term elections effect is a total unknown at this point.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

 

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for 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.

 

 


Presented as a public service by:

Joe Peters Logo
 


Click Here to Real Estate Market Guides

NJ Residential Real Estate

Hunterdon County’s Real Estate Market Conditions | August 2018

Hunterdon County’s Real Estate Market Conditions | August 2018

Hunterdon County's Real Estate Market Conditions

Get ahead of the real estate market economic and behavior drivers in Hunterdon County, New Jersey with Coldwell Banker Residential Broker sales associate, Joe Peters.

This Market Update will not only show you what is happening in your local market area, but it will also explain why it is happening and what is contributing to these results.

“What” is happening

 

Hunterdon County New Jersey Real Estate Market Conditions (including):

  1. Clinton Township
  2. Flemington
  3. Raritan Township
  4. Readington Township
  5. Clinton

Based on the last full month’s contract sales, statistics show a supply of approximately six months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 59 days on the market. 156 properties went “under contract” in July, down from 204 in the prior month. Newly listed properties in the same period totaled 230.

Hunterdon County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings  Supply
Condos/Town Houses * 45 33 135 4
Over 55 Communities * 4 3 19 6
$000K to $199K 27 22 97 4
$200K to $299K 28 35 109 3
$300K to $399K 43 26 143 6
$400K to $499K 38 35 132 4
$500K to $599K 42 20 158 8
$600K to $699K 24 10 118 12
$700K to $799K 8 5 55 11
$800K to $899K 7 0 36
$900K to $999K 6 1 26 26
$1,000K and Up 7 2 71 36
Totals for July 230 156 945 6

 

Hunterdon County Sales Breakdown Overview:

  • 76 % of sales in houses < $500,000
  • 24 % of sales in houses > $500,000
  • 05 % percent of total sales (or 8 in total) in houses >$700,000

Hunterdon County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Alexandria Twp. 55 6 9
Bethlehem Twp. 34 6 6
Bloomsbury Boro. 13 4 3
Califon Boro. 4 1 4
Clinton Town 13 6 2
Clinton Twp. 104 13 8
Delaware Twp. 33 9 4
East Amwell Twp. 34 4 9
Flemington Boro. 14 6 2
Franklin Twp. 22 6 4
Frenchtown Boro. 7 2 4
Glen Gardner Boro. 11 8 1
Hampton Boro 12 1 12
High Bridge Boro. 20 4 5
Holland twp. 26 6 4
Kingwood Twp. 32 5 6
Lambertville City 29 3 10
Lebanon Boro. 5 1 5
Lebanon Twp. 46 6 8
Milford Boro. 14 1 14
RaritanTwp. 146 29 5
Readington Twp. 102 17 6
Stockton Boro. 3 0
Tewksbury Twp. 100 7 14
Union Twp. 49 3 16
West Amwell Twp. 17 2 9
Totals 945 156 6

One area in Hunterdon County reported no sales reported in the past month:

  • Stockton

Five areas reported one or 2 sales each last month:

  • Clinton (town)
  • Frenchtown
  • Hampton
  • Lebanon Boro.
  • Milford

Hotspots:

  • Clinton/Clinton Township – 19 sales
  • Raritan Township – 29 sales
  • Readington Township – 17 sales

Hotspot areas equaled 42% of the sales last month. The average new listing coming on the market last month neared $497,851. The average price of a unit going “under contract” neared $391,024 (22% less).

Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Plus, we can now tell you where people are moving into your area from and market to that area directly.  Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.

 

The initial section of this Market Report reported on “What” is happening.

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

An increase of 1% in home sales in NJ in Year to Date helped to record over 12,000 sales which is a record.

Activity concentrates in the <$400,000 market (which pulled back a little in June due to lack of inventory) where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all other price points showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high end in towns where rail service to Manhattan is available.

At the same time, the number of homes offered for sale in New Jersey remained low and had recently decreased. The supply decreased by ~ 4,000 homes, compared to a year ago.  Currently, ~30,000 fewer homes are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with some having only 2.7 months.  No county presently has more than eight months of supply.  The average is at 3.7 months compared to 3.9 months a year ago.

