Somerset County’s Real Estate Market Conditions November 2019

Residential Real Estate

Somerset County's Real Estate Market Conditions October 2019

Somerset County’s Real Estate Market Conditions November 2019

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

What is happening

Based on the last full month’s contract sales, statistics show a supply of approximately three months, indicating a seller’s market. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 63 days on the market. 373 properties went “under contract” in  October compared to 420 in the prior month. Newly listed properties in the same period totaled 434.

Somerset County Inventory Breakdown By Price For Last Month:

October October Total  
Somerset County New Under Active Months’
Listings Contract Listings Supply
Condos/Town Houses * 156 129 385 3
Over 55 Communities* 20 7 67 10
$000K to $199K 24 25 41 2
$200K to $299K 78 78 189 2
$300K to $399K 73 71 203 3
$400K to $499K 66 54 185 3
$500K to $599K 36 41 137 3
$600K to $699K 33 31 105 3
$700K to $799K 25 17 98 6
$800K to $899K 25 17 87 5
$900K to $999K 20 17 66 4
$1,000K and Up 40 22 170 8
Totals for October 420 373 1281 3
Average Price $590,113 $519,172 -12.0%  
Average Days on Market 63
* Included in $ breakdowns
  • 57% of sales in houses < $500,000
  • 33% of sales in houses > $500,000 and < $1,000,000
  • 10% percent of total sales (or 22 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Municipality Active Listings Under Contract in Last Month Months Supply
Bedminster Twp
75
13 6
Bernards Twp 156 40 4
Bernardsville 91 8 11
Bound Brook 18 6 3
Branchburg Twp 53 23 2
Bridgewater Twp 149 56 3
Far Hills Boro 13 0
Franklin Twp 172 58 3
Green Brook 31 6 5
Hillsborough 127 53 2
Manville Boro 27 15 2
Millstone Boro 3 3 1
Montgomery Twp 119 24 5
North Plainfield 44 19 2
Peapack Gladstone 21 4 5
Raritan Boro 11 3 4
Rocky Hill Boro 4 0
Somerville Boro 23 9 3
South Bound Brook 19 1 19
Warren Twp 80 24 3
Watchung Boro 45 8 6
Totals 1281 373 3

Only two areas in Somerset County reported no sales in the past month

  • Far Hill
  • Rocky Hill

One area reported one or two sales each last month

  • S Bound Brook

Hotspots:

  • Bernards – 40 sales
  • Bridgewater – 56 sales
  • Franklin – 58 sales
  • Hillsborough – 53 sales
  • Montgomery – 24 sales

These hotspot areas equaled 62% of the sales last month. The average new listing coming on the market last month neared $590,113 The average price of a unit going “under contract” neared $519,172 (12% less).

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

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales:

The still low inventory numbers lead to a bit of softening in the price appreciation on existing homes and a slowdown in growth. It is turning the tide back to a buyers market (or at least neutralize it to being a normal market).

We saw an increase of 12% in sales in September and year to date; we are ahead of 2018 by 4%.  While this is not state-wide, 18 of the 21 counties have benefited with an increase in sales.

Increases in inventory have occurred in all price points above $400,000 with the $400,000 to $600,000 range seeing the largest jump (+4%) followed by the $600,000+ with very slight increases.

The under $400,000 range saw a 13% drop in inventory.

Activity still concentrates in the under $400,000 market where Millennial buyers are transitioning into homeownership.  But, this price point only saw an 8% increase vs. 2018 YTD due to lack of inventory.  The $400 to $600K range also saw a little under 1,500 increase in units sold YTD while dropping 13% in inventory levels.

During the same period, all housing sales above $400,000 and below $1 million showed very modest increases showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high-end in towns where rail service to Manhattan is available.  Houses above $1 million showed a small increase as well.

At the same time, the number of homes offered for sale in New Jersey remained low. Currently, ~31,000 fewer homes (-46%) are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with only 3.2 months in some and none being above 8.0.  The state is averaging just over four months.

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

Hunterdon and Somerset County have about 5% & 16% less inventory than we had a year ago, respectively, and the inventory is 6% less in Hunterdon & 17% less in Somerset as compared to 2 years ago.

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

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

 

Interest Rates:

Interest rates have risen slightly over the last month.

The economy is strengthening, and Interest rates have fallen in recent weeks to just over 3.75% for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 3.18%  mark. Five-year arms are just under the 3.40% range.

Consumer fears of further rises in interest rates and slowly rising home prices are driving the current market demand. The Fed has made several downward adjustments, and more may still be in order.

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

 

National Job Front:

On the national level, the US added over 2,700,000+ jobs in 2018.

