Guide Me Home to North Jersey

If you were one of the many homebuyers who took advantage of the Homebuyers Tax Credit this spring, there isn’t much time left to get it all done! The time between April 30th (when you had to be under contract) and June 30th (when you have to close) seemed like a very long time, but it’s not! There has been talk (and some defeated legislation) to extend the closing date for two months-but don’t count on this.

Contact your lawyer and real estate agent to develop a plan for the completion of the following steps towards closing:

Most importantly, you must obtain a mortgage. There has been a flood of applications, and although banks are prioritizing Homebuyer Tax Credit applications, make sure you are on top of the process every step of the way. As with everything, communication is crucial. Ask your lender ahead of time what is needed, get it to them swiftly, and then follow up to make sure all is received. Double check the checklist!

Next, follow up on inspections. By now you should have scheduled one and received the analysis back. If there is remediation, make sure the seller is addressing the issues on a timely basis.

Hand in hand with inspections are the smoke, fire, and carbon monoxide certifications. Each town requires something different, so verify what the rules are and that these are also being done. If there are other outstanding issues, such as missing documentation for oil tanks, permits for work done on the house, Certificate of Occupancy (CO) or Certificate of Continued Occupancy (CCO) if the town requires, or other contingencies, etc., follow up!

Finally, create an artificial close date with the seller. This will be the goal date for completion of all issues, and will give you a little wiggle room in case something goes awry.

Good luck and congratulations!

Posted by:  Mary Jane Benedetto

In spite of all the forecasts about higher mortgage rates happening in the latter part of 2010 (up to 6%), the unexpected strengthening of the dollar against the Euro has pushed rates down to a new low as investors are now investing in US bonds. Once yields on treasury bonds lowered, this triggered a decline in mortgage rates.

According to the Wall Street Journal article by Nick Timiraos on May 24, 2010, rates averaged 4.84% last week ending May 20, 2010. Rates were around 5.27% in April.
 

Why is this important?

Remember my previous blogs? I explained that for every one point in increase or decline of a mortgage rate, there is a corresponding 10% increase or decline in the cost of the home. If you are a seller, you may not be forced to lower the price of your home as the monthly cost to the buyer will be less with a lower rate. (This assumes, of course, that you priced the house properly at the outset of the listing.) If you are a buyer, you can buy more house for the same monthly cost!
 

So, if you are in the real estate market either as a buyer or seller (or know someone who is), timing is of the essence! Lock in a low rate and let’s start looking at houses!

Posted by:  Mary Jane Benedetto

If you are thinking of buying or building a home in Morris, Somerset, or Hunterdon Counties, you may find that you will not have access to public water. This means that your property will require a well for drinking water. Before you close on the house (whether buying or building) the well must be tested. The primary purpose is to verify that the water is potable. Testing also tracks any changes in the status of the seven largest aquifers in New Jersey.

The following is a brief explanation of the well testing process that is in no way meant to be all you need to know!

When you buy a home, the contract will include the requirement that the well water be tested for contaminants by a state-certified water testing laboratory. This is usually at the seller’s expense. The test must be done on untreated water. This means the test must be done before the water goes through any water softener, filter, etc. The parameters covered are for contaminants such as iron, manganese, pH, nitrate, lead, etc. In addition, there is a second part of the test that focuses on bacteria, specifically total coliform bacteria. The first test is usually valid for a year and the second test for 6 months. Check with both the county and the state as you must follow all laws for both.

Once the results come back, both buyer and seller review the report. Testing and results don’t take long, but in the event remedial work or treatment needs to be done, the test should be done as soon as you go under contract. According to the law, a test in which one or more drinking standards are not met doesn’t mean the sale can’t go through. In some cases local health departments may require remediation of the water. Check with your county or township!

For more information, click on this link NJDEP Private Well Testing Act.