We have an acute shortage of inventory in both Hunterdon and Somerset county in our more popular price points and locations.

Hunterdon and Somerset County have 1 and 6% less inventory respectively than a year ago.  And, those counties have about 12 and 18% less inventory respectively than two years ago.

The fear of increasing interest rates based on future increases and the Fed’s slightly loosening lending standards are driving the current market activity.

 

Interest Rates:

The economy is strengthening, and Interest rates at the end of June fall slightly to around 4.53% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 4% mark. Five-year arms are just under the 3.875% range.

Consumer fears of steadily rising interest rates and slowly rising home prices are driving the current market demand. The Fed already instituted several initial increases in rates and are talking about additional ones. Industry analysts forecast to be nearly 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power and have already lost 6% with rate increases over the past few months.

Combine this with the steadily increasing prices and consumer confidence, and you have what is driving our current market activity

 

National Job Front:

US unemployment rate has risen a bit to 3.8%, the lowest it has been in eighteen years! This trend is expected to continue as a result of the recent tax reform.

On the national level, the US added nearly 1,300,000+ jobs in January thru June of 2018 and is trending towards 2.6 million added jobs by year-end.

At the end of May, there were 6.5+ Million openings compared to nearly 6 Million unemployed persons, with unemployment being the lowest since January 2001.

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004. Great news for the housing industry!

 

New Jersey Job Front:

The NJ unemployment rate fell slightly to 4.3%, bolstering consumer confidence in NJ as well.

NJ lost 500 jobs in June, and 32,700+ jobs have been added in NJ in the first four months of 2018 which was a significant improvement over 2017, and if it continues, NJ could add over 45,000 jobs by year-end.

The level of jobs created was at a much higher level than in the past several years (a silver lining?).

It also should be noted that these jobs are concentrated in the northern half of the state.

 

Rental Market Trends:

We still have an extremely tight rental market!

Prior restrictive mortgage standards nudged Millennials to postpone home ownership in life later than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from 29 to 37 years over the past five years.  Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.

Rental prices in New Jersey rose ~ 5% in 2017, averaging nearly $1,500 per unit. Current vacancy rates in New Jersey rose to 3.8% with the in northern and southern NY and Philadelphia at 4+%.

We have seen a 2Q2018 rise in rental prices in Central NJ of 2.8% alone. With the demand being what it is, we see new construction in this sector rise almost 400%.

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 64%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 230,000+ additional renters in our state.  Households with no children stand at 65%, reflecting the decline in our school population.

 

New Jersey Foreclosures:

New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note:  Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #2 in the country at 3.0%, led by only FL with 4.3% (mostly hurricane-related) and followed by NY, LA, MS, ME, TX, DE, MD, and PA.  The national baseline number sits at ~ 1.7%.

2017 foreclosure filings decreased slightly to 70,150+ or -5%, putting pressure on home prices in concentrated areas.  Base on the first five months of results 2018 could fall another 6% to around 66,000 filings.

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

  1. State and Local Taxes (SALT) are now limited to a $10,000 deduction going forward.
  2. Mortgage and Interest Deductions (MID) are now limited to a maximum principal balance of $750,000.
  3. Home Equity Line of Credit (HELOC) Loan interest deductions is for the most part eliminated

Although it is still too early to tell how these areas will impact total 2018 real estate values in New Jersey, they are sure to have some impact. New Jersey is one of the highest taxed states in the union, and our home values are also some of the highest. How this affects each of us on an individual basis needs to be better understood as there is some trade-off such as higher deductions and overall lower income brackets.

Obviously, the higher income luxury market is probably most at risk.  But how it affects the overall incentive to own a home is still unfolding.

There were several proposals on the new tax code, and most consumers are not up to date on what actually passed.  It will take time for this information to be digested.

It also is evident that the out-migration from New Jersey to other more affordable states has continued.

In a nutshell, these changes appear to be having little impact to daye, but there will be some very high-end people affected, and that will, in turn, affect that market…

That effect might slow the price growth in higher priced homes NJ and even turn into a deficit in some most affluent areas.

