Somerset County's Real Estate Market Conditions July 2020

Somerset County’s Real Estate Market Conditions July 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions July 2020

 

Somerset County’s Real Estate Market Conditions July 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 an extremely low supply of approximately two months. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 48 days on the market. 546 properties went “under contract” in June, quite a bit up from 334 in the prior month. Newly listed properties in the same period totaled 435, also quite a bit up from 335 in the prior month.

Our total inventory number decreased from 1,580 (last year) to 1,032 units, nearly 35% less than the same time last year.  And, in contrast, sales were up by nearly 27%. in June, as we saw the initial effect of the Real Estate market starting to recover from the COVID-19 pandemic effect.  It is an optimum supply and demand curve for our sellers.

Looking forward to July, we expect to see a continuance of fewer (but now steadily increasing) listings and many more sales as compared to a year earlier due to pent up buyer demand.  But we are still seeing many listings restricting the number of showings and new listings hesitant to list just yet because they do not want people in their house as of yet.  And, many buyers are still hesitant to view listings as well.  This is where virtual showings are filling the gap.  It is taking time to understand and adjust to virtual showing and open house methodology and is too early to tell just how much of an effect these issues will have.  But, the listings that are coming on the market are selling very quickly due to more buyers than sellers. I will try to cover the possibilities under the “Why” it is Happening section.

We are expecting a strong bounce back in listings and sales in late summer.  The pent up demand combined with the below 3% mortgage rates should give us a strong fall season. You can read more about these predictions in the “Why” it is Happening” section of this market report as well.

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

June June Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 149 171 324 2
Over 55 Communities* 19 16 50 3
$000K to $199K 15 25 35 1
$200K to $299K 68 90 121 1
$300K to $399K 73 122 154 1
$400K to $499K 52 89 117 1
$500K to $599K 52 73 107 1
$600K to $699K 34 50 86 2
$700K to $799K 37 27 92 3
$800K to $899K 28 25 77 3
$900K to $999K 17 21 59 3
$1,000K and Up 59 24 184 8
Totals for June 435 546 1032 2
Average Price $618,962 $520,183 -16.0%
Average Days on Market 48
* Included in $ breakdowns
  • 60% of sales in houses < $500,000
  • 36% of sales in houses > $500,000
  • 04% percent of total sales (or 24 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 56 19 3
Bernards Twp 101 63 2
Bernardsville 93 20 5
Bound Brook 16 14 1
Branchburg Twp 48 30 2
Bridgewater Twp 125 79 2
Far Hills Boro 15 1 15
Franklin Twp 118 78 2
Green Brook 25 11 2
Hillsborough 95 81 1
Manville Boro 23 18 1
Millstone Boro 2 1 2
Montgomery Twp 114 41 3
North Plainfield 31 25 1
Peapack Gladstone 16 7 2
Raritan Boro 10 5 2
Rocky Hill Boro 4 1 4
Somerville Boro 12 8 2
South Bound Brook 13 8 2
Warren Twp 86 19 5
Watchung Boro 29 17 2
Totals 1032 546 2

No areas had no sales last month:

Three areas reported 1 or 2 sales each last month:

  • Far Hills
  • Millstone
  • Rocky Hill

Hotspots:

  • Bernards/Bernardsville – 83 sales
  • Branchburg – 30 sales
  • Bridgewater – 79 sales
  • Franklin – 78 sales
  • Hillsborough – 81 sales
  • Mongomery – 41 sales

Hotspot areas equaled 72% of the sales last month. The average new listing coming on the market last month neared $618,962. The average price of a unit going “under contract” neared $520,183 (16% less).

Note: To get an accurate price point for your property based on its location and price point, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will put you at a unique advantage. I can show you the latest age and earnings breakdown for your particular area, show you where people are moving into that area from 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 July 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 have seen a more than 50% decline in sales in April and 35% in May over the same month last year.
  • But, in June, a large rebound started to take place:
  • Hunterdon County actually had 38% less inventory than last year and sold 52% more houses than last year for the same month.
  • Somerset County actually had 35% less inventory than last year and sold 27% more houses than last year for the same month.
  • At the same time, the unsold inventory in NJ dropped by 15,500+ homes vs. this time next year (a 42% decline on a statewide basis).
  • We haad seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current unsold inventory in Hunterdon now averages two months and in Somerset County for two months.  This is mostly due to the rapid sales as new inventory comes on the market.
  • Hunterdon and Somerset County have about 38% & 35% less inventory than we had a year ago, respectively.  This is a big drop. And it is predicted to stay low.
  • Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop.
  • And, we have seen increases of sales across all price points with the under $400K range seeing the smallest increase of only14%.
  • As we have depleted most (if not all) of the pipeline from before April, most of the current month’s sales were post the COVID-19 outbreak.

 

Interest Rates:

  • Interest rates have been all over the place over the last few months.
  • The economy is adjusting, and Interest rates are just over 3.125% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 2.59%  mark. Five-year arms are just under the 3.08% 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 funds that are available.
  • As said, the last few months have been a rollercoaster.  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.
  • We are already using some rated below 3%.

 

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 last3+ months alone, pushing unemployment numbers to a peak of around 15%.
  • The May end-of-month numbers were expected to be somewhere south of 20%.  But, we received a big surprise in that they actually came in lower by 2.5 million claims lowering the unemployment rate to 13.3%.
  • Then in June, they dropped another 4.8 million with the unemployment rate dropping to 11.4%.
  • This indicated that the recovery is apparently underway and the results are promising.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was very strong 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 two months ago, and were just over 10% in April. The May numbers were at around 15.2%.
  • The level of jobs created has been at consistently higher levels than in the past several years (a silver lining as these additions to our job market will be able to afford to buy houses eventually).
  • But, this too has ended as 1.2 million+ people have filed for NJ unemployment over the past ten weeks.
  • 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.
  • This will certainly have a huge 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 risen to around 4.3% 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 loose lending standards of the early 2000s 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 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 5 fold to meet this demand.

