It is starting to look like there may be some consistent improvement in the local real estate market, at least as it relates to the sales of single family homes. Last month, the pending sales (those under contract but not closed) of single family homes showed an increase over April of last year. That was the first time in quite a while that we have seen an improvement in year to year sales, for pretty much any category of housing.
The improvement that began in April has continued into May. Over that period, the pending sales of single family homes in Monmouth County has been about 13% higher than for the same period last year.
Good news indeed, but we are not out of the woods just yet. Although we are happy to see improvement, the increase is not enough to stabilize prices. There is still a heavy oversupply relative to demand and to get to a point of price stability we will need to see sales improve year to year by about 75%, not the 13% we aer seeing now.
The closing of single family homes are still way behind the pace of last year. For April and May, those number are almost 27% behind last year. Also, condos have not shared in the good fortune. The pending sales continue to track behind the numbers of last year and the closings are off by even more than the single family homes.
The increased sales activity seems to be concentrated in the lower end of the price scale where you typically find first time home buyers. I would appear that the $8000 tax credit available to first time buyers is stimulating sales. Here is a crazy idea. If the tax credit is getting people into the market and buying, why not extend it to everyone, not just first time buyers. Why not say that if you buy a home as your primary residence, you get the tax credit also. Those in government say that they want to support the housing market. This would be a great opportunity to do something that might actually work.
Let's keep fingers crossed and hope the sales continue to improve.
Showing posts with label Monmouth county. Show all posts
Showing posts with label Monmouth county. Show all posts
Wednesday, May 27, 2009
Wednesday, April 15, 2009
A Glimmer of Good News, But Just a Glimmer
After months of nothing but negative news in the real estate market, the first 14 days of April have brought us some news that is not totally negative. This is what it has come to, new is that not totally negative is now good.
Although the closed sales of single family homes and condominiums still lag the figures from the sale time last year, 27% and 46% respectively, the new sales of single family homes in Monmouth County, those reported under contract for the month, are about the same as last year. Keep in mind last year was bad, so to say it hasn't gotten worse in the first 14 days of the month isn't saying much, but it's better than it's been for the first 90 days of the year. Also keep in mind that 14 days does not make a trend and the new sales of condos is still running 30% behind the first 14 days of April 2008.
People continually ask us if things are getting "better". By "better" most are asking about what the prices are doing. The short answer is they are still going down. People want to know when they will stabilize. They won't stabilize until sales improve to soak up the excess inventory that is putting the negative pressure on prices. Before sales can improve, the have to stop going down. The first 14 days of April, at least as it applies to single family homes, gives us a glimmer of hope that the sales may, and I say may, be bottoming out.
Once they bottom out, they won't necessarily start to improve but at least it is a step in the right direction. We will see what the rest of the month as to hold and then see what May, June and July have to offer. Keep in mind that a modest increase in sales will not fix the problem. The oversupply relative to demand is so great that sales will have to improve significantly to reach a point of price stability. But we have to start somewhere, and maybe this is the start.
Only time will tell. Keep your fingers crossed.
Although the closed sales of single family homes and condominiums still lag the figures from the sale time last year, 27% and 46% respectively, the new sales of single family homes in Monmouth County, those reported under contract for the month, are about the same as last year. Keep in mind last year was bad, so to say it hasn't gotten worse in the first 14 days of the month isn't saying much, but it's better than it's been for the first 90 days of the year. Also keep in mind that 14 days does not make a trend and the new sales of condos is still running 30% behind the first 14 days of April 2008.
People continually ask us if things are getting "better". By "better" most are asking about what the prices are doing. The short answer is they are still going down. People want to know when they will stabilize. They won't stabilize until sales improve to soak up the excess inventory that is putting the negative pressure on prices. Before sales can improve, the have to stop going down. The first 14 days of April, at least as it applies to single family homes, gives us a glimmer of hope that the sales may, and I say may, be bottoming out.
Once they bottom out, they won't necessarily start to improve but at least it is a step in the right direction. We will see what the rest of the month as to hold and then see what May, June and July have to offer. Keep in mind that a modest increase in sales will not fix the problem. The oversupply relative to demand is so great that sales will have to improve significantly to reach a point of price stability. But we have to start somewhere, and maybe this is the start.
Only time will tell. Keep your fingers crossed.
