New Jersey Real Estate Information Archive

While the housing market has certainly showed signs of recovery in our area, the fact remains that with unemployment at a 25 year high, many homeowners in our area are struggling to afford their monthly mortgage payment due to either job loss, income cuts,  mortgage payment increases due to interest rate “resets”, or some other type of life hardship such as a family illness, which happen in any economy.

Although local towns like Scotch Plains, Westfield, and Cranford have not experienced nearly the amount of foreclosures and “distressed” property sales as areas such as Las Vegas, South Florida, or California, the financial crisis has still had an effect on the local distressed property numbers.

Distressed properties include those homes that have already been foreclosed on by the banks, homes that are in the process of foreclosure, homes that are on the market for sale, but are worth less than their mortgage balance (short sales), or homes where the homeowner is already in default (30 days or more late on the mortgage) or will soon be in default (current now, but likely won’t be for long)

Some of these numbers are harder to track, as the unfortunate reality is that 7 out of 10 homeowners that go into foreclosure have done so with no visible signs of intervention, such as listing the property for sale, or attempting to contact their mortgage lender. For this reason, these properties do not show up in the distressed property numbers until the lender has filed a public notice of default, or a public notice of foreclosure sale, or in some cases, until the home is sold at auction.

According to RealtyTrac, foreclosure filings in Scotch Plains totaled 36 in the third quarter of this year, which is up from 8 in the first quarter. While this may not seem like a lot, it is an increase of nearly 4 times. The troubling fact about this statistic is that these are just the public notices that have been filed, and do NOT include homeowners who may be as much as 90-120 days in default on the mortgage, but have not received a public notice yet.

Nationwide, it is estimated that at least 10% of all mortgages are in default, so it is a fair assumption that there are hundreds of homeowners in Scotch Plains who may not appear in these statistics, but who are still struggling to pay their mortgage every month and don’t know what to do about it. As the economy and housing market stabilize, much like unemployment, the foreclosures and defaults may still continue to rise, even as the housing market improves with increased transactions.

It’s important for local area homeowners who are having difficulty paying their mortgages that there are other options besides foreclosure. In fact, foreclosure should be the last resort, as it is one of the most emotionally and financially devastating consequence, and it CAN be avoided. Many homeowners are not even aware that there are numerous ways which can help them avoid foreclosure, and in many cases help them keep their home. Some of these options include mortgage modification, forebearance, reinstatement, refinance, short sale, deed in lieu of foreclosure.

While some of these may be viable options for distressed homeowners, it is critical for these individuals to receive good legal, real estate, and tax advice from qualified professionals in the area before making any decisions. In most cases, a licensed Real Estate Agent with experience in distressed properties is an excellent first resource for not only information about possibly selling the property, but also as someone who has a trusted network of attorneys, CPA’s, and lenders in their database ready to give the homeowner the advice that they need. Realtors who have earned the CDPE designation as Certified Distressed Property Experts, have some of the best training and experience on this subject, and more information about the CDPE designation can be found by clicking here.

In future articles, we will be publishing more information on the different options for homeowners in need of this type of assistance. For a detailed explanation, or to download free reports on this subject, homeowners in Scotch Plains can logon to http://www.HomeOwnerHelpSite.com

Scotch Plains, Fanwood NJ Real Estate Market Report – November 3, 2009

In this report, we’ve included the comparison of 3^rd quarter 2008 to 3^rd quarter 2009 to see how SPF’s market is performing relative to a year ago.

Here are the raw numbers:

3^rd Quarter 2009

Closed Sales: 101

Average Sales Price: $452,008

Average Days on Market: 66

Sale Price to List Price Ratio: 95.3 percent

3^rd Quarter 2008

Closed Sales: 91

Average Sales Price: $504,572

Average Days on Market: 66

Sale Price to List Price Ratio: 96.5 percent

So what does this mean for homeowners and people considering a home purchase in SPF? Well, quite simply there are signs that the market continues to stabilize, but still will take some time to level out. The SPF market was considerably more active in Q3 2009 than one year ago. The number of transactions increased by 11 percent. However, it’s worth noting that the average sales price did still decline by 10 percent. This decline in price is due in large part to the supply of homes on the market still being higher than the demand in SPF, and the decline is consistent with what our last report showed for the “year to date” numbers. The difference between supply and demand is shrinking due to the increase in sales transactions, which should lead to price stabilization if the trend continues.

This increase in number of transactions can be likely attributed in part to the first time homebuyer $8000 tax credit that is set to expire on November 30, 2009. Many first time homebuyers decided to make a purchase this year due to this incentive. Also, mortgage financing became less restrictive than a year ago during the worst of the financial market challenges. Also, very low interest rates in the 2^nd and 3^rd quarters of 2009, helped improve affordability and purchasing power of buyers.

Congress is currently debating whether or not to extend/expand the first time homebuyer tax credit, and this decision will likely have a sizable affect on the residential real estate market. If they extend or expand the credit, sales are likely to remain strong. If the credit expires, it may cause a short term slowdown in sales activity until more job creation spurs more home purchases.

Sean Carroll is Team Leader of “Team Carroll” at RE/MAX Classic Group, and can be reached via phone at 908-376-1569, by email at Sean@TeamCarrollNJ.com,  or via the web at www.TeamCarrollNJ.com.

