Somerset County's Real Estate Market Conditions June 2020

Somerset County’s Real Estate Market Conditions September 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions September 2020

Somerset County’s Real Estate Market Conditions September 2020

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

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

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

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

New Jersey Residential Real Estate Market Forecast

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

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

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

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

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

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

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

Only one area had no sales last month:

  • Millstone

One area reported 1 or 2 sales each last month:

  • Rocky Hill

Hotspots:

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

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

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

 

Somerset County's Real Estate Market Conditions September 2020

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales and inventory levels:

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

Interest Rates:

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

National Job Front:

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

New Jersey Job Front:

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

Rental Market Trends:

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

New Jersey Foreclosures:

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

Hunterdon County's Real Estate Market Conditions September 2020

Real Estate Market Recap

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

     

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

     

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

     

    Changes in Lifestyle:

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

    Market conditions:

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

    Forecast:

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

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

     

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

     

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

 

Somerset County's Real Estate Market Conditions September 2020

Somerset County's Real Estate Market Conditions August 2020

Somerset County’s Real Estate Market Conditions August 2020

Residential Real Estate

Somerset County's Real Estate Market Conditions August 2020

Somerset County’s Real Estate Market Conditions August 2020

Somerset County’s Real Estate Market Conditions August 2020: Get ahead of the residential real estate market drivers in Somerset County, New Jersey, with Coldwell Banker Residential Broker sales associate, Joe Peters. Joe’s monthly report walks people through the economic conditions and trends that influence our local markets.  You will come away knowing what is happening, and more importantly, why it is happening. As a result, you will be better informed to make home buying and selling decisions.

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

Based on the last full month’s contract sales, statistics show a meager supply of inventory of ~ two months. Normal market conditions average four to six months in Somerset County. Units going under contract averaged 44 days on the market. Five hundred eighteen units went “under contract” in July, up from 546 in the prior month. Newly listed properties in the same period totaled 417, down a bit up from 435 in the preceding month.

Our total inventory number decreased from 1,356 (last year) to 994 units, nearly 27% less than last year. In contrast, sales were up by almost 32% in July, as we saw the ongoing effect on the Real Estate market as it recovers from the COVID-19 pandemic effect. It is an optimum supply and demand curve for our sellers.

New Jersey Residential Real Estate Market Forcast – August 2020

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

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

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

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

July July Total
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 164 187 342 2
Over 55 Communities* 20 21 48 2
$000K to $199K 14 23 31 1
$200K to $299K 65 114 117 1
$300K to $399K 65 119 137 1
$400K to $499K 60 93 121 1
$500K to $599K 58 74 106 1
$600K to $699K 41 41 92 2
$700K to $799K 24 43 74 2
$800K to $899K 26 26 82 3
$900K to $999K 22 15 54 4
$1,000K and Up 42 33 180 5
Totals for July 417 581 994 2
Average Price $680,558 $518,537 -23.8%
Average Days on Market 44
* Included in $ breakdowns
  • 60% of sales in houses < $500,000
  • 40% of sales in houses > $500,000
  • 06% percent of total sales (or 33 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 59 21 3
Bernards Twp 116 59 2
Bernardsville 94 23 4
Bound Brook 11 15 1
Branchburg Twp 49 27 2
Bridgewater Twp 125 84 1
Far Hills Boro 17 0
Franklin Twp 121 92 1
Green Brook 28 12 2
Hillsborough 80 87 1
Manville Boro 10 23 0
Millstone Boro 2 0
Montgomery Twp 94 39 2
North Plainfield 28 23 1
Peapack Gladstone 15 6 3
Raritan Boro 10 6 2
Rocky Hill Boro 3 2 2
Somerville Boro 16 19 1
South Bound Brook 6 8 1
Warren Twp 81 25 3
Watchung Boro 29 10 3
Totals 994 581 2

Two areas had no sales last month:

  • Far Hills Boro
  • Millstone

One area reported 1 or 2 sales each last month:

  • Rocky Hill

Hotspots:

  • Bernards/Bernardsville – 82 sales
  • Branchburg – 27 sales
  • Bridgewater – 84 sales
  • Franklin – 92 sales
  • Hillsborough – 87 sales
  • Mongomery – 39 sales

Hotspot areas equaled 71% of the sales last month. The average new listing coming on the market last month neared $660,558. The average price of a unit going “under contract” neared $518,537 (24% less).

