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.