“How’s real estate and what should I do?” I am receiving so many calls and messages like this that I thought I should post some answers. It seems that real estate is on everyone’s mind lately. Let’s find out how to handle the Bergen County housing market.
Here’s something to consider: A primary motivating factor for most people is simply because it was the right time. So ask yourself this question – Is this the right time for you?
The right time to move can be due to many reasons such as getting your kids out of the city and into a backyard with pretty lighting, you’ve outgrown your home and need more space, you’ve had it with renting and want your own place, you’re ready to move to your dream retirement, everyone’s moved to California and you’re still in Bergen County etc.
If you’re wondering how to manage things based on how the real estate market is doing in Bergen County, here are some answers to help you:
Are you thinking of buying a home? Do it now – we’re at or near the bottom with mortgage rates at historic lows; inflation, with its high interest rates, is projected for the future.
Want to move up to a larger home? Move up now – the cost of upgrading is always the cheapest when you’re around a market’s bottom which is where we are today.
Own a home and not moving? Check your mortgage rate immediately. No matter when you purchased or if you did refinance recently, do this for your own benefit.
Thinking of selling your home? Get your home on the market now – you stand to lose another 5% this year so waiting will hurt you.
Not sure if this is the right time to move? Then don’t. If you’re not sure, its always best to stay put. However, it’s also best to investigate your options fully; I suggest you do this bi-annually.
Let me know if you have any other questions about how to handle the Bergen County housing market today. All you have to do is contact me today.
What Can We Expect in 2009 and for Tenafly real estate in particular?
I can answer this with one word – improvement. I had projected 10% depreciation but that was before the stunning sub prime mess was revealed. While we have “Monday Morning Quarterbacks,” the truth is virtually no one knew of this growing menace. The Tenafly market for homes in 2008 ended with 25% fewer sales and 18% depreciation.
Yet Tenafly homes did better than most; our market is more resilient than you’d think. Selling a home took less time in 2008 and first quarter figures indicate we’ll do even better this year.
Appraisers are still deducting 1% per month but say this will end later in the year; Jeff Otteau, the renowned analyst of New Jersey’s housing market, announced in mid March that 2009 will end with 9% depreciation statewide. This dovetails with a second half recovery; homes in Tenafly will see it during the fourth quarter.
By recovery I do not mean that prices will go up; they won’t. They will stop going down and the market will stabilize. We’ll stay there for another year or two before any upward swing bringing us to 2012 or later.
Although unemployment will continue to increase over the next several months, it should level off by year’s end. Unfortunately unemployment will not improve quickly. For now we can only estimate how this will affect our market; its impact takes a while to be felt.
But Washington funded the FHA to continue lending and increased the tax credit to $8,000 with no payback required. This enabled first time buyers to get in the market. With the lion’s share of price depreciation done and mortgage rates so low most of us have never seen this, home buyers are back in the market. Activity has really picked up since March 1st with no signs of slowing down.
What is certain is that Tenafly real estate remains one of the most in demand markets in the NYC metropolitan area. This will not change. While we can’t escape the storms of life, the truth is that Tenafly weathers them better than most in Bergen County and the New York City area.
Cresskill is celebrating Earth Day in a very special way by having it’s first ever Cresskill Earthfest. The date is Sunday, April 18th and everyone is looking forward to it.
This is going to be an all day fun filled event for people of all ages. The focus is not only on celebrating our planet but also learning about it. As a result there’s going to be a large number of learning activities and exhibitions.
Cresskill Earthfest is also about having fun. This is why they have plenty of live entertainment and fascinating exhibits. There are the following events for even more fun too:
- A Family Bicycle Tour (it’s also ok if you’re not a family),
- An Environmental Fun Walk
- a Volunteer Community Clean up of the Tenakill Brook
- A Children’s Bicycle Rodeo and Safety Check (be sure the kids bring their bikes)
Cresskill Earthfest starts at 9 am and ends at 2 pm (although it might run a bit longer). This is going to be an awesome event. Many environmental groups and regulation agencies are coming to help enthuse and educate everyone. They will teach us how to preserve and protect the environment. They will also show us to live a better life by going green.