With all of the news media reports about the ‘national’ economy, and the ‘national’ real estate market, it is very difficult to decipher exactly what that means for towns like Scotch Plains and Fanwood. There really is no such thing as a “national” real estate market, as people who purchase homes in a community often work in that community, or within commuting distance. This means that they earn money locally, and usually spend that money locally.  The national media often reports on national statistics, and while they can be helpful to uncover trends in the macro-economy, it is important to understand that the Real Estate market, and even the economy are highly localized, and can vary tremendously from one state to the next, or even one town to the next.

In this month’s Market News, I thought it would be helpful to share what’s happening now, while also comparing it to historical data, to illustrate how SPF real estate has performed from its peak of 2005-2006 to the present. Whether you are buying or selling, or just live in Scotch Plains or Fanwood, this information can help you better understand how the recent recession has affected the local picture.

**All information is taken from the Garden State Multiple Listing Service Statistics**

Here are some statistics:

Year to Date 2009 (through August 31)

Active Listings: 1854

Closed Transactions: 199

Average Days on Market (DOM): 78

Average Sold Price: $471,273

Sales Price to List Price Ratio: 95%

These statistics don’t mean much unless compared with other periods in time, to see how the market is trending. So, let’s compare with the same period 2008

Scotch Plains from January through August, 31 2008

Active Listings: 2036

Closed Transactions: 194

Average DOM: 76

Average Sold Price: $496,423

Sales Price to List Price Ratio: 96%

What does this mean?

Well in looking at the averages, here are some factual conclusions:

1. Average Sales Price declined by approximately 5%
2. Number of closed transactions remained about the same
3. Number of active listings decreased by about 9%

In summary, the average sales prices in Scotch Plains declined slightly since last year. The prices dipped more in some neighboring towns, as there were declines in the number of closed sales in those towns that were not present in Scotch Plains and Fanwood. This kept supply and demand a bit more balanced, which kept average prices relatively stable. Generally speaking, the markets in 2008 and 2009 were similar in Scotch Plains Fanwood, with an actual decrease in months of supply.  Also, keep in mind that these numbers are averages only. Home prices for first time buyers ($300,000 to $450,000 on average) remained more stable than those in the “move up” ranges between $500,000 and $800,000. This is due in part to the government $8000 tax credit available for first time buyers. The higher priced homes saw steeper declines since last year, as many of the first time buyer homes were “distressed properties (short sale or foreclosure) which means the sellers of those homes were not purchasing a larger home as frequently as they might do in a more robust market.

Here is one more comparison. When we compare the 12 months ending August 2009 data with key data from the peak period of the market in the 12 months ending February 2006, here is how the 2009 market compares:

Number of Closed Transactions: Decline of 27.6% since peak

Sold Price to List Price Ratio: Decline from 99% to 95% 

Active Listings for Sale: Increase of 29.3%

Average Days on Market: up from 57 to 76 days

Average Price Declines: 12-20% (depending upon location and price range)

What this means for SPF is that while prices may not have dropped as rapidly or heavily as other parts of the country, the buyers have much more inventory from which to choose, and homes are staying on the market longer. Homes are still selling, and selling well, as long as they are priced correctly, and priced better than the competition. In fact, homes that are priced competitively in SPF are selling often with multiple offers. The difference between now and 2005-2006, is that if a buyer gets outbid on a home they like, or finds a seller who will not accept a fair offer, they will just move on, and wait until they see another one that is priced well, rather than make a bid on the next house available, or overpay because there is more selection, and less urgency.

Here is another very important statistic, which is number of expired listings in SPF which failed to sell:

2004 – 56 expired listings

2005- 70 expired listings

2006 – 155 expired listings

2007 – 199 expired listings

2008 – 165 expired listings

To help you understand what all of this means, here are some general observations when examining this data:

1. SPF sellers who price their homes competitively and at today’s market value will sell their homes successfully in approximately 76 days, for approximately 95-96% of list price
2. Sellers who overprice their homes are 3 to 4 times more likely not to sell their home than at the market peak, and will likely stay on the market much longer, and may need to reduce their asking price to within 5% of the comparable sales.
3. These numbers are averages only. Homes for first time buyers have been selling more strongly than “move up” homes, and the price declines in homes priced from $600,000 to $900,000 have been more severe than the less expensive homes. Be sure to get an accurate market analysis or appraisal before listing your home for sale.
4. SPF buyers will be purchasing their home today at anywhere from a 12-25% lower price than they would have had just a few years back, depending upon the price range of the home, and the neighborhood of the home they are buying. If a home is properly priced, there will likely be high interest, so offer fairly. If the home is not priced properly, use the comparable data to negotiate the best possible price.
5. SPF has remained a stronger market than many other towns because of the strong school system, access to transportation, and limited “investment, or speculative” buying during the real estate boom. The primary driver of the market and prices going forward will be employment, both locally and along the route 22, I-78 corridor, and in New York City.

Well the numbers are in for Scotch Plains and Fanwood, and they look very similar to Westfield and Cranford. I suspect when I look at Berkeley Heights and New Providence that it will be similar as well. For a complete look at the numbers, remember to check my Active Rain blog or subscribe to it's RSS feed on my Facebook page.

http://activerain.com/blogsview/918626/Scotch-Plains-and-Fanwood-NJ-Real-Estate-Market-Update