Monday, March 9, 2009
Real Estate Market Continues to Lag as we Move to Spring
The first two months of the year are behind us and the hoped for improvement in the Monmouth County real estate market has yet to materialize. The sales of both single family homes and condominiums are running significantly behind the figures for the same period last year and the inventory levels relative to demand, for both single family homes and condominiums are at staggering levels.
As bad as last year was, this year is shaping up to be worse. Through February the number of closed sales of single family homes was more than 30% behind 2008. Keep in mind that 2008 sales were more than 20% less than the 2007 figures. The news for condos is even worse. So far this year, sales figures for condos are more than 50% behind the figures of just one year ago.
As if this new wasn't grim enough, the Months of Inventory for both single family homes and for condominiums were averaging about 25 months in through February. Keep in mind that 6 months of inventory relative to sales is considered a price stable marketplace.
What can we expect as we move forward. Although California, Arizona, Nevada and Florida are the worst markets in the country, it looks like we are trying to catch up with them. So far all efforts made by the Government to stabilize the housing market have not had any measurable results. Expect prices to drop significantly as we move through the year. A figure of 1% per month would make sense, but it wouldn't be surprising if it were more.
When will the market bottom out and prices start to stabilize. Nobody knows the answer to that, but the guess here is that 2011 is the earliest we can expect that to happen. If you are thinking of selling and postpone the sale because you don't like today's prices, be prepared to wait at least 5 years, and quite possibly more, to realize a price significantly higher than today will bring you.
I know the news isn't good, but houses are being bought and sold. There is always value in the present and gambling on the future may prove to be a costly mistake.
As bad as last year was, this year is shaping up to be worse. Through February the number of closed sales of single family homes was more than 30% behind 2008. Keep in mind that 2008 sales were more than 20% less than the 2007 figures. The news for condos is even worse. So far this year, sales figures for condos are more than 50% behind the figures of just one year ago.
As if this new wasn't grim enough, the Months of Inventory for both single family homes and for condominiums were averaging about 25 months in through February. Keep in mind that 6 months of inventory relative to sales is considered a price stable marketplace.
What can we expect as we move forward. Although California, Arizona, Nevada and Florida are the worst markets in the country, it looks like we are trying to catch up with them. So far all efforts made by the Government to stabilize the housing market have not had any measurable results. Expect prices to drop significantly as we move through the year. A figure of 1% per month would make sense, but it wouldn't be surprising if it were more.
When will the market bottom out and prices start to stabilize. Nobody knows the answer to that, but the guess here is that 2011 is the earliest we can expect that to happen. If you are thinking of selling and postpone the sale because you don't like today's prices, be prepared to wait at least 5 years, and quite possibly more, to realize a price significantly higher than today will bring you.
I know the news isn't good, but houses are being bought and sold. There is always value in the present and gambling on the future may prove to be a costly mistake.
Saturday, February 7, 2009
2009 Starts Where 2008 Left Off
With a new year comes the hope of some good news, especially when it comes to the Monmouth County housing market. Sadly, this year has picked up where last year left off.
I would like to report that the January sales figures showed improvement from a year ago, but sadly, that is not the case. Hard is it is to believe the market continues to grow weaker, sales continue to decline and prices continue to fall.
There is a bit of a new wrinkle to January's sales figures. Last year the condo market some more strength, although you could hardly describe it as strong, than the single family market. The reverse now seems to be the case. In December 2008 and now in January 2009, the closings for condominiums plummeted. Condo closing in January 2009 were almost 60% fewer than for January 2008. The end result of this is that January ended with almost 27 months of standing condominium inventory. Remember, six months of inventory is considered a level that leads to stable prices. Twenty seven months can only mean one thing, look for condo prices to get hit hard in the the early part of the year.
The single family market continues to weaken, just not a dramatically. Closings reported for single family homes were off about 23% in January this year when compared against January last year. Keep in mind, sales of single family homes were off about 22% in 2008, so the latest figures give no indication that the market is bottoming out. Standing inventory for single family homes in January was just over 22 months. You know what that means for prices, down they go.
So far the incredible amounts of money that the government has thrown at the problem has had not visible effect. The focus continues to be on the supply side of the equation, but that would not appear to be where the problem lies. Right now there are only slightly more homes for sale around the county than there were in 2006. So why is there so much pressure on prices? Sales have plummeted.