Have you ever thought about going green with a car? If you have, you’re in for a treat because there will be an exhibit of the latest in green cars.
This very impressive event is put together by the Cresskill Environmental Commission and the Cresskill Education Fund. Working hard together they have created a spectacular day. It has everything you’d expect of an Earth Day celebration. You’ll find things from alternative energy exhibits to an arts and crafts table to foods from organic farms. If it’s about the environment and making your world more green, it will be there for you.
Come to the Cresskill Earthfest on the 18th. This major event is located on the 3rd Street field and rec center near the town pool.
The figures are in and the real estate market in Bergen County is doing OK. It’s still a buyer’s market for homes but you can see some signs of improvement with Bergen County real estate.
In January I had written that the real estate market in Bergen County would shift during the 4th quarter of 2009 and stabilize. From then on for a few years we would be working in a narrow range before turning upward again. This time it would take longer than it did in the early 90’s to rebound fully but being stable is good. So far my projection is still on target.
Most of the reports at that time were for this to happen once we were solidly in 2010 – well, the media reports are singing a different song because things have changed. And so has the Bergen County real estate market.
If you look at the number of homes coming onto the market and going under contract, what you’ll find is very interesting. For the homes becoming active in the New Jersey MLS, there’s been an 11% drop during the first quarter of 2009 but the pace of homes going under contract is the same this year as it was last year. Do I hear the word stable anywhere? Yes, this is indeed a sign of stabilization and that’s, to quote Martha Stewart, a good thing.
For the first quarter in both 2008 and 2009 the Active to Under Contract ratio is 3.9 to 1 in the New Jersey MLS data. This means that the pace of home sales is maintaining itself and it’s also quite respectable – the ratio of a strong seller’s market is 2 to 1.
Looking closer to see what happened we find that in 2008 the rate at which homes became active was pretty normal – a gradual progression as you moved more into the year. But in 2009, January and February were anemic and then we had a 32% explosion upward in March. Do you think that the spring real esate market is back in Bergen County? I sure do.
Home buying activity has really picked up since March 1st and home sellers have correspondingly jumped into the real estate market. Why would they wait until now to put their home on the market for sale? Because the atmosphere was so negative at the end of 2008 that it made many homeowners hold off. What’s changed? Well, just to mention a few items – the $8,000 tax credit, liberalization of FHA mortgages, even lower mortage rates, home prices not seen in nearly 8 years and the natural spring rhythm of home buying.
While home values are still going down – another 5% for the rest of this year – I still feel that the market will be stabilized by the 4th quarter. What we’ve seen so far this year in maintaining the pace of sales and in the recent surge in home buying activity certainly point to this and also to a good spring market for Bergen County real estate. In fact, I won’t be surprised to learn that the bottom of the real estate market in Bergen County was the end of 2008 and the very beginning of 2009. 2009 will be a year of change.
The most important first step in buying a home is financing which involves getting prequalified for a home mortgage. It doesn’t matter if you’re buying Bergen County real estate or a home somewhere else – because your mortgage loan is so critical to your home buying process, you are naturally interested in any news about these loans. Here is where you begin what I call Mortgage Rate Madness.
People afflicted with this disease believe that they can get mortgage rates at levels not seen because they don’t exist. The other day I had a call from a consumer who had this disease – a really bad case of MRM! She thought she could get a mortgage rate of 4%. The reason she was so sure of this was simply because one of her friends heard this on the radio and someone else saw it on TV.
Hmm…..maybe at 3 in the morning you might see some infomercial where all sorts of nice people are sitting in their Bentleys (which they rented for the hour) telling the world all sorts of mysterious fables. You know, the folks who make millions without working and get tons of free money. It isn’t your fault if you get the MRM disease. This virus is everywhere – it’s on the radio, it’s on TV, it’s online, it comes from a friend who heard it from a friend who heard it from…and on and on and on.
OK – how about a good dose of reality? Mortgage rates are indeed low. In fact, they’re so low that they’re truly at historic lows. But the interest rate on your mortgage depends on many things – for example, if you have a small down payment, for almost everyone that means a FHA loan. Because your down payment is small, the risk is greater to the lender so the interest rate is a little higher; the FHA specializes in such loans. It’s all in the details as they say.