Posted by:  Mary Jane Benedetto

The spring 2010 Real Estate market is upon us. If you are a buyer or seller, you are probably asking whether to buy or sell now or wait. The real question is: how will the price of homes and interest rates be affected by the following combination of circumstances:

• The expiration of the first and repeat home owner’s tax credit (April 30, 2010.)
• The expiration of the Fed program which protected interest rates by purchasing mortgage backed securities (March 30, 2010.)
• The current foreclosures on the market and the rising delinquency rates (3.5 million in January 2010 vs. 2.8 million in January 2009 according to Fox News RealtyTrac report).
• The increased number of bank owned properties coming on the market.

Supply and demand is clearly at play here. Steve Harney, the nationally recognized real estate guru of Keeping Current Matters, recommends in his January 26, 2010 article, to buy now if the Feds let the current tax credit program expire. He also recommends selling now while demand is still high. We saw what happened to the demand in November when the first tax credit expired, pending sales fell by 10%. In addition, Harney says, prices are projected to fall and not regain footing until 1st quarter 2013. As for mortgage rates, 5 of the top economic publications such as HSH & Associates, Moody’s, Washington Post, Barry Habib, and Morgan Stanley all project rates will rise to between 6% and 8%.

Why is all this important? There is a definite relationship between mortgage rates and home prices. Generally, for every point the mortgage rates increase, the value of the house you can buy is reduced 10%. For example, if you wish to take out a $200,000 loan at 5.0%, your monthly mortgage payment will be $1,074. However, if you borrow $200,000 at 6% your monthly mortgage payment will rise to $1,199. To remain at $1,074, the value of the house you can purchase must be reduced to $180,000.

It becomes clear that the time to act is right now. All the positive forces in the market right now (low interest rates and the 1st time and repeat homeowner’s tax credit to highlight the most important), make this a great time to buy or sell. Let’s talk before interest rates dramatically rise reducing your ability to buy or sell the most house for the best price.

Posted by:Mary Jane Benedetto

On November 6, 2009, Congress passed an extension of the law that gives an $8,000 tax credit to first time home buyers. It was set to expire on November 30, 2009. But this is more than an extension. The new law changes income limits, allows homeowners to receive a credit of up to $6,500 if they purchase a new principle residence, restricts home price, and changes deadlines among other things.

Below is a brief summary and explanation of this news. This writing does not pretend to discuss all qualifications, specifics, and provisions of the law and should not be used as any type of legal or tax advice. (As with all legal and tax related issues, you should consult your tax preparer or lawyer before doing anything).

Income limits: The new limits, which apply to both first-time and repeat buyers who purchase after Nov. 6, are $125,000 to $145,000 for singles and $225,000 to $245,000 for joint filers as reported by the New Jersey Association of Realtors.

Credits: The $8,000 credit for first-time buyers remains, but the law now gives repeat buyers up to $6,500. It requires that they have lived in their home for at least 5 years in a row in an 8 year period.

Home price: There is an $800,000 ceiling on the sale price of the house in order to be eligible.

Deadlines: The house must be under contract by April 30, 2010 and be closed by June 30, 2010.

If you are planning to purchase a new home in the next 6-8 months, I invite you to call me and discuss your options. You may email me at mjbenedetto@turpinrealtors.com or call me at 908-234-9100, x203. The time to buy equals a large inventory plus low mortgage rates plus the tax credit extension!

Posted by:Mary Jane Benedetto

Just in case you’ve been hearing a lot of good real estate news lately, here’s what it means to you, the home seller.

Yes, the market conditions have improved over a year ago. Contract sales have increased. Buyers are buying. But there is still much inventory to sell off before we reach the supply and demand levels at which home prices begin to increase. The good news is that we are at an 8 month supply level now, compared to a 12 month supply at the start of the year.

While contract sales have steadily increased for the first 6 months of 2009—the first time in 3-4 years–so too has the inventory, as pent-up sellers move to the market. The forecast is that following a long flat period, during which inventory is sold off at “bottom” prices, we will slowly see a return to a normal balance of supply and demand and begin to see increases in home values by 2012.

Therefore, for the long haul, price remains the biggest advantage a seller can offer over the competition. All challenges and objections can be overcome with price. In other words…the best price wins.

But if you have your heart set on 2005-2006 peak home values, hang in there…we expect prices to return to peak levels by 2020.