US unemployment rate in September came in with 136,000 jobs added.  And unemployment dropped to 3.5%.

At the end of September, there were 7.1+ million openings compared to nearly 6.0 million unemployed persons.

 

New Jersey Job Front:

NJ added 39,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.

The NJ unemployment rate fell to 3.1% (the lowest it has been on over ten years), bolstering consumer confidence in NJ as well.  In effect, NJ is rising with the national tide of nearly full employment.   Based on the first nine month’s results for 2019, the state is on course to add 55,000 jobs, which would be nearly a 40% gain over 2018.

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

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

 

Rental Market Trends:

We have seen an 11 year high in rental availability,

Rental prices in New Jersey rose nearly 5% in 2018, averaging just over $1,600 per unit. Current vacancy rates in New Jersey have held at 2.7% in central NJ.

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 to meet this demand and now seems to have caught up.

 

New Jersey Foreclosures:

New Jersey continues to face falling foreclosure rate filings dropped to  2.1%. Other states have begun to, or already have recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #5 in the country with 2.1%, led by NY with 2.7%, MS with 2.5% (mostly hurricane-related)  LA with 2.4%, ME with 2.1% and trailed by FL, DE, MD, PA, and AL.  The national baseline number sits at a little under 1.3%.

Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 looks to be even better with a forecast of under 40,000 foreclosure filings.

 

Real Estate Market Recap

Economic conditions:

  • Nationally, 2018 was the eighth straight year of 2 million + job gains.
  • We are now in our longest economic expansion period in America’s history with 100+ months of positive job gains.
  • The GDP is still rising (although its rate of increase seems to be slowing).
  • At 3.1% unemployment, NJ is now near to the national average, which is currently at 3.6% & leading economic indicators in NJ are now surpassing the nation by almost two-fold.
  • The best paying and most attractive jobs are in NYC, pulling many of our millennials in that direction (although this trend is diminishing).
  • And, wages are up 3.2% at the same time.
  • Interest rates have increased to just under 3.75%.
  • And, house prices have risen around 3+% in the more popular housing price points and areas further exasperating the situation (although this appreciation now appears to be slowing).
  • Baby boomers who were choosing to “stay put’ and update rather than “move up” to their dream house as it is no longer considered a sound investment (and a lot of times inventory is not available) which is causing most of the housing shortage are now finding available inventory.  This situation has loosened up as many new listings have come on the market over the past few months.
  • And there is still little entry-level construction going on in our area, just larger homes and new rentals.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage (the shelves are empty in our starter housing price points).
  • And, some empty houses are starting to appear at out higher price points.
  • Foreclosures rates continue to decline (or normalize).
  • There is continued confidence as the new tax and jobs act further stimulates the economy with more jobs as the economy remains robust.

Changes in lifestyle:

  • The average age at marriage is now in the mid to late ’30s (up seven years from just a decade ago).
  • Families usually have only one to two children due to costs and the ability to choose.
  • 70% of all NJ homes have no children of school age, and 50% do not have more than one person in them. This factor minimizes the need for larger housing not only in NJ but everywhere.
  • As a result of job opportunities, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 80% of consumers still perceive homeownership as part of the American Dream.  It is just what they want to buy (or rent) that has changed.
  • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking of smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).
  • 60% of all new housing starts in 2018 in NJ were in the rental sector.

Market conditions:

  • We experienced a sales slump in late 2018 due to interest rate hikes. But the first half of 2019 made up for it by being the best we have seen, and the 2nd half is also promising.
  • It appears that we are now entering the next phase of the housing cycle, which is still active, just less robust in price appreciation.  Sort of a cool down from 2018. Or, maybe back to normal.
  • And, we see some warnings of an economic slowdown starting in 2020 and beyond.
  • However, these warnings are not holding back sales activity.  We may see fewer sales and less price appreciation as a result.
  • The effect on housing is seen to be limited to curtailing the growth of price appreciation and not in any loss in value.
  • But, in general, homeowners are sitting with more equity than ever (NJ reports 95+% with positive equity) and are no longer using their homes as an ATM.  So, the effect of any slowdown on housing should be minimal (if at all).
  • Consumer confidence remains high nation-wide based on the job and stock market increases.
  • Most consumers still see homeownership as a sound investment.
  • There is a bit of offset to this encouraging news from the discord that we see in our national politics and trade policies.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with a lack of inventory in our lower price points, there are fewer houses for sale.
  • Affordability will never be in this good of shape as interest and price increases start to eat into what you can afford.
  • Millennials make up about 35% of our current homeowners with much more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend in early 2019 shows an increase in home sales, but price increases only in houses clustered in < $400,000 market where the first-time buyers and Millennials are focused.
  • The >$400K market holds diminishing slightly due to a lack of inventory.  We have seen additional new inventory in the $400K to $600K range.
  • Minimal new construction, lack of entry-level new housing, and COAH restrictions add additional value to the current inventory.
  • The five-year forecast indicates slow but steady price growth (but at reduced rates) at an annual average of 2 to 4% (depending on location and price point).  This price growth will remain higher in the under $400K market. And, little depreciation is being forecasted except in the higher-end inventory.
  • There is an acute shortage of inventory in both Hunterdon and Somerset County in our more popular price points and locations which is holding back even more sales.  In general, we have only about 65% of the inventory that we had in 2011 but are selling current inventory at faster rates.
  • It is simple; we could sell more houses if we had more inventory on hand,  And, as we have started to see small inventory increases over the past six months, 2019 can be a boom for resales.
  • In 2018 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2019 promises to be more normalized with at least 3% growth in prices.  But it depends on your price point and location. The following two years will also see less in % but should still show modest positive growth.
  • Mortgage delinquency is normalizing.