It also depends on how much money you are going to borrow. Up to $417,000 it’s one rate, at $417,000 – $1 million it’s about one half point higher, etc. Mortgage rates vary depending on how much you borrow, your down payment and, of course, your credit score. I can tell you that that there is a cure for MRM disease – work with a good licensed mortgage banker. Invest some time in getting properly educated and pre-approved for your mortgage. It’s usually the biggest loan you’ll ever have. If you go to the Financing section at www.BergenCountyHomes.com you’ll find several. Trust me – if it’s too good to be true, it’s MRM disease!
Here is a quick update for you and it is indeed great news. Buyers are back. As a result activity’s up in the real estate market.
There has been a noticeable increase in the number of people looking at homes over the past two weeks. We’re seeing more buyers coming out on Sundays to our open houses. We are also receiving more calls into our offices and more web responses to our internet postings. The Bergen County real estate market has become very very busy.
At the same time, the inventory of homes for sale is growing daily. More and more people are putting their homes on the market for sale now that we’re safely past the snow season. Most home owners do not want to sell their home during the winter weather. As a result having the number of homes for sale grow significantly at winter’s end is quite normal.
The reason for home buyer activity is improved market conditions. Because market conditions for buyers have improved greatly, buyers are back. Prices are down substantially from 2004 (by 20 to 25% in most areas) and mortgage rates tumbled over the past 2 weeks.
Jeffrey Otteau is one of the most respected analysts of New Jersey real estate. When he speaks people listen. Here is his take on things:
Mr. Otteau announced last week that New Jersey real estate will depreciate another 9% in 2009. He went on to say that prices will stay at that level in 2010 as the real estate market stabilizes. For many home buyers, this combination of factors made buying a home now a great idea.
It will be interesting to see if this pick up in activity continues and for how long. I have a funny feeling that the “smart money” is buying a home now. Only a lucky person picks the market bottom but I must say that we’ve got to be pretty close to it now. What I do know is that buyers are back and that’s a very good thing.
A short sale occurs when a home that is sold is worth less than the mortgage amount and the homeowner cannot make up the difference. For example, you sell a home for $75,000 but the mortgage is $100,000; you’re short $25,000. The bank enables the homeowner to sell the house by forgiving the $25,000 difference. So while the bank doesn’t own the house, the owner can’t sell it without the bank’s cooperation. Of course, in an actual short sale, the bank would be forgiving the mortgage amount, any other liens and the closing costs.
This is my best advice to pursue a short sale in Bergen County: Contact an attorney who specializes in real estate before you do anything. It is always best if you begin by being fully informed.
You do several things to get a bank to allow a short sale. Banks require homeowners to complete a “workout package”. Hardship letters are part of this package. They are written by the owner to explain the circumstances that led to the owner’s financial difficulties. Supporting documents are included too such as pay stubs and account statements. You need to make a strong case to get the bank’s approval.
Why would a bank do this? Because the other alternative is a foreclosure. Foreclosures cost the bank much more in time and money.
Why would a homeowner dos this? Because a short sale erases the debt. Banks forgive everything most of the time. They may insist on a promissory note for part of the loss sometimes. That’s still much better than a foreclosure.
Foreclosures do not erase debt. Debt collectors pursue you for years. They take your vehicles, garnish your wages, clean out your checking account etc. Your credit is ruined for about 10 years. That is a Titanic sized disaster. Short sales recover your credit in a few years. Debts are wiped clean. The IRS does not consider forgiven debt as income.
3,703 single family homes are for sale in Bergen County. Short sales total 346 or 9.3% of all homes for sale. They resolve a difficult situation for both banks and owners.
Getting a pet when you move into your new home is almost a ritual for many families in Bergen County. It’s not unusual for me to learn that one of my customers has added a new dog or cat or other pet to their family once everything is unpacked. Those of us who grew up with pets can remember how excited we were when our parents let us bring home our new pet. It was so much fun and it taught us to be responsible – after all, a pet needs to be taken care of but oh what love they give us in return! When you adopt a pet you add so much to your life and that of your family’s.