If our government wants to approve things, they needs to focus on the demand side of the problem. Until there is a greater appetite for real estate, the situation will continue to be bad. I have to admit, as a veteran of 30 years in this business, I am getting tired of reporting the same distressing news month after month. I would like to be able to say there is a light at the end of the tunnel, even if it is a freight train coming straight at us. But there is no light, in fact we may not even be in a tunnel.
Hopefully things will improve soon. The government is about to pass the largest single expenditure legislation in the history of the world. Perhaps that will help. If it doesn't, watch out!
I would like to report that the January sales figures showed improvement from a year ago, but sadly, that is not the case. Hard is it is to believe the market continues to grow weaker, sales continue to decline and prices continue to fall.
There is a bit of a new wrinkle to January's sales figures. Last year the condo market some more strength, although you could hardly describe it as strong, than the single family market. The reverse now seems to be the case. In December 2008 and now in January 2009, the closings for condominiums plummeted. Condo closing in January 2009 were almost 60% fewer than for January 2008. The end result of this is that January ended with almost 27 months of standing condominium inventory. Remember, six months of inventory is considered a level that leads to stable prices. Twenty seven months can only mean one thing, look for condo prices to get hit hard in the the early part of the year.
The single family market continues to weaken, just not a dramatically. Closings reported for single family homes were off about 23% in January this year when compared against January last year. Keep in mind, sales of single family homes were off about 22% in 2008, so the latest figures give no indication that the market is bottoming out. Standing inventory for single family homes in January was just over 22 months. You know what that means for prices, down they go.
So far the incredible amounts of money that the government has thrown at the problem has had not visible effect. The focus continues to be on the supply side of the equation, but that would not appear to be where the problem lies. Right now there are only slightly more homes for sale around the county than there were in 2006. So why is there so much pressure on prices? Sales have plummeted.
If our government wants to approve things, they needs to focus on the demand side of the problem. Until there is a greater appetite for real estate, the situation will continue to be bad. I have to admit, as a veteran of 30 years in this business, I am getting tired of reporting the same distressing news month after month. I would like to be able to say there is a light at the end of the tunnel, even if it is a freight train coming straight at us. But there is no light, in fact we may not even be in a tunnel.
Hopefully things will improve soon. The government is about to pass the largest single expenditure legislation in the history of the world. Perhaps that will help. If it doesn't, watch out!
Friday, January 9, 2009
2008 Is Behind Us, Thank Goodness!
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!
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!
Saturday, November 29, 2008
Weakening Economy Takes It's Toll On The Real Estate Market
With the month of November at an end, the effects of the weakening economy on the already weak real estate market are becoming more evident, and the impact has been negative. For November, the closings of single family homes declined from 357 in 2007 to 232 this year. That is a decline of 35%. For the year, sales of single family homes around the county have been off by about 21% on a year to year basis, so the November numbers show a further weakening of the real estate market.
Closed sales are a trailing indicator of real estate activity because the closed numbers reflect deals that were actually struck 30, 60 or 90 days earlier. New contracts, called pending sales, is a more current indicator of sales activity, so let's take a look at those numbers. In November 2007 there were 352 pending sales reported in Monmouth County as compared to 245 for November 2008. That represents a decline of 31% year to year. That is not as bad as the closing figures, but still represents clear evidence that the weakening economy is having a negative effect on the local real estate market.
What does all this mean and what can we expect as we move into 2009. Sadly, there is no evidence that the real estate market is showing signs of improvement. The oversupply of housing, relative to demand, is the highest it's been this decade. Because of this, it is likely that prices will continue to decline well into 2009, at the very least. Will there be more buyers in the Spring? Yes there will. But those buyers will likely be buying at lower prices than we see today. What to do?
If you are a seller, time is of the essence. You find yourself in a race against time for every day that your house doesn't sell means you are likely to get less money when it does. We have many clients that tell us they "aren't in a hurry" or "we don't have to sell" or "we don't have a gun to our head". Those people will probably wish they had been in a hurry. If you are a seller and want to attract the next buyer for your type of house, make sure you offer the best value based on the asking price. You have to price your house to stand out from the competition. You must make your home a "no brainer" in the mind of a buyer. As we advise our clients, this is a market that requires a strong stomach and bold action. This is not a market for half hearted sellers.
