The Real Estate Market in Bergen County, NJ

Market Research by Barbara Weismann
December 17, 2009

As we end 2009 its clear that the real estate market in Bergen County performed exactly as expected. We are past the worst of it and into a recovery. At the same time, there’s been a surprise – the number of sales is nearly identical to what we had last year. Fewer sales had been projected.

According to New Jersey MLS figures, sales are only off 1% and we still have 2 more weeks. Dollar volume and the average sold price tell a different story – dollar volume is down 14% and the average sold price by 13%. This means that higher priced homes aren’t selling. All that activity is in the bottom half of the market.

Part of the reason for this is the tax credit which spurred on first time buyers to take action together with historically low interest rates.

Part of this is due to unemployment. Early on short sales and foreclosures were often due to irresponsible habits. People used their homes like open ended bank accounts. Now, sadly, we’re seeing a second wave due to long term unemployment. People who lose their homes don’t buy another; they become tenants breaking the upward chain of transactions.

Part of this is due to financing – affluent buyers were able to purchase with a small down payment. Today that’s no longer possible. Down payments of 25-35% are now required.

Part of this is due to construction loans – they vanished for most of 2009 although I have seen this beginning to loosen up a bit lately. Without construction loans, upper tier new home projects have ground to a halt.

All of this is changing now as we enter 2010.

The first time buyer tax credit has been extended through April 20th and extended to now include current homeowners who want to purchase another house. This, together with mortgages near 5% and a growing recognition that we’re past the bottom has brought back many buyers into the market. Based on the volume of calls and internet inquiries we’ve been receiving, the market in 2010 is going to be significantly better than it has been this year. Jeff Otteau’s graphs through the 3rd quarter show the turn around came once we entered June; that’s when unsold inventory started to drop.

Don’t misunderstand me – we’re not going to see a major uptick for several years but that doesn’t mean we’ll be in trouble. Things will definitely be livelier in 2010 and we will be working with a solid real estate market. Solid and well paced is always good.