Bergen County has several opportunities for pet adoption. Unfortunately, there are so many pets available these days waiting to be adopted. Why not make your house a home by adopting a pet?
There are two animal shelters – the Bergen County Animal Shelter in Teterboro and the Ramapo Bergen Animal Refuge in Oakland. We also have some wonderful organizations where I have met many teriffic volunteers during my time in Bergen County real estate sales.
There’s PetResQwhich is an all volunteer group based in Tenafly and having it’s first ever annual “Fur Ball” dinner dance at the Clinton Inn in Tenafly on March 27th. We also have the Bergen County Humane Society based in Lyndhurst but serving the entire county. Another great group is the New Jersey Boxer Rescue which is extremely active in Bergen County although they cover the entire state. I’ve had personal experience with the New Jersey Boxer Rescue folks and I can’t say enough good things about them.
If you’re ready for a new member of the family, you can certainly find one in Bergen County. Adopt a pet from an animal shelter or one of these organizations and you’ll rescue an animal that will love you for years to come.
Buying a home for most of us means getting a mortgage. Mortgage rates become a prime issue for home buyers as does their credit report. The interest rate on that mortgage is determined in large part by your credit score.
Whether or not you qualify for a mortgage is often determined by your credit score alone. It is true that income, debt and assets are important but your credit score is the first determining factor. Your credit score must be at a certain level for the rest to matter. Rates are based on your credit score as well.
Credit scores are vital to your financial well being in so many ways that have nothing to do with purchasing a home. For example, your credit score can impact what you are charged for auto insurance or whether or not a utility company requires a security deposit in order to get the lights turned on in your new home.
Here’s a good tip to improve your credit score – don’t pay off your credit cards. Get them down to half or less of what you’re allowed to charge. Ellen Jacobson is a Senior Mortgage Banker with JP Morgan Chase and someone I’ve worked with for years. She told me that most folks she sees make the same mistake. They pay off one credit card at a time in an effort to have fewer credit cards. “Nothing could be further from the truth” she told me. In fact, she said that closing a credit card can hurt your credit score.
Of course no one is advocating that you maintain credit card debt. If you do have several credit cards, try to make sure you keep them all no higher than 50% of what you are allowed. This will improve your scores. You may also want to get best balance transfer cards. It’s also a smart idea to consult with your mortgage banker before you do anything. Being careful is always a good idea.
The New Jersey Association of Realtors publishes a report every year on the characteristics of people who buy and sell homes in New Jersey. The National Association of Realtors has it’s own buyer and seller profile but naturally that’s on a national scale. I prefer to use the New Jersey Home Buyer Profile report because it focuses on our State.
There are some very interesting facts in this report and you might just be surprised by a few. Here are some highlights from the New Jersey Association of Realtors profile of home buyers:
- The median age of New Jersey home buyers is 36
- First time home buyers had a median age of 30
- 56% were married couples
- 21% were single females
- 10% were single males
- 49% of home buyers were first time buyers
- 64% had no children under 18 living with them
- The #1 reason to buy a home – a desire to own your own home
- The #1 reason for deciding when to do it – it was the right time in their life
- Top reason to choose the location – quality of the neighborhood
- 2nd reason to choose the location – convient to their job
- 68% of all purchases were detached single family homes
- 89% used a fixed rate mortgage
- 72% used the internet frequently to search for a home; 17% occasionally
There are two key items here ito note – 49% of all buyers in 2008 were first time home buyers and they decided to buy a home because the time was right for them.
First time home buyers are crucial to keep a market moving – without them, a real estate market will collapse because they are the first cog in the wheel that drives the real estate engine forward. There was also a rise in the we buy houses companies. They are the one’s that come in and pay cash for the home fix it up and make a large profit. Most are on the up and up but a few have talked the elderly into selling their homes promising them the world and then come to find out they are left with less than half what the home is worth. It’s also interesting to see that no matter the external factors at work (economy, interest rates, etc), it still comes down to when it’s the right time for me. If you want a copy of the full report, just email me.