Feel free to contact me for your real estate needs. I can be reached at 973-543-7400 ext. 19 or ampyontek@turpinrealtors.com.

Posted by: Alaina May Pyontek

Here in the Somerset Hills (which for the purposes of this article we will very loosely define as Bedminster, Bernardsville, Far Hills, Bernards Twp, Tewksbury, the Chesters the Mendhams and Harding Twp) the real estate market has certainly picked up. While we have become accustomed to experiencing a spring market as early as January or February in recent years, it wasn’t until April of 2009 that we began to see an increase in contract activity. The improvement in the real estate market between the 1st and 2nd quarters of 2009 is striking and includes a number of other encouraging signs too.

Most notably, contract sales in the 2nd quarter of this year have almost doubled from the 1st Quarter. In Q1 there were a total of 167 sales, as compared with 321 in Q2. Lest we attribute the increase simply to a seasonal pattern, in 2008 there were 209 sales in Q1 and 307 in Q2, and in 2007 the numbers were 316 and 405 respectively. So while we are accustomed to seeing an increase in contract activity between the 1st and 2nd quarters, this year’s increase has been significantly more dramatic. Before you break out the champagne, keep in mind that transactions YTD are still running approximately 6% below our 2008 numbers and almost 50% below 2007.

In several other areas the performance of our real estate market also improved, including average sales price, days on market and sale price to list price ratio. Average sales price went from $568,184 in Q1 to $687,778 in Q2. Average days on market for homes that have closed declined from 101 days to 96, while the percentage of final list price achieved went from 92% to 93.4%. While these changes are small, they do reflect a positive trend in the market.

This good news is a welcome reprieve from the slide we have been experiencing for years in the New Jersey real estate market, but it is important to keep in mind that with inventory levels still so high, it may be many more months before we hit bottom and prices begin to stabilize. The good news is that for now it looks like we are headed in the right direction.

Posted by: John Turpin

If you put your house on the market several weeks or months ago and it hasn’t sold, you are probably struggling to decide whether to lower the price. The answer is usually yes, especially if the lack of interest isn’t due to other factors such as lack of maintenance, poor location, or style or decorating that isn’t main stream.

Buyers continue to focus primarily on price, even when they like a house. However, Turpin Realtors has seen, in several recent cases, that listing at a lower price than expected has generated multiple offers, sometimes resulting in a higher selling price than the listing price. There is no magic percentage that you need to lower your home- analysis of very recent sales and contracts in your neighborhood will guide you to where you need to be.

Currently, the market has a few favorable characteristics for sellers to sell homes to buyers who are seriously looking.

1. Low Mortgage Rates: We are currently experiencing unprecedented low mortgage rates. However, these low rates have been artificially pushed down by the Tarp and the Bailout. Once that money is used, it will dry up and mortgage rates will go up sharply and quickly.
   


2. Consumer Confidence: Consumer opinion of the market is turning around. According to the Pew Research Center survey of March 16, 2009, “75% said it was a good or very good time to buy a home”. This is important because there are serious buyers out there and you need to position your home in the center of their attention.
   


3. Movement to realistic prices: The market is a buyer’s market and the buyers expect to buy as low as possible. They are correct in their thinking for two reasons. First, according to the Brooking Papers, the housing market experienced an unsustainable price increase of 89% in 2000-2006 (vs. the average 5 year increase of 25%). Lowering prices is a natural correction. A home just will not sell at the high price of 2006!

Second, according to The Otteau Report, as a result of lower or more realistic prices, New Jersey is currently experiencing far greater affordability (the relationship of income to housing prices). Movement has been from a low of 81% affordability to the current high of 110% affordability. A low price positions your home advantageously to the right buyer.

A reduced price combined with low mortgage rates, consumer confidence, and improved customer affordability just might entice those buyers who have been interested in your home but have not made an offer.

Posted by:Mary Jane Benedetto

In last Sunday’s New York Times the headline in the Real Estate section was “For the Brave, the Moment is Now”. The article goes on to say that in New York City, in the last few weeks, first time homebuyers are beginning to take advantage of depressed prices and very attractive mortgage rates. Buyers without a place to sell, who have stable jobs and good credit are certainly in the drivers seat right now. Many who previously were priced out of the market can now afford to own their own home.