 

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 12  months.  And, there most likely will be only a slowdown impact on the rate of price appreciation if this happens.
  • Prime Interest rates have dropped three times already this year.
  • Home prices will rise by an average of another 3% during that same period (this will depend on your price point and location), further decreasing buying power. And, the most bullish projections show at least a 7% increase over the next few years.
  • While improving, supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs seem to be resulting from the Tax and Jobs act (look at the help wanted signs).
  • For the first time in memory, the US is reporting 7.1+million open jobs and only 6 million unemployed.  We are at full employment if you consider that 3% of unemployed is the normal level.
  • We now need to match the skills of the unemployed to the job openings to prosper further as many four-year degrees currently being obtained, are not useful in the current job market. It has also opened up the need for inward migration of workers to the economy.  In some areas, this is happening via people immigrating from outside of the US to areas with the skills needed to fill open positions.
  • The affordability index shows that there is room for much more sales; all we need an increase in inventory.  The most affordable time to buy appears to be now!.
  • Some high-end fall-out has resulted in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market is flourishing as a result of creating more buying demand.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.
  • And, thirty-seven percent of all homes in the US have no mortgage at all.
  • Small investor activity in the market is up.  In many cases, these are flippers buying-low end unsaleable inventory and bringing it up to marketable status.

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

 

 

 

Somerset County's Real Estate Market Conditions 2019

Somerset County’s Real Estate Market Conditions May 2019

Residential Real Estate

Residential Real Estate

Somerset County’s Real Estate Market Conditions May 2019

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 and human behaviors that influence local markets. You will come away knowing what is happening and why to be better informed to make home buying and selling decisions.

 

What is happening

Based on the last full month’s contract sales, statistics show a supply of approximately three months. Normal market conditions average four to five months in Somerset County.  Units going under contract averaged 52 days on the market. 435 properties went “under contract” in April compared to 322 in the prior month. Newly listed properties in the same period totaled 574.

 

Somerset County Inventory Breakdown By Price For Last Month:

 

 

  • 66% of sales in houses < $500,000
  • 30% 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 For Last Month:

 

Only two areas in Somerset County reported no sales in the past month

  • Millstone
  • Rocky Hill

Two areas reported one or two sales each last month

  • Far Hills
  • Peapack/Gladstone

Hotspots:

  • Bernards – 45 sales
  • Bridgewater – 55 sales
  • Franklin – 84 sales
  • Hillsborough – 41 sales
  • Montgomery – 27 sales

These hotspot areas equaled 58% of the sales last month. The average new listing coming on the market last month neared $623,481 The average price of a unit going “under contract” neared $464,253 (26% less).

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

 

Why it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales:

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

The still low inventory numbers lead to a bit of softening in the price appreciation on existing homes and a slowdown in growth. It is turning the tide back to a buyers market (or at least neutralize it to being a normal market).

We saw an increase of 3% in home sales in NJ in March.  Year to date we are 2% above 2018.

Activity still concentrates in the under $400,000 market where Millennial buyers are transitioning into home ownership.  But, this price point only saw a slight increase vs. 2018 YTD most likely due to lack of inventory.  The $400 to $600K range also saw a small increase YTD due to additional inventory coming on the market in that price range.

During the same period, all housing sales above $600,000 and below $1 million showed very modest increases showing confidence in the changes made on taxes and deregulation. There has also been an improvement at the very high-end in towns where rail service to Manhattan is available.  Houses above $1 million showed a small decrease.

At the same time, the number of homes offered for sale in New Jersey remained low (but rose by 4% last month). Currently, ~35,000 fewer homes (-47%) are on the market compared to the 2011 peak.