 

Real Estate Market Recap 

 

Economic conditions:

  • 2017 was the seventh straight year of 2 million + job gains.
  • Although improving in 2018, the NJ job situation had been declining for the past two years.
  • At 4.4% unemployment, NJ is almost 10% above the national average which is currently 4.0%.
  • The best paying and most attractive jobs are in NYC luring the millennials in that direction.
  • Interest rates have already risen .5% in recent months are forecasted to rise another .5% by year’s end, taking almost 10% away from buyers buying power.
  • And, house prices are rising 6+ % in the popular housing price points further exasperating the situation.
  • Baby boomers are choosing to “stay put’ and update rather than “move up” to their dream house as it is no longer considered a sound investment (and a lot of times is simply not available) which is causing most of the housing shortage.
  • And there is no entry level construction going on in our area.  Just larger homes and new rentals.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage.
  • Foreclosures are on the decline and to some extent are helping to offset fewer listings.
  • Also, there is confidence that the new tax and jobs act will further stimulate the economy with more jobs.
  • The new tax rules appear only to affect our very higher-end buyers.

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up 7 years from just a decade ago).
  • Families usually have only one to two children due to costs and ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 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.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

  • We are starting to see some warnings of a slowdown in 2020, and this needs to be monitored.
  • But, in general, homeowners are sitting with more equity than ever and are not longer using their homes as an ATM.  So, the effect of any slowdown on housing should be minimal (if at all).
  • Consumer confidence remains extremely high nation-wide based on the job and stock market increases.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with lack of inventory, there are fewer houses for sale.
  • Millennials make up 24% of our current homeowners with more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales but price increases only in houses clustered in < $500,000 market where the first-time buyers and Millennials are focused.
  • The >$600K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.). The extreme high-end market has also seen some appreciation in 2018 so far.
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow and steady price growth at an annual 3 to 4%.
  • There is an acute shortage of inventory in both Hunterdon and Somerset county. In our more popular price points and locations, this holds back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • In 2017 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2018 promises to be even stronger (without factoring in any tax impact).
  • Mortgage delinquency is normalizing.

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 18 + months.
  • Interest rates will Climb to about 5% by year-end further decreasing buying power.
  • Home prices will rise by an average of another 3% during that same period (this will depend on your price point and location).
  • Supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs seem to be resulting from the Tax and Jobs act.
  • For the first time in memory, the US is reporting 6+ million pen jobs and only 6 million unemployed.
  • We now need to match the skills of the unemployed to the job openings to prosper further.
  • The affordability index shows that there is room for much more sales, we just need the inventory.
  • Some decrease in moderate prices home ownership could result in the raising of the standard deduction.
  • Some high-end fall-out could result in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market will flourish as a result.
  • Mid-term elections effect is a total unknown at this point.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

 

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions 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.

 

 


Presented as a public service by:

Joe Peters Logo
 


Click Here to Real Estate Market Guides

Hunterdon County’s Real Estate Market Conditions | July 2018

 

Hunterdon County’s Real Estate Market Conditions | July 2018

Hunterdon County's Real Estate Market Conditions

Get ahead of the real estate market economic and behavior drivers in Hunterdon County, New Jersey with Coldwell Banker Residential Broker sales associate, Joe Peters.

This Market Update will not only show you what is happening in your local market area, but it will also explain why it is happening and what is contributing to these results.

“What” is happening

 

Hunterdon County New Jersey Real Estate Market Conditions (including):

  1. Clinton Township
  2. Flemington
  3. Raritan Township
  4. Readington Township
  5. Clinton

Based on the last full month’s contract sales, statistics show a supply of approximately four months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 56 days on the market. 204 properties went “under contract” in June, up from 200 in the prior month. Newly listed properties in the same period totaled 281.

