Somerset County’s Real Estate Market Conditions
Somerset County March sales active with 429 homes sold
(Below is a market update on the real estate and property activity in Somerset County
including Branchburg, Bridgewater, Somerville and Hillsborough
This information is provided by courtesy of Somerset County Realtor Joe Peters.)
In February, 429 properties went “under contract” in Somerset County, as compared to 352 reported as going “under contract” in the prior month. During that same period, 550 properties were newly listed during the same period. As a result, statistics show an overall current supply of about 3 months (4 to 6 months is a normal market) for Somerset County, with an average of 60 days on the market for the units that were sold.
Sales broke down as follows:
- 64 percent of sales were in houses under $500,000
- And, 30 percent of sales were in houses between $500,000 and $1 Million
- Leaving only 6 percent of sales were in houses more than $1 Million
Three two areas in Somerset County reported no sales last month:
- Far Hills
- Rocky Hill
At the same time, there are the usual hot spots:
- Bridgewater Township with 58 sales
- Franklin Township with 89 sales
- Hillsborough Township with 50 sales
These three areas combined for 46% of total sales last month. The average new listing coming on the market last month was at nearly $594,795 while the average price of a unit going “under contract” was at nearly $476,201 or about 20% less.
Note: In order to get a true picture of the status of your particular property, this needs to be done by price point within your specific town. I do this as part of my research when listing a property and can do it for you. I also can show you how the market is trending for your particular town. Just give me a call.
Houses that are priced properly are selling. There is a current market for them with many active buyers. But more than ever, buyers and sellers need to be working with an experienced agent who has a strong grasp of the market conditions specific to your local area. I can share information on all of these statistics with you. Just call me at 908-238-0118. I can offer you knowledgeable and proven advice based upon my more than 20 years of experience, with a special emphasis on Somerset County. Meet Joe Peters (short video)
Other conditions impacting sales in our area are:
New Jersey Home Sales:
Home purchase demand increased in New Jersey during February (these figures run about a month behind) showing strong consumer, rising by a plus 35% over the same month last year, which marks the 30th monthly increase in a row.
The increase has been most widely seen in the under $400,000 market where the millennial buyers are most active as they transition in to home ownership. During the same period luxury housing sales showed a slight increase showing confidence in the new administration’s plans on taxes and deregulation.
At the same time, the number of homes being offered for sale in New Jersey, has remained low, and has recently decreased. The supply has decreased by some 6,700 homes as compared to a year ago or minus 14%. And, there are currently 32,000+ fewer (-44%) homes on the market in New Jersey than there were at our peak in NJ in 2011.
The current unsold inventory in New Jersey sits at just under 4.7 month vs. 5.9 month a year ago.
Current increasing interest rates (combined with the fear of higher interest rates in the future) combined with the Fed’s slightly loosening lending standards seems to be driving the current market activity.
At this point, it looks as if 2017 is off to a strong start.
Interest rates at the end of January have recently increased to just over the 4.2% level for a 30 year conventional mortgage (10 basis point move). A fifteen year conventional mortgages is at just under the 3.5% range. Five and seven year arms are at the 3.25% range.
The combination of the fear of steadily rising rates and slowly rising home prices is driving the current market. And, we have seen several industry experts state that the economy could support a 6 to 7% interest rate making you wonder what is coming down the pike. And, the Fed has already instituted an initial increase in rates and are currently talking about more to come. Most industry experts are forecasting at least another 3/4% increase for this time next year (which would decrease buying power by about 9%).
National and New Jersey Job Front:
On the national level the US reached full recovery in May of 2014 and saw an increase of 2,700,000+ in 2015. Revised figures show a gain of 2,242,000+ in 2016. This is a decrease of 17% from 2015 . In January and February 473,000 jobs were added based on preliminary figures which represents a strong start.
The national U-3 unemployment rate stand at 4.7% at the end of February. It should be noted, due to full-time and part-time jobs being counted equally by the BLS, these numbers are misleading. Actually, the US Economy still needs to create nearly an additional 2.6+ Million jobs to achieve the same employment situation that existed prior to the start of the 2007 to 2009 recession and the U-6 unemployment rate actually stand at 9.5%
NJ job growth increase by 65,000+ jobs in 2015 (the best in 15 years). At that pace, NJ was on track to recover all of its jobs lost in the recession by 2017 (3 years later than the national level) and has recovered about 96% of those jobs to date.
