Somerset County’s Real Estate Market Conditions | December of 2017
Get ahead of the real estate market economic and behavior drivers in Somerset County, New Jersey with Coldwell Banker Residential Broker sales associate, Joe Peters.
Somerset County New Jersey Real Estate Market Conditions (including):
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 sold averaged 61 days on the market. 307 properties went “under contract” in November, down from 338 in the prior month. Newly listed properties in the same period totaled 252.
Somerset County Inventory Breakdown by Price | November:
|New Listings||Under Contract||Active Listings||Month’s Supply|
|Condos/Town Houses *||133||132||358||3|
|Over 55 Communities*||10||19||50||3|
|$000K to $199K||33||38||91||2|
|$200K to $299K||81||94||245||3|
|$300K to $399K||79||64||199||3|
|$400K to $499K||40||42||153||4|
|$500K to $599K||31||33||139||4|
|$600K to $699K||29||22||122||6|
|$700K to $799K||21||14||98||7|
|$800K to $899K||10||12||83||7|
|$900K to $999K||16||6||73||12|
|$1,000K and Up||49||13||260||20|
|Totals for October||389||338||1463||4|
|Average Days on Market||61|
|* Included in $ breakdowns|
Somerset County Sales Breakdown Overview:
- 70 % of sales in houses < $500,000
- 26 %of sales in houses > $500,000 and < $1,000,000
- 04 % percent of total sales (or 13 in total) in houses >$1,000,000
Somerset County Inventory Breakdown by Municipality | November
Somerset County Sales Breakdown Detailed:
|Active Listings||Under Contract||Month’s Supply|
|Far Hills Boro||14||0|
|Rocky Hill Boro||2||1||2|
|South Bound Brook||13||7||2|
Two areas in Somerset County reported no sales in the past month:
- Far Hills
One area reported one or two sales each last month:
- Rocky Hill
- Bernards – 24 sales
- Bridgewater – 35 sales
- Franklin – 65 sales
- Hillsborough – 35 sales
- Montgomery – 19 sales
- N Plainfield – 18 sales
These hotspot areas equaled 64% of the sales last month. The average new listing coming on the market last month neared $545,660 The average price of a unit going “under contract” neared $432,561 (21% less).
Note: To get an accurate price point for your property, contact me. Coldwell Banker’s big data technology capabilities will put you at an advantage. Houses priced and marketed accurately sell fast, especially with a real estate industry veteran and local expert helping you navigate the process.
New Jersey’s Economic Drivers:
New Jersey Home Sales:
Home purchase demand increased by 9% in New Jersey during October giving the state its 6th consecutive month of increases. (These numbers run a month behind). The same number were about 4% in 2016.
New Jersey experienced a compounded growth rate of 14% over the past two years. Sales increased by 5% YTD.
Activity concentrates in the <$400,000 market where Millennial buyers transition into home ownership. During the same period, all housing sales showed increases across all price points showing confidence in the new administration’s plans on taxes and deregulation.
At the same time, the number of homes offered for sale in New Jersey remained low and had recently decreased. The supply decreased by ~ 5,000 homes, compared to a year ago. Currently, ~33,000 fewer (-46%) homes are on the market compared to the 2011 peak.
Current unsold inventory in New Jersey sits at just under 4.3 months vs. 5.2 months from a year ago.
Hunterdon County has ~10% less inventory, and Somerset County also has ~ 13% less inventory than a year ago.
The fear of increasing interest rates based on future increases, and the Fed’s slightly loosening lending standards affect the current market activity.
Interest rates at the end of October rose slightly to a level of just over 3.9% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just under the 3.3% range. Five and seven-year arms are at the 3.3% range as well.
Consumer fears of steadily rising rates and slowly rising home prices impact the current market. The Fed already instituted initial increases in rates and are talking about additional ones. Industry analysts forecast a 4.7% rate by the end of the year, 5% by the end of 2018, and 5.5% by the end of 2019. If the rate increases from 4% to 5%, buyers will lose 9% of their buying power.
Combine that with the steadily increasing prices and consumer confidence, and you have what is driving our current market activity
National Job Front:
US unemployment rate is 4.1%. This is the lowest it has been in over forty+ years ! And, it is a decline of over 70% from the peak which happened in 2009.