Current unsold inventory in New Jersey varies widely by county with a total of only 3.5 months (the same as last year).  All of NJ’s counties presently have less than eight months of supply.

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

Hunterdon and Somerset County have about 2 & 10% more inventory that we had a year ago respectively, but about 3 & 1 % less than two years ago respectively.

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

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

 

Interest Rates:

Interest rates have risen slightly further over the last month.

The economy is strengthening, and Interest rates have fallen in recent weeks to just over 4.2 for a 30-year conventional mortgage. A fifteen-year conventional mortgage rests at just over the 3.6%  mark. Five-year arms are just under the 3.76% range.

Consumer fears of further rises in interest rates and slowly rising home prices are driving the current market demand. The Fed appears to have interest rates on hold for the first two quarters (and maybe the year).

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

 

National Job Front:

US unemployment rate had a rebound in March with 196,000 jobs added.  And, unemployment remained at 3.8%.

On the national level, the US added over 2,700,000+ jobs in 2018 (an improvement over the initial reports).

At the end of January, there were 7.1+ million openings compared to nearly 6.3 million unemployed persons.

Consumer confidence is the highest since 2004.

 

New Jersey Job Front:

The NJ unemployment rate rose slightly to 4.1% (the lowest it has been on over ten years) bolstering consumer confidence in NJ as well.  In effect, NJ is rising with the national tide of nearly full employment.  We added jobs in January, but lost jobs in February and then added 3,600 in March.  Based on these three month’s results, 2019 does not look too promising for NJ.

NJ added 62,000+ jobs in 2018 as compared to 47,100 for the same period in 2017.  That number was revised down to 39,000 jobs for 2018.

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

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

 

Rental Market Trends:

We still have an extremely tight (but improving) rental market.

Rental prices in New Jersey rose nearly 5% in 2018, averaging just over $1,600 per unit. Current vacancy rates in New Jersey have fallen to just under 4% statewide and 2.8% in central NJ.  This rise resulted in part by a rapid increase in building in this sector.

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level was a result of the loose lending standards of the early 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 home ownership).

However, the number of renters has increased by 7% over the past 25 years with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into their discretionary income (including savings).  Makes one wonder where this all is heading.

The pace of new rental construction has increased to meet this demand.

 

New Jersey Foreclosures:

New Jersey continues to face high, but falling foreclosure rate filings remained at 2.3%. Other states have begun to, or already have recovered. In a tight real estate market, these foreclosures sell at a small discount.

Note: Figures vary by the local market, especially those walloped by Hurricane Sandy three years ago and rural and urban areas. We rank #4 in the country, led by NY with 2.9%, MS with 2.9% (mostly hurricane-related)  LA with 2.6% and trailed by ME, FL, DE, MD, PA, and AL.  The national baseline number sits at a little under 1.7%.

Foreclosures in NJ in 2018 were the lowest in the state in over four years.  And, 2019 looks to be even better with a forecast of under 45,000 foreclosure filings.

 

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns. State and Local Taxes (SALT), Mortgage and Interest Deductions (MID) and Home Equity Line of Credit (HELOC) Loan interest deductions.

In a nutshell, these changes appear to be having little impact to date, but there will be some very high-end people affected, and that will, in turn, affect that segment of the market.  That effect might slow the price growth in higher priced homes in NJ and even turn into a deficit in some most affluent areas.

The initial findings after people are returning from their accountants is promising with many low to moderate income bracket taxpayers finding that they have more money in their pocket that they expected.  Let’s see how this plays out.

 

Real Estate Market Recap 

Economic conditions:

  • Nationally, 2018 was the eighth straight year of 2 million + job gains.
  • We are in our second longest economic expansion period in America’s history and will be in the longest in just another month.
  • The GDP is still rising (although its rate of increase seems to be slowing).
  • At 4.1% unemployment, NJ is now near to the national average which is also currently at 3.8% & leading economic indicators in NJ are now surpassing the nation by almost two-fold.
  • The best paying and most attractive jobs are in NYC pulling many or our millennials in that direction.
  • Interest rates have dropped to surprising lows since the first of the year.
  • And, house prices have risen around 3+% in the more popular housing price points and areas further exasperating the situation (although this appreciation now appears to be slowing).
  • Baby boomers are choosing to “stay put’ and update rather than “move up” to their dream house as it is no longer considered a sound investment (and a lot of times inventory is simply not available) which is causing most of the housing shortage.  This situation may loosen up as many new listings have come on the market over the past few months.
  • And there is little entry-level construction going on in our area, just larger homes and new rentals.
  • As a result of the previous two points, we are experiencing the current housing inventory shortage (the shelves are empty in our starter housing price points).
  • Foreclosures are on the decline.
  • There is continued confidence that the new tax and jobs act will further stimulate the economy with more jobs as the economy remains robust.
  • The new tax rules appear only to affect our very high-end buyers.  We are seeing a lot of smiles on the faces of those that have done their taxes already.