Hunterdon County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Month’s Supply
Condos/Town Houses * 45 45 121 3
Over 55 Communities * 4 1 21 21
$000K to $199K 24 30 87 3
$200K to $299K 37 39 115 3
$300K to $399K 36 45 112 2
$400K to $499K 54 26 140 5
$500K to $599K 38 28 146 5
$600K to $699K 42 15 123 8
$700K to $799K 19 8 56 7
$800K to $899K 10 7 29 4
$900K to $999K 3 1 22 22
$1,000K and Up 18 5 72 14
Totals for June 281 204 902 4
Average Price $548,367 $422,023 -23.0%
Average DOM 56
* Included in $ breakdowns

Hunterdon County Sales Breakdown Overview:

  • 69 % of sales in houses < $500,000
  • 31 % of sales in houses > $500,000
  • 10 % percent of total sales (or 21 in total) in houses >$700,000

Hunterdon County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Alexandria Twp. 50 10 5
Bethlehem Twp. 36 5 7
Bloomsbury Boro. 16 1 16
Califon Boro. 5 2 3
Clinton Town 18 6 3
Clinton Twp. 91 23 4
Delaware Twp. 44 6 7
East Amwell Twp. 35 4 9
Flemington Boro. 14 5 3
Franklin Twp. 25 10 3
Frenchtown Boro. 10 2 5
Glen Gardner Boro. 15 4 4
Hampton Boro 11 4 3
High Bridge Boro. 16 8 2
Holland twp. 24 12 2
Kingwood Twp. 28 2 14
Lambertville City 27 7 4
Lebanon Boro. 3 3 1
Lebanon Twp. 43 9 5
Milford Boro. 11 1 11
RaritanTwp. 130 40 3
Readington Twp. 97 21 5
Stockton Boro. 2 0
Tewksbury Twp. 101 10 10
Union Twp. 38 8 5
West Amwell Twp. 12 1 12
Totals 902 204 4

No area in Hunterdon County reported no sales reported in the past month:

Six areas reported one or 2 sales each last month:

  • Califon
  • Franklin Twp.
  • Frenchtown
  • Lambertville
  • Lebanon Boro.
  • West Amwell

Hotspots:

  • Clinton/Clinton Township – 29 sales
  • Raritan Township – 40 sales
  • Readington Township – 21 sales

Hotspot areas equaled 44% of the sales last month. The average new listing coming on the market last month neared $548,367. The average price of a unit going “under contract” neared $422,023 (23% less).

Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Plus, we can now tell you where people are moving into your area from and market to that area directly.  Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.

The initial section of this Market Report reported on “What” is happening.

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

An increase of 2% in home sales in NJ in May (vs. the same month last year) helped to record over 12,000 sales which is an all-time record.  YTD that number is up over 1%.

Activity concentrates in the <$400,000 market (which actually pulled back a little in May due to lack of inventory) where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all other price points showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high end in towns where rail service to Manhattan is available.

At the same time, the number of homes offered for sale in New Jersey remained low and had recently decreased. The supply decreased by ~ 2,500 homes, compared to a year ago.  Currently, ~31,000 fewer homes are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with some having only 2.5 months.  no county presently has more than 8 months of supply.  The average is at 3.5 months compared to 3.8 months a year ago.

We have an acute shortage of inventory in both Hunterdon and Somerset county in our more popular price points and locations.

Hunterdon and Somerset County have 8 and 5% less inventory respectively than a year ago.  And, those counties have about 15 and 17% less inventory respectively than two years ago.

The fear of increasing interest rates based on future increases and the Fed’s slightly loosening lending standards are driving the current market activity.

 

Interest Rates:

The economy is strengthening, and Interest rates at the end of June fall slightly to around 4.57% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 4% mark. Five-year arms are just under the 3.875% range.

Consumer fears of steadily rising interest rates and slowly rising home prices are driving the current market demand. The Fed already instituted several initial increases in rates and are talking about additional ones. Industry analysts forecast to be nearly 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power and have already lost 6% with rate increases over the past few months.

Combine this with the steadily increasing prices and consumer confidence, and you have what is driving our current market activity

 

National Job Front:

US unemployment rate has dropped to 3.8%, the lowest it has been in eighteen years! This trend is expected to continue as a result of the recent tax reform.