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

 

Somerset County's Real Estate Market Conditions 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 saw a more than 50% decline in sales in April and 35% in May over the same months last year.
  • But, in June, a large rebound started to take place and it has continued into July where Somerset County actually had 27% less inventory than last year and sold 34% more houses than last year for the same month.
  • It looks like the rebound in June and July will help us to actually top the year over year numbers if this trend keeps up.
  • At the same time, the total unsold inventory in NJ dropped by 15,500+ homes vs. this time next year (a 42% decline on a statewide basis).
  • We have seen some sellers reluctant to list in this troublesome time, but that seems to be reversing itself.
  • The current unsold inventory in Hunterdon and Somerset County is two months.  This is mostly due to the rapid sales as new inventory comes on the market.
  • Hunterdon and Somerset County have about 34% & 27% less inventory than we had a year ago, respectively.  This is a big drop. And it is predicted to stay low ad sales outpace listings.
  • Decreases in inventory have occurred in all price points with the under $400,000 market seeing the largest drop.
  • NJ actually has 26,000 units in inventory this yeas as compared to 42,000 a year prior.
  • And, we have seen increases in sales across all price points with the under $400K range seeing the smallest increase of only14%.

Interest Rates:

  • Interest rates have been steadily declining over the past few months.
  • The economy is adjusting, and average Interest rates are just under 3% for a 30-year conventional mortgage (we are actually seeing rates close to 2.5% in some cases). A fifteen-year conventional mortgage rests at just over the 2.5%  mark. Five-year arms are just under the 3% range.
  • Mortgages are becoming harder to get based on which industry you are employed in and the new stricter rules being adopted by lenders.  This could affect the size of the buyer pool.
  • And, mortgage forbearance is causing unforeseen issues in the mortgage market which may cause a drop in the number of funds that are available.
  • As said, the last few months have been dropping.  Yet, we expect the rates to fall a bit further, giving buyers a once in a lifetime opportunity to buy at rates they probably will not see again.
  • We are already using some rates well 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 4+ 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 11.1%.
  • And in July, they dropped another 1.8 million in June with the unemployment rate dropping to 10.2%
  • This indicated that the recovery was indeed well underway with over 40% of the unemployed now back in the workforce.
  • In contrast, the claims have risen over the past two weeks.  We are going to have to see July month-end numbers to get a better feel for where we currently are.
  • 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 five months ago and were just over 10% in April. The May numbers were at around 15.2%. And in June (the last month reported) they rose to 16.6%.  It should be noted that at end of month June NJ had only returned 26% of the unemployed to the workforce while the nation as a whole had returned nearly 34%.  Not surprising as NJ was one of the states hardest hit by VOVID-19 in the early months of the pandemic.
  • 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 four months
  • The NJ unemployment number was 16.6% in June and the first two weeks in July showed improvements to that number.
  • 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.
  • The average rental price in NJ is now over $1700 and the vacancy rate has increased to over 5%.  This reflects the ability or confidence to afford these rent prices by a large number of potential renters no unemployed.

 

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.  And, some sets like NY are still much higher with a 2.5% filing number. In a tight real estate market, these foreclosures sell at a small discount.
  • 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 an 18,000 foreclosure number in 2020 representing a 54% 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 August 2020

Real Estate Market Recap

  • Overall Economic Conditions:
    • In early March:
      • We were at our longest economic expansion period 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%
      • It was as if someone had hit the “pause” button on the real estate market.
      • 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 and July: 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.
    • Buyers are not looking for open areas as in the past and gravitating towards more compartmentalization within the home.  Also back yare recreation facilities such as pools now have a preference.
    • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
    • Buyers were thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
    • Now, there is an open question of ho9w many workers will gravitate back towards the city as they adapt to the working from home lifestyle.
    • 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 4+ 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 and July, 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 not 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 seems 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 (at least in our area).
    • 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.
    • And’ the local market will have to adapt to the new suburban renaissance of where people will be working from and what they will need in order to adapt to this,

    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 August 2020

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