 

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 1.4%. Other states have begun to or have already recovered. In a tight real estate market, these foreclosures sell at a small discount.
  • Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #4 in the country with 1.4%, led by NY with 2.4%, MI with 2.3%, LA with 2.2% (mostly hurricane-related), and ME also with 1.8%.  The national baseline number sits at a little under 1.2%.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with a number of just under 38,000 foreclosure filings (the lowest since 2012). With the first six months in, NJ looks to be on track for a 20,000 foreclosure number in 2020 representing a 47% decline.  Obviously, this could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic.

Hunterdon County's Real Estate Market Conditions May 2020

Real Estate Market Recap

Overall Economic Conditions:

  • In early March:
    • We were at our longest economic expansion period just a month ago in America’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+% as listings are being withheld.
    • Buying activity is also down about 35%
    • The balance of 2020 real estate is now under extreme pressure as a result.
    • Current Real estate values do not seem to be affected as to the lack of inventory.

 

  • In June:
    • Inventory came on the market at a faster pace. Sales picked up at an even higher pace. Inventory dropped as a result and we saw impressive sales numbers. We’re optimistic about 2020. This is a true seller’s market, so let’s add your house to the inventory!

 

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 good 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.
  • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
  • 60% of all new housing starts in 2020 in NJ were in the rental sector and, 2020 numbers will surpass that.  This is contributing to the lack of new construction.

Market conditions:

  • What a difference 3+ months make!
  • Consumer confidence is was 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.
  • This was affecting how many listings and new buyers we see during the next few months and surely could have an effect on prices.
  • 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 obviously helped by our having such a strong economy and real estate going into the pandemic.
  • The current seller’s market has resulted.
  • Yet people buy and sell homes based on life events. This will no change. Life events will go on.
  • And never before seen interest rates will help this situation once it stabilizes.
  • We are hoping to see a continued strong 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 may be that the spring market starts to appear more mid-summer and lasts until late in 2020.

Forecast:

  • The effect of the COVID-19 pandemic is now seeming to begin to correct itself.
  • The economy is starting 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 in order 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 or at best stay low over the next few months.
  • But, once we have a stronger 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 being pushed out till further in 2020.
    • Life events (as mentioned earlier) will still happen.  This will 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.
  • More attention is being given to horses with pools and less open areas which lend themselves to working and studying at home.

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 May 2020

Somerset County's Real Estate Market Conditions June 2020

Somerset County’s Real Estate Market Conditions June 2020

Somerset County’s Real Estate Market Conditions June 2020

Somerset County's Real Estate Market Conditions June 2020

Residential Real Estate

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 supply of approximately three months. Normal market conditions average four to six months in Hunterdon County.  Units going under contract averaged 57 days on the market. 334 properties went “under contract” in May, quite a bit up from 212 in the prior month. Newly listed properties in the same period totaled 385, also quite a bit up from 204 in the prior month.

Our total inventory number decreased from 1,578 (last year) to 1,029 units, nearly 35% less than the same time last year.  And sales were down by nearly 33% as well.  In May, we saw the full effect of the COVID-19 pandemic effect.  And, some of the sales and new listings that were seen in May were already in the pipeline form January and February. In May, we have nearly exhausted the pre-COVID-19 pipeline activity resulting in only 334 sales for the month as compared to 500 a year earlier (a decrease of roughly 33%).

Looking forward to June, we expect to see a continuance of fewer (but increasing) listings and sales as compared to a year earlier.  Just how many fewer, time will tell.  But we are seeing many existing listings restricting showings and new listings hesitant to list just yet because they do not want people in their house.  And, most buyers are hesitant to view listings as well.  This is where virtual showings are filling the gap.  It will take time to understand and adjust to virtual showing and open house methodology to know better just how much of an effect these issues will have.  But, the listings that are coming on the market are selling quickly due to more buyers than sellers. I will try to cover the possibilities under the Why it is Happening section.

We are expecting a strong bounce back in listings and sales in late summer.  The pent up demand combined with the below 3% mortgage rates should give us a strong fall season. You can read more about these predictions in the “Why it is Happening” section of this market report as well.

 

Somerset County Inventory Breakdown By Price For Last Month:

May May Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 113 96 307 3
Over 55 Communities* 14 4 45 11
$000K to $199K 7 17 41 6
$200K to $299K 47 64 108 2
$300K to $399K 65 76 150 2
$400K to $499K 65 44 145 2
$500K to $599K 56 41 129 2
$600K to $699K 38 26 99 3
$700K to $799K 20 21 74 4
$800K to $899K 29 12 77 3
$900K to $999K 19 13 53 3
$1,000K and Up 39 20 153 4
Totals for May 385 334 1029 3
Average Price $618,962 $530,542 -14.3%
Average Days on Market 57
* Included in $ breakdowns
  • 60% of sales in houses < $500,000
  • 34% of sales in houses > $500,000
  • 06% percent of total sales (or 20 in total) in houses >$700,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 51 11 5
Bernards Twp 112 28 4
Bernardsville 100 19 5
Bound Brook 20 5 4
Branchburg Twp 57 17 3
Bridgewater Twp 117 35 3
Far Hills Boro 12 6
Franklin Twp 115 50 2
Green Brook 21 10 2
Hillsborough 105 45 2
Manville Boro 23 9 3
Millstone Boro 2 1
Montgomery Twp 109 20 5
North Plainfield 31 23 1
Peapack Gladstone 14 4 4
Raritan Boro 10 4 3
Rocky Hill Boro 5 1
Somerville Boro 12 9 1
South Bound Brook 13 4 3
Warren Twp 67 23 3
Watchung Boro 33 10 3
Totals 1029 334 3

Two areas had no sales last month:

  • Far Hills
  • Rock Hill

Two areas reported 1 or 2 sales each last month:

  • Millstone
  • Peapack Gladstone

Hotspots:

  • Bernards/Bernardsville – 47 sales
  • Branchburg – 17 sales
  • Bridgewater – 35 sales
  • Franklin – 50 sales
  • Hillsborough – 45 sales
  • Mongomery – 20 sales

Hotspot areas equaled 64% of the sales last month. The average new listing coming on the market last month neared $477,776. The average price of a unit going “under contract” neared $476,170 (.03% less).