On the national level, the US added nearly 1,00,000+ jobs in January thru May of 2018 and is trending towards 2.6 million added jobs by year-end.

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004. Great news for the housing industry!

 

New Jersey Job Front:

The NJ unemployment rate fell slightly to 4.4%, bolstering consumer confidence in NJ as well.

NJ gained 4,100 jobs in May, 32,000+ jobs were added in NJ in the first four months of 2018 which was a significant improvement over 2017 and if it continues, NJ could add over 75,000 jobs by year-end.

The level of jobs created was at a much higher level than in the past several years (a silver lining?).

It also should be noted that these jobs are concentrated in the northern half of the state.

 

Rental Market Trends:

We still have an extremely tight rental market!

Prior restrictive mortgage standards nudged Millennials to postpone home ownership in life later than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from 29 to 37 years over the past five years.  Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.

Rental prices in New Jersey rose ~ 5% in 2017, averaging nearly $1,500 per unit. Current vacancy rates in central New Jersey rose to 2.5% with the in northern and southern NY and Philadelphia at 4.1%.

With the demand being what it is, we are seeing new construction in this sector rise almost 400%.

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 64%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 230,000+ additional renters in our state.  Households with no children stand at 65%, reflecting the decline in our school population.

 

New Jersey Foreclosures:

New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In tight real estate market, these foreclosures sell at a small discount.

Note:  Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #2 in the country at 3.1%, led by only FL with 4.6% (mostly hurricane-related) and followed by NY, LA, MS, ME, TX, DE, MD, and PA.  The national baseline number sits at ~ 1.7%.

2017 foreclosure filings decreased slightly to 70,150+ or -5%, putting pressure on home prices in concentrated areas.  Base on the first five months of results 2018 could fall another 7% to around 65,000 filings.

 

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

  1. State and Local Taxes (SALT) are now limited to a $10,000 deduction going forward.
  2. Mortgage and Interest Deductions (MID) are now limited to a maximum principal balance of $750,000.
  3. Home Equity Line of Credit (HELOC) Loan interest deductions is for the most part eliminated

Although it is too early to tell how these areas will impact total 2018 real estate values in New Jersey, they are sure to have some impact. New Jersey is one of the highest taxed states in the union, and our home values are also some of the highest. How this affects each of us on an individual basis needs to be better understood as there is some trade-off such as higher deductions and overall lower income brackets.

Obviously, the higher income luxury market is probably most at risk.  But how it affects the overall incentive to own a home is still unfolding.

There were several proposals on the new tax code, and most consumers are not up to date on what actually passed.  It will take time for this information to be digested.

It also is evident that the out-migration from New Jersey to other more affordable states has continued.

In a nutshell, these changes appear to be having little impact, but there will be some very high-end people affected, and that will, in turn, affect that market…

That effect might slow the price growth in higher priced homes NJ and even turn into a deficit in some most affluent areas.

Real Estate Market Recap 

Economic conditions:

  • 2017 was the seventh straight year of 2 million + job gains.
  • Although improving in 2018, the NJ job situation had been declining for the past two years.
  • At 4.4% unemployment, NJ is almost 15% above the national average which is currently 3.8%.
  • The best paying and most attractive jobs are in NYC.
  • Interest rates have already risen .675% in recent months are forecasted to rise another .5% by year’s end, taking almost 10% away from buyers buying power.
  • And, house prices are rising 5+ % in the popular housing price points further exasperating the situation.
  • Baby boomers are choosing to “stay put’ rather than “move up” to their dream house as it is no longer considered a sound investment which is causing most of the housing shortage.
  • And there is no entry level construction going on in the area.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage.
  • Foreclosures are on the decline and to some extent are helping to offset fewer listings.
  • Also, there is confidence that the new tax and jobs act will further stimulate the economy with more jobs
  • The new tax rules appear only to affect the very higher-end buyers.

Changes in lifestyle:

  • Average age at marriage is now in the late 30’s (up 7 years from just a decade ago).
  • Families are usually having only one to two children.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 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.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County has reported more deaths than births.