On the national level, we reached full recovery in May of 2014 with 2,700,000+ job gains in 2015. Revised figures show a gain of 2,242,000+ in 2016. Expectations of 2,000,000 jobs in 2017 leave us at -6% from 2016.
- The national U-3 unemployment rate stands at 4.1%.
- U-6 unemployment rate stands at 7.9%
Note: Due to full-time and part-time jobs counted equally by the BLS, numbers differ. The US economy still needs to create an additional 2,600,000 jobs to reach the same employment rate that existed before the start of the 2007 to 2009 recession.
But, the momentum is building and the result is consumer confidence is the highest since 2004. Great news for the housing industry !
New Jersey Job Front:
NJ unemployment rate increased to 4.9%, bolstering consumer confidence remains high in NJ as well.
New Jersy job growth increased by 65,000+ in 2015, the best in 15 years. Projecting on those numbers, New Jersey’s recession losses would recover by 2017. To date, we reached 96% of projected numbers. Finalized projected numbers showed 59,000 in 2016. Still good! Although we still trail the nation, we’re on pace to add 25,000 jobs this year vs. 59,000 being added in 2016 (- 60%).
Thru October, 22,000 additional jobs were added YTD vs. 50,900 for the same period last year.
It should be noted that even though these numbers are disappointing, the levels of the jobs being added at is much higher than in the past several years (a silver lining?).
Rental Market Trends:
Prior restrictive mortgage standards nudged Millennials to postpone home ownership until later in life than previously seen. These potential buyers live with parents or share rentals. We are starting to see them now re-enter the rental and first-time buyer markets. The average age of our first-time buyer changed from 29 to 37 years over the past five years. Older Americans impacted by underfunded retirement plans due to the economic downturn rent houses too.
Rental prices in New Jersey rose ~ 10% annually, averaging over $1,300 per unit. Current vacancy rates in New Jersey rest at 3.5%, the lowest in the state and nation (which is at 4.5%).
The drop in New Jersey’s homeownership contributes to rental demand. A 12+ year trend shows a decrease from 71% to 52%. This 8% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state. One or two-person households with no children stands at 65%, reflected in our school population.
New Jersey Foreclosures:
New Jersey continues to face high foreclosure rate filings. Other states have begun to, or already have recovered. In tight real estate market, these foreclosures sell at a small discount.
Note: Figures vary by local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We still rank #1 in the country at 4.0%, followed by NY, LA, MS, ME, FL, MD, PA, MD, RI and DE. The national baseline number sits at ~ 1.7%.
2016 saw a 3% decrease over the prior year and added a ~ 71,100 filings, compared to 76,800 in 2015. 2017 YTD foreclosure filings YTD have decreased sllightly with 2016 YTD. Forecasts project 72,000+ or -3%, putting pressure home prices in concentrated areas.
Real Estate Market Recap
- Consumer confidence is high. This is mainly based on the job and stock market increases.
- 80% of consumers perceive homeownership as part of the American Dream.
- Millennials make up 24% of homeowners with room for expansion at the lower end of the market with adequate inventory supply.
- Analysts five-year forecast indicates slow and steady price growth ay an annual 4%.
- Central New Jersey’s trend for 2016 and early 2017 showed a surge in home sales, but not prices, clustered in < $500,000 market. In 2016, a 1% rise in prices tallied for New Jersey. As inventory builds, prices will rise.
- In 2017 prices rose ~ 4% in the more popular price points with ideal locations. Projections for 2017 rest at 5% by the end of the year. Houses priced <$400,000 for first-time buyers, and Millennials experience greater pricing fluctuations.
- The >$600K market holds steady to diminishing slightly, depending on location and price. Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly.
- People in their home > 10 years think about making a change with a healthy economy. Home equity built up and a more significant portion of payments applies to principle. Increases in pricing motives people to make changes or even start a new business with the extra equity cash.
- Minimal new construction adds additional value to the current inventory.
- Foreclosures help to offset fewer listings.
Either as a seller or buyer, navigate this real estate market with me!
- Low-interest rates
- Pent-up demand
- Active market with increasing prices in the more popular price points and locations
- High consumer confidence
Call me at 908-238-0118 to discuss your situation, and I’ll put my expertise and access to big data to work for you.
Note: Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics. I assume no liability.