Note: To get an accurate price point for your property based on its location and price point, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will put you at a unique advantage. I can show you the latest age and earnings breakdown for your particular area, show you where people are moving into that area from 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 June 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 have seen a more than 50% decline in sales in April and 35% in May over the same month last year.
  • At the same time, the unsold inventory in NJ dropped by 15,000+ homes vs. this time next year (a 36% decline on a statewide basis).
  • We have not only seen some sellers reluctant to list in this troublesome time, but we have also seen some homes removed from the active inventory.
  • The current unsold inventory in Hunterdon now averages four months and in Somerset County for three months.  This is mostly due to the rapid sales as new inventory comes on the market.
  • Hunterdon and Somerset County have about 35% & 37% less inventory than we had a year ago, respectively.  This is a big drop. And it is predicted to stay low.
  • Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop which, was about a 25% decline.
  • As we have depleted most of the pipeline from before April, most of the current month’s sales were post the COVID-19 outbreak.

 

Interest Rates:

  • Interest rates have been all over the place over the last few months.
  • The economy is adjusting, and Interest rates are just over 3.15% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 2.62%  mark. Five-year arms are just under the 3.13% range.
  • Mortgages are becoming harder to get.  This is 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 amount of funds that are available.
  • As said, the last few weeks have been a rollercoaster.  Yet, we expect the rates to fall further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.
  • We are already using some rated below 3%.

 

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 ten weeks alone, pushing unemployment numbers to around 15%.
  • These new end of month numbers were expected to be somewhere south of 20%.  But, we received a big surprise in that they actually came in lower by 2.5 Million claims at 13.3%.
  • This indicated that the recovery is apparently underway and the results are promising.
  • The claims have been falling each week and indicating that the PPP and associated programs are starting to work.
  • Fortunately, the economy was very strong 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 two months ago, and were just over 10% in April. The May numbers were at around 15%.
  • The level of jobs created has been at consistently higher levels than in the past several years (a silver lining as these additions to our job market will be able to afford to buy houses eventually).
  • But, this too has ended as 1.2 million+ people have filed for NJ unemployment over the past ten weeks.
  • 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.
  • This will certainly have a huge 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 risen to around 4.5% 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 loose lending standards of the early 2000s 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 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 5 fold to meet this demand.

 

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 1.8%. Other states have begun to or have already recovered. In a tight real estate market, these foreclosures sell at a small discount.
  • Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #5 in the country with 1.8%, led by NY with 2.4%, MI with 2.3%, LA with 2.3% (mostly hurricane-related), and ME also with 1.8%.  The national baseline number sits at a little under 1.2%.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with a number of just under 38,000 foreclosure filings (the lowest since 2012). With only one month in, NJ looks to be on track for a 40,000 foreclosure number in 2020.  Obviously, this could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic.

 

Hunterdon County's Real Estate Market Conditions May 2020

Real Estate Market Recap

Overall Economic Conditions:

  • In early March:
    • We were at our longest economic expansion period just a month ago in America’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+% as listings are being withheld.
    • Buying activity is also down about 35%
    • The balance of 2020 real estate is now under extreme pressure as a result.
    • Current Real estate values do not seem to be affected as to the lack of inventory.

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 are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • We are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot.
  • 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 larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
  • 60% of all new housing starts in 2020 in NJ were in the rental sector and, 2020 numbers will surpass that.  This is contributing to the lack of new construction.

Market conditions:

  • What a difference a 3 months make!
  • Consumer confidence is now 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.
  • This will affect how many listings and new buyers we see during the next few months and surely could have an effect on prices.
  • In May, we saw a 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 will hopefully be helped by our having such a strong economy and real estate going into the pandemic.
  • It is going to take time to tell and how much time is the question. In the meantime, real estate is predicted to be pretty much paused.
  • Yet people buy and sell homes based on life events. This will no change. Life events will go on.
  • And never before seen interest rates will help this situation once it stabilizes.
  • We are hoping to see a strong spike up as things are better understood, and people get back to a normal life.
  • The latest unemployment dip should surly have and effect on the market in June and we are starting to see more listings coming on to the market.
  • It may be that the spring market starts to appear more mid-summer and lasts until late in 2020.

Forecast:

  • The effect of the COVID-19 pandemic is now seeming to begin to correct itself.
  • The economy is suffering from the recent spike in unemployment numbers, and we are only eleven weeks into this crisis (at this writing).
  • 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
    • More possible foreclosures (this is way out)
  • Prime Interest rates have dropped several times in the past months in order to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
  • Inventory supply will start to increase or at best stay low over the next few months.
  • But, once we have a stronger confidence level in having things under control, the housing market should have a strong 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 being pushed out till further in 2020.
    • Life events (as mentioned earlier) will still happen.  This will 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.

Wow.  That is a lot to digest.  And it is changing daily.  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 May 2020

Somerset County's Real Estate Market Conditions May 2020

Somerset County’s Real Estate Market Conditions May 2020

Somerset County’s Real Estate Market Conditions May 2020

Somerset County's Real Estate Market Conditions May 2020

Residential Real Estate

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 supply of approximately four months. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 51 days on the market. 212 properties went “under contract” in April, quite a bit down from 329 in the prior month. Newly listed properties in the same period totaled 204, also way down from 360 in the prior month.