Market conditions:

  • Consumer confidence remains extremely high nation-wide based on the job and stock market increases.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with lack of inventory, there are fewer houses for sale.
  • Millennials make up 24% of our current homeowners with more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales but price increases only in houses clustered in < $500,000 market where the first-time buyers and Millennials are focused.
  • The >$600K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.). The extreme high-end market has also seen some appreciation in 2018 so far.
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow and steady price growth at an annual 3 to 4%.
  • There is an acute shortage of inventory in both Hunterdon and Somerset county. In our more popular price points and locations, this holds back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • In 2017 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2018 promises to be almost as strong (without factoring in any tax impact).
  • Mortgage delinquency is normalizing.

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 18 + months.
  • Interest rates will Climb to about 5% by year-end further decreasing buying power.
  • Home prices will rise by an average of another 3 to 4+% during that same period (this will depend on your price point and location).
  • Supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs are resulting from the Tax and Jobs act.
  • The affordability index shows that there is room for much more sales, we just need the inventory.
  • Some decrease in home ownership could result in the raising of the standard deduction.
  • Some high-end fall-out could result in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market will flourish as a result.
  • Mid-term elections effect is a total unknown at this point.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

Call me at 908-238-0118 to discuss your situation, and I’ll put my expertise and access to big data to work for you.

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions 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.

 


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Hunterdon County’s Real Estate Market Conditions | June 2018

Hunterdon County’s Real Estate Market Conditions | June 2018

Hunterdon County's Real Estate Market Conditions

Get ahead of the real estate market economic and behavior drivers in Hunterdon County, New Jersey with Coldwell Banker Residential Broker sales associate, Joe Peters.

This Market Update will not only show you what is happening in your local market area, but it will also explain why it is happening and what is contributing to these results.

“What” is happening

 

Hunterdon County New Jersey Real Estate Market Conditions (including):

  1. Clinton Township
  2. Flemington
  3. Raritan Township
  4. Readington Township
  5. Clinton

Based on the last full month’s contract sales, statistics show a supply of approximately four months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 56 days on the market. 200 properties went “under contract” in April, down from 206 in the prior month. Newly listed properties in the same period totaled 268.

Hunterdon County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Month’s Supply
Condos/Town Houses * 41 49 122 2
Over 55 Communities * 5 2 18 9
$000K to $199K 19 38 91 2
$200K to $299K 44 42 118 3
$300K to $399K 43 42 124 3
$400K to $499K 39 31 120 4
$500K to $599K 49 23 152 7
$600K to $699K 36 14 115 8
$700K to $799K 11 6 51 9
$800K to $899K 7 1 29 29
$900K to $999K 6 1 28 28
$1,000K and Up 14 2 70 35
Totals for May 268 200 898 4
Average Price $541,719 $378,184 -30.2%
Average DOM 56
* Included in $ breakdowns

Hunterdon County Sales Breakdown Overview:

  • 77 % of sales in houses < $500,000
  • 23 % of sales in houses > $500,000
  • 05 % percent of total sales (or 10 in total) in houses >$700,000

Hunterdon County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Alexandria Twp. 47 9 5
Bethlehem Twp. 32 4 8
Bloomsbury Boro. 14 5 3
Califon Boro. 4 2 2
Clinton Town 21 5 4
Clinton Twp. 98 19 5
Delaware Twp. 41 6 7
East Amwell Twp. 30 4 8
Flemington Boro. 16 10 2
Franklin Twp. 28 2 14
Frenchtown Boro. 26 2 13
Glen Gardner Boro. 14 5 3
Hampton Boro 13 3 4
High Bridge Boro. 16 7 2
Holland Twp. 28 6 5
Kingwood Twp. 25 6 4
Lambertville City 32 2 16
Lebanon Boro. 5 2 3
Lebanon Twp. 39 8 5
Milford Boro. 13 3 4
RaritanTwp. 132 45 3
Readington Twp. 90 28 3
Stockton Boro. 2 3 1
Tewksbury Twp. 89 7 13
Union Twp. 32 5 6
West Amwell Twp. 11 2 6
Totals 898 200 4