If you are a buyer, you should only pursue those homes that meet your lifestyle needs and are absolutely the best value, based on the asking price. Since prices are likely to decline again next year, you should only buy if you plan to be in the home at least five years. If you only see yourself in the home for a period less than that, you should not buy! This is a market that does require a buyer have faith that prices will stabilize and once again go up. Though we don't have these markets often, they do test one's faith in the future.
Closed sales are a trailing indicator of real estate activity because the closed numbers reflect deals that were actually struck 30, 60 or 90 days earlier. New contracts, called pending sales, is a more current indicator of sales activity, so let's take a look at those numbers. In November 2007 there were 352 pending sales reported in Monmouth County as compared to 245 for November 2008. That represents a decline of 31% year to year. That is not as bad as the closing figures, but still represents clear evidence that the weakening economy is having a negative effect on the local real estate market.
What does all this mean and what can we expect as we move into 2009. Sadly, there is no evidence that the real estate market is showing signs of improvement. The oversupply of housing, relative to demand, is the highest it's been this decade. Because of this, it is likely that prices will continue to decline well into 2009, at the very least. Will there be more buyers in the Spring? Yes there will. But those buyers will likely be buying at lower prices than we see today. What to do?
If you are a seller, time is of the essence. You find yourself in a race against time for every day that your house doesn't sell means you are likely to get less money when it does. We have many clients that tell us they "aren't in a hurry" or "we don't have to sell" or "we don't have a gun to our head". Those people will probably wish they had been in a hurry. If you are a seller and want to attract the next buyer for your type of house, make sure you offer the best value based on the asking price. You have to price your house to stand out from the competition. You must make your home a "no brainer" in the mind of a buyer. As we advise our clients, this is a market that requires a strong stomach and bold action. This is not a market for half hearted sellers.
If you are a buyer, you should only pursue those homes that meet your lifestyle needs and are absolutely the best value, based on the asking price. Since prices are likely to decline again next year, you should only buy if you plan to be in the home at least five years. If you only see yourself in the home for a period less than that, you should not buy! This is a market that does require a buyer have faith that prices will stabilize and once again go up. Though we don't have these markets often, they do test one's faith in the future.
Tuesday, September 2, 2008
Are Prices Going Down on the Beachfront Properties
As we all know, we are in a Buyer's Market and real estate prices have come down from their highs of 2005-2006. But a question I still get is "Are prices going down on the beachfront properties?" The short answer is "yes", but there is more to it than that.
When prices are going down, no class of real estate gets exempted from the market conditions, but that doesn't mean that all types of homes are impacted to the same degree. As a general rule, those properties that perform best, regardless of whether prices are going up or down, are those with locational advantages and those that are the most modern. If a home has both of those advantages, it will hold it's value the best in a Buyer's Market.
All of the properties along the beachfront automatically have a locational advantage. Beachfront properties are the ones in shortest supply so there is an advantage there. Some of beachfront homes also have the advantage of being modern when compared other options in the market. Although all the prices of all properties feel the impact of the current market, beachfront properties generally hold their value better than non-beachfront homes.
The two complexes that seem to have been impacted the least are Grand Resorts and The Bluffs in Long Branch, both of which are on the beachfront and both are the newest options out there, being only about two years old. Based on the sales, the impact on prices has been minor.
Got a question, feel free to ask. Hopefully I can help you benefit from my 30 years of productive experience right here in the Monmouth County Shore market.
When prices are going down, no class of real estate gets exempted from the market conditions, but that doesn't mean that all types of homes are impacted to the same degree. As a general rule, those properties that perform best, regardless of whether prices are going up or down, are those with locational advantages and those that are the most modern. If a home has both of those advantages, it will hold it's value the best in a Buyer's Market.
All of the properties along the beachfront automatically have a locational advantage. Beachfront properties are the ones in shortest supply so there is an advantage there. Some of beachfront homes also have the advantage of being modern when compared other options in the market. Although all the prices of all properties feel the impact of the current market, beachfront properties generally hold their value better than non-beachfront homes.
The two complexes that seem to have been impacted the least are Grand Resorts and The Bluffs in Long Branch, both of which are on the beachfront and both are the newest options out there, being only about two years old. Based on the sales, the impact on prices has been minor.
Got a question, feel free to ask. Hopefully I can help you benefit from my 30 years of productive experience right here in the Monmouth County Shore market.
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