Now that the year is done, it is a good time to reflect back and also look forward. 2008 will go down as one of the toughest years in the Monmouth County real estate market since the late 1980's. The sale of single family homes was off about 22% from 2007 and prices declined as well.
Not all communities and not all types of homes felt the impact of the market equally. Those properties that fared the best were those with strong locations and those that were the newest or recently renovated. The condominium market showed more strength than the single family market, but the multi-family homes were hit hardest of all. We finished the year with the highest imbalance between supply and demand in the decade.
Where do we go from here? One thing seems certain, prices are going to continue to decline at least for the first half of 2009, possibly longer. There is just too much supply relative to demand to expect anything else to happen. So far the attempts by the government to stabilize the market have had little impact. Until such time as the demand for real estate improves, we will continue to have an oversupply of housing and declining prices. The demand for homes has declined about 40% from the levels of 205-2006.
We do have lower interest rates, about 5% on a 30 year fixed rate mortgage, and the lower rates will draw some into the market. However, the overhang of a weak economy will likely offset some of the upside of lower interest rates, leaving the impact of the rates to be marginal at best.
If you are buying, there are some tremendous values in the market, especially for first time buyers. If you are selling, the sooner you find a buyer the more money you are likely to see. No doubt you will be disappointed by the prices, but waiting will likely cost you more money.
This too shall pass, hopefully sooner rather than later. But for now, the market remains challenging and there is a chance we haven't seen the worst of it yet. Happy New Year!