Finalized numbers show that this number will be more in the range of 59,000 in 2016 (also good).
The NJ unemployment rate has decreased slightly to 4.4% which is now under the overall US rate of 4.8%.
In general, things are headed in the right direction, but still trail the nation.
Rental Market Trends:
Prior restrictive mortgage standards have forced younger age buyers (millennials) to postpone their transition to home ownership until later in life than was previously seen. For the most part, these potential have been living with mom and dad or sharing rentals with others in the same situation.
Yet, we are starting to see them now re-enter the rental and first time buyer markets.
The average age of our first time buyer is reported to have risen from 29 to 37 years over the past five years.
And, many older age households are selling their homes and moving into rentals to close their gap in underfunded retirement plans which were affected by the recent economic downturns.
The net result of these actions are continuing to cause rental prices to quickly rise in New Jersey (about 10% annually) and keeping rental inventory extremely low. We currently have a 2.2% vacancy rate in central NJ (with the average rental price topping $1,330) as compared the national vacancy rate of 6.8%.
Contributing to the demand in rentals is the drop in home ownership in NJ which has dropped from 71% to 64% over the past 10+ years. This is a drop of 10% in NJ as compared to a drop of 8% at the national level and contributes to the slower recovery of home prices in the state. Also affecting it is the increase in 1 or 2 person households that have no children. This is also reflected in our school population.
NJ continues to face very high foreclosure rate filings while other states have begun to, or already have recovered.
This figure varies widely by local market. It is also impacted greatly in areas hit particularly hard by hurricane Sandy (which was just about three years ago).
The percentage of delinquent mortgage loans in NJ that are 90+ days past due is at 5.7 percent (which is down from 11.4% four to five years earlier). This ranks NJ as number one in the country followed by NY and then LA, MS , ME, FL, MD and DE. Nationally this number is just around 2.6%.
NJ experienced a slightly decreased rate in foreclosure filings. In 2016 there was a 3% decrease over the prior year and added an additional nearly 71,100 filings as compared to 76,800 in 2015. These foreclosures will continue to add pressure to home prices (especially in areas where they are concentrated).
The positive news is that in a market starved for inventory, these foreclosures are now only selling at a small discount.
Last year, 2016 was not a normal year from the elections viewpoint to the US and NJ economy viewpoint.
And, we did not have a severe winter which has kept the buyers out (also not normal).
And, 2017 has started off strong with increases in the stock market, interest rates and as a result in increased consumer confidence.
We saw surge in home sales (but not prices) in central NJ in 2016 and earl 2017. Especially in the sub $400,000 market. We are plagued my not having enough inventory in those more popular price points and these sales increases could be even better if we had more inventory. But, as inventory builds up as prices continue to rise (and people are no longer under water), this should have a positive effect on prices. In 2016 we saw a less than 1% rise in prices in NJ. And, it is dependent on location and price point.
We are also seeing people in their home over 10 years thinking about making a change. They were reluctant over the past five or so years because of the poor economy. Their equity has built back up and they now can more comfortably make a change.
We are seeing the most effect on prices in the under $400K markets where the first time buyers and millennials are shopping. The over $500K market is holding steady to diminishing slightly depending on location and price. A lot of times when a $500K property come on the market, it is completing with a $600K that really needs to sell is and now in the $500s competing with them (and so on…).
And, the foreclosures are to some extent helping to offset the fewer listings.
Net, net: As either a seller or buyer, the time could not be better to be in the market. We still have low (but increasing) interest rates, a pent up demand from both a buyer and seller viewpoint and a very active market with slightly increasing prices in the more popular price points. Give me a call at 908-238-0118 to discuss your particular situation and let me put my expertise to work for you.
Note: The information presented is deemed accurate but not reliable or guaranteed. Reasonable precautions were taken in the preparation and presentation of this information to ensure accuracy, but the author assumed no liability for any actions taken based on this information. Some opinions expressed represent forecasts of economic conditions as the impact real estate values. All such information is solely conjecture and should be regarded as opinion only and not serve as the sole basis of any financial decision.
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