Hunterdon County Sales Breakdown Detailed:

No area in Hunterdon County reported no sales reported in the past month:

Six areas reported one or 2 sales each last month:

  • Califon
  • Franklin Twp.
  • Frenchtown
  • Lambertville
  • Lebanon Boro.
  • West Amwell

Hotspots:

  • Clinton/Clinton Township – 24 sales
  • Raritan Township – 43 sales
  • Readington Township – 28 sales

Hotspot areas equaled 48% of the sales last month. The average new listing coming on the market last month neared $541,719. The average price of a unit going “under contract” neared $378,184 (30% less).

Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Plus, we can now tell you where people are moving into your area from and market to that area directly.  Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.

The initial section of this Market Report reported on “What” is happening.

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

Home purchase demand in the first two months of 2018 in New Jersey reached a new record and representing a 2% increase over the prior year. In March they went down by 6% netting a break even for the quarter. In April an additional 11,000 purchases were recorded putting NJ at about even for the year so far.

The effect of the new Tax and Jobs Act seems to be minimal.

Activity concentrates in the <$400,000 market (which actually pulled back a little in March due to lack of inventory) where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all other price points showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high end in towns where rail service to Manhattan is available.

At the same time, the number of homes offered for sale in New Jersey remained low and had recently decreased. The supply decreased by ~ 3,700 homes, compared to a year ago.  Currently, ~32,000 fewer homes are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with some having only 2.5 months.  no county presently has more than 8 months of supply.  The average is at 3.7 months compared to 4.2 months a year ago.

We have an acute shortage of inventory in both Hunterdon and Somerset county in our more popular price points and locations.

Hunterdon and Somerset County have 6% less inventory respectively than a year ago.  And, those counties have about 17 and 20% less inventory respectively than two years ago.

The fear of increasing interest rates based on future increases and the Fed’s slightly loosening lending standards are driving the current market activity.

 

Interest Rates:

The economy is strengthening, and Interest rates at the end of April rose slightly to around 4.675% for a 30-year conventional mortgage (highest since 2014). A fifteen-year conventional mortgage rests at just over the 4% mark. Five-year arms are just under the 3.875% range.

Consumer fears of steadily rising interest rates and slowly rising home prices are driving the current market demand. The Fed already instituted initial increases in rates and are talking about additional ones. Industry analysts forecast to be nearly 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power and have already lost .6% with rate increases over the past few months.

Combine this  with the steadily increasing prices and consumer confidence, and you have what is driving our current market activity

 

National Job Front:

US unemployment rate has dropped to 3.8%, the lowest it has been in over eighteen years! This trend is expected to continue as a result of the recent tax reform.

On the national level, the US added nearly 800,000 jobs in January thru April of 2018 and is trending towards 2.5 million added jobs by year-end.

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004. Great news for the housing industry!

 

New Jersey Job Front:

NJ unemployment rate rose slightly to 4.6%, bolstering consumer confidence remains high in NJ as well.

Although NJ lost 7,200 jobs in April, 27,000+ jobs were added in NJ in the first four months of 2018 which was a significant improvement over 2017 and if it continues, NJ could add nearly 100,000 jobs by year-end.

The level of jobs created was at a much higher level than in the past several years (a silver lining?).

It also should be noted that these jobs are concentrated in the northern half of the state.

 

Rental Market Trends:

We still have an extremely tight rental market!

Prior restrictive mortgage standards nudged Millennials to postpone home ownership in life later than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from 29 to 37 years over the past five years.  Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.

Rental prices in New Jersey rose ~ 5% in 2017, averaging nearly $1,500 per unit. Current vacancy rates in central New Jersey rose to 3.6% with the nation at 4.7%.

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 64%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 230,000+ additional renters in our state.  Households with no children stand at 65%, reflecting the decline in our school population.

 

New Jersey Foreclosures:

New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In tight real estate market, these foreclosures sell at a small discount.