Our total inventory number decreased to 947 units compared to 1,500 at the same time last year (a decrease of 37%).  And sales were 292 as compared to 475 last year (a decrease of 55%).  In March, we started to see the onset of the COVID-19 pandemic effect.  And, many of the sales and new listings that were seen in March were already in the pipeline form January and February. In April, we have nearly exhausted the pre-COVID-19 pipeline activity resulting in only 212 sales for the month as compared to 329 a year earlier.

Looking forward to May, we expect to see a continuance of fewer listings and sales as compared to a year earlier.  Just how many fewer is anyone’s guess.  But we are seeing many existing listings restricting showings and new listings hesitant to list just yet because they do not want people in their house.  And, most buyers are hesitant to view listings as well.  It will take time to understand and adjust to virtual showing and open house methodology to know better just how much of an effect these issues will have.  I will try to cover the possibilities under the “Why it is Happening” section.

We are expecting a strong bounce back in listings and sales in late summer.  The pent up demand combined with the nearly 3% mortgage rates should give us a strong fall season. You can read more about these predictions in the “Why it is Happening” section of this market report as well.

 

Somerset County Inventory Breakdown By Price For Last Month:

April April Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 82 64 284 4
Over 55 Communities* 6 7 34 5
$000K to $199K 12 13 40 3
$200K to $299K 40 41 106 3
$300K to $399K 46 48 152 3
$400K to $499K 35 36 119 3
$500K to $599K 29 30 121 4
$600K to $699K 17 18 88 5
$700K to $799K 7 8 78 11
$800K to $899K 4 4 59 15
$900K to $999K 4 4 45 11
$1,000K and Up 10 10 139 14
Totals for April 204 212 947 4
Average Price $477,776 $476,170 -0.3%
Average Days on Market 51
* Included in $ breakdowns
  • 65% of sales in houses < $500,000
  • 30% of sales in houses > $500,000
  • 05% percent of total sales (or 10 in total) in houses >$700,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 54 7 8
Bernards Twp 99 18 6
Bernardsville 97 6 16
Bound Brook 15 6 3
Branchburg Twp 58 12 5
Bridgewater Twp 106 33 3
Far Hills Boro 14 0
Franklin Twp 103 37 3
Green Brook 21 4 5
Hillsborough 78 26 3
Manville Boro 17 9 2
Millstone Boro 1 0
Montgomery Twp 97 15 6
North Plainfield 38 15 3
Peapack Gladstone 12 1 12
Raritan Boro 13 4 3
Rocky Hill Boro 4 0
Somerville Boro 18 6 3
South Bound Brook 10 5 2
Warren Twp 65 5 13
Watchung Boro 27 3 9
Totals 947 212 4

Two areas had no sales last month:

  • Far Hills
  • Rock Hill

Two areas reported 1 or 2 sales each last month:

  • Millstone
  • Peapack Gladstone

Hotspots:

  • Bernards/Bernardsville – 24 sales
  • Branchburg – 12 sales
  • Bridgewater – 33 sales
  • Franklin – 37 sales
  • Hillsborough – 26 sales
  • Mongomery – 15 sales

Hotspot areas equaled 70% of the sales last month. The average new listing coming on the market last month neared $477,776. The average price of a unit going “under contract” neared $476,170 (.03% less).

Note: To get an accurate price point for your property based on its location and price point, contact me at (908) 238-0118. Coldwell Banker’s big data technology capabilities will put you at a unique advantage. I can show you the latest age and earnings breakdown for your particular area, show you where people are moving into that area from 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 May 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 have seen a more than 50% decline in sales in April over the same month last year.
  • At the same time, the unsold inventory in NJ dropped by 14,000 homes vs. this time next year (a 34% decline on a statewide basis).
  • We have not only seen some sellers reluctant to list in this troublesome time, but we have also seen some homes removed from the active inventory.
  • Current unsold inventory in New Jersey now averages seven months as compared to 3.3 months just two months ago, which is a major change already.
  • Hunterdon and Somerset County have about 36% & 37% less inventory than we had a year ago, respectively.  This is a big drop. And it is predicted to continue.
  • Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop which, was about a 25% decline.
  • Much of the business transacted in April was in the pipeline for 30 to 60 days prior.  It will be interesting to see what occurs as the current pipeline dissipates.

 

Interest Rates:

  • Interest rates have been all over the place over the last month or two.
  • The economy is adjusting, and Interest rates are just over 3.3% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 2.9%  mark. Five-year arms are just under the 3.3% range.
  • Mortgages are becoming harder to get.  This is 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 amount of funds that are available.
  • As said, the last few weeks have been a rollercoaster.  Yet, we expect the rates to fall 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 22 million unemployment claims in the last four weeks alone, pushing unemployment numbers to around 15%.
  • These numbers are expected to peak somewhere south or 30% before they pull back to the mid-teens.
  • Fortunately, the economy was very strong 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 two months ago, and were just over 10% in April. They are expected to follow the national trend.
  • The level of jobs created has been at consistently higher levels than in the past several years (a silver lining as these additions to our job market will be able to afford to buy houses eventually).
  • But, this too has ended as 675,000+ people have filed for NJ unemployment over the past four weeks.  The new unemployment rate for NJ is yet to be published.
  • We are barely at the outset of this local unemployment issue in NJ.
  • 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.
  • This will certainly have a huge impact on the buyers market in or crucial spring period.

 

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 risen to around 5% in central NJ. vs. 4.9% 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 loose lending standards of the early 2000s 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 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 5 fold to meet this demand.