Traditionally, as the New York City market picks up, the increase in activity ripples out to surrounding areas. The homes that are moving in our area tend to be the lower priced homes. Fourteen Condominiums or Townhomes went Under Contract in the last month, in the area of Bernards Township, Bedminster and Bernardsville, which is two more than the same time last year. So the dream of home ownership is now becoming a reality for some who previously found it just out of their grasp.

Posted by: Susan Wagner

Everywhere I go, people ask, “How’s the market?” I’m glad they ask. I’m happy for the opportunity to spread the good news that buyers are buying, houses are selling... if they are priced right. Quite simply put... if your house is the most attractively priced house for your market you win the buyer.

Sometimes buyers are competitively bidding with each other on those right-priced houses. This should not be surprising to hear. It makes sense that if something is well-priced, the knowledgeable buyer will recognize it and go after it. Many buyers have been in the market for a long time now. They will recognize a good value when they see it.

First-time buyers are particularly active right now. This is more good news. The first-time buyer market is extremely important to the real estate market. They are the engine that moves the train of recovery. When a first-time buyer buys a home, he allows that homeowner to then move up…moving that train.

If you’re a first-time buyer…or want to be... take heart. First-time buyers by definition have nothing to sell in order to buy, making them particularly attractive buyers for sellers. And there are mortgage products available that make it possible for a buyer to buy with as little as 3 ½% down. A first-time buyer with little cash but good credit can secure a loan in this strict mortgage climate.

Good news: Prices are down, mortgage rates are down... and NOW is a great time to buy.

Posted by: Alaina May Pyontek

Here in Tewksbury the real estate market has not escaped the downturn that the rest of the country has suffered, but there are still some bright spots. In the past 45 days, 12 homes have been listed in Tewksbury while four have gone under contract. This is good news when you consider that in all of 2008 Tewksbury averaged 4.66 sales per month.

Of the 12 new listings, the average list price is $1,557,463 and the median list price is $849,000. Of the 4 that have sold the average list price is $756,700. While higher priced homes continue to be listed, it is clearly the homes under $1,000,000 that are selling.

In the 4th quarter of 2008 ten homes sold, and at this moment four of those homes have closed. Of these four closed sales the average sale price was 98.8% of final list price. Two of these sales were listed below $400,000 and sold at or close to their list price. The other two were higher priced and over the course of several listing terms took and average reduction of 28.5%. This is a clear indication that even though many buyers are making very low bids, homes that are selling are those where the seller has reached a realistic listing price and the buyer recognizes the value.

The lesson for sellers is clear: Price your home correctly and you will be one of the relatively few homes to sell in this market. If you choose to “test the market” with a higher price, you are likely to spend a long time on the market and take several reductions along the way. With the market declining at a significant rate, it is plain to see that the longer your home takes to sell the lower the price you will obtain.

Posted by: John Turpin

Go to any social event – yesterday mine was the Peapack Gladstone 10 & 11 year old basketball scrimmage- and you will hear what’s on the minds of your friends and neighbors. In the top 3 is probably the real estate market.

So what are the latest housing statistics? The S&P/Case-Shiller Index reports that the annual change in the home pricing for the 20 metropolitan areas it tracks is down 18% through October 2008. The biggest losses were in the Sunbelt – Las Vegas and Phoenix down over 30%. The NY Metro area is faring better at -7.5%.

The Otteau Valuation group reports that NJ Contract Sales in November ran at 30% below November 2007. On the bright side, mortgage rates have recently come down substantially, with 30 year fixed loans running at just over 5%.

Some creampuff homes are out there for sale, with pricing not seen in the last few years. Once first time homebuyers jump in, the domino effect will work its way up the price curve. And whatever 2009 brings, I will enjoy the many pleasures of living in this area, including kids’ basketball games. Final score 24/24.

Click here for more on the S&P/Case Shiller index.

For more on the Otteau Valuation Group click on: www.otteau.com

Posted by: Susan Wagner