 

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.
  • Demand for larger houses has diminished not only in NJ but everywhere.
  • As a result of job opportunities, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 80% of consumers still perceive homeownership as part of the American Dream.  It is just what they want to buy (or rent) that has changed.
  • Builders have been thinking larger 4 BR center hall colonials on 1+ acre in the country (based mostly on local building codes).
  • Buyers are thinking smaller luxury hi-rise close to mass transportation and work in the east (truly a mismatch).

 

Market conditions:

  • We experienced a sales slump in late 2018 due to interest rate hikes.
  • It appears that we are now entering the next phase of the housing cycle which is still active, just less robust.  Sort of a cool down from 2018. Or, maybe back to normal.
  • And, we are starting to see some warnings of an economic slowdown starting in late 2020 and beyond as the fed might raise interest rates to curb inflation.
  • The effect on housing is seen to be limited to curtailing the growth of price appreciation and not in any loss in value.
  • But, in general, homeowners are sitting with more equity than ever (NJ reports 92% with positive equity) and are no longer using their homes as an ATM.  So, the effect of any slowdown on housing should be minimal (if at all).
  • Consumer confidence remains high nation-wide based on the job and stock market increases.
  • There is a bit of offset to this encouraging news from the discord that we see in our national politics.
  • A lot of negative and inaccurate news about the housing industry results.  For the most part, this news is unfounded.
  • This confidence is reflected in buyer traffic being up at open houses.  However, with a lack of inventory, there are fewer houses for sale.
  • Affordability will never be in this good of shape as interest and price increases start to eat into what you can afford.
  • Millennials make up about 35% of our current homeowners with much more room for expansion at the lower end of the market when adequate inventory supply materializes.
  • Central New Jersey’s trend in early 2019 shows an increase in home sales but price increases only in houses clustered in < $400,000 market where the first-time buyers and Millennials are focused.
  • The >$400K market holds steady to diminishing slightly, depending on location and price.  Often when a >$600K property goes on the market, it’s competing with a >$700K that needs to sell quickly (etc.).
  • Minimal new construction, lack of entry-level new housing and COAH restrictions add additional value to the current inventory.
  • Analysts five-year forecast indicates slow but steady price growth (but at reduced rates) at an annual average of 2 to 4% (depending on location and price point).  This price growth will remain higher in the under $400K market.
  • There is an acute shortage of inventory in both Hunterdon and Somerset County in our more popular price points and locations holding back sales.  In general, we have only about 50% of the inventory that we had in 2011.
  • It is simple, we could sell more houses if we had more inventory on hand,  And, as we have started to see small inventory increases over the past six months, 2019 can be a boom for resales.
  • In 2018 prices rose ~ averaging just over 3.5% and depending on price points and locations.  2019 promises to be more normalized with a 2 to 3% growth in prices.  But it depends on your price point and location. The following two years will also see less in % but should still show modest growth.
  • Mortgage delinquency is normalizing.

 

Forecast:

  • The economy will continue to prosper with no recession currently in sight for the next 24 to 36 months.  And, there most likely will be only an impact on the rate of price appreciation if this happens.
  • Interest rates will probably not climb too much further in 2019.  They could even drop further.
  • Home prices will rise by an average of another 2 to 3% during that same period (this will depend on your price point and location) further decreasing buying power.
  • While improving, supply will remain tight in the more popular price points in the residential real estate.
  • Many new jobs seem to be resulting from the Tax and Jobs act (just look at the help wanted signs).
  • For the first time in memory, the US is reporting 7.5+million open jobs and only 6.5 million unemployed.  We are at full employment if you consider that 3% of unemployed is the normal level.
  • We now need to match the skills of the unemployed to the job openings to prosper further as many four-year degrees currently being obtained, are not useful in the current job market. It has also opened up the need for inward migration of workers to out the economy.
  • The affordability index shows that there is room for much more sales; we need an increase in inventory.  The most affordable time to buy appears to be now!.
  • Some high-end fall-out has resulted in the residential real estate from the SALT and mortgage interest changes in the Tax and Jobs act.
  • The commercial real estate market is flourishing as a result of creating more buying demand.
  • People in their home > 10 years have very positive home equity built up, and a more significant portion of payments applies to principle.  Increases in selling prices should eventually motivate people to make changes in their lifestyle by investing in summer homes or even start a new business with the extra equity cash.

 

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability.

