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Real Estate Bubble in Northern New Jersey, the Summit NJ Stats Don’t Reflect It
By admin | January 21, 2009
There are a select few people who seem to think that New Jersey is experiencing the aftermath of a real estate bubble. No matter what evidence is presented to them, they would rather stick their heads in the sand and ignore the facts.
Real Estate Bubble in Northern New Jersey, the Summit NJ Stats Don’t Reflect It
I thought I would bring you some interesting numbers from the Summit NJ real estate markets past.
Median sold price for a Summit New Jersey home 1999 $482,767
Median sold price for a Summit New Jersey home 2006 $825,362
Median sold price for a Summit New Jersey home 2008 $777,571
Average sold price for a Summit New Jersey home 1999 $540,667
Average sold price for a Summit New Jersey home 2006 $1,016,109
Average sold price for a Summit New Jersey home 2008 $965,898
The Summit NJ real estate market moved up on average about 88% from the 1999 market year to the 2006 market year (the commonly accepted peak year). By 2008 the average Summit NJ home was selling for about 95% of what it was selling for in 2006.
If you look at the median Summit NJ home sales price it appreciated about 71% from 1999 through 2006, and in 2008 the median Summit NJ home sold for about 94.2% of what it sold for in 2006.
Those numbers hardly paint the picture of a New Jersey real estate bubble deflating. The commonly accepted real estate bubble description includes real estate prices that doubled or tripled over the course of 3 or 4 years, and a deflating bubble likely at this point would have sold prices off 30% to 50%, clearly not what we are seeing here.
Some people will point out that foreclosures in New Jersey have doubled over the past year. While I feel for those families who get foreclosed on, in most towns the actual foreclosure rate is still very low with bank owned homes (foreclosures) making up just 2% to 3% of the sold homes. That number is way to low to have much effect on the overall market. Push the market weight of foreclosures up to 30% or more and I agree they would have a big impact on home values in any town.
Here are a few questions from one of the people I referred to at the top of this post, with my answers.
These problems that face New Jersey right now:
Increasing foreclosures (in fact they doubled this past year) Still very low in most towns, making up less then 2% to 3% of the homes sold in most towns. Com pair that to other states where that number is more like 50% and higher. If you double the rate and push those numbers up to 4% to 6% there still is very little impact on the overall market of said town.
Increasing unemployment no real new news there, what is the rate now 7.5% that means better than 90% who want to work are working. In fact I am working with a new relocation client who got a new job here in Morris County. So it is still possible to get a job. Not denying that times are tuff, but you know what, lots of homes sold during that last several recessions, and they will in this one as well.
Sky high property taxes nothing has changed there, this is New Jersey, you want to change the property tax situation, run for office.
Record budget deficits and the state and municipal level OK So what, at the fed level much of that is now, an attempt to inflate us out of this situation, I for one believe that if they want to get the economy growing again and are willing to spend any amount to make that happen, it will happen sooner rather than later.
Low savings rate (read no down payment) Savings rate has actually been increasing over the past year, otherwise the savings rate has hovered close to 0 for the better part of a decade now. That is one thing the fed and treasury is trying to discourage in the short term. when trying to get out of a recession, the last thing you want people to do is save money.
Drastically lower stock portfolios (read no down payment) Anybody who has money invested in the stock market that they intended to use as a down payment on a home within the next 3 or 4 years should have their head examined. There are probably some very good deals in the stock market right now, but I know that I personally can make better investment returns in real estate more safely than I can in the stock market.
Oh yeah, and plenty of houses on the market that don’t seem to move. As I have said before, in almost any town in any market time frame, probably 20% of the homes listed are actually priced and conditioned to sell and they do sell. The rest are just listed and likely will not sell.
Look for signs that the economy is responding to all the stimulus being forced into it by the end of June 2009. This year will be the end of the residential real estate downturn and currently is representing one of the best times to be a home buyer of the past 20 years.
James Boyer
Summit NJ REALTOR
Summit NJ real estate specialist
RE/MAX Properties Unlimited
973-539-6300 Office
973-647-0253 Direct
Category: Summit |
3 Responses to “Real Estate Bubble in Northern New Jersey, the Summit NJ Stats Don’t Reflect It”
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February 1st, 2009 at 2:26 am
Those are great numbers to share; even though prices are down from last year, they are still up from 06-wonderful! I hope you are right that the market will be on an upturn now and you are right-a qualified home buyer is in a very wonderful position to get the home of their dreams at a bargin price!
February 8th, 2009 at 7:58 am
I have what seems to me to be the typical mentality of someone who’s looking to buy right now, based on the other buyers I meet. Here’s what buyers see:
I don’t know anyone who’s not worried about losing their job. Rents are suddenly falling fast in this area. You can’t think of a good reason to invest in stocks and buyers like me can’t think of a good reason to buy a house
Where do you get the 2-3 percent figure for the percentage of foreclosures? Distressed sales seem to be a big chunk of sales in this area. One consequence of the local tax structure around here is that as prices fall sharply, many former $700,000 homes are sliding into my $500,000 budget, but I still won’t touch them because they taxes won’t adjust. I hope you’re right that things will turn around in six months.
I wholeheartedly agree that very few homes are priced to sell, and those that are do sell quickly. Until about September, they even sold above list price, but that seems to have stopped.
February 8th, 2009 at 10:18 am
Hi Tom,
I got the foreclosure information for New Jersey from http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=5681&accnt=64847
The site currently shows much of New Jersey being in very good shape, with the foreclosure rate state wide at 1.8% for New Jersey.
Morris County New Jersey was particularly low.