 

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 1.8%. Other states have begun to or have already recovered. In a tight real estate market, these foreclosures sell at a small discount.
  • Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #6 in the country with 1.9%, led by NY with 2.4%, MI with 2.3%, LA with 21.8% (mostly hurricane-related), and MD also with 1.8%.  The national baseline number sits at a little under 1.2%.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with a number of just under 38,000 foreclosure filings (the lowest since 2012). With only one month in, NJ looks to be on track for a 40,000 foreclosure number in 2020.  Obviously, this could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic.

Hunterdon County's Real Estate Market Conditions May 2020

Real Estate Market Recap

Overall Economic Conditions:

  • In early March:
    • We were at our longest economic expansion period just a month ago in America’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:
    • We have seen a sharp spike in unemployment
    • The GDP is affected
    • Wage growth is Affected.
    • Interest rates are bouncing around (but holding).
    • Inventory levels are down by 35+% as listings are being withheld.
    • Buying activity is down 50+%
    • The balance of 2020 real estate is now under extreme pressure as a result.
    • Current Real estate values may be short-lived.

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 are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • We are already seeing a reversal of the above after the NYC area has become a COVID-19 hotspot.
  • 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 larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
  • 60% of all new housing starts in 2020 in NJ were in the rental sector and, 2020 numbers will surpass that.  This is contributing to the lack of new construction.

Market conditions:

  • What a difference a 2 months make!
  • Consumer confidence is now on hold (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
  • This will affect how many listings and new buyers we see during the next few months and surely will have an effect on prices.
  • 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 will hopefully be helped by our having such a strong economy and real estate going into the pandemic.
  • It is going to take time to tell and how much time is the question. In the meantime, real estate is predicted to be pretty much on hold (or paused).
  • Yet people buy and sell homes based on life events. This will no change. Life events will go on.
  • And never before seen interest rates will help this situation once it stabilizes.
  • We are hoping to see a strong spike up as things are better understood, and people get back to a normal life.
  • It may be that the spring market starts to appear more mid-summer and lasts until late in 2020.

Forecast:

  • The effect of the COVID-19 pandemic is now upon us.
  • The economy is suffering from the recent spike in unemployment numbers, and we are only seven weeks into this crisis (at this writing).  There will most certainly be more unemployment effects.
  • 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
    • More possible foreclosures (this is way out)
  • Prime Interest rates have dropped several times in the past month in order to stimulate the economy and, as of yet have had not had any downward effect on mortgage rates.
  • Inventory supply will continue to diminish or at best stay low over the next few months.
  • But, once we have a stronger confidence level in having things under control, the housing market should have a strong 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 being pushed out till further in 2020.
    • Life events (as mentioned earlier) will still happen.  This will drive the pent up demand.
    • Lower than ever mortgage rates.

Wow.  That is a lot to digest.  And it is changing daily.  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 May 2020

Somerset County’s Real Estate Market Conditions April 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions April 2020

Somerset County’s Real Estate Market Conditions April 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 is happening

Based on the last full month’s contract sales, statistics show a supply of approximately three months, indicating a seller’s market. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 47 days on the market. 329 properties went “under contract” in February compared to 356 in the prior month. Newly listed properties in the same period totaled 360.  And, many of the sales and new listings that were seen were already in the pipeline form January and February.

Our total inventory number decreased from 1359 to 1009 units nearly 26% less than the same time last year.  Yet, sales were only slightly off due to strong spring buyer demand so far.  In March, we started to see the onset of the COVID-19 pandemic effect.  And, many of the sales and new listings that were seen in March were already in the pipeline form January and February.

Looking forward to April, we expect to see fewer listings and sales.  Just how many fewer is anyone’s guess.  But we are already seeing existing listings restricting showings and new listings hesitant to list just yet because they do not want people in their house.  And, most buyers are hesitant to view listings as well.  It will take time to understand and adjust to virtual showing and open house methodology to know better just how much of an effect these issues will have.  I will try to cover the possibilities under the Why it is Happening section.

Somerset County Inventory Breakdown By Price For Last Month:

March March Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 110 118 305 3
Over 55 Communities* 5 14 36 3
$000K to $199K 11 24 39 4
$200K to $299K 53 76 115 2
$300K to $399K 59 68 160 3
$400K to $499K 48 44 144 3
$500K to $599K 48 47 129 3
$600K to $699K 39 22 99 3
$700K to $799K 24 14 74 3
$800K to $899K 20 19 57 3
$900K to $999K 16 4 47 3
$1,000K and Up 42 11 145 3
Totals for March 360 329 1009 3
Average Price $615,388 $464,825 -24.5%
Average Days on Market 47
* Included in $ breakdowns
  • 48% of sales in houses < $500,000
  • 41% of sales in houses > $500,000 and < $1,000,000
  • 12% percent of total sales (or 11 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 57 10 6
Bernards Twp 105 34 3
Bernardsville 98 13 8
Bound Brook 15 6 3
Branchburg Twp 62 16 4
Bridgewater Twp 118 40 3
Far Hills Boro 13 1 13
Franklin Twp 116 67 2
Green Brook 20 10 2
Hillsborough 88 37 2
Manville Boro 19 14 1
Millstone Boro 1 2 1
Montgomery Twp 105 23 5
North Plainfield 45 13 3
Peapack Gladstone 11 4 3
Raritan Boro 14 5 3
Rocky Hill Boro 3 1 3
Somerville Boro 15 13 1
South Bound Brook 11 5 2
Warren Twp 68 13 5
Watchung Boro 25 2 13
Totals 1009 329 3

No areas in Somerset County reported no sales in the past month:

 

Only four areas reported one or two sales each last month:

  • Far Hills
  • Millstone
  • Rocky Hill
  • Watchung

Hotspots:

  • Bernards Twp & Bernardsville – 47 sales
  • Bridgewater – 40 sales
  • Franklin – 67 sales
  • Hillsborough – 37 sales
  • Montgomery – 23 sales

These hotspot areas equaled 65% of the sales last month. The average new listing coming on the market last month neared $615,388. The average price of a unit going “under contract” neared $464,825 (25% less).