 

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

 

Somerset County's Real Estate Market Conditions May 2019

Somerset County's Real Estate Market Conditions February 2019

Somerset County’s Real Estate Market Conditions October 2018

Residential Real Estate

Real Estate Market Conditions

Somerset County’s Real Estate Market Conditions October 2018

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 and human behaviors that influence local markets. You will come away knowing what is happening and why and be better informed to make home buying and selling decisions.

“What” is happening

Based on the last full month’s contract sales, statistics show a supply of approximately five months. Normal market conditions average four to six months in Somerset County.  Units going under contract averaged 52 days on the market. 301 properties went “under contract” in September, down from 364 in the prior month. Newly listed properties in the same period totaled 485.

Somerset County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Month’s Supply
Condos/Town Houses * 152 117 394 3
Over 55 Communities* 23 7 38 5
$000K to $199K 23 32 79 2
$200K to $299K 96 85 247 3
$300K to $399K 86 62 223 4
$400K to $499K 64 37 173 5
$500K to $599K 47 24 152 6
$600K to $699K 43 19 121 6
$700K to $799K 31 18 108 6
$800K to $899K 27 8 89 11
$900K to $999K 20 5 81 16
$1,000K and Up 48 11 252 23
Totals for September 485 301 1525 5
Average Price $571,671 $436,507 -23.6%
Average Days on Market 52
* Included in $ breakdowns

Somerset County Sales Breakdown Overview:

  • 71 % of sales in houses < $500,000
  • 25 %of sales in houses > $500,000 and < $1,000,000
  • 4 % percent of total sales (or 11 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 69 21 3
Bernards Twp 180 24 8
Bernardsville 99 6 17
Bound Brook 27 8 3
Branchburg Twp 76 8 10
Bridgewater Twp 177 32 6
Far Hills Boro 17 2 0
Franklin Twp 219 64 3
Green Brook 34 9 4
Hillsborough 138 41 3
Manville Boro 32 10 3
Millstone Boro 1 2 1
Montgomery Twp 127 14 9
North Plainfield 54 15 4
Peapack Gladstone 22 0
Raritan Boro 16 3 5
Rocky Hill Boro 7 0
Somerville Boro 28 12 2
South Bound Brook 16 6 3
Warren Twp 134 19 7
Watchung Boro 52 5 10
Totals 1525 301 5

Somerset County Sales Breakdown Detailed:

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

  • Peapack Gladstone
  • Rocky Hill

Two area reported one or two sales each last month

  • Far Hills
  • Millstone

Hotspots:

  • Bernards – 24 sales
  • Bridgewater – 32 sales
  • Franklin – 64 sales
  • Hillsborough – 41 sales
  • Montgomery – 14 sales

These hotspot areas equaled 58% of the sales last month. The average new listing coming on the market last month neared $571,671 The average price of a unit going “under contract” neared $436,507 (24% less).

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

“Why” it is happening

New Jersey’s Economic Drivers:

New Jersey Home Sales:

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

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

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

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

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

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

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

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

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

 

Interest Rates:

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

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

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

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

 

National Job Front:

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

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

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

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

Consumer confidence is the highest since 2004.

Great news for the housing industry!

 

New Jersey Job Front:

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

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

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

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

 

Rental Market Trends:

We still have an extremely tight rental market!

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

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

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

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state. However, the 71% level was a result of the loose lending standards of the early 2000’s and is actually at a good level.  Households with no children stand at 65%, reflecting the decline in our school population.

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

However, the number of renters has increased by 7% over the past 25 years with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into to their discretionary income (including savings).  Makes one wonder where this all is heading…

 

New Jersey Foreclosures:

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

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

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

 

Tax cuts and Jobs Act effect:

Three specific areas had appeared were concerns:

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

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

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

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

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

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

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

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

 

Real Estate Market Recap 

 

Economic conditions:

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

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up seven years from just a decade ago).
  • Families usually have only one to two children due to costs and the ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than one person in them.
  • Demand for larger houses has diminished not only in NJ but everywhere.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 80% of consumers still perceive homeownership as part of the American Dream.
  • It is just what they want to buy (or rent) that has changed.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work (truly a mismatch).
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

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

Forecast:

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

 

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability.

 

 


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bridgewater-nj-real-estate-market-february-2019

Somerset County, NJ Residential Real Estate Market Conditions | September 2018 – Bridgewater Township Edition

Somerset County, NJ

Residential Real Estate Market Conditions | September 2018 – Bridgewater Township Edition

Real Estate Market Conditions

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

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

“What” it is happening

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 57 days on the market. 364 properties went “under contract” in August, down from 423 in the prior month. Newly listed properties in the same period totaled 426.