Note:  Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #2 in the country at 3.3%, led by only FL with 5% (mostly hurricane-related) and followed by NY, LA, MS, ME, TX, DE, MD, and PA.  The national baseline number sits at ~ 1.7%.

2017 foreclosure filings decreased slightly to 70,150+ or -5%, putting pressure on home prices in concentrated areas.  Base on the first three months of results 2018 could fall another 8% to around 64,000 filings.

 

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

  1. State and Local Taxes (SALT) are now limited to a $10,000 deduction going forward.
  2. Mortgage and Interest Deductions (MID) are now limited to a maximum principal balance of $750,000.
  3. Home Equity Line of Credit (HELOC) Loan interest deductions is for the most part eliminated

Although it is too early to tell how these areas will impact total 2018 real estate values in New Jersey, they are sure to have some impact. New Jersey is one of the highest taxed states in the union, and our home values are also some of the highest. How this affects each of us on an individual basis needs to be better understood as there is some trade-off such as higher deductions and overall lower income brackets.

Obviously, the higher income luxury market is probably most at risk.  But how it affects the overall incentive to own a home is still unfolding.

There were several proposals on the new tax code, and most consumers are not up to date on what actually passed.  It will take time for this information to be digested.

It also is evident that the out-migration from New Jersey to other more affordable states has continued.

In a nutshell, these changes seem to be having little impact, but there will be some very high-end people affected, and that will, in turn, affect the market…

This effect might slow the price growth in NJ and even turn into a deficit in some more affluent areas.

 

Real Estate Market Recap 

Economic conditions:

  • 2017 was the seventh straight year of 2 million + job gains.
  • Although improving in 2018, the NJ job situation had been declining for the past two years.
  • At 4.6% unemployment, NJ is almost 15% above the national average which is currently 3.8%.
  • The best paying and most attractive jobs are in NYC.
  • Interest rates have already risen .675% in recent months are forecasted to rise another .5% by year’s end, taking almost 10% away from buyers buying power.
  • And, house prices are rising 3+ % in the popular housing price points further exasperating the situation.
  • Baby boomers are choosing to “stay put’ rather than “move up.”
  • And there is no entry level construction going on in the area.
  • Foreclosures are on the decline and help to offset fewer listings.
  • Also, there is confidence that the new tax and jobs act will further stimulate the economy with more jobs
  • The new tax rules appear only to affect the very higher-end buyers.

Changes in lifestyle:

  • Average age at marriage is now in the late 30’s (up 7 years from just a decade ago).
  • Families are usually having only one to two children.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 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.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County has reported more deaths than births.

Market conditions:

  • Consumer confidence remains extremely high nation-wide based on the job and stock market increases.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with lack of inventory, there are fewer houses for sale.
  • Millennials make up 24% of our current homeowners with more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales but price increases only in houses clustered in < $500,000 market where the first-time buyers and Millennials are focused.
  • The >$600K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.). The extreme high-end market has seen some appreciation in 2018 so far.
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow and steady price growth at an annual 3 to 4%.
  • There is an acute shortage of inventory in both Hunterdon and Somerset county (both sitting with about 20% less inventory than just two years ago and 6% less than last year). In our more popular price points and locations, this holds back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • In 2017 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2018 promises to be almost as strong (without factoring in any tax impact).
  • Mortgage delinquency is normalizing.

Forecast:

  • The economy will continue to prosper with no recession currently in sight.
  • Interest rates will Climb to about 5% by year-end further decreasing buying power.
  • Home prices will rise by an average of another 3 to 4+% during that same period (this will depend on your price point and location).
  • Supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs could result from the Tax and Jobs act.
  • The affordability index shows that there is room for much more sales, we just need the inventory.
  • Some decrease in home ownership could result in the raising of the standard deduction.
  • Some high-end fall-out could result in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market will flourish as a result.
  • Mid-term elections effect is a total unknown at this point.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

Call me at 908-238-0118 to discuss your situation, and I’ll put my expertise and access to big data to work for you.

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions 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.


Presented as a public service by:

Joe Peters Logo
 


Click Here to