Note: To get an accurate price point for your property based on its location and price point, contact me. Coldwell Banker’s big data technology capabilities will put you at a unique advantage. I can show you the latest age and earnings breakdown for your particular area, show you where people are moving into that area from 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 April 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 have seen a 25% decline in sales in March over the same month last year.
  • This 25% decline in sales was felt statewide.
  • At the same time, the unsold inventory in NJ dropped by 10,000 homes vs. this time next year.
  • We have not only seen some sellers reluctant to list in this troublesome time, but we have also seen some homes removed from the active inventory.
  • Current unsold inventory in New Jersey now averages 7 months as compared to 3.3 months just last month which is a major change already.
  • Hunterdon and Somerset County have about 22% & 26% less inventory than we had a year ago, respectively.  This is a big drop.
  • Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop which was about a 25% decline.
  • Most business transacted in March was in the pipeline for 30 to 60 days prior.  It will be interesting to see what occurs as the current pipeline dissipates.

 

Interest Rates:

  • Interest rates have been all over the place over the last month.
  • The economy is adjusting, and Interest rates are just over 3.5% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 3%  mark. Five-year arms are just under the 3.35% range.
  • Mortgages may be harder to get based on which industry you are employed in.  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 amount of funds that are available.
  • As said, the last few weeks have been a rollercoaster.  Yet, we expect the rates to fall 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 came in with 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.

Fortunately, the economy was very strong going into this, but the effect is devastating and raises unemployment nationwide to 4.4% almost overnight.

And, it appears to be only the beginning of what is surely more to come.

 

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 a month ago.
  • The level of jobs created has been at consistently higher levels than in the past several years (a silver lining as these additions to our job market will be able to afford to buy houses eventually).
  • But, this too has ended as 371,000 people have filed for NJ unemployment over the past three weeks.  The new unemployment rate for NJ is yet to be published.
  • We are barely at the outset of this local unemployment issue in NJ.
  • Food services and accommodations are again the leaders in job losses, though more states are now citing pain in retail, wholesale trade and construction, according to the U.S. Department of Labor. Health care, social assistance, and manufacturing are shedding workers, too.
  • This will certainly have a huge impact on the buyers market in or crucial spring period.

 

Rental Market Trends:

  • Rental prices in New Jersey rose again in 2019, averaging just over $1,600 per unit. Current vacancy rates in New Jersey have held to around 2.6% in NJ. vs. 3.8% 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 loose lending standards of the early 2000s 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 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 5 fold to meet this demand.

 

New Jersey Foreclosures:

  • New Jersey continues to face falling foreclosure rate filings at about 1.9%. Other states have begun to or have already recovered. In a tight real estate market, these foreclosures sell at a small discount.
  • Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #5 in the country with 1.9%, led by NY with 2.5%, MI with 2.4%, LA with 2.3% (mostly hurricane-related) and MW also with 1.9%.  The national baseline number sits at a little under 1.2%.
  • Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with a number of just under 38,000 foreclosure filings (the lowest since 2012). With only one month in, NJ looks to be on track for a 40,000 foreclosure number in 2020.  Obviously, this could change depending on how long it takes workers to get back on their feet from the COVID-19 pandemic.

 

Somerset County's Real Estate Market Conditions April 2020

 

Real Estate Market Recap

Overall Economic Conditions:

  • In early March:
    • We were at our longest economic expansion period just a month ago in America’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.
  • COVID-19 has now changed all that !
  • In early April:
    • We have seen a sharp spike in unemployment
    • The GDP is threatened
    • Wage growth is threatened.
    • Interest rates are bouncing around (but holding).
    • Inventory levels are down by 25% as listings are being deferred.
    • The balance of 2020 real estate is now under extreme pressure as a result.
    • Current Real estate values may be short-lived.

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 are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • We may see a reversal of the above after the NYC area has become a COVID-19 hotspot.
  • 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 larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
  • 60% of all new housing starts in 2020 in NJ were in the rental sector and 2020 numbers will surpass that.  This is contributing to the lack of new construction.

Market conditions:

  • What a difference a month makes!
  • Consumer confidence is now on hold (at best) until the total effect of the COVID-19 pandemic plays out and is better understood.
  • This will affect how many listings and new buyers we see during the next few months and surely will have an effect on prices.
  • 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 will hopefully be helped by our having such a strong economy and real estate going into the pandemic.
  • It is going to take time to tell and how much time is the question. In the meantime, real estate is predicted to be pretty much on hold.
  • Yet people buy and sell homes based on life events. This will no change. Life events will go on.
  • And never before seen interest rates will help this situation once it stabilizes.
  • We are hoping to see a strong spike up as things are better understood and people get back to a normal life.
  • It may be that the spring market starts to appear more mid-summer and lasts until late in 2020.

Forecast:

  • Last month I said setting virus fears aside, the economy will continue to prosper with no recession currently in sight for the next 12 months.   That is now off the table. The effect of the COVID-19 pandemic is now upon us.
  • The economy is suffering from the recent spike in unemployment numbers and we are only three weeks into this crisis (at this writing).  There will most certainly be more unemployment effects.
  • And, this will affect the following:
    • Current and future real estate values
    • The amount of inventory available
    • The ability for some buyers to get a mortgage
    • More possible foreclosures
  • Prime Interest rates have dropped several times in the past month in order to stimulate the economy and as of yet have had not had any downward effect on mortgage rates.
  • Inventory supply will continue to diminish over the next few months.
  • But, once we have a stronger confidence level in having things under control, the housing market should have a strong 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 being pushed out till further in 2020.
    • Lower than ever mortgage rates.
    • Life events (as mentioned earlier) will still happen.  This will drive the pent up demand.