Somerset County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Month’s Supply
Condos/Town Houses * 145 119 382 3
Over 55 Communities* 8 11 23 2
$000K to $199K 35 39 84 2
$200K to $299K 99 80 245 3
$300K to $399K 81 65 223 3
$400K to $499K 53 54 153 3
$500K to $599K 49 42 141 3
$600K to $699K 28 25 111 4
$700K to $799K 19 24 106 4
$800K to $899K 14 12 85 7
$900K to $999K 14 8 89 11
$1,000K and Up 34 15 253 17
Totals for August 426 364 1490 4
Average Price $519,030 $468,431 -9.7%
Average Days on Market 57
* Included in $ breakdowns

Somerset County Sales Breakdown Overview:

  • 65 % of sales in houses < $500,000
  • 30 %of sales in houses > $500,000 and < $1,000,000
  • 04 % percent of total sales (or 15 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 69 14 5
Bernards Twp 174 41 4
Bernardsville 84 9 9
Bound Brook 24 12 2
Branchburg Twp 68 14 5
Bridgewater Twp 163 43 4
Far Hills Boro 16 2 0
Franklin Twp 212 85 2
Green Brook 42 7 6
Hillsborough 147 36 4
Manville Boro 35 9 4
Millstone Boro 3 2 2
Montgomery Twp 128 22 6
North Plainfield 56 25 2
Peapack Gladstone 16 4 4
Raritan Boro 13 5 3
Rocky Hill Boro 6 0
Somerville Boro 27 12 2
South Bound Brook 19 3 6
Warren Twp 138 15 9
Watchung Boro 50 4 13
Totals 1490 364 4

Somerset County Sales Breakdown Detailed:

One area in Somerset County reported no sales in the past month

  • Rocky Hill

Two area reported one or two sales each last month

  • Far Hills
  • Millstone

Hotspots:

  • Bernards – 41 sales
  • Bridgewater – 43 sales
  • Franklin – 85 sales
  • Hillsborough – 36 sales
  • Montgomery – 22 sales

These hotspot areas equaled 62% of the sales last month. The average new listing coming on the market last month neared $519,030 The average price of a unit going “under contract” neared $468,431 (10% less).

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

Bridgewater Township Statistics:

  • There are 163 homes for sale in Bridgewater Township as of this writing.
  • Of the 177 homes for sale, 40 are community properties (such as town houses and condos) and none is in our 55+ communities
  • The average list price for all listings in Bridgewater Township is $582,520.
  • There were 50 new listings in Bridgewater Township last month with an average list price of $501,125.
  • There were also forty-three homes that have gone under contract in the past 30 days with an average list price of $448,891 and 49 days on market.
  • Giving us over 3 months of inventory
  • Call for additional details

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

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

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

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

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

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

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

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

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

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

Interest Rates:

Interest rates are holding.

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

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

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

National Job Front:

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

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

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

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004.

Great news for the housing industry!

New Jersey Job Front:

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

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

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

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

Rental Market Trends:

We still have an extremely tight rental market!

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

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

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

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state.  Households with no children stand at 65%, reflecting the decline in our school population.

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

However, the number of renters has increased by 7% over the past 25 years with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into to their discretionary income (including savings).  Makes one wonder where this all is heading…

New Jersey Foreclosures:

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

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

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

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

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

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

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

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

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

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

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

Real Estate Market Recap 

Economic conditions:

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

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up 7 years from just a decade ago).
  • Families usually have only one to two children due to costs and ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 80% of consumers still perceive homeownership as part of the American Dream.
  • It is just what they want to buy (or rent) that has changed.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

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

Forecast:

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

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability.


Presented as a public service by:

Joe Peters Logo
 


Click Here to Real Estate Market Guides

Somerset County, NJ Residential Real Estate Market Conditions | September 2018 – Warren Township Edition

Somerset County, NJ

Residential Real Estate Market Conditions | September 2018 – Warren Township Edition

Real Estate Market Conditions

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

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

“What” it is happening

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 57 days on the market. 364 properties went “under contract” in August, down from 423 in the prior month. Newly listed properties in the same period totaled 426.

Somerset County Inventory Breakdown By Price For Last Month:

New Listings Under Contract Active Listings Month’s Supply
Condos/Town Houses * 145 119 382 3
Over 55 Communities* 8 11 23 2
$000K to $199K 35 39 84 2
$200K to $299K 99 80 245 3
$300K to $399K 81 65 223 3
$400K to $499K 53 54 153 3
$500K to $599K 49 42 141 3
$600K to $699K 28 25 111 4
$700K to $799K 19 24 106 4
$800K to $899K 14 12 85 7
$900K to $999K 14 8 89 11
$1,000K and Up 34 15 253 17
Totals for August 426 364 1490 4
Average Price $519,030 $468,431 -9.7%
Average Days on Market 57
* Included in $ breakdowns

Somerset County Sales Breakdown Overview:

  • 65 % of sales in houses < $500,000
  • 30 %of sales in houses > $500,000 and < $1,000,000
  • 04 % percent of total sales (or 15 in total) in houses >$1,000,000

Somerset County Inventory Breakdown By Municipality For Last Month:

Active Listings Under Contract Month’s Supply
Bedminster Twp 69 14 5
Bernards Twp 174 41 4
Bernardsville 84 9 9
Bound Brook 24 12 2
Branchburg Twp 68 14 5
Bridgewater Twp 163 43 4
Far Hills Boro 16 2 0
Franklin Twp 212 85 2
Green Brook 42 7 6
Hillsborough 147 36 4
Manville Boro 35 9 4
Millstone Boro 3 2 2
Montgomery Twp 128 22 6
North Plainfield 56 25 2
Peapack Gladstone 16 4 4
Raritan Boro 13 5 3
Rocky Hill Boro 6 0
Somerville Boro 27 12 2
South Bound Brook 19 3 6
Warren Twp 138 15 9
Watchung Boro 50 4 13
Totals 1490 364 4

Somerset County Sales Breakdown Detailed:

One area in Somerset County reported no sales in the past month

  • Rocky Hill

Two area reported one or two sales each last month

  • Far Hills
  • Millstone

Hotspots:

  • Bernards – 41 sales
  • Bridgewater – 43 sales
  • Franklin – 85 sales
  • Hillsborough – 36 sales
  • Montgomery – 22 sales

These hotspot areas equaled 62% of the sales last month. The average new listing coming on the market last month neared $519,030 The average price of a unit going “under contract” neared $468,431 (10% less).

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

Warren Township Statistics:

  • There are 138 homes for sale in Warren Township as of this writing.
  • Of the 138 homes for sale, 13 are community properties (such as town houses and condos) and two are in our 55+ communities
  • The average list price for all listings in Warren Township is $1,074,909.
  • There were 22 new listings in Warren Township last month with an average list price of $960,727.
  • There were also fifteen homes that have gone under contract in the past 30 days with an average list price of $849,520 and 70 days on market.
  • Giving us just over 9 months of inventory
  • Call for additional details

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

This section will focus on “Why” it is happening

 

New Jersey’s Economic Drivers:

New Jersey Home Sales:

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

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

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

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

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

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

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

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

Interest Rates:

Interest rates are holding.

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

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

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

National Job Front:

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

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

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

And the GDP is predicted to keep expanding.

Consumer confidence is the highest since 2004.

Great news for the housing industry!

New Jersey Job Front:

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

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

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

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

Rental Market Trends:

We still have an extremely tight rental market!

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

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

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

The drop in New Jersey’s homeownership contributes to rental demand.  A 12+ year trend shows a decrease from  71% to 66%.  This 7% decrease compared to an 8% national decrease contributes to the slower recovery of home prices in the state and adds over 20,000+ additional renters in our state.  Households with no children stand at 65%, reflecting the decline in our school population.

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

However, the number of renters has increased by 7% over the past 25 years with the less educated leading the way.  And, we are now seeing more educated millennials moving east into higher rent and cost of living areas that eat into to their discretionary income (including savings).  Makes one wonder where this all is heading…

New Jersey Foreclosures:

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

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

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

Tax cuts and Jobs Act effect:

Three specific areas had appeared as concerns:

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

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

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

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

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

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

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

Real Estate Market Recap 

Economic conditions:

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

Changes in lifestyle:

  • Average age at marriage is now in the mid to late 30’s (up 7 years from just a decade ago).
  • Families usually have only one to two children due to costs and ability to choose.
  • 65% of all NJ homes have no children of school age.
  • 50% do not have more than 1 person in them.
  • Demand for larger houses has diminished.
  • As a result of the job situation, buyers are gravitating to areas within 15 miles of NYC with good mass transportation systems.
  • 80% of consumers still perceive homeownership as part of the American Dream.
  • It is just what they want to buy (or rent) that has changed.
  • Builders have been thinking 4 BR center hall colonials on 1+ acre in the country.
  • Buyers are thinking luxury hi-rise close to mass transportation and work.
  • And, for the first time in history, Hunterdon County (which has been declining in population) has reported more deaths than births in 2017.

Market conditions:

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

Forecast:

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

Note:  Presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. I took reasonable precautions for presenting this information. Please consult with a professional sales agent and take no actions based on my opinions, gathered trends, and statistics.  I assume no liability.

 


Presented as a public service by:

Joe Peters Logo
 


Click Here to Real Estate Market Guides