Wow.  That is a lot to digest.  And it is changing daily.  For clarity and understand, 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 March 2020

Somerset County Real Estate Market March 2020

Somerset County’s Real Estate Market Conditions March 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions March 2020

Somerset County’s Real Estate Market Conditions March 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 is happening

Based on the last full month’s contract sales, statistics show a supply of approximately three months, indicating a seller’s market. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 57 days on the market. 356 properties went “under contract” in February compared to 347 in the prior month. Newly listed properties in the same period totaled 399.

Somerset County Inventory Breakdown By Price For Last Month:

February February Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 144 121 329 3
Over 55 Communities* 13 10 51 5
$000K to $199K 17 18 49 3
$200K to $299K 54 73 120 2
$300K to $399K 62 83 162 3
$400K to $499K 48 63 145 3
$500K to $599K 51 50 119 2
$600K to $699K 35 28 93 3
$700K to $799K 32 20 74 2
$800K to $899K 35 8 67 2
$900K to $999K 25 5 50 2
$1,000K and Up 40 8 140 4
Totals for February 399 356 1019 3
Average Price $645,192 $468,990 -27.3%
Average Days on Market 57
* Included in $ breakdowns
  • 45% of sales in houses < $500,000
  • 45% of sales in houses > $500,000 and < $1,000,000
  • 10% percent of total sales (or 8 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 63 20 3
Bernards Twp 118 33 4
Bernardsville 69 14 5
Bound Brook 13 7 2
Branchburg Twp 65 21 3
Bridgewater Twp 114 48 2
Far Hills Boro 13 0
Franklin Twp 127 65 2
Green Brook 20 9 2
Hillsborough 94 40 2
Manville Boro 23 11 2
Millstone Boro 2 0
Montgomery Twp 99 23 4
North Plainfield 35 16 2
Peapack Gladstone 13 5 3
Raritan Boro 15 3 5
Rocky Hill Boro 4 1 4
Somerville Boro 19 8 2
South Bound Brook 10 4 3
Warren Twp 68 19 4
Watchung Boro 35 9 4
Totals 1019 356 3

Two areas in Somerset County reported no sales in the past month:

  • Farr Hills
  • Millstone

Only one area reported one or two sales each last month:

  • Rocky Hill

Hotspots:

  • Bernards – 33 sales
  • Bridgewater – 48 sales
  • Franklin – 65 sales
  • Hillsborough – 40 sales
  • Montgomery – 23 sales

These hotspot areas equaled 59% of the sales last month. The average new listing coming on the market last month neared $645,192 The average price of a unit going “under contract” neared $468,900 (27% less).

Note: To get an accurate price point for your property based on its location and price point, contact me. Coldwell Banker’s big data technology capabilities will put you at a unique advantage. I can show you the latest age and earnings breakdown for your particular area, show you where people are moving into that area from 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.

 

 

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

The still low inventory numbers are leading to price appreciation on existing homes. It is turning the tide back to a buyers market (or at least neutralize it to being a normal market).

We saw an increase of 12% in sales in January vs. last January.  While this is not state-wide, 19 of the 21 counties have benefited with an increase in sales. NJ finished 2019 with the highest contract sales on record.

Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop which was about a 25% decline.

Total purchases in January increased by 950+ units over last January.  Interest still concentrates in the under $400,000 market where Millennial buyers are transitioning into homeownership.  The $400 to $600K range also saw a little over 25%  increase in units sold.

At the same time, the number of homes offered for sale in New Jersey remained low. Currently, ~44,000 fewer homes (-60%) are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with only 3.3 months as compared to 4.5 months last year, which is a significant drop.

We still 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 about 12% & 15% less inventory than we had a year ago, respectively.

The market has changed from a seller’s to a buyer’s market above $500K market due to the additional inventory coming on to the market affecting the selling prices for those properties.

Also, we are now seeing some millennials coming back into our local markets, with 26% thinking that it is the right time to buy (good news).

 

Interest Rates:

Interest rates have fallen slightly over the last month.

The economy is strengthening, and Interest rates have fallen in recent weeks to just over 3.45% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 3%  mark. Five-year arms are just under the 3.25% range.

Consumer fears of further rises in interest rates and slowly rising home prices are driving the current market demand. The Fed has made several downward adjustments, and more may still be in order (especially to correct the current financial market jitters caused by the virus scare)

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

 

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, came in with 225,000 jobs added.  And unemployment rose slightly to 3.6%.

At the end of January, there were 6.4+ million openings compared to nearly 5.8 million unemployed persons.

We are hearing not only can’t we find qualified people but that we just can’t find people to fill the current job openings.

 

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 remained at 3.5%, maintaining consumer confidence in NJ as well.  In effect, NJ is rising with the national tide of nearly full employment.

The level of jobs created has been at consistently higher levels than in the past several years (a silver lining as these additions to our job market will be able to afford to buy houses eventually).

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

It is important to look at the unemployment numbers by county as well.  In both Hunterdon and Somerset counties, these numbers are well below the state figure (more like 2.5%).

 

Rental Market Trends:

Rental prices in New Jersey rose again in 2019, averaging just over $1,600 per unit. Current vacancy rates in New Jersey have held to around 3.8% in NJ. vs. 4.7% nationally.

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 loose lending standards of the early 2000s 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 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 5 fold to meet this demand.

 

New Jersey Foreclosures:

New Jersey continues to face falling foreclosure rate filings at about 2.0%. Other states have begun to or have already recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #4 in the country with 2.0%, led by NY with 2.6%, MI with 2.4%, LA with 2.4% (mostly hurricane-related).  The national baseline number sits at a little under 1.3%.

Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 was even better with a number of just under 38,000 foreclosure filings (the lowest since 2012). With only one month in, NJ looks to be on track for a 40,000 foreclosure number in 2020.

 

Real Estate Market Recap

Overall Economic conditions:

• We are now in our longest economic expansion period in America’s history with 125+ months of positive job gains.
• The GDP is still rising (although its rate of increase seems to be slowing a bit).
• At 3.5% unemployment, NJ is now near to the national average, which is currently at 3.6% & leading economic indicators in NJ are now surpassing the nation.  And both Hunterdon and Somerset counties are in the 2.5% range.

• The best paying and most attractive jobs are in NYC, pulling many of our millennials in that direction (although this trend is diminishing).
• And, wages are up significantly at the same time.
• Interest rates have decreased to just under 3.5%.
• And, house prices have risen around 3+% in the more popular housing price points and areas further exasperating the situation (although this appreciation now appears to be slowing).
• Baby boomers who were 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 inventory is not available) which is causing most of the housing shortage are now finding available inventory. This situation has loosened up as many new listings have come on the market over the past few months.
• And there is still little, if any, entry-level construction going on in our area, just larger homes and new rentals.  Nationally new construction is 50% of what it was over the last 10 years.
• As a result of the previous two points, we are experiencing the current housing inventory shortage (the shelves are empty in our starter housing price points of under $400K).
• And, some empty houses are starting to appear at out higher price points.
• Foreclosures rates have almost normalized.
• There is strong continued buyer confidence. The robust job situation is supporting our national economic situation.

The current virus scare is a wild card as it is getting more and more press.

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 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 larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
• Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
• 60% of all new housing starts in 2020 in NJ were in the rental sector and 2020 numbers will surpass that.  This is contributing to the lack of new construction.

Market conditions:

• It appears that we are now entering the next phase of the housing cycle, which is still active, just less robust in price appreciation. Sort of a cool down from previous years. Or, maybe back to normal.
• And, the warnings of an economic slowdown seem to be on hold for the present as there is no current forecast for a rise in the prime rate.  It might even drop to help correct current financial market conditions.
• Should we eventually see a slowdown, we may see fewer sales and less price appreciation as a result. The effect is not predicted to result in any loss in value in our popular price points.
• But, 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. So, the effect of any slowdown on housing should be minimal (if at all).
• Consumer confidence remains high nation-wide based on the job and stock market increases.
• Most consumers still see homeownership as a sound investment.
• There is a bit of offset to this encouraging news from the discord that we see in our national politics and trade policies.
• This confidence is reflected in buyer traffic being up at open houses. However, with a lack of inventory in our lower price points, 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 about 35% 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 in 2019 shows an increase in home sales, but price increases only in houses clustered in < $400,000 market where the first-time buyers and Millennials are focused.
• Prices in the >$400K to $600K market have increased a bit as we have seen additional new inventory in this range.  We also saw increased sales in this range.
• The over $600K market is challenged price-wise depending on the location and the higher the price-point.
• Minimal new construction, lack of entry-level new housing, and COAH restrictions add additional value to the current inventory.
• The five-year forecast indicates slow but steady price growth (but at reduced rates) at an annual average of 2 to 4% (depending on location and price point). This price growth will remain higher in the under $400K market. And, little depreciation is forecasted except in the higher-end inventory.
• There is an acute shortage of inventory in both Hunterdon and Somerset County in our more popular price points and locations, which is holding back even more sales. In general, we have only about 60% of the inventory that we had in 2011 but are selling current inventory at faster rates.
• It is simple; we could sell more houses if we had more inventory on hand, And, as we have started to see small inventory increases over the past six months, 2019 can be a boom for resales.
• In 2019 prices rose ~ averaging just over 3% and depending on price points and locations. 2020 promises to be more normalized with at least 2 to 3% growth in prices. But it depends on your price point and location. The following two years will also see about 3 % showing modest positive growth.
• Mortgage delinquency is now approaching more normal levels.

Forecast:

• setting virus fears aside, the economy will continue to prosper with no recession currently in sight for the next 12 months. And, there most likely will be only a slowdown impact on the rate of price appreciation if this happens.
• Prime Interest rates have dropped several times in the past 12 months and may drop further.
• 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. And, the most bullish projections show at least a 6 to 7% increase over the next few years.
• While improving, 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 6.4+ million open jobs and under 5.8+ million unemployed. We are at full employment if you consider that 3% of unemployed is the normal level.
• 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 has also opened up the need for inward migration of workers to the economy. In some areas, this is happening via people immigrating from outside of the US to regions with the skills needed to fill open positions.
• The affordability index shows that there is room for much more sales; all we need an increase in inventory. The most affordable time to buy appears to be now!.
• Some high-end fall-out has resulted in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
• The commercial real estate market is flourishing as a result of creating more buying demand.
• 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.
• And, thirty-seven percent of all homes in the US have no mortgage at all.
• Small investor activity in the market is up. In many cases, these are flippers buying-low end unsaleable inventory and bringing it up to marketable status.

 

Impact of the Coronavirus on the U.S. Housing Market

As New Jersey is a gateway state for foreign trade with our large trade ports in Newark and Elizabeth, there will be most certainly some fall-out from the slowdowns in the shipping industry.  Also, we see impacts in the entertainment and travel industries already.  It is way too early to tell what this impact will be at this point.  But until we get our hands around this scare, we can expect to continue to see an impact in our state’s economy.  That impact will most certainly affect our real estate industry.

But, on the positive side, this new low level on interest rates offers a unique short-term opportunity to buy at a price point in mortgage rates that we may never see again.

 

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 